- At the closing press briefing of the February G7 Finance
Ministers Meeting in Florida, U.S. Treasury Secretary John Snow signaled
three fundamental and foundational changes to the structure of national
government when he announced:
-
- (1) All countries are interdependent.
-
- "We recognize that we are so interdependent that
growth in Asia is important to us and our growth is important to Japan
and Japan's growth is important to the euro nations, and their growth is
important to us and the UK's growth is important to us and Canada, so that
we are all interconnected in ways that one nation's growth feeds and assists
growth in other parts of the globe"
-
- (2) The market is central to global growth.
- "By letting market forces work, can economies achieve
their potential."
-
- (3) The value of the dollar is to be to determined
by the market and not the strength or policy of government,
- "But the relative values of currencies are best
established in open, competitive, currency markets."
-
- Interestingly when Snow declared that market forces would
determine the value of the dollar he voiced three great "ahh's"
as if to reduce the impact of what he declared. After all, he stood before
the world's press that may not recognize the profound changes cited: how
far the system of government has been changed. The new system is "market
based governance" in which the stock, bond, and currency markets dictate
the nature of government and the value of currency. Thus, the basic question
which concerns us is why U.S. leaders talk of global integration with markets
determining the strength of its government and currency?
-
- The answer embraces two major international structures
with play powerful roles: the Bank for International Settlements and the
Group of Eight heads of state. This international structure would not be
in place was it not for the agreement of U.S. president's facilitating
its birth. In other words, Presidents Woodrow Wilson, Franklin Roosevelt,
Henry Truman, John Kennedy, Richard Nixon, George H.W. Bush, Bill Clinton,
and George W. Bush replaced the U.S. Constitution with the U.N. Charter
which governs a world governmental system. As mentioned at the outset,
the first step taken concerns the idea of the interdependence of nations.
-
-
- Interdependence
-
- Early on, in 1963, President Kennedy called for a "Declaration
of Interdependence." Twelve years later, the newly formed Group of
Eight heads of state would declare that interdependence was their common
goal. Building on the G8, in 2003, President Bill Clinton told University
of Miami students that the "challenge of the current generation would
be to move from interdependence to integration." Again, at the World
Economic Forum in January, 2004, he said,
-
- All of human history is a story of increasing contact.
We move from isolation to interdependence to integration to an environment
of shared benefits and responsibilities and values. Our job is to move
the world from interdependence to an integrated environment with shared
benefits and responsibilities. We are caught in the middle between interdependence
and integration.
-
- In defining interdependence and integration, we find
that interdependence is "depending on one another; mutual dependence"
while integration is "Making or forming into a whole, unifying. The
move towards integration has been gradual through (1) the establishment
of numerous international structures; (2) the removal of the political,
economic, trade, and legal barriers among nation-states; and (3) the passage
of national laws that de-regulate and facilitate the change in structure
of traditional government.
-
- In an interview with U.S. Treasury Deputy Assistant Secretary
for Public Affairs, Tony Fratto in Florida, I asked him, "Given the
drop in the economic, financial and trade barriers, and as America moves
into a global economy, what else needs to be done to complete this global
economy?" He replied,
-
- There is still a lot more that needs to be done. There
are many countries around the world with trade barriers affecting financial
services, affecting capital flows, allowing for financial services firms
to invest and be welcomed into their countries and we are going to see
a lot more of that and is part of the free trade agreement/negotiations,
regionally and at the [WTO] Doha Round as well and is a very important
part of our trade effort. Treasury plays a major role in negotiating the
investment chapters [of the WTO agreement] and the chapters that concern
financial flow and we will see a lot more of that.
-
- I. INTERNATIONAL STRUCTURES
- Central Banks
- The rise of central banks began in 1668 when the Sveriges
Riksbank in Sweden birthed the concept of a private corporation lending
money to government. In turn, the government pays interest in perpetuity
and thus is always in debt to the central bank. However, it was with the
Bank of England in 1694, that this concept became global. Similarly, the
Bank of France began in 1803, the German Bundesbank in 1870, the Bank of
Japan in 1882, the Bank of Italy in 1893 and the U.S. Federal Reserve in
1913. Today, most countries have a private corporation controlling their
monetary system. New central banks now exist in Afghanistan, Russia, China
and Iraq.
