Volatility

September 18, 2009

Peak Oil and Legislation

 

America is entering a stage of crisis perhaps unprecedented in its history. The banks and their compliant government policy have plunged us into what will likely be a permanent depression, measured by the standards of the space age paradise we were being promised just a few years ago. Instead, the very processes of industrialism have plunged the globe into an environmental crisis which will, for top-heavy energy-intensive industrial civilization, likely be irrecoverable. The spear point of this ecological blowback is the climate crisis already enveloping the unindustrialized world with drought, famine, and pestilence. Now these effects are increasingly coming to the homeland.
 
Is America at least looking to its safety net, the one thing which could possibly hold it together through the travails we shall endure? Not a bit: on the contrary, the health crisis of fifty million uninsured and growing is seen by the corporate structure and the prostitute political and media class as a war profiteering opportunity, the war being waged by the corporate/political/media class against the American people.
 
Never has the very basis of the country, physical and moral, been so eroded. The World Wars were boom times for the economy, and the resource base was still intact. The people were largely united, and no enemy seriously threatened the homeland. The War Between the States, often miscalled a civil war, was at its core the assertion of dominance of a strong economic predator over a decrepit one, while the people, for the most part understanding little of the structural issues and caring even less, simply went along with what their state did.
 
Today the two great features are Peak Oil and civil disintegration. The physical resource base is shot, the real economy is gutted, and America will not be able to rebuild along these lines. At the same time the power structure has become purely predatory, psychotic, and anti-American. It is now a vast parasite plaguing the land.
 
It understands the physical impossibility of maintaining its power through the normal manipulation of debt and democracy. Exponential debt and mass liberal democracy were luxuries of the Oil Age. Today a power elite will be able to hold a vast mass in thrall only through overt resource imperialism abroad and class war at home. Oil wars and authoritarian government are the only way to keep the energy flowing for the existing power structure.
 
Let’s take a look at what this means for legislation. Two of the Obama administration’s top legislative priorities have been health care and climate change, while they have also (unwillingly) pushed for finance sector reform.
 
Where it comes to the FIRE sector (Finance, Insurance, Real Estate) the priority of both parties is clear. Everything possible is to be done to further empower these rackets, everything to increase their profits, everything to turn the country into a cash cow. While politically the Democrats would probably prefer to leave the status quo in place, they have felt enough bottom up pressure to go through the motions of “reform”.
 
Since we have not capitalism but disaster capitalism, the goal of the rackets and their political whores is to use this opportunity to further tighten their stranglehold. This is currently most clear with health care legislation, where the clear goal of the Dems is to impose an odious individual mandate without a public plan, or at most a phony public plan. The only purpose here is to really add the “I” to FIRE, to increase the massive tax the health insurance racket already extorts from those who work.
 
(By now I’m convinced the “public option”, which requires the mandate in order to constitute reform, was always a Trojan Horse. When they first dangled the public option they were lying. Anyone who sincerely wanted reform would’ve sought single-payer, with a strong public plan as the one and only compromise position. Perhaps Obama might have really had to fight for single-pay, but he probably could have achieved it.
 
Instead, what do we have? Few ever put up a fight for a real public plan at all, while the public plans which have passed out of various committees are Potemkin plans. I may still be proven wrong, but the chances look vanishingly small that anything with a real public option will ever come up for a vote.)
 
Just as we have a finance racket with trillions looted through direct giveaways, no-interest loans, loan guarantees, sweet “consulting” contracts, so they want to set up a parallel trillionaire looter insurance racket. Once this mandate’s in place, with zero competition and only the lying veneer of “regulation”, nothing short of mass civil disobedience and taxpayer strikes (the IRS is supposed to serve as the strong-arm goon for the insurer) can stop them from astronomically jacking up rates while imposing monstrous deductibles and every other kind of co-pay and surcharge. Promised subsidies will not materialize and regulations will not be enforced.
 
(A government which has the will to enforce regulations has the will to enact the right policy in the first place. Regulating insurers is not politically easier than enacting single payer, it’s just being mean and paltry. It bespeaks what Wilfred Owen condemned as “paucity that was never simplicity”.)
 
Meanwhile the propaganda machine promises bank reform. And with good reason, you’d think, after what the banks have done to America, the crimes they’ve committed against it.
 
Even if you don’t agree that they’re criminals, certainly all sane people agree Too Big To Fail must now mean To Big To Allow To Exist. The number one priority has to be to break up these banks and NEVER allow any financial entity to ever become so big again.
 
So that’s the bank equivalent of single payer.
 
