Last year, around this time, NC held its first fundraiser. You helped show that Naked Capitalism was a valuable place for honest discourse, a corner of the world where we could peer into the abyss, together. It worked. Your generosity helped us upgrade the site’s infrastructure, bring in a series of guest bloggers, and in a host of ways large and small, aid us in ruthlessly describing the destructive impact of growing power of elite finance in the US and abroad.
As we move toward the elections, I’m going to ask all of you to join me once again. You can give by using the Tip Jar at the upper right for one-time or monthly donations through PayPal or via check made out in the name of Aurora Advisors Incorporated, mailed to Aurora Advisors Incorporated, 903 Park Avenue, 8th Floor, New York, NY 10075 (please also e-mail email@example.com, with “Check is in the mail” in the headline and the $ amount in the body, so we can include your donation in our tally). You an also use WePay (buttons in the lower right column; PayPal is preferable since WePay takes a higher percentage of your donation). If you can’t afford to give, please, take what you’re learning here and share it with people you know. But if you can afford more, please give more. The truth costs money, but it is far cheaper than the free lies elsewhere.
At this point, the convention for a fundraiser is to discuss why the mission is worthy and instill guilt (like threats re the imminent death of three legged dogs if you don’t pull out your credit card, pronto, or in our case, bloggers doing exhaustion-induced face plants in their keyboards). But we need to talk about something much more important: how raw things are right now.
My sense is that the widespread sense of gloom, the increased level of aggression in many walks of life (and on the Internet) isn’t just due to the lousy state of the economy, although that certainly isn’t helping. In the last year, it has become increasingly evident that a very ugly set of changes that will have broad social impact is moving forward with surprising speed.
We are in the midst of a finance-led counterrevolution. The long standing effort to roll back New Deal reforms has moved from triumph to triumph. The foundation was laid via increasingly effective public relations efforts to sell the Ayn Randian world view that granting individuals unfettered freedom of action would produce only virtuous outcomes, since the talented would flourish and the rest would deservedly be left in the dust. In fact, societies that have moved strongly in that direction such as Pinochet’s Chile and Russia under Yeltsin, have seen plutocratic land grabs, declining standards of living (and even lifespans), and a rise in authoritarianism or (in the case of Columbia) organized crime. Those who won these brawls did flourish, but at tremendous cost to society as a whole.
In the US, the first step was making taxation less progressive. A second, parallel measure was deregulation, particularly in financial services. Together, they fostered the growth of an uber wealthy cohort that increasingly lives apart from middle class and poor citizens. The rich can thus tell themselves they have little to gain from the success of ordinary people. And, perversely, the global financial crisis has worked to the advantage of the financial elite. As former IMF chief economist Simon Johnson described in a May 2009 Atlantic article, the US instead suffered a quiet coup, with the top end of the financial services industry becoming more concentrated, and more firmly in charge of the political apparatus. And you see more vivid evidence of the financial takeover in Europe, where technocrats are stripping countries of their sovereignty and breaking them on the rack via failing austerity programs, so as to avoid exposing the insolvency of French and German banks. In the US, the events of the last year are less dramatic but no less telling, including a coordinated 17-city paramilitary crackdown on Occupy Wall Street, a “get out of jail almost free” settlement for the mortgage-industrial complex, and an election where the two candidates are indistinguishable in their enthusiasm for
having old people die faster cutting Medicare and Social Security, and murder by drone.
The implications of gutting social protections are far more serious than they might appear. Dial the clock back eighty years, and most people lived in or near the communities they grew up in. They could turn to extended family, or other members of the community for support if they suffered a serious setback. Informal social safety nets stood in the place of the government provided ones we have now.
Broadly shared prosperity and government safety nets are essential underpinnings of a modern, mobile society. The American nuclear family isn’t just an outgrowth of the automobile era; it’s also the result of union jobs in an industrial economy helping create a wage foundation, and the high confidence most men (in those days, it was men) had in continued employment, and the existence of social protections if something bad happened (Social Security’s disability programs have raised entire families, for instance) made it viable to move far from one’s hometown in pursuit of opportunity.