-
- Clearly then, governments have turned over management
and control of their finances to bankers. As such, bankers' goals are money,
power and profit which is contrary to goals of honest government. Furthermore,
the interest government's pay on national debt goes to these international
bankers, and the higher the debt, the more interest is paid to them. As
a result, a central bank dictates interest rates, the amount of money in
circulation, and economic policies in a country. Moreover, the central
bank ministers that manage the central banks of their respective country
meet at the Bank for International Settlements-BIS in Basel, Switzerland,
which is the central bank's bank. The BIS is at the apex of power and control
over the world's monetary system. In Tragedy and Hope, Dr. Carroll Quigley,
Bill Clinton's mentor at Georgetown University, writes about the purpose
of central banks, as follows:
-
- [T]he powers of financial capitalism had another far-reaching
aim, nothing less than to create a world system of financial control in
private hands able to dominate the political system of each country and
the economy of the world as a whole. This system was to be controlled
in a feudalist fashion by the central banks of the world acting in concert,
by secret agreements arrived at in frequent private meetings and conferences.
Each banksought to dominate its government by its ability to control Treasury
loans, to manipulate foreign exchanges, to influence the level of economic
activity in the country, and to influence cooperative politicians by subsequent
economic rewards in the business world. When a currency is off the gold
standard, fluctuations of exchange can go on indefinitely.
-
- The unbalance of international payments is worked out
by a shift in exchange rates. In 1980, Jimmy Carter gave the Federal Reserve
vast powers over the U.S. banking system which began their rise as a major
power over the U.S. economy when he signed the Monetary Control Act of
1980. At the same time, other G7 countries passed similar laws heralding
ascendancy of the Bank for International Settlements with legal jurisdiction
over the world's international banking system. Its goal is to "foster
international monetary cooperation" which is a ruse for total control
over the world's financial system.
-
- Prior to the 1998 Asian financial crisis, the G7 finance
ministers met alone. As a result of the Asian crisis, the respective central
bank ministers of the G7 countries began meeting with the finance ministers.
This was a major power play because the central banks lend money to countries
that have become debtors to the central banks. Therefore the central truth
is if countries become broke in the process, then the evolving international
financial architecture turns out to be a transfer of wealth into the hands
of the international bankers. Again, as Quigley writes, "[T]he powers
of financial capitalism had another far reaching aim, nothing less than
to create a world system of financial control in private handsto be controlled
in a feudalist fashion by the central banks of the world." At every
turn, this control is growing and expanding over each individual country.
-
-
- The Group of Eight
-
- Over the past 29 years, the Group of Eight or G8 has
become a key world center of power. It began when Nixon took the dollar
off the gold standard in 1971. By 1973, he called to the White House the
heads of state of three countries' along with their finance and foreign
ministers. There they determined how the world was to be financially governed.
Two years later, the U.S., France, England, Italy, Japan, and Germany
met in Rambouillet, France where the G5 power structure was birthed. A
year later Canada joined and it was the G7 until 1999 when Russia joined
and it became the G8. Currently, there is talk of China joining the G8
process because of its growing economic and trade power. In their first
Communiqué in 1975, the G8 declared their purpose:
-
- We came together because of shared beliefs and shared
responsibilities. To assure in a world of growing interdependence the
success of the objectives set out in this declaration, we intend to play
our own full part and strengthen our efforts for closer international cooperation.
-
- Actually, the original purpose of the G8 was to monitor
a post-gold world. But its structure has expanded through the addition
of a global cabinet. Because their agenda now includes such governmental
oversights as labor, education, law, finance, health, transportation, trade,
and foreign affairs, the respective ministers of these functions meet year-round.
-
- The G8 has never hid its goal of global integration.
It appeared in a 1991 declaration: "We seek to build world partnership,
based on common values and to strengthen the international order."
In 1994, they strengthened the international financial architecture of
free trade and new international mechanisms to facilitate economic integration.
