feudalism

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The Depressing Reality of Indefinite Detention

After all the promises from both Obama and Congressional leaders that indefinite detention for Americans would not be written into law, the 2013 National Defense Authorization Act contains exactly that.

What can we conclude from that? That both the executive branch including Barack Obama, Janet Napolitano and Eric Holder and majority elements of the legislative branch — the Senate voted 81-14, and the House voted 305-107 — want the power to detain Americans indefinitely without charge or trial. And why would they want the power if they didn’t intend to use it?

Ron Paul:

The now-infamous NDAA for fiscal year 2012, passed last year, granted the president the authority to indefinitely detain American citizens without charge, without access to an attorney, and without trial. It is difficult to imagine anything more un-American than this attack on our Constitutional protections. While we may not have yet seen the widespread use of this unspeakably evil measure, a wider application of this “authority” may only be a matter of time.

Historically these kinds of measures have been used to bolster state power at the expense of unpopular scapegoats. The Jewish citizens of 1930s Germany knew all about this reprehensible practice. Lately the scapegoats have been mostly Muslims. Hundreds, perhaps many more, even Americans, have been held by the US at Guantanamo and in other secret prisons around the world.

Rand Paul:

When you’re accused of a crime in our country you get a trial, you get a trial by a jury of your peers, no matter how heinous your crime is, no matter how awful you are, we give you a trial.

And children of those indefinitely detained during World War 2 have launched a legal challenge to the status quo:

The children of Japanese-Americans whose internment during World War II was upheld by the infamous Supreme Court ruling Korematsu v. United States are stepping into a new legal battle over whether the military can indefinitely detain American citizens.

Writing that their parents “experienced first-hand the injustice resulting from a lack of searching judicial scrutiny,” the children of Fred Korematsu and other Japanese-Americans who were interned filed a brief on Monday in support of a lawsuit against the National Defense Authorization Act of 2012. Critics say the law allows the military to lock Americans away without trial merely on suspicion of support for terrorist organizations.

“During WWII, President Roosevelt essentially issued the military a ‘blank check,'” Korematsu’s children wrote in a friend-of-the-court brief. The military’s orders, “to which the Court uncritically deferred, culminated in the internment. In reviewing the NDAA’s new detention provision, the courts cannot afford to mimic the wartime Supreme Court’s failure.”

Then, America was at war with nations. Once a peace treaty was signed, the vile, racist detention ended. But for those detained under an accusation of being a part of decentralised groups like al-Qaeda, or Wikileaks, or Anonymous there are no peace treaties, no definite end to hostilities.

And while the judiciary has so far thrown out indefinite detention as unconstitutional under the Fifth Amendment, this has not stopped the legislative and executive branches of government from bulldozing on. Obama, the “constitutional scholar” defends the principle of the indefinite detention of Americans. The neocon triumvirate of Lindsey Graham, John McCain and Joe Lieberman continue to demand it.

This is terrible. If evidence exists of lawbreaking, suspects can be charged and tried. If the government has no evidence that can stand up in court, it shouldn’t be in the business of detaining anyone.

Today the detained may be those accused of being members of al-Qaeda, Wikileaks, or Anonymous. Tomorrow, who knows who might find themselves in the crosshairs of indefinite detention — journalists, whistleblowers, dissidents. As Naomi Wolf noted when Judge Katherine Forrest first struck down indefinite detention:

Forrest asked repeatedly, in a variety of different ways, for the government attorneys to give her some assurance that the wording of section 1021 could not be used to arrest and detain people like the plaintiffs. Finally she asked for assurance that it could not be used to sweep up a hypothetical peaceful best-selling nonfiction writer who had written a hypothetical book criticizing US foreign policy, along lines that the Taliban might agree with. Again and again the two lawyers said directly that they could not, or would not, give her those assurances. In other words, this back-and-forth confirmed what people such as Glenn Greenwald, the Bill of Rights Defense Committee, the ACLU and others have been shouting about since January: the section was knowingly written in order to give the president these powers; and his lawyers were sent into that courtroom precisely to defeat the effort to challenge them. Forrest concluded: ”At the hearing on this motion, the government was unwilling or unable to state that these plaintiffs would not be subject to indefinite detention under [section] 1021. Plaintiffs are therefore at risk of detention, of losing their liberty, potentially for many years.“

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Krugman, Diocletian & Neofeudalism

The entire economics world is abuzz about the intriguing smackdown between Paul Krugman and Ron Paul on Bloomberg. The Guardian summarises:

  • Ron Paul said it’s pretentious for anyone to think they know what inflation should be and what the ideal level for the money supply is.
  • Paul Krugman replied that it’s not pretentious, it’s necessary. He accused Paul of living in a fantasy world, of wanting to turn back the clock 150 years. He said the advent of modern currencies and nation-states made an unmanaged economy an impracticable idea.
  • Paul accused the Fed of perpetrating “fraud,” in part by screwing with the value of the dollar, so people who save get hurt. He stopped short of calling for an immediate end to the Fed, saying that for now, competition of currencies – and banking structures – should be allowed in the US.
  • Krugman brought up Milton Friedman, who traversed the ideological spectrum to criticize the Fed for not doing enough during the Great Depression. It’s the same criticism Krugman is leveling at the Fed now. “It’s really telling that in America right now, Milton Friedman would count as being on the far left in monetary policy,” Krugman said.
  • Paul’s central point, that the Fed hurts Main Street by focusing on the welfare of Wall Street, is well taken. Krugman’s point that the Fed is needed to steer the economy and has done a better job overall than Congress, in any case, is also well taken.