But what do we see here, but the exact same sellout. Instead of TBTF breakup, we get the promise of a Consumer Finance Protection Agency, the Fed as systemic regulator, derivatives regulation, exec pay restrictions. Of these only the CFPA is any good in theory, but we see from the start how it’ll be rendered toothless, since making the arch-bank the lead bank regulator is as clear a signal as possible that business as usual will continue. The point of the Fed is not to regulate anything, but to allow every reckless and criminal practice and then pick up the pieces afterward using taxpayer money. In principle the Fed is there to set up the casino, let the banks play with house money, and pay off their bets even when they lose.
 
Even if you look at the alleged mechanism for the “resolution” of Too Big To Fail crackups (“systemically important” entities), you find there’s no there there. And then there’s the derivative and exec pay proposals, which even on paper are paper tigers, ridden with loopholes.
 
Most of all, there’s zero will to break up the TBTF banks proactively. Since this is the only real reform, the whole package equals no reform, anti-reform.
 
If a government had the will to regulate at all, it would enact the right policy to begin with, not the wrong one which it then tries to fix.
 
For all their political power at the moment, banks and insurers remain epiphenomena. The very fact that they embody no economic reality is what would make it so easy to cleanse them if the people could only muster the political will.
 
Climate change is a tougher knot, since greenhouse gases are the normal result of the real industrial civilization. To really mitigate them in order to forestall the worst effects of climate change would require real changes in civilization itself.
 
So it’s not surprising that here too we see only the phony motions of reform, while the legislative package is really meant to further enrich the polluters and – you guessed it – the banks.
 
The ACES bill has an insufficient cap to begin with, this cap is flimsy (we again see the sinister term “trigger”, in this case meaning that if the price of emissions permits goes too high, that is if the cap is doing its job, new permits will be issued; this is also called an “off-ramp” or a “safety valve”), the worst polluters among fossil fuel and industrial agriculture interests are exempted from regulations and receive lots of pork.
 
The bill allows many of the putative emission reductions to be exported through the use of offsets. This kind of imperialism allows the first world to continue its high-impact high-pollution activities while the non-industrial world is forced to forego such activity. (That is, the kleptocrats of these countries pocket the offset money while the people go without the benefits of whatever projects are cancelled or foregone; and that’s assuming such projects really are foregone. The record of the offset mechanism is pretty spotty.)
 
Most of all, the permit and offset markets are intended to open a new frontier of securitization and casino gambling for finance speculators. In the eyes of the bankers this is one of the most promising new bubbles waiting to be blown.
 
(If you doubt this, compare the low interest legislators have shown in writing strong anti-speculation safeguards into the ACES bill to the clear lack of will the administration shows for regulating the finance racket. Then compare both to the standard behavior of the banks and speculators, how their casino is fully back not even one year after the crash they caused, and now running completely on public money. I think you’ll agree, only a naif would expect them not to turn this into one of their casino games. See my post Subprime Carbon on the looming carbon casino.)
 
So let’s sum up these three legislative projects.
 
*There’s the up-front good sounding stuff:
 
Health care – ban on rejecting pre-existing conditions, ban on recissions, ban on “extra charges”, promised regulation of rates, some competition mechanism such as a public plan.
 
Bank reform – CFPA, Fed as systemic regulator with resolution authority, derivatives regulation, exec pay regulation.
 
Carbon reform – finally a mitigation mechanism, and a better political position going into the Copenhagen climate change conference this winter, which is the last chance to get real international action in time.
 
Yet these are all immediately countered by
 
*the up-front assault on the people:
 
Health care – an insurance mandate without a strong public plan is prima facie pure highway robbery.
 
Bank reform – here it’s implicit: TBTF and the bailout bonanza are now officially enshrined as the law of the land.
 
Carbon reform – the ACES bill would strip the EPA of its command and control authority under the Clean Air Act (CAA). More on this in a moment.
 
*Then there’s the elements which will be chronically profitable for the rackets:
 
Health care – the whole point is to maintain the insurance racket in existence, while anyone who didn’t have this priority would have fought for single-payer. Even the MSM widely admitted in its coverage that the benefit of private insurers is the most important thing here. That’s the ONLY reason concepts like “co-ops”, “exchanges”, “triggers”, or the public option itself are even part of the discourse.
 
Bank reform – same thing. The point is to enshrine banks as a corporatist protection gang in perpetuity. Enshrining the chief gangster, the Fed, as chief regulator is meant to not only maximize the profitability of the TBTF version of corporatist ideology, but to forestall once and for all any other reform approach, short of revolution.
 