But as the population has become more mobile, the role of community, and their local support mechanisms, has faded. Yes, when people get desperate, they might still move in with a parent or child. But anecdotally, that seems far less common today than it was a few generations ago. So when government provided social insurance programs are gutted, the broader social impact is much greater than taking us back to the era right before they were implemented. Michael Hudson has described the changes under way as neo-feudalism. We are moving towards the sort of stratified society we had not in the 1920s, but in the early Industrial Revolution with a landed aristocracy, a small haute bourgoisie, some well remunerated craftsmen, and a large agricultural/servant class. In other words, the effort to roll back the New Deal is in fact going much further, in terms of reinstitutionalizing class stratification, lack of mobility, and a resulting large new “lower order” that will live in stress and often squalor. A new, more brutal society is being created before our eyes, and it seems such an incredible development that many people are still in denial about what is happening.
So how does this grim overview relate to the mission of this humble blog?
Why we should hope, or merely why we should continue to struggle, are existential questions, but I’ll give some narrower ideas. Even though this website is nominally about finance and economics, I’ve always thought its real mission is, in its small way, to encourage critical thinking, something you don’t see all that often in the US (the contrast between America and Commonwealth countries is striking). As Alex Carey explains in his landmark book Taking the Risk Out of Democracy, it’s no accident that America is where propaganda and public relations have grown to the extent they have and have proven to be so effective in reshaping this society.
To the extent that more people learn to look at the output of corporate-affiliated outlets with skepticism, to read them not just for content but for how the argument is presented, who is pushing what line and what their motives are, the less susceptible they will be to propaganda. And although this is a small community, I suspect some readers are strengthening the PR immune systems of friends and colleagues by challenging them when they fall prey to conventional wisdom.
Despite these grim prospects, we can all do what we can in our small ways to push back for a better, more just future either based on hope or fatalism. And even though the rich and powerful look to be cementing their advantaged positions, outcomes are not linear. John Kay has stressed in his book Obliquity that in complex systems, it’s impossible to chart a direct path, since no one understands the landscape well enough to know what that might be. So people who try to pursue seemingly narrow and clear objectives, such as “maximize shareholder value” fall short because their idea of the right way to go about it turns out to be inefficient and incorrect. Put more simply, the big dogs actually don’t, and can’t know the best way to use their power. The odds that they will stuff up, which can present opportunities to change what now seems to be an inexorable dynamic.
Another feature of complex systems is that when they have reached a critical state, a very small event can produce large scale changes. Who could have predicted that the self immolation of an unemployed fruit monger in Tunisia would spark revolution throughout the Arab world? We’ve also cited this section of a Jonathan Hari column:
And protest can have an invisible ripple-effect that lasts for generations. A small group of women from Iowa lost their sons early in the Vietnam war, and they decided to set up an organization of mothers opposing the assault on the country. They called a protest of all mothers of serving soldiers outside the White House – and six turned up in the snow. Even though later in the war they became nationally important voices, they always remembered that protest as an embarrassment and a humiliation.
Until, that is, one day in the 1990s, one of them read the autobiography of Benjamin Spock, the much-loved and trusted celebrity doctor, who was the Oprah of his day. When he came out against the war in 1968, it was a major turning point in American public opinion. And he explained why he did it. One day, he had been called to a meeting at the White House to be told how well the war in Vietnam was going, and he saw six women standing in the snow with placards, alone, chanting. It troubled his conscience and his dreams for years. If these women were brave enough to protest, he asked himself, why aren’t I? It was because of them that he could eventually find the courage to take his stand – and that in turn changed the minds of millions, and ended the war sooner. An event that they thought was a humiliation actually turned the course of history.
The difficult part is that individuals like the fruit vendor or the anti-war mothers have no way of knowing their actions will have an impact; that’s another feature of complex systems, you’d can’t identify the trigger point that will set off a cascade of events. But it is possible to tell when a system has reached a critical state, and I suspect most readers would hazard that our political and economic systems are in that sort of vulnerable condition now.
Since we aren’t big on dispensing hopium, there’s another rationale for persisting with quixotic-looking undertakings. Humans are hard wired to struggle despite the inevitability of ultimate failure. In the Indian epic Mahabharata, Yudhisthira goes looking for his missing brothers, who went searching for water. He finds them all dead next to a pond. In despair, but still parched, he is about to drink, but a crane tells him he must answer some questions first. The last and most difficult: “What is the greatest wonder of the world?” Yudhisthira answers, “Day after day, hour after hour, countless people die, yet the living believe they will live forever.” The crane reveals himself to be the Lord of Death and, after some further discussion, revives the brothers.