They pledged their full energies "to strengthening the institutions
in partnership with the entire membership to enhance the security and prosperity
of the world. The major challenge confronting us is to manage increased
interdependence." And later, in 1998, they wrote, "In a world
of increasing globalization, we are ever more interdependent. In an interdependent
world, we must work to build sustainable economic growth in all countries."
All of these declarations clearly bear out the G8 over-arching objective
of global integration.
-
- While the goal of global integration may sound utopian
and a way of achieving world peace, it can be seen in another light: one
of gathering the natural and manufactured assets of the various individual
nation-states and transferring them into a global market whereby the most
powerful can control the value of the market by buying low and selling
high, leaving the small investor to wonder where his unrealized gain went.
It was transferred into the bank account of those who REALIZED the gain
at the market-top. This is a direct transfer of wealth!!! A transfer
of assets requires an open system-a world without borders where laws facilitate
integration and harmonization. The biggest economy in the world, the U.S.,
has been the driving force behind such integration. The Monetary Control
Act of 1980 is foundational to asset transfer and ensuring integration
market-based governance. It is not until we review the admonishments of
our first president, George Washington, that we see how far we have strayed
from nationalism and the ability of our country to protect itself from
foreign and domestic enemies of all kinds, including those presidents who
are traitors to the U.S. Constitution.
-
- II. TEARING DOWN THE WALLS BETWEEN THE NATION-STATES
- George Washington in his Farewell address admonished
his fledging country to make no permanent alliances with "any portion
of the foreign world." He said it would be "unwise to extend
them." Unfortunately in the 20th and 21st centuries, the U.S. failed
to heed this warning. Indeed, a vast global governmental structure is
now in place over nation-states, and it is exercising judicial power given
to them by the countries worldwide. Some of the areas of power are
those which are economic, political, trade, legal, policing and electronic,
described below.
-
-
- Economic
-
- World finance ministers and secretaries of treasury met
in New Hampshire in 1944 to determine how to govern world economically
after World War II. Their goal was to reduce obstacles to international
trade and to harmonize national economic and financial policies. Specifically,
British economist John Maynard Keynes sought to set up "the exact
opposite of the gold standard" and it was U.S. Assistant Secretary
of the Treasury Harry Dexter White who drew up the plans for the International
Bank for Reconstruction and Development, known as the World Bank-WB and
the International Monetary Fund-IMF.
- In 1947, the World Bank changed its original mandate
to providing loans to helping countries develop their infrastructure.
Currently, it has expanded its jurisdiction to advising a country as to
its governmental and legal structure as well as how to arrange its social
and economic functions. At the same time, the IMF created its own form
of money in the 1960s when it promulgated "Special Drawing Rights"
or SDRs. The U.S. Secretary of the Treasury regularly meets with his peers
from other countries at the IMF/World Bank spring and annual meetings.
In his dual role as an IMF Finance Minister, he votes with his counterparts
on rules and regulations for all countries to implement. The growing financial
and economic integration is reflected by the G7 Finance Ministers and Central
Bank Ministers meeting where the president of the World Bank and the Managing
Director of the IMF are represented.
-
-
- Political
-
- After WWII, Americans learned that a global organization
was necessary to bring countries together to work out differences and to
avoid another major world war. In 1945, interested countries met in San
Francisco for five months to hammer out the United Nations Charter. Numerous
churches, women's liberation groups, and other pro-world government organizations
lobbied Congress and the American people to ratify the United Nations treaty
in 1945. Actually, it was Franklin Delano Roosevelt who suggested the name
"United Nations." Under its charter, the U.N. has a head of
state; a governing body, the General Assembly, comprised of ambassadors
from 191 countries, and a Security Council currently comprised of five
permanent members: Britain, China, France, Russia and the United States.
