classical economics
for analysis,  forecasting
and policy design

Paradigm E
PARADIGM “E”
By Wayne Jett
© September 17, 2009

In 2006, three years ago next month, I identified specific, intentional acts by Congress and U. S. presidents Hoover and Roosevelt which caused the Great Depression. In November, 2007, I described again how government policies caused the Great Depression, and I detailed rampant fraud in contemporary U. S. financial markets and how federal regulators were captured by predators who were looting capital of middle class investors.

In 2008, financial fraud was more aggressive than at any time in U. S. history, including the Crash of 1929 and the Great Depression, robbing trillions in capital created and invested by the middle class.

In 2009, the rape of the middle class continues unabated. If we are to overcome this affliction, we must have courage to identify our attackers and understand their motives.

We were taught as children to overcome fear of monsters under the bed by getting out of the covers and looking to see nothing there. As adults, however, we sometimes keep our head under our pillow even as the monster is out in the house smashing or stealing every treasure.

Milton Friedman and Henry George

Thirty years ago, Milton Friedman said: “In my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago” (Mark Blaug. Economica, New Series, 47, no. 188 [1980] p. 472). Friedman’s compliment led many to learn of Henry George’s “single tax” proposal for the first time. George’s great book of 1880, Progress and Poverty, was the best selling book in the world at the turn of the 20th Century and remains today the best selling book on economics in history.

Henry George is defined by his proposal that government should be limited to a single tax equal to the rental on the undeveloped value of all land within its bounds. But he wrote Progress and Poverty during the longest economic contraction in U. S. history, and the book has much to say that is important today.

George wrote that “the great masses of men” are persuaded “by widespread fallacious and erroneous habits of thought which lead them to look in every direction but the right one for an explanation of the evils which oppress and threaten the civilized world. And back of these elaborate fallacies and misleading theories is an active, energetic power, a power that in every country, be its political forms what they may, writes laws and molds thought – the power of a vast and dominant pecuniary interest. (Emphasis added.)”

There we have it. In the mind of perhaps the most important economic thinker of the 19th Century, “a vast and dominant pecuniary interest” existed in America and exerted “active, energetic power … that … writes laws and molds thought.” By 1900, George’s Progress and Poverty sold two million copies.

FDR and E. M. House

Thirty-three years later, Franklin Roosevelt wrote a private letter to Col. E. M. House, Wall Street’s top lobbyist during the Woodrow Wilson administration. In his 1933 letter to Col. House, Roosevelt asserted the “truth” that every U. S. government since Andrew Jackson had been “owned” by certain elements of the financial sector we commonly call Wall Street. Roosevelt expressly included the Democratic Wilson administration in which he served. By all evidence, I am convinced the same “truth” was never more accurate than during Franklin Roosevelt’s presidency.

Considering the statements of Henry George and Franklin Roosevelt together with the U. S. economic crisis of 2008-2009, we have important questions to ask and answer.

Questions Posed

Is the U. S. government “owned” by elements of the financial sector now?

Is the financial sector a “vast and dominant pecuniary interest” which is an “active, energetic power” writing our laws and molding thoughts?

Answering these questions requires further exploration of history.

Henry George lost election as mayor of New York in 1886 as a third party candidate, beaten narrowly by a capable and experienced Democratic candidate who was also a wealthy retired industrialist and philanthropist. Coming in a distant third was Republican candidate Theodore Roosevelt, who publicly congratulated himself for helping to defeat George.

Henry George ran for mayor of New York again in 1898, but died within weeks before the election, as his book captured sales worldwide. Not, however, in elite circles of New York and New England where Theodore Roosevelt was at home.

H. G. Wells

Among America’s elite, Henry George was anathema and an Englishman, H. G. Wells, captured imaginations. Wells was a novelist, essayist, historian, futurist, socialist and teacher – in essence, a prolific writer with devoted followers.  
    
Wells was born and raised poor, and he rose to prominence as a productive member of the middle class. He succeeded, in substantial part, by hawking ideas attractive to the world’s elite and to aspiring elitists. Indeed, he became both theoretician and advocate of the dominant elite.

Wells combined literary talents with inventive imagination as a prolific writer and novelist. His writing spanned science-fiction, futurism, politics and social planning. Early novels included: The Time Machine, The Island of Doctor Moreau, The Invisible Man, The War of the Worlds, When the Sleeper Wakes, and The First Men in the Moon.