I find it quite disappointing that there has not been more discussion in the media of the idea — something Ron Paul alluded to — that most of the problems we face today are extensions of the market’s failure to liquidate in 2008. Bailouts and interventionism has left the system (and many of the companies within it) a zombified wreck. Why are we talking about residual debt overhang? Most of it would have been razed in 2008 had the market been allowed to liquidate. Worse, when you bail out economic failures — and as far as I’m concerned, everyone who would have been wiped out by the shadow banking collapse is an economic failure — you obliterate the market mechanism. Should it really be any surprise that money isn’t flowing to where it’s needed?

A whole host of previously illiquid zombie banks, corporations and shadow banks are holding onto trillions of dollars as a liquidity buffer. So instead of being used to finance useful and productive endeavours, the money is just sitting there. This is reflected in the levels of excess reserves banks are holding (presently at an all-time high), as well as the velocity of money, which is at a postwar low:

Krugman’s view that introducing more money into the economy and scaring hoarders into spending more is not guaranteed to achieve any boost in productivity.

As I wrote last month:

The fundamental problem at the heart of this is that the Fed is trying to encourage risk taking by making it difficult to allow small-scale market participants from amassing the capital necessary to take risk. That’s why we’re seeing domestic equity outflows. And so the only people with the apparatus to invest and create jobs are large institutions, banks and corporations, which they are patently not doing.

Would more easing convince them to do that? Probably not. If you’re a multinational corporation with access to foreign markets where input costs are significantly cheaper, why would you invest in the expensive, over-regulated American market other than to offload the products you’ve manufactured abroad?

So will (even deeper) negative real rates cause money to start flowing? Probably — but probably mostly abroad — so probably without the benefits of domestic investment and job creation.

Nor is it guaranteed to achieve any great boost in debt relief.

As Dan Kervick wrote for Naked Capitalism last month:

Inflation only reduces debt overhang in a significant way for households who are fortunate enough to see their nominal wages rise along with the general rise in prices. In today’s economy, workers are frequently not so fortunate.

Again, I have to bring this back to why we are even talking about debt relief. The 2008 crash was a natural form of debt-relief; the 2008 bailouts, and ongoing QE and Twist programs (which contrary to Professor Krugman’s apologetics really do transfer wealth from the middle classes to Wall Street) crystallised the debt burden born from a bubble created by Greenspan’s easy money policies. There would be no need for a debt jubilee (either an absolute one, or a Krugmanite (hyper)inflationary one) if we had simply let the market do its work. A legitimate function for government would have at most been to bail out account holders, provide a welfare net for poor people (never poor corporations) and let bankruptcy courts and markets do the rest. Instead, the central planners in Washington decided they knew best.

The key moment in the debate?

I am not a defender of the economic policies of the emperor Diocletian. So let’s just make that clear.

Paul Krugman

Actually you are.

Ron Paul

Ron Paul is dead right. Krugman and the bailout-happy regime for which he stands are absolutely following in the spirit of Diocletian.

From Dennis Gartman:

Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with the imminent danger of barbarian invasion, he issued in A.D. 301 an edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government – which already owned most mines, quarries, and salt deposits – brought nearly all major industries and guilds under detailed control.

Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely with external danger.

While Krugman does not by any means endorse the level of centralism that Diocletian introduced, his defence of bailouts, his insistence on the planning of interest rates and inflation, and (most frighteningly) his insistence that war can be an economic stimulus (in reality, war is a capital destroyer) all put him firmly in Diocletian’s economic planning camp.

So how did Diocletian’s economic program work out?

Well, I think it is fair to say even without modern data that — just as Krugman desires — Diocletian’s measures boosted aggregate demand through public works and — just as Krugman desires — it introduced inflation.

Diocletian’s mass minting of coins of low metallic value continued to increase inflation, and the maximum prices in the Edict were apparently too low.

Merchants either stopped producing goods, sold their goods illegally, or used barter. The Edict tended to disrupt trade and commerce, especially among merchants. It is safe to assume that a gray market economy evolved out of the edict at least between merchants.

And certainly Rome lived for almost 150 years after Diocletian. However the long term effects of Diocletian’s economic program were dire:

Thousands of Romans, to escape the tax gatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all their debts and taxes had been paid. In this and other ways medieval serfdom began.

Have the 2008 bailouts done the same thing, cementing a new feudal aristocracy of bankers, financiers and too-big-to-fail zombies, alongside a serf class that exists to fund the excesses of the financial and corporate elite?

Only time will tell.