1990 britain and these economically rational programs. the poor majority made the mistake of entering the political arena and the like in their own candidate, aristide, a populist priest and had a standard operating procedures, to undermine the regime and a couple of months later came the military coup in instituting a horrible reign of terror in which was backed by bush, bush won, and even more so by clinton. in .. nothing at all

surprising about what followed next. in 1995, u.s. aid wrote a report pointing out, and i'm quoting it, that the export-driven trade in investment policy that washington, d.c. mandated will squeeze the domestic rice farmer. in fact, the neoliberal policies rammed down haiti's throat destroyed, dismantled what was left of economic sovereignty, drove the country into chaos. now, that was accelerated by bush number 2's banning of

international aid on totally cynical grounds. in february, 2004, the two traditional tortures of haiti, france and the united states, combined to back a military coup and send president aristide off to africa. the u.s. denies him permission to return to the entire region. haiti had by then lost the capacity to feed itself. making it highly vulnerable to food price fluctuation. that was the immediate cause of the 2008 food crisis which led to riots and enormous protest but not getting food. the story is familiar. in fact, quite similar in much of the world. so going back to the bangladesh newspaper, it's true enough that the food crisis results from western lack of concern. a pittance by our standards

would overcome its worst immediate effects but more fundamentally, it results from the dedication to adam smith's principles of business-run state policy. these are all matters that we too easily evade. along with the fact that bailing out banks is not upper most in the minds of the billion people now facing starvation. not forgetting the tens of millions during hunger in the richest country in the world. also sidelined is an easy way to make a significant dent in the financial and the food crisis. it is suggested by the publication a couple days ago of the authoritative annual report on military spending by a piece

research institute. the scale of military spending is phenomenal that regularly increasing its last year as well. the u.s. is responsible for almost as much as the rest of the world combined. seven times as much as its nearest rival, china. no need to waste time commenting. this distribution of concerns reflects another crisis here a cultural crisis that is the tendency to focus on short-term parochial gains. that's a core element of our socioeconomic institutions and the ideological support system on which they rest. one example now prominent is the array of perverse incentives that are devised for corporate managers to enrich themselves.

for example, what's called the two big to fail insurance policies that are provided by the one w-- unwitting public. they recognized one of the roots of the financial crisis is the underpricing of systemic risk, the risk that affects the whole system. so, for example, -- and that's general. like if you and i make a transaction, say, you sell me a car, we may make a good deal for ourselves but we don't price into that transaction the cost to others. and there's a cost. pollution, congestion, raising the price of gas, all sorts of other things, killing people in nigeria because we're getting the gas from them. that doesn't count when we -- we don't count that in. that's an inherent market

inefficiency, one of the reasons why markets can't work. and when you turn to the financial institutions, it can get quite serious so it means that, say, goldman sachs, if they're managed properly -- if they make a risky loan, they calculate the potential cost to themselves if the loan goes bad but they simply don't calculate the impact on the whole financial system. and we now see how severe that can be. not that it's anything new. in fact, this inherent deficiency of markets, this inefficiency of markets is perfectly well-known ten years ago at the height of the euphoria about efficient markets. two prominent economists, john etwell and lance taylor, they wrote an important book in which they spelled out the

consequences of these market inefficiencies, which we now see. and they outline means to deal with them. these proposals were exactly contrary to the deregulatory rage that was then being carried forward by the clinton administration under the leadership of those who obama has now called upon to put band-aids on the disaster that they helped create. in substantial measure, the food crisis plaguing much of the south and the financial crisis of the north have common roots, name namely, the shift toward neoliberalism since the 1970s. that brought to an end the post-war, post-second world war system that was instituted by the united states and britain.

i had two architects written, and they anticipated that its core principles, which included capital controls and regulated currencies -- they anticipated that these principles would lead to relatively balanced, economic growth and would also free governments to institute the social democratic programs, welfare state programs, that had enormous public support around the world. and to a large extent they were vindicated on both counts. in fact, many economists called the years that followed, until the 1970s, the golden age of capitalism. that golden age led not only to unprecedented and relatively egalitarian growth but also the introduction of welfare state measures. keynes and white were perfectly

well that free capital movement and speculation inhibit these options. professional economics literature points out, which should be obvious, that the free flow of capital creates what they sometime call a virtual senate of lenders and investors who carry out a moment by moment referendum on government policies and if they find that they're irrational, meaning they help people instead of profits, then they vote against them by capital flight, by tax on the country and so on. so the democratic governments have a dual constituency, their own population and the virtual senate who typically prevail. and for the poor, that means regular disaster. in fact, one of the differences between -- one of the reasons for the radical difference between latin america and east

asia in the last half century is that latin america didn't control capital flight. in fact, in general, the rich in latin america don't have responsibilities. capital flight approximated the crushing debt. in contrast, during south korea's remarkable growth period, capital flight was not only banned but could bring the death penalty. one of many factors that led to the surprising divergence latin america has much richer resources you'd expect it to be far more advanced than east asia but it had the disadvantaged of being imperialist wings. from the 1970s, the golden age faded. when neoliberal rules were observed insofar as they've been