The World Set Free (1914) theorized use of radioactive decay to make a bomb which exploded with the force of dynamite and continued to do so in a chain reaction for days.

His first best-seller, Anticipations of the Reactions of Mechanical and Scientific Progress upon Human Life and Thought (1901), plus his notoriety and influence among American intellectuals and elite, gained Wells an extended hearing in the White House with Theodore Roosevelt.

Wells’ Premises

    What ideas did Wells espouse?

1.    He deplored the middle class and the “dictatorship” it imposed on enlightened elites of society.  

2.    He was hostile to population growth, capitalism and democracy.

3.    Concurrently with Lenin and before Mussolini, Wells moved away from democracy as a means for “improving” capitalism.

4.    Wells professed loathing for the “idle, parasitic rich,” but advocated an aggressive social agenda for the “competent” ultra-rich to take charge of human society.

5.    Wells argued that improved living standards produce “increase in population,” which he called “the greatest evil in life.”

6.    In his 1901 non-fiction book Anticipations, Wells argued that an ascendant nation would be one which “resolutely” educates superior individuals and “sterilizes, or poisons its People of the Abyss….”

7.    Wells proposed eugenics as the means to provide “fullest freedom of public service” to the “better sort of people.”

In short, Wells preached Malthusian dogma that human reproduction outstrips productive capacity; he promoted enmity for capitalism, which is the process by which the middle class competes against each other and the elite; and, he found democracy distasteful, because it stood in the way of elitists imposing their will upon the people. Elitists loved what Wells offered. He was a salesman who knew his customers.

I am obliged to mention this. In the years Wells profited by pumping elitist views that middle class prosperity caused “the greatest evil in life” (population growth) and that “people of the abyss” should be poisoned or sterilized, millions of fertile young men were poured into trenches of World War I and gassed, blown apart or otherwise maimed. Simultaneously, in 1918, millions worldwide died of a mysterious “influenza” in an epidemic more virulent and deadly than any in history, before or since, which strangely was more mortal in attacking the young and virile than the old and weak.

Wells and Theodore Roosevelt

Anticipations, the book which encouraged governments to poison “people of the abyss,” preceded Wells’ invitation to the White House from Theodore Roosevelt. After his audience with Roosevelt, Wells enthused that Teddie was, indeed, the human demigod he envisioned as embodying “the creative will in man.” Wells met also with U. S. presidents Harding and Hoover (not with Coolidge), but his highest praise for a president was reserved for another Roosevelt.

Wells and Franklin Roosevelt

    H. G. Wells met with Franklin and Eleanor Roosevelt, and with the president’s Brain Trust, in 1934. Afterwards, Wells wrote that both Franklin and Eleanor were “unlimited people, entirely modern in the openness of their minds and the logic of their actions.”  He said the president was “continually revolutionary in the new way without ever provoking a stark revolutionary crisis.” Is that not another way of saying Roosevelt could act against the little people without inciting them?

    In Franklin Roosevelt, Wells saw “’the most effective transmitting instrument possible for the coming of the new world order,’ and in Brains Trusters Raymond Moley, Felix Frankfurter, and Rex Tugwell, Wells found the nucleus of the new elite, those who were destined to take full power in time.”

After FDR

This outcome seemed to be temporarily averted when Roosevelt failed to anticipate his own mortality and placed a middle class politician, Harry Truman, on the presidential ticket for his fourth term.

Truman was middle class, not an elitist. One of his first acts as president was to fire a Roosevelt protégé, Nelson A. Rockefeller, from his post at the State Department. Still, Truman’s administration and others to follow were burdened by policies which advanced the elitist agenda voiced by H. G. Wells.

Remember, Wells argued that the “greatest evil in life” is population growth which results from increasing prosperity (improved living standards) among the middle class. Wells must have believed Franklin Roosevelt shared this view, or Wells would not have showered Roosevelt with accolades after their lengthy visit.

This elitist mindset would provide “ethical cover” and motive for Roosevelt’s deliberately designed actions throughout his presidency to drain capital from the private economy and to impoverish and starve the American people.

The Elitist Paradigm

Population growth control is only one motive of the “active, energetic power” which Henry George described as writing our laws and molding our opinions. It is a “vast and dominant pecuniary interest,” meaning its primary essence is material gain.

The dominant elite want more capital. They covet more and more influence of government power, which pours additional capital into their coffers. Fraud in financial markets and monopoly positions given by “protectionist” laws are primary sources of elitist capital gains.