The United Nations has its own currency, the Special Drawing Rights of
the IMF, it issues its own stamps and has its own court system, policing
mechanism, flag, and oath of allegiance. In 2000 the 191 member-states
gave the Secretary-General additional powers that equate those of an elected
president, it gave the UN the right to create a Rapid Deployment Force
for quelling disturbances that might upset world peace, it gave the UN
the right to create a House of Representatives or "People's Parliament,"
and to consider ways to tax globally the people of the world. During the
last nine years, the UN has emerged a central player on the global stage
with regard to war, health, peace, education, and trade.
-
- Trade
-
- In 1944, an international trade organization was recommended.
Though the senate supported establishment of the World Bank and International
Monetary Fund, President Truman and the Senate concluded that a world trade
organization would diminish U.S. sovereignty and interfere with our domestic
laws. When the Senate failed to ratify the International Trade Organization,
countries interested in world trade met in Cuba in 1947 to negotiate a
reduction in global tariffs. This agreement was the "General Agreement
on Tariffs and Trade" -GATT. It established headquarters in Geneva,
Switzerland, where it operated until 1994 when the United States ratified
GATT. In 1994, after eight years of negotiations, the Senate voted 76
to 24 along with the House (68-21) to give bi-partisan support to a global
trade accord. The GATT documentation lay in 27,000 pages reducing trade
barriers among all countries on goods and services. GATT, along with the
North American Free Trade Agreement-NAFTA, contributed to the loss of importance
of U.S. markets because investment opportunities, production facilities,
workers and markets were available elsewhere at lower costs. Thus, the
global economy became more important than the U.S. domestic economy.
-
- Legal
-
- Like the UN's World Court that arbitrates disputes between
companies and countries, an International Criminal Court-ICC, established
in 1998 in Rome, Italy, tries crimes against humanity, genocide and aggression.
In the future, this court will deal with narcotics, terrorism, and environmental
degradation. The establishment of the ICC signaled the first time since
the Roman Empire that a world court has the power to transcend national
sovereignty to issue an international search warrant to make arrests to
detain and to extradite alleged offenders to The Hague for trial by a jury
of judges. The Indian delegate to the 1998 ICC said the following about
the passage of the ICC:
-
- We have always had in mind a Court that would deal with
truly exceptional situations where the State machinery had collapsed or
where the judicial system was either so flawed, inadequate or nonexistent
that justice had to be meted out through an International Court, because
redress was not available within the country. Instead of legislating for
the exception, the scope of the Statute has been broadened so much that
it could be misused for political purposes or through misplaced zeal, to
address situations and cases. For which the ICC was not intended, and where,
as a matter of principles, it should not intrude. What the zealots have
achieved, therefore, is a contradiction in terms: a Court framed with Armageddon
in mind is set in Utopia (emphasis added)!
-
- Military/Police
-
- Unfortunately with the September 11, 2001 Attack on America,
countries of the world are now cooperating in ways they never did before.
The U.S. shares information across borders formerly forbidden and our
CIA/FBI co-operate with their counterparts around the world in new ways.
Through the auspices of INTERPOL-the international police agency-law enforcement
agencies link with each other. President Bush called allies to form a common
assault against terrorism and to join the U.S. in invading Iraq and now
policing it. Furthermore, several years ago, the Group of Eight formulated
a plan for how they would fight international terrorism in their "Forty
Points." These points call for the integration of the world's police
force and full cooperation at all levels of police and intelligence agencies.
-
- Electronic
-
- With the rise of the internet in the early 1990s and
with Y2K, countries are now truly connected. A "global village"
via an electronic system now exists and it connects individuals to the
whole world. Most Americans do not know or understand all of the foregoing
history, and they cannot imagine that our Congress would allow and facilitate
the establishment of an international layer of power above U.S. sovereignty.
As an aside, the Internet has made possible the outsourcing of hundreds
of thousands of white collar jobs from U.S. mainland to the lesser developed
countries.
-
- 3. LAWS TO DEREGULATE AND FACILITATE CHANGE
- The road to a new structure of government originated
in the early 20th century. Changing the structure of government entails
destroying the current structure. By adopting policies of economist John
Maynard Keynes in the 1930s, the U.S. found herself in the 1930s with a
debt of $130B for the first time. This bankrupting of America continued
since then with key legislation to enable debts and deficits and to force
Americans to move savings from the banking system to the market.