People press onward, in day-to-day denial of what lies ahead. For most of us, the reason is our personal and larger communities. Their health is threatened by the new order that is, brick by brick, being put in place. If you doubt this grim outlook, look at what is happening in Ireland and Latvia, where they’ve bottomed economically in part due to large scale emigration, or in Greece, where a country is being broken pour decourager les autres.
Social species exhibit both cheating and altruistic enforcement, which is defined as members taking steps to punish cheaters, even when it produces no personal benefit and requires an expenditure of effort. The fact that this behavior takes place across a wide range of social animals says that a sense of fairness, a visceral need to punish tricksters, is pro survival. Bizarrely, economics and Ayn Randian propaganda have, in mere two generations, undermined deeply ingrained social instincts. So much for so-called higher reasoning.
So join in our efforts of altruistic punishment, of identifying how high class grifters have run amok and are trying to compound the con by persuading the wronged public that their ripoffs are really for our good. As you know all too well, this is a target-rich environment, and staying vigilant on this beat requires a lot of energy as well as the support of our fellow bloggers; our 10,000th post mini retrospective gives you an idea of how many people, including our active and engaged readership, have contributed to the vitality of this effort.
Getting the truth is not free. It take time, effort, expertise, and resources. That means I need your help. Some of it results from the fact that as the readership has grown, it takes more to support it: better hosting, more help with offloading tasks so I can respond to more input and leads via e-mail and the comment section. But it also comes about from the fact that the nature of blogging in the wake of the crisis has changed. Not only has the scope of relevant topics widened, but the complexity of many new stories is high, particularly since many are no longer just financial but also have a strong political component.
What you get here at Naked Capitalism is something I honestly believe you do cannot get anywhere else on the Web in the finance and economics sphere, and certainly not in the mainstream media: a willingness to question institutions and individuals in power, and get behind skillful sloganeering to uncover sloppy thinking, bad practices, intellectual capture, corruption, and destructive policies. We name names and get granular. This is a role that traditional journalists aspire to play, but shrinking news budgets, accelerating news cycles, the native complexity of finance-related material, and the collusive game of access journalism have defanged the press. We know this sort of hard-hitting, skeptical coverage is something many of you value; the caliber and thoughtfulness of the comments section proves it. So we hope that those of you who are able will invest in this site in a more tangible way.
So here is how the fundraiser will work. Our target is 1000 donors over the next week.
We are looking to get broad-based participation from the NC community. So if you are a student or took a financial setback in the crisis and can only make a small contribution, we’d still appreciate that, because we also have readers such as successful private investors, attorneys, executives, entrepreneurs, and fund managers, who cam make much bigger donations.
We will also put forward specific things we intend to do with your donations and will tell you when we’ve hit each of these monetary goals.
The first one is to upgrade our hosting and tech support. We’ve conferred with other operators of similar blogs, and there is a dearth of providers set up to handle high traffic WordPress sites. We think we’ve found one who will not only host us but will also help improve our site configuration, which should improve performance and considerably reduced the number and frequency of site outages (and related hair pulling by yours truly). We are also (finally) moving forward on a site facelift (this is an overdue item that I’m finally getting to; it does NOT come out of this fundraiser but is part of the changes you’ll be seeing). The result is that our “nut” on the hosting front will nearly double and we need to allow for the higher cost of any special requests with our new service. So our first target, for a higher caliber of hosting and some site rejiggering, is $6700. Once we’ve hit that, we’ll let you know what our next item is.
As we described earlier, there are multiple channels for donating. The first are here on the blog, the “Donate” and “Subscribe” buttons in the upper right, both of which take you to PayPal (the charge will be in the name of Aurora Advisors). If you are allergic to PayPal, you can send a check (or multiple post dated checks, if you want to spread out payments) in the name of Aurora Advisors Incorporated to Aurora Advisors Incorporated, 903 Park Avenue, 8th Floor, New York, NY 10075. Please also send an e-mail to firstname.lastname@example.org with the headline “Check is in the mail” (and just the $ en route in the message) so we can count your contribution in the total number of donations.
If neither of these work for you, please use the “Donate” button lower in the right column, which takes you to WePay, which will process a one-time or repeat credit card payment. I encourage you to use PayPal or a check, since WePay takes a larger percentage of your donation than PayPal.
Finally, I feel guilty that the volume of donations means that I won’t be sending individual “thank you” messages. This is symptomatic of the state of my life. I hope this fundraiser will help me to a place where I have the bandwidth to express my gratitude formally).
Thanks again for your interest and generous support!