observed, economic reform deteriorated and social democratic programs have been substantially weakened. we see that right here. the united states partially accepted these rules and for the past 30 years, real wages for the majority of the population have stagnated up till then, they essentially tracked growth. work hours have increased. now well beyond europe. benefits which have always lagged have declined. social indicators kind of general measure of the health of the society, they also attracted growth until the mid-1970s when they began to decline reaching the 1960 level by the end of the millennium. there has been economic growth but it's finding its way into very few pockets. increasingly, into the financial industries, which have grown enormously while productive

industry has significantly declined. we're seeing it right now. and with the decline of productive industry, of course, that means a decline in living standards. in fact, the opportunities to survive for much of the work force. the economy has been punk waited by the bubbles of the financial crises and public bailouts so the huge bailout of citigroup is nothing new. something happened to its early '80s citibank thanks to the u.s. taxpayer. these details were described all through that period and explained by a few really outstanding international economists. david felix is one but the mythology about efficient markets and rational choice prevailed. and that's not at all surprising. these myths were highly

beneficial to the very narrow sectors of privilege and power. what that adam smith called the principal architects of society. now, actually the phrase "golden age of capitalism" is a little misleading. it might more accurately be called estate capitalism. it's worth bearing in mind that the dynamic state sector was and remains a primary factor in the development and innovation through a variety of measures of search and development, government procurement, public subsidy, regular bailouts and other means. that's particularly true in the united states. it was done here under a pentagon cover as long as the cutting edge of the high tech industry advanced economy was

electronics based for that, the pentagon served as good cover. in recent years, if you look at government spending, it's shifting more towards the health institutions of the government. that's a reflection of the fact that the cutting edge of the economy is becoming more biology-based. that includes computers, the internet, satellites, most of the rest of the i.t. revolution that finally exploded in the late '90s in a tech bubble but also much else. civilian aircraft, advanced machine tools, pharmaceuticals, biotechnology, and a lot more. the crucial role of the state in economic development should be kept in mind when we read these days dire warnings about government intervention in the financial system after private management has once again driven

it to ruins. at this time an unusually severe crisis and one that harms the rich, not just the poor so it merits concern. it's also worth recalling that large state intervention of the economy is nothing new. on the contrary, it's always been a central factor in economic development. there's no time to review it here. but the history is quite instructive. these state-guided modes of economic development require considerable deceit in a society where the public can't be controlled by force. so people can't be told that the advanced economy relies heavily on the principle that the population pays the cost and takes the risks and that the profit is eventually privatized.

and eventual can be a long time, sometimes decades in the case of computers and the internet for example. after world war ii, americans were told their taxes were going to support defense against monsters about to overcome us. that's why it was under pentagon cover. so, for example, in the mid-60s, when lbj warned that there are only 150 million of us and there are 3 billion of them and if mike makes right they are going to sweep us and take over what we have so we have to stop them in vietnam, and if that sounds familiar, it's because it is. for those who are concerned to understand the realities of the whole cold war system of control of the public there's it's a very obvious moment to inspect carefully. that's just 20 years ago at the

time of the fall of the berlin wall. and what followed later. now, the celebration of the 20th anniversary this november -- it's already begun with ample coverage. and that's surely going to increase as the date approaches. but the very revealing policy implications of what followed have been ignored. as in the past. and probably this coming november. except on democracy now. what happened after the berlin wall fell? well, the bush one administration reacted immediately. it issued a new national security strategy and a budget proposal that is laid out what our new course will be after the collapse of what kennedy called the monolithic and ruthless conspiracy to conquer the world.

reagan's evil empire. it was gone and now that it was gone the whole framework of propaganda collapsed. so what was the response of the planners in the bush administration? very straightforward. in brief, everything will go on exactly as before but with new pretexts so we still need the same new huge military system but for a new reason. literally, because of the technological sophisticated of third world powers. nobody laughed. [laughter] >> we have to maintain -- we have to maintain what they call the defense industrial base. it's a standard euphemism for high tech industry. the system whereby the public pays the cost and takes the risk and high tech industry gets the profits. they said we have to maintain intervention forces directed mostly at the middle east.

and then comes this interesting phrase. directed at the middle east where the threats to our interests that required military intervention could not be laid at the kremlin's door. in other words, sorry, folks, we've been lying to you for 50 years but now the clouds have lifted so you could see if you choose to and few chose to. the fate of nato is very instructive and highly pertinent right now. prior to gorbachev and nato's announced purpose was top deter a russian invasion of europe. that was often a little hard to take seriously. for example, in 1945, in may, 1945 winston churchill ordered war plans to be drawn up for what they called operation unthinkable. it was aimed at, quote, the elimination of russia.