-
- Bankrupting Governments
-
- John Maynard Keynes was a member of the Fabian Society
which supports the tenets of communism. As a result, Keynes boasted that
he shared the Bolshevik's desire to destroy the free-enterprise system.
He stated that his economic ideas were going to be "the euthanasia
of capitalism."
-
- Interestingly enough, President Franklin Roosevelt turned
to Keynesian theory to fix the American economy after the 1929 stock market
crash and subsequent depression. Educated at Eton and Cambridge, Keynes
was a Bloomsbury homosexual and a freemason. In 1936 he published The
General Theory of Employment, Interest and Money, which asserted that replacing
private investment with government investment financed by deficits could
resolve problems in the economy.
-
- The New Deal
-
- Using Keynes economics, Roosevelt launched the New Deal
by instituting massive governmental spending programs founded on debt.
These included the Federal Emergency Relief Administration to provide
state relief agencies; Civilian Conservation Corps for reforestation and
flood-control work. Reconstruction Finance Corporation to make loans to
large and small businesses. Agricultural Adjustment Administration to help
farmers. Public Works Administration to help the unemployed. National Industrial
Recovery Act for public works. Social Security for retirement wages. Fair
Labor Standards Act for minimum wages.
-
- Roosevelt also created the Tennessee Valley Authority,
an experiment in public ownership and development economics which is providing
loans to develop basic infrastructure such as schools, roads, water and
sewer in the underprivileged mid-South. Roosevelt also initiated national
regulation through the Interstate Commerce Commission to regulate railroads
and the National Recovery Administration to partner labor, business and
government.
- As a result of Keynesian economics, today all levels
of American government are broken, whether local, county, state or federal.
This status provides the impetus to change the structure of government
and thus gut it of its power and assets through privatization and public-private
partnerships. It also leads to new replacement structures.
-
- Margaret Thatcher and Privatization-Smaller Government
-
- A new concept, privatization, now unfolded. In Britain
upon election in 1979, Margaret Thatcher rejected Keynesianism and the
welfare state. Earlier she had read Friedrich von Hayek's The Road to Serfdom
proposing a market-based economy. The Road to Serfdom set forth the radical
concept of government selling off assets. Thatcher called this process
"privatization," a term she borrowed from Peter Drucker, who
used it in a book which described a new market-based economy.
-
- Underlying the concept of selling state owned assets
is the freeing-up of cash to service government debt. Also selling government
industries shifts the pension burden to the purchaser. Said Thatcher,
"I wanted to use privatization to achieve my ambition of a capital-owning
democracy in which people own houses, shares and have a stake in society
and in which they have wealth to pass on to future generations" (emphasis
added). What Thatcher adopted then was a "market-based" form
of governance.
-
- By 1992, two-thirds of British state-owned industries
moved into the private sector. They included major businesses with 900,000
employees, and thus privatization increased the government's coffers by
$30B. What was once a massive drain on government was now a major source
of tax revenues. Clearly then privatization is the gutting of government,
leaving it without assets or control of assets. Control now resides in
the market and individual who control the market.
-
- Friedrich von Hayek
-
- As mentioned, under Roosevelt and Keynes, the first step
in gutting government was to bankrupt it. Under Thatcher and Reagan, the
second step was to sell government assets as a way to reduce debt, a concept
originated by Friedrich von Hayek. The third step was to change laws creating
another structure: the stock, bond and currency markets.
- By switching to Hayek's theory of "free markets,"
the government would sell its prized assets to pay down Keynesian debt
while working for "free trade" to facilitate "free markets."
But in practice, the theory posed a double-edged sword. While government
casts off debt, still it engenders a new structure: market-based governance.
As Reagan said, "[V]ote for me if you believe in yourself. Too much
government-get government off our backs." But Americans did not understand
that Reagan was shifting from a traditional to a market-based form of government.
