The politics of fear

[towerclimber37]

We all knew that the country accelerated its dive under Democratic leadership. When gas hit 4 bucks a gallon in some places..then the housing bubble collapsed and it was shown that the primary culprits were none other than democratic leaders. the big O himself among them!

Tim Geithner helps to make the dollar worth .10 LESS than the Canadian dollar.

Folks know it's happening, they KNOW who's responsible. What has entered their mind at some point in time is "WHY"?

well..Its kind of long, but here's a blueprint for it.

First proposed in 1966 and named after Columbia University sociologists Richard Andrew Cloward and Frances Fox Piven, the "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

Inspired by the August 1965 riots in the black district of Watts in Los Angeles (which erupted after police had used batons to subdue a black man suspected of drunk driving), Cloward and Piven published an article titled "The Weight of the Poor: A Strategy to End Poverty" in the May 2, 1966 issue of The Nation. Following its publication, The Nation sold an unprecedented 30,000 reprints. Activists were abuzz over the so-called "crisis strategy" or "Cloward-Piven Strategy," as it came to be called. Many were eager to put it into effect.

In their 1966 article, Cloward and Piven charged that the ruling classes used welfare to weaken the poor; that by providing a social safety net, the rich doused the fires of rebellion. Poor people can advance only when "the rest of society is afraid of them," Cloward told The New York Times on September 27, 1970. Rather than placating the poor with government hand-outs, wrote Cloward and Piven, activists should work to sabotage and destroy the welfare system; the collapse of the welfare state would ignite a political and financial crisis that would rock the nation; poor people would rise in revolt; only then would "the rest of society" accept their demands.

The key to sparking this rebellion would be to expose the inadequacy of the welfare state. Cloward-Piven's early promoters cited radical organizer Saul Alinsky as their inspiration. "Make the enemy live up to their (sic) own book of rules," Alinsky wrote in his 1972 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judaeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system's failure to "live up" to its rule book can then be used to discredit it altogether, and to replace the capitalist "rule book" with a socialist one.

The authors noted that the number of Americans subsisting on welfare -- about 8 million, at the time -- probably represented less than half the number who were technically eligible for full benefits. They proposed a "massive drive to recruit the poor onto the welfare rolls." Cloward and Piven calculated that persuading even a fraction of potential welfare recipients to demand their entitlements would bankrupt the system. The result, they predicted, would be "a profound financial and political crisis" that would unleash "powerful forces … for major economic reform at the national level."

Their article called for "cadres of aggressive organizers" to use "demonstrations to create a climate of militancy." Intimidated by threats of black violence, politicians would appeal to the federal government for help. Carefully orchestrated media campaigns, carried out by friendly, leftwing journalists, would float the idea of "a federal program of income redistribution," in the form of a guaranteed living income for all -- working and non-working people alike. Local officials would clutch at this idea like drowning men to a lifeline. They would apply pressure on Washington to implement it. With every major city erupting into chaos, Washington would have to act.

This was an example of what are commonly called Trojan Horse movements -- mass movements whose outward purpose seems to be providing material help to the downtrodden, but whose real objective is to draft poor people into service as revolutionary foot soldiers; to mobilize poor people en masse to overwhelm government agencies with a flood of demands beyond the capacity of those agencies to meet. The flood of demands was calculated to break the budget, jam the bureaucratic gears into gridlock, and bring the system crashing down. Fear, turmoil, violence and economic collapse would accompany such a breakdown -- providing perfect conditions for fostering radical change. That was the theory.

Cloward and Piven recruited a militant black organizer named George Wiley to lead their new movement. In the summer of 1967, Wiley founded the National Welfare Rights Organization (NWRO). His tactics closely followed the recommendations set out in Cloward and Piven's article. His followers invaded welfare offices across the United States -- often violently -- bullying social workers and loudly demanding every penny to which the law "entitled" them. By 1969, NWRO claimed a dues-paying membership of 22,500 families, with 523 chapters across the nation.