Carbon reform – there’s the free allocations of permits instead of auctions. This is simply giving away public property. The poison pill provisions guarantee the prices of the permits which are auctioned will never be too onerous. The emissions of industrial ag are grandfathered in, and EPA is forbidden from applying indirect land use calcuations to those emission measures in the first place. The “clean coal” scam is included to let Big Coal in on the feeding frenzy. So to borrow what Gal Luft said about the 2005 energy bill, this mitigation bill is really “the sum of all lobbies”.
 
*Finally the long run gutting:
 
Health care – the point of the trigger would be to gut any nominal public option which might be included. And of course all the supposedly good features of the bill (universal coverage, no rejection for pre-existing), under the scenario of a universal mandate and no real public option, will open up the space for the rackets to charge arbitrarily extortionate rates. Optimally for them, the taxpayer would subsidize it all. In practice these subsidies will not exist, but the coercive mechanism will still be there to extract the maximum rent possible.
 
Banks – we already know the game plan. Boom-bust, bubble-crash, casino-disaster, with the Fed’s role being benevolent negligence in the upsurges, active loot conveyor in the disasters.
 
Carbon reform – we have the anemic cap to start with, the off-ramp/safety valve, the offset market. While the cap is in principle a good thing, the whole setup of this bill is a signal that in practice it will be gutted. The fact that they don’t seek a lower, firmer cap probably means they won’t defend a higher one.
 
*What should be done? What is the strong policy which would mean business and achieve real change?
 
Here too it’s a matter of political will, but those who had the will would seek action this way:
 
Health care – it’s simple. Single-payer, single negotiator of drug rates, change provider fee structure from per-service to per-patient or per-case or per-team, cost-effectiveness measures. All these are well known ideas. We know how to enact them. All we need is legislative authority to do so.
 
With the other two it’s even easier, since we not only know what to do but already have the authority.
 
Bank reform – Break up the Big Banks! Too Big To Fail is Too Big To Allow To Exist! And existing law, the Prompt Corrective Action Law (PCA) already requires the breakup of insolvent banks. Bush and Obama have been breaking the law by bailing these things out. (Their bogus excuse has been that the PCA doesn’t empower them to regulate bank holding companies. Like that kind of legerdemain ever stopped anyone who wanted to enforce a law.)
 
Carbon reform – The Supreme Court in EPA vs. Massachusetts affirmed the obvious, that greenhouse effect-causing carbon is a pollutant under the CAA, that the EPA has the authority and indeed the mandate to regulate it. So EPA could take rigorous action today against carbon polluters toward achieving the same goals as carbon legislation. Even if you think the legislative route is more certain than EPA command and control, it’s still clearly an important part of the toolbox.
 
So what’s the most important tool of the ACES toolbox? Explicitly countermanding the court decision and stripping EPA of its regulatory power. That the polluters lobbied for this and the crooks in Congress gave it to them should tell you how potent the regulatory power already existing under CAA should be.
 
So why don’t we try using that instead?
 
These are examples of how the power structure will toy with reform ideals and abuse the legislative process to give the simulacrum of change while actually further entrenching the status quo. The goal every time is to buy time, to stave off action, to satiate the will to Change.
 
Perhaps by now our best hope is gridlock. If both parties are enemies of the people, if any bill passed can only make things worse, then it follows that we should want no more bills passed.
 
It also follows that optimally we’d have the executive and legislative branches in the hands of the opposing gangs, but that the majority in the Senate not have 60 votes. (And we should stop trying to get rid of the filibuster. It seems quaint how not that long ago (last January) I still wanted to do away it. That’s when I was still being optimistic about the Dems seeking Change now that they held all the nominal power. Now I regard it as one more safeguard.)
 
Meanwhile the real Change Movement has to temporarily give up on Washington. We have to focus on movement building, and our electoral goals for the foreseeable future are at the local and state levels. 
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4 Comments

  1. If I were young I would think seriously about voting with my feet.

    Comment by jake chase — September 19, 2009 @ 6:23 am

  2. Yeah, I’ve thought of it. Haven’t really done any research, though.

    I probably should. I think it’s possible some of us might end up as political exiles, if things get much worse.

    Comment by Russ — September 19, 2009 @ 4:19 pm

  3. I’m adding you to my blog roll. Alas, this should have very little effect on your traffic, but one does what one can.

    Comment by Edwardo — September 24, 2009 @ 11:18 am

  4. Thanks, Edwardo. Glad you like the place. (I didn’t get a chance to post this week, but I should be back to work in a day or so.)

    Comment by Russ — September 24, 2009 @ 5:12 pm


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