Later Bill Clinton built on Reagan's privatization through his "Reinventing
Government" by defining corporations as the "co-manager"
with government through public-private partnerships. Because of the Thatcher/Reagan
revolution, countries borrowing from the IMF/World Bank must reduce debts
by selling state-owned assets. The European Union also demands of countries
that they pay down debt by privatizing before admission to the EU. Moving
away from state control of assets of course, leads to a new global economy
that is market-based.
-
- Facilitating this economic revolution was the dropping
of barriers between nation-states. Clearly, Thatcher and Reagan were key
to opening the door to market based governance upon which free trade arises.
In other words, markets, instead of traditional government, now rule.
-
- The Monetary Control Act of 1980
-
- In 1980, under Jimmy Carter, Congress passed the Monetary
Control Act of 1980. It impacted the U.S. in three ways: first, it changed
various federal laws. Foreigners could now invest in America, and Americans
could now invest in their countries. These changes led to the proliferation
of foreign and global mutual funds, global mergers and acquisitions, and
$2T in stateless money running around the world daily looking for higher
returns and quick play. Second, the Act removed ceilings and floors on
interest banks had to pay and charge on savings and certificates of deposit.
Banks can pay the going rate of interest rather than a minimum percentage.
Currently banks are paying _% to 1 _% on savings and short-term certificates
while charging 5 _% to 6% on mortgages and 21% on credit cards. By paying
such a minimum interest, banks influenced depositors to turn to the stock
market where the value of stocks rose as a result.
-
- Another economist, Kevin Phillips, writes in Wealth and
Democracy, about this trend that
- Over the three decades from 1970 to 2000, the U.S. slowly
substituted the securities sector for the banking sector as the linchpin
of the overall financial sector. In 1980, the average daily volume of
shares traded on the NYSE was 45 million, in 2000, it was 1.041B. In 1980,
all mutual fund assets totaled $135B in 2000, they totaled $7.8T. The
value of all stocks in 1980 was $1.4T by 2000, it was $12.2T.
-
- As a final impact, the Monetary Control Act gave the
Federal Reserve, a private corporation not part of the U.S. Treasury or
government, greater power over the U.S. banking system.
-
- Reagan's Tax Cuts
-
- Further, President Reagan obtained passage of major tax
laws in 1981, 1982, 1984, 1985, and 1986. The Economic Recovery Tax Act
of 1981, ERTA, reduced the maximum individual tax rate from 70 to 50% and
the top tax rate on long-term capital gains from 28% to 20%. While lower
tax rates made the U.S. attractive for foreign investors as capital flowed
into the U.S. from all over the world and eroded the after-tax income of
lower bracketed taxpayers. Kevin Phillips documents that as a result of
Reagan's tax cuts the tax rate of the median family rose from 5.30% in
1948 to 24.44% in 1985 while the millionaire level or top 1% dropped from
76.9% in 1948 to 24.9% in 1985. Thus between the changes in corporate
tax laws and in the tax brackets of the rich and famous, the tax burden
has been shifted to the middle and lower classes. In a more detailed analysis,
he writes Looking at both the before-tax and after-tax incomes of each
income level leaves no doubt about the real-world blessings of 1981-86
tax reform. Indeed, the after-tax numbers were more revealing than pre-tax
figures. Between 1977 and 1999, according to one analysis of Congressional
Budget office data, the after-tax income of the top 1%, adjusted for inflation,
grew faster (115%) than their before-tax income (up to 96%). By contrast,
the inflation-adjusted, after-tax income flowing to the middle 60% of households
in 1999 was slightly below the same figure for 1977.
-
- The bottom fifth of households experienced a 9% loss.
The upper middle class, far from benefiting in millionaire style, was
actually put in a higher tax bracket than millionaires. Furthermore, Phillips
points out, the "safe harbor leasing" provision allowed corporations
that could not use the act's extravagant depreciation allowances and investment
tax credits to sell them to other companies. For example, General Electric
used the provision to wipe out most of the company's 1981 tax liability
and to pick up $110M in refunds for previous years.