Regarding Wiley's tactics, The New York Times commented on September 27, 1970, "There have been sit-ins in legislative chambers, including a United States Senate committee hearing, mass demonstrations of several thousand welfare recipients, school boycotts, picket lines, mounted police, tear gas, arrests - and, on occasion, rock-throwing, smashed glass doors, overturned desks, scattered papers and ripped-out phones."These methods proved effective. "The flooding succeeded beyond Wiley's wildest dreams," writes Sol Stern in the City Journal. "From 1965 to 1974, the number of single-parent households on welfare soared from 4.3 million to 10.8 million, despite mostly flush economic times. By the early 1970s, one person was on the welfare rolls in New York City for every two working in the city's private economy."As a direct result of its massive welfare spending, New York City was forced to declare bankruptcy in 1975. The entire state of New York nearly went down with it. The Cloward-Piven strategy had proved its effectiveness.

The Cloward-Piven strategy depended on surprise. Once society recovered from the initial shock, the backlash began. New York's welfare crisis horrified America, giving rise to a reform movement which culminated in "the end of welfare as we know it" -- the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which imposed time limits on federal welfare, along with strict eligibility and work requirements. Both Cloward and Piven attended the White House signing of the bill as guests of President Clinton.

Most Americans to this day have never heard of Cloward and Piven. But New York City Mayor Rudolph Giuliani attempted to expose them in the late 1990s. As his drive for welfare reform gained momentum, Giuliani accused the militant scholars by name, citing their 1966 manifesto as evidence that they had engaged in deliberate economic sabotage. "This wasn't an accident," Giuliani charged in a 1997 speech. "It wasn't an atmospheric thing, it wasn't supernatural. This is the result of policies and programs designed to have the maximum number of people get on welfare."

Cloward and Piven never again revealed their intentions as candidly as they had in their 1966 article. Even so, their activism in subsequent years continued to rely on the tactic of overloading the system. When the public caught on to their welfare scheme, Cloward and Piven simply moved on, applying pressure to other sectors of the bureaucracy, wherever they detected weakness.In 1982, partisans of the Cloward-Piven strategy founded a new "voting rights movement," which purported to take up the unfinished work of the Voting Rights Act of 1965. Like ACORN, the organization that spear-headed this campaign, the new "voting rights" movement was led by veterans of George Wiley's welfare rights crusade. Its flagship organizations were Project Voteand Human SERVE, both founded in 1982. Project Vote is an ACORN front group, launched by former NWRO organizer and ACORN co-founder Zach Polett. Human SERVE was founded by Richard A. Cloward and Frances Fox Piven, along with a former NWRO organizer named Hulbert James.

All three of these organizations -- ACORN, Project Vote and Human SERVE -- set to work lobbying energetically for the so-called Motor-Voter law, which Bill Clinton ultimately signed in 1993. The Motor-Voter bill is largely responsible for swamping the voter rolls with "dead wood" -- invalid registrations signed in the name of deceased, ineligible or non-existent people -- thus opening the door to the unprecedented levels of voter fraud and "voter disenfranchisement" claims that followed in subsequent elections.

The new "voting rights" coalition combines mass voter registration drives -- typically featuring high levels of fraud -- with systematic intimidation of election officials in the form of frivolous lawsuits, unfounded charges of "racism" and "disenfranchisement," and "direct action" (street protests, violent or otherwise). Just as they swamped America's welfare offices in the 1960s, Cloward-Piven devotees now seek to overwhelm the nation's understaffed and poorly policed electoral system. Their tactics set the stage for the Florida recount crisis of 2000, and have introduced a level of fear, tension and foreboding to U.S. elections heretofore encountered mainly in Third World countries.

[Guest Mugster]

I doubt there's much of a conspiracy. Don't get me wrong, I'm sure those guys have some kind of half ass plan. They just have no power to implement it. I think the majority of those organizations are composed of well meaning folks. Possibly a dose of laziness or hate in some of them.

What you are looking at economically is a depression. You can call it what you want I guess, but the underlying problem is that:

1. Everyone borrowed money.

2. There's no one left to lend anything to (in large statistical numbers), as a population everybody already has maximum leverage.

3. When jobs get lost, people don't service their debt. Credit cards, mortgage, car note, what have you. It goes unpaid. When that happens, the banks fail. With the change in the mark to market accounting rules, no one really has any idea how bad it is except the bankers, and they ain't talking. Its bad though. The smaller banks will continue to go under. I think traditional durable goods will be slow selling for a long time. Electronics like phones and laptop like devices should do OK, but they are a commodity now, imo. They should add cpu chips to the commodity index.