the plans which were declassified 10 years ago, i'll quote it, called for a surprise attack by hundreds of thousands of british and american troops joined by 100,000 rearmed german soldiers while the raf would attack soviet cities from bases in northern europe. and pretty soon nuclear weapons were added to the mix. all of this was declassified 10 years ago. well, that's -- the official stand also wasn't very easy to take. about 10 years later when khrushchev took over. he understood the much weaker soviet economy couldn't possibly sustain an arms race with the united states and still hoped to

develop. well, when the u.s. dismissed the offer as it did, he carried out the reduction unilaterally. and kennedy did react to that. he reacted with a very sharp increase in military spending. which the russian military later tried to match. that's tanking the economy as khrushchev had anticipated. that was the crucial moment in the soviet economy collapsed. well, what everyone thinks of the defensive pretext for nato at least had some credibility. but what happens when the soviet union is gone? and the pretext disappears? well, it got more extreme. gorbachev permitted a unified germany to join a hostile military alliance run by the global superpower. that is astonishing in the light of history.

germany alone had practically destroyed russia twice in the century. now, there was a quid pro quo. this is bush number one and james baker. it had been thought up until a couple months ago that bush and baker promised not to expand nato to the eastern european former soviet satellites but there was the first careful study of the original documents came out by mark kramer, a cold war historian. he believes that he's refuting charges of u.s. duplicity but, in fact, what he shows is that it's much more cynical than what had been assumed. itfn turns out that bush and r promised gorbachev that nato wouldn't even fully extend to east germany. i quote them, they told gorbachev no nato forces would ever be deployed on the territory of the former german

g.d.r., east germany. nato forces would not move eastward. they also assured gorbachev that nato would be transforming itself into a more political organization. well, there's no need to comment on that promise. but what follows tell us a lot more about the cold war and its aftermath. right after that clinton came into office and one of the first be expansion of nato to the east in violation -- a radical violation of the commitment process accelerated with bush's general aggressive militarism. these are severe security threat to russia. they naturally reacted by developing more offensive military capacity. all of this is a serious threat to human survival. obama's national security advisor, james jones -- he has a

still more expansive conception. he calls for expanding nato further to the east and the south, becoming, in effect, a u.s.-run global intervention force as it is today in afghanistan. the secretary-general of nato a dutch officer -- he informed the nato meeting that nato troops have to guard pipelines that transport oil and gas that's directed for the west. and more generally nato has to protect sea routes used by tankers and other crucial infrastructure of the global energy system. all of that just opens up a few phase of western imperial domination. the polite term for it is bringing stability and peace. that's what's happening now.

afghanistan and pakistan, obama is building enormous new embassies and other facilities on the model of the city within a city in baghdad. these are like no embassies anywhere in the world. and they are signs of an intention to be there for a long time. right now in e[giraq, something interesting is happening. obama is pressing the iraqi government not to permit the referendum that's required by the status of forces agreement. agreem forced down the throats of the bush administration which had t war aims in the face of massive iraqi resistance. washington's current objection to the referendum was explained two days ago by a "new york

times" correspondent alyssa rubin. obama fears that the iraqi population might reject the provision that delays u.s. troop withdrawal to 2012.&ñ'j they might insist an immediate departure of u.s. forces. iraqi analysts in london -- [applause]o; >> the head of iraqi foundation for democracy of development in london is quite prowestern, he explained this is an election year for iraq. no one wants to appear that he's appeasing the americans, antiism is popular now in iraq. as indeed it's been throughout. in the facts that are familiar to anyone who's read the western-run polls, the pentagon-run polls. well, the current u.s. efforts to prevent the -- to prevent the

legally required referendum are extremely revealing. sometimes they're called democracy promotion. well, while obama is signaling very clearly his intention to establish a firm and large-scale presence in the region, he's also, as you know sharply escalating the afpak war following the strategy to drive the taliban into pakistan with potentially awful results for this extremely dangerous and unstable state, which is facing insurrections throughout its territory. these are the most extreme in the tribal areas, which cross the afpak border called the durand line. and the same people live on both sides of it, the pastun tribes

and they have never accepted -- the afghan government never accepted it as long as it was independent. well, that's where most of the fighting is going on. one of the leading specialists on the region is alec harrison. he recently wrote that the outcome of washington's current policies might well be what he calls an islamic pastun-stan, pastun-based separate kind of quasi state. the pakistani ambassador had warned if the taliban and pastun nationalism emerge, we've it had. and we're on the verge of that. the prospects become still more ominous with the escalation of drone attacks that embitter the population with their huge civilian toll. and more recently, just a couple days ago, in fact, with the unprecedented authority that has

just been granted to general stanley mccrystal is taking charge. he's kind of a wild-eyed special forces assassin. he's been put in charge of heading the operations. petraeus's own counterinsurgency advisor in work, he described the obama/petraeus/mccrystal policies is a fundamental strategic error which may lead to the collapse of pakistan. he says it's a calamity that would dwarf all other current issues given the country's size, strategic location and nuclear stockpile. it's also not too encouraging that pakistan and india are now rapidly expanding their nuclear arsenals. pakistan's nuclear arsenals were developed with reagan's crucial aid and india's nuclear weapons program has got