Influence on government is a zero-sum game. If the middle class gains influence in the political arena, elitist influence diminishes. Therefore, the dominant elite aim to subjugate, impoverish and destroy the middle class so as to reduce middle class influence over government policies.

Ever-greater accretions to capital, defeat of the middle class and population growth control are central tenets of the dominant elite.  They act aggressively in every aspect of American society to advance an agenda consistent with these aims. In theory and operation, this is the elitist paradigm.

Financial fraud is permitted in financial markets so dominant elite may rob capital from the middle class without fear of prosecution. No federal laws interfered with financial fraud in 1929. When the SEC was created in 1934, it was given express discretion to refrain from investigating violations of federal securities laws. Joseph P. Kennedy, the most notorious manipulator of the time, was appointed the first SEC commissioner so he could pick friendly SEC staff to assure the elite would continue to be shielded from prosecution.

The dominant elite literally control the Federal Reserve, as they own controlling interest in it. Since 1971, they hold power to manipulate the dollar’s value and to control domestic interest rates. This power is used to great advantage in redistributing capital created by the middle class to the dominant elite.

The Elitist Agenda

The “vast and dominant pecuniary interest” is every bit as aggressive and assertive today as H. G. Wells argued the elite should be.

Elitists use the federal tax system to attack the most productive upper middle class with its highest tax rates on earned income. They use tax revenues to buy votes from serfs who see no chance for prosperity.

Environmental laws such as the Endangered Species Act elevate a “bait fish” known as the Delta Smelt over humanity, serving as elitist reasoning for releasing 150 billion gallons of fresh water into the Pacific annually so San Joaquin Valley farmers cannot use it to grow food for humans. This is far more effective in stopping food production than FDR’s farm bill requiring destruction of six million piglets in 1933.

Using corn to make ethanol to burn as energy is an elitist “two-fer.” It greatly increases the price of a most important foodstuff of Central and South America, not to mention the U. S. And it deprives the middle class of access to cheaper energy derived from crude oil.

Cash for Clunkers uses middle class tax revenues (borrowed entirely from future generations) to pay for destroying working cars so poor Americans who cannot afford more expensive cars will have no transportation.

Elitists propose “cap-and-trade” laws which would assert control of all sources and uses of energy – and of all emissions of carbon dioxide. By controlling price and use of energy, the elite have power to impoverish the middle class overnight.

Of course, “people of the abyss” emit carbon dioxide, as do all living animals. Some animals, dairy cows and beef cattle (both are important food sources), for example, are already on the “cap-and-trade” hit list. Therefore, cap-and-trade legislation is, in fact, highly relevant to elitist aims to control human population growth. The same is true of healthcare legislation presently pressed in Congress.

Cap-and-trade, healthcare and financial regulation reform are the major items presently on the national legislative agenda. Each has elitist hallmarks of inexorable, unrelenting political power behind it.

These are attributes of every item on the elitist political agenda. Backing by the “vast and powerful pecuniary force” gives a legislative proposal the imprimatur of inevitability.

The “mainstream media” and academic intellectuals are tools with which the dominant elite mold thoughts. Dominance over media and academia is obtained in much the same way as congressional support. Vast pools of capital are magnetically attractive and, at the same time, very intimidating. Media owners, academics and corporate executives are subject to influence by those with more than enough capital to make or break them – as politicians are.

“Dumbing down” the middle class through substandard education is another aim of the elitist agenda. Rational argument for vouchers to enable middle class children to get out of failing public schools and enjoy private competition to educate them falls on deaf ears.

Foreign policy and national security policies of the dominant elite are beyond the scope and time limits of this presentation. But you may be certain that an agenda exists and is pursued aggressively towards improving the position of the elite relative to the middle class.

Conclusions

Here are my specific conclusions.

A “vast and dominant pecuniary interest” exists in the U. S. It includes names such as Goldman Sachs, Morgan Stanley, J. P. Morgan Chase, Rockefeller, Rothschild, Soros, Kennedy, Paulson, Flowers, Cohen, Milken and others, some recognizable and some not.

This “vast and dominant pecuniary interest” is “an active, energetic force … which writes laws and molds thought,” and it “owns” the U. S. government today.

Class warfare exists in the American society today. The dominant elite of the financial sector wage aggressive social and economic war against the middle class, using every lever of federal government power. They must be stopped and brought to justice. ~