The fix is:

There ain't no fix. There's been no let off of deflationary pressure as of yet. When you can't continue to sell stuff because people can't take on more debt, the economy just stops. You see it right now in real estate, car sales, and other durable goods. To stimulate sales, the .gov is offering some pretty juicy incentives and tax rebates on cars and houses. Shrug. The next biggest crash will be commercial real estate, credit card debt or educational loans, take your pick. There's plenty of waaaaaaaaaaaay over leveraged industries. For example, the average 4 year college grad these days starts out with 16k in notes. And thats just the average.

The band-aid:

Greater government spending. They have to put money in the economy somehow. It doesn't matter how, really. Tax rebates, welfare, whatever. They have to try to keep the money supply about the same. So far its about 16T lost. Between the fed and the congress, thats about what they have spent. This is a good move, imo. It prevented wholesale bank collapse in 08 and possibly riots in the street. There's no fix though, eventually the deleveraging process will complete itself. Where the country will be at the end of the pipe is anyone's guess.

I think they shot their political wad on the first bailout. So if there's significant money supply shrinkage the next few years, they will be somewhat powerless to stop it, imo. In a total crash vs a slow downward spiral scenario, I'll take the slow spiral anyday.

Bottom line. They have to spend the money. You can argue about where it goes, but spend it they must. In any problem, you have to follow and understand the money to understand it.

Edited July 27, 2009 by Mugster

[Guest CrazyLincoln]

I doubt there's much of a conspiracy. Don't get me wrong, I'm sure those guys have some kind of half ass plan. They just have no power to implement it. I think the majority of those organizations are composed of well meaning folks. Possibly a dose of laziness or hate in some of them.

What you are looking at economically is a depression. You can call it what you want I guess, but the underlying problem is that:

1. Everyone borrowed money.

2. There's no one left to lend anything to (in large statistical numbers), as a population everybody already has maximum leverage.

3. When jobs get lost, people don't service their debt. Credit cards, mortgage, car note, what have you. It goes unpaid. When that happens, the banks fail. With the change in the mark to market accounting rules, no one really has any idea how bad it is except the bankers, and they ain't talking. Its bad though. The smaller banks will continue to go under. I think traditional durable goods will be slow selling for a long time. Electronics like phones and laptop like devices should do OK, but they are a commodity now, imo. They should add cpu chips to the commodity index.

The fix is:

There ain't no fix. There's been no let off of deflationary pressure as of yet. When you can't continue to sell stuff because people can't take on more debt, the economy just stops. You see it right now in real estate, car sales, and other durable goods. To stimulate sales, the .gov is offering some pretty juicy incentives and tax rebates on cars and houses. Shrug. The next biggest crash will be commercial real estate, credit card debt or educational loans, take your pick. There's plenty of waaaaaaaaaaaay over leveraged industries. For example, the average 4 year college grad these days starts out with 16k in notes. And thats just the average.

The band-aid:

Greater government spending. They have to put money in the economy somehow. It doesn't matter how, really. Tax rebates, welfare, whatever. They have to try to keep the money supply about the same. So far its about 16T lost. Between the fed and the congress, thats about what they have spent. This is a good move, imo. It prevented wholesale bank collapse in 08 and possibly riots in the street. There's no fix though, eventually the deleveraging process will complete itself. Where the country will be at the end of the pipe is anyone's guess.

I think they shot their political wad on the first bailout. So if there's significant money supply shrinkage the next few years, they will be somewhat powerless to stop it, imo. In a total crash vs a slow downward spiral scenario, I'll take the slow spiral anyday.

Bottom line. They have to spend the money. You can argue about where it goes, but spend it they must. In any problem, you have to follow and understand the money to understand it.

Actually, there are a few problems with that statement:

1. There is a fix. We have to promote growth of the economy (a recession by definition is negative growth). To promote growth, you must encourage short-term spending and long term investing. The long-term investments cause productive spending, which in turn stimulates the economy exponentially.