-
- The sum of corporate-claimed depreciation for 1982-87
totaled $1.65T. Huge sums of corporate income tax liability vanished because
of depreciation excesses in ERTA. Indeed, a recession and the first double-digit
unemployment since the Depression succeeded ERTA and ballooned the federal
deficit partly because of revenues given away to corporations. Bearing
this outcome, Philips notes that "In 1950, corporate taxes as a percentage
of total receipts, was 26.5%, in 1980, it was 12.5% and in 2000, it was
10.2%." By 1983, social security and Medicare payroll taxes on lower
and middle-income Americans required increases. The Tax Reform Act of
1986 dropped the highest income tax bracket to 28% and gave the rich some
650 special tax preferences to embellish their after tax income. And by
1995, expanding FICA earnings coverage and higher rates made these taxes
a greater burden for two-thirds U.S. families. Currently the Bush administration
is looking to make this process further by eliminating estate taxes and
thus creating an aristocratic class in the U.S. whose vast wealth passes
tax-free. In addition, Bush is recommending a national sales tax in place
of income tax. These steps will produce a feudalistic economic system.
Wealthy taxpayers with tax-free trusts who continue to buy and sell businesses
and commercial and residential property avoid taxes which are sheltered
by the trust. Now add to their style of living by making all their income
tax free via a national sales tax! 4.
-
- CHANGES IN TRADITIONAL GOVERNMENT
- The final move toward global integration involves passage
of national laws changing traditional government structures. In The Commanding
Heights - The Battle Between Government and the Marketplace that is Remaking
the Modern World, Daniel Yergin and Joseph Stanislaw, present an in depth
historical study of the move from traditional government to market-based
government. The title stems from the Fourth Congress of the Communist
International which met in 1922 in St. Petersburg.
-
- Here, Lenin defended his policy of resumption of small
trade and private agriculture as a way to solve economic breakdown in the
Soviet Union. For this action, militant communists attacked Lenin for
selling out the revolution. He responded that the state would control
the "commanding heights" or the most important elements of the
economy.
-
- Yergin and Stanislaw show that the stock markets of the
world have now become the Commanding Heights. How Markets Became the Commanding
Heights The transfer of power over important elements of economy began
with the bankrupting of government. Roosevelt adopted Keynesian economics
to spend America's way out of the 1930's depression. And when governmental
debt became too burdensome, Thatcher and Reagan sold off or privatized
government assets. President George H.W. Bush brought in "total quality
management;" Clinton "reinvented" government. Therefore,
the move to a market-based economy was an objective of both parties.
- Privatization
- Privatization lies at the heart of the market-based approach
to public management. Developed countries like the UK and US privatized
and the World Bank and International Monetary Fund have made privatization
a focal point for aiding countries and for building a global infrastructure-all
to facilitate a market based economy. As mentioned, privatization is the
selling off of government assets to shift country wealth to private hands.
To assist with privatization, the IFC provides technical assistance and
advisory services. It also helps with privatizing state-owned enterprises
through the following methods:
-
- Supporting small and medium-sized enterprise by using
project facilities,
- Venture capital funds,
- Credit lines and leasing companies;
- Developing capital markets;
- Drafting securities markets laws and regulations,
- Shaping the regulatory environment for new types of
financial institutions,
- Establishing supervisory and enforcement entities and
mechanisms for securities market
- Creating stock exchanges in developing countries.
-
- Indeed, the World Bank created the $50B global bond market,
and assisted with multi-currency offerings. For example, McDonald's offers
bonds in euros, Germany companies offer bonds in Canadian dollars and British
banks offer investments in Swiss francs. Furthermore, in 1989, the World
Bank started to create stock exchanges in third world countries like Bermuda,
Argentina, Botswana and Spain; and in 1990, in China, Ghana, Panama and
Russia. It erected additional exchanges in Poland and Bulgaria in 1991
and in El Salvador, Honduras, Hungary, India and Pakistan in 1992 and in
Armenia, Columbia and the Czech Republic. In 1993, many of the former
Comecon countries followed. The bottom line is that privatization requires
a stock market, and if moving from traditional government to market-based
governance, stock, bond and currency markets as well. According to the
World Bank more than eighty countries are privatizing their state-owned
enterprises.
-
- Clinton and Reinventing Government Bill Clinton while
Governor of Arkansas was chairman of the Democratic Leadership Council.
At the 1990 annual meeting, the DLC issued the New Orleans Declaration;
which became the guiding philosophy of Clinton's 1992 campaign for the
presidency. This Declaration called for a citizen-government relationship
based on the values of opportunity, responsibility, and community, it was
also the main organizing principle of the Third Way movement in Britain
and elsewhere. New Democrats believe in a free enterprise to stimulate
economic innovation and growth. They believe too, that global markets
demand global rules and institutions to ensure fair competition and to
provide checks and balances on private power. When Clinton ran for the
presidency, he promised change in government. On March 3 1994, he declared,
"We intend to redesign, to reinvent, to reinvigorate the entire national
government" (Washington Times). Clinton stated that he wanted to
eliminate government waste and inefficiency. His running mate, Al Gore
declared, "It's time we had a new customer service contract with the
American people." Initially, Clinton turned to reinventing government.
At the first "Global Forum on Reinventing Government," attendees
heard that citizens were no longer citizens but "customers."
Sponsors were the Ford Foundation, Innovations in American Government
program at Harvard's John F. Kennedy School of Government, the World Bank,
the National Partnership for Reinventing Government in the Office of the
Vice President, the Brookings Institution, and the Organization for Economic
Cooperation and Development (OECD) in Paris. A key way to re-invent government
and change it to a market-based system came with the appointment of Robert
Rubin, former currency arbitrageur and co-chairman of Goldman Sachs, as
chairman of the National Economic Council in 1993. Three years later,
Rubin became Secretary of the Treasury. From his experience in running
the most sophisticated money-making machine on Wall Street, Rubin, more
than any other individual, changed the running of the U.S. economy under
the auspices of the U.S. government. Rubin ran the economy like a major
Wall Street international investment firm, whose goal was to make money
and attract investment from around the world. Leverage and speculation
were givens, and the global reach of the Federal Reserve extended as a
result of Rubin's vision (Wealth and Democracy). Reduction of the Federal
deficit cheered the bond market, brought down interest rates, and stimulated
economic expansion. These results bolstered tax receipts, corporate profits
and the Dow-Jones and Nasdaq averages. The Fed and the treasury, in a
sense, became joint proactive managers of the multi-trillion-dollar "USA
Fund." Globalized U.S. economic management became the game (Wealth
and Democracy).
-
- A key tenet in this New Economy holds that markets should
set prices. In the old economy, government often regulated prices while
monopolies dominate national markets. However, in the new and competitive
global economy, market determines value. The new role of government focuses
on increasing investment in technological innovation, education, and skills.
The new model of governing is decentralized, non-bureaucratic, results-oriented,
and performance based. Integral to reinventing government was public-private
partnership: a business arrangement between government and business with
the help of non-governmental organizations. Such partnerships, too, were
at the center of Clinton's plan to reinvigorate and reinvent government.
In the structure for the "New World Order," corporations buy
out government through public-private partnerships. This approach which
changes government and society as known in the past is fascism. Of the
largest 100 countries, 51 transnational corporations compete with forty-nine
for the largest. In the 1970s, national corporations developed an international
presence; and by the 1990s, they were transnational-or beyond national
borders-as a result of their size. This phenomenal growth has challenged
the need for nation-states; after all, trade, economic and political rules
of individual countries are what corporations view as impediments to their
desire to do business. CONCLUSION Most recently Gov. Arnold Schwarzenegger
won a major victory to issue $15B in bonds to give the state a chance to
refinance its debt. The alternative to raising taxes was to go into the
market. At a time when all levels of government are broke, the alternative
to raising taxes are the markets. When Treasury Secretary Snow announced
that all countries are interdependent, markets are central to global growth,
and market determines the value of the dollar, he was basically explaining
the vast changes to government as formerly known.
-
-
- The Women's International Media Group, Inc.
- P. O. Box 77 Middletown, MD 21769-0077
- 301/371-0541 (F) 301/371-0541
- Vol. 6, Issue 1 January-February, 2004
-
- www.womensgroup.org
|