2. The government, in respect to the economy does not have to spend money. The government cannot "inject" money into the economy, it either collects it from taxes or borrows it. It is a rob Peter to pay Paul scenario. This could be useful if the government used it to stimulate productive companies, however, the government gave the money to two sources which are actually counter-productive. Firstly they gave money to inefficient companies who were making poor market decisions, which is like dipping a wounded limb into a cesspool. Secondly, they were building infrastructure, which creates jobs in the short run, but does very little for sustainable growth (unless you have a weak infrastructure, which we don't). The government inefficiencies add to this counter-productivity. Government intervention actually stagnates the economy. I don't have a problem that they made loans available, but the concept that we have 'spend' our way out of this is ludicrous. That's how we got in this mess.

[Guest Mugster]

Actually, there are a few problems with that statement:

1. There is a fix. We have to promote growth of the economy (a recession by definition is negative growth). To promote growth, you must encourage short-term spending and long term investing. The long-term investments cause productive spending, which in turn stimulates the economy exponentially.

2. The government, in respect to the economy does not have to spend money. The government cannot "inject" money into the economy, it either collects it from taxes or borrows it. It is a rob Peter to pay Paul scenario. This could be useful if the government used it to stimulate productive companies, however, the government gave the money to two sources which are actually counter-productive. Firstly they gave money to inefficient companies who were making poor market decisions, which is like dipping a wounded limb into a cesspool. Secondly, they were building infrastructure, which creates jobs in the short run, but does very little for sustainable growth (unless you have a weak infrastructure, which we don't). The government inefficiencies add to this counter-productivity. Government intervention actually stagnates the economy. I don't have a problem that they made loans available, but the concept that we have 'spend' our way out of this is ludicrous. That's how we got in this mess.

We agree on how we got in this mess. And we agree on nothing else.

Assuming overcapacity is really a core problem, what do you propose to invest in? We're looking at a real bad commercial real estate bubble that is one symptom of over-investment.

China has bought off on your theory of investing in long term growth. It'll be interesting to see what happens.

US:

FT.com / Comment / Opinion - America is for now still blowing bubbles

China:

The China Bubble?s Coming ? But Not the One You Think -- GuruFocus.com

[Guest Ralph G. Briscoe]

We agree on how we got in this mess. And we agree on nothing else.

Assuming overcapacity is really a core problem, what do you propose to invest in? We're looking at a real bad commercial real estate bubble that is one symptom of over-investment.

China has bought off on your theory of investing in long term growth. It'll be interesting to see what happens.

US:

FT.com / Comment / Opinion - America is for now still blowing bubbles

China:

The China Bubble?s Coming ? But Not the One You Think -- GuruFocus.com

Bravo Mugster! Always great to discover intelligent life.

[Guest CrazyLincoln]

We agree on how we got in this mess. And we agree on nothing else.

Assuming overcapacity is really a core problem, what do you propose to invest in? We're looking at a real bad commercial real estate bubble that is one symptom of over-investment.

China has bought off on your theory of investing in long term growth. It'll be interesting to see what happens.

US:

FT.com / Comment / Opinion - America is for now still blowing bubbles

China:

The China Bubble?s Coming ? But Not the One You Think -- GuruFocus.com

America does not have an overcapacity problem. We have an overcapacity problem in some sectors. We also have sectors that are underutilized. The shift in consumer habits causes this. It solves itself when people are re utilized in those sectors. Where do these sectors get money to hire people? From INVESTMENT!

Slight Problem using the real estate sector as an argument that investing will have negative effects. We didn't "over invest". People bought houses they couldn't afford with loans the banks shouldn't have given. That buying on margin not investing. Investment relies purchasing with capital in which the investors expect a return on investment. Buying a house you can't afford is not investing. Forcing banks to give people who can't pay loans is not an investment.

To answer your question, how about we invest in sectors that do well, like Healthcare, Technology, Energy, Security. And by invest, I don't mean forced tax dollars, but incentives for investors.

Or how about investing in Ford? Who didn't need government money by managing properly. How about rental managment companies? Many more people are renting these days.

Spending or investing in areas that have already proven themselves to be unfruitful is counter-productive to growth. And government spending has very little to do with true economic growth. It can actually stagnate growth. Economists have developed far more encompassing schools of thought from the days of Keynesian economics.

Some scholarly articles on the subject from economist Paul Romer:

http://www.stanford.edu/~promer/EconomicGrowth.pdf

Beyond Classical and Keynesian Macroeconomic Policy