Capitalism, PROUT and Deficiencies of Democracy – II

Deficiencies in Democracy

Dr. Susmit Kumar
Democracy was first introduced over 2,500 years ago in the ancient Indian state of Vaishali, which was situated in East India in the present state of Bihar. It was there that the Licchavi republic framed the first written constitution. Prior to that, the word of the king was law and kings ruled according to the advice of their ministers. Women had voting rights, but they were barred from contesting elections. The origin of the democracy we know today in turn lies in a few Greek cities from about 2,000 years ago.

Even in the West, democracy has been based on restricted rights until only relatively recently. In the ancient Greek city-states, only males, not women or slaves, had political rights. A 1430 English statue provided that only those adult males with “a freehold estate the annual income from which was forty shillings” could elect members of the House of Commons. Forty shillings was the amount that in 1430 would supposedly “furnish all the necessaries of life, and render the freeholder, if he pleased, an independent man.” In France, property and tax payment qualifications severely limited the franchise, even during the revolutionary period. In 19th century Belgium, class domination by French speakers was perpetuated by laws limiting the vote to the propertied classes. Universal male suffrage arrived only in 1919.4 Most Western women received voting rights only last century.

In the former colonies, freedom fighters were initially at the helm of political affairs. They were usually great persons of good breed, because only people like them had the capacity to undergo torture at the hands of their colonial rulers. The first generation of politicians in any newly independent country was as a consequence generally motivated by genuine ideals of welfare. After the founding generation, however, the political environment would start to decline. In addition, a couple of decades of money and power generally corrupted the first generation of Third World leaders also, if they stayed in power that long, because of a lack of checks and balances; the latest example is Robert Mugabe in Zimbabwe. Finally, in most newly independent countries illiteracy was usually very high, and illiteracy is one of the main obstacles to a healthy political system.

Information technology has given mass media outlets like radio stations, television stations, and newspapers an important role to play in the democratic process because of their ability to convey information to virtually all members of a population. The major American media now tend to do little more than parrot official government policies, however, treating them like the dictates of a religion, and they rarely give a “true” picture of American leaders or of the facts around controversial government decisions. In February 2003, for example, veteran talk show host Phil Donahue was fired from MSNBC because he opposed the 2003 invasion of Iraq. The major media had sold the invasion to the American people based on false evidence presented by the government, and large newspapers published information contrary to government policies in just a few lines in the interior pages only. Americans are losing confidence in the media as a result.

Eason Jordan, CNN’s chief news executive, also had to resign, in February 2005 after his remarks made the previous month at the World Economic Forum in Davos, Switzerland. It is said that he told the audience U.S. forces had deliberately targeted journalists in Iraq, though he later denied making this statement. He had been with CNN for 23 years. In fact, he may have been close to the mark. By March 2006, 18 journalists had been killed by U.S. troops since the invasion began.5 President Bush himself even expressed interest once in bombing the Qatar-based headquarters of al-Jazeera, the Arabic television network, during a conversation with British Prime Minister Tony Blair in April 2004.6 On the other hand when Vice President Cheney travels, his hotel requirements include the “American al-Jazeera”—Fox News, the Republican Party’s propaganda network.7

According to the Pew Research Center, a Washington-based, non-advocacy fact tank, in April 2007 less than half (46 percent) of Americans had a great deal or fair amount of confidence that the U.S. military was giving the public an accurate picture of the war in Iraq; this number had been 85 percent in March 2003 and 87 percent in January 1991 (during the first Gulf War). They had even less confidence in the press coverage of the war, which was at 38 percent in April 2007; this number had been 81 percent in March 2003 and 85 percent in January 1991.

On the eve of the 2004 presidential elections, a Reuters/DecisionQuest poll found 61 percent of Americans had lost faith in leaders and institutions over the past four years. The study showed politicians received “C” grades on a scale from “A-plus,” meaning totally trustworthy, to “F,” meaning totally untrustworthy. President Bush and Democratic candidate Senator John Kerry both received C grades; so did newspaper and television reporters.8

In his book The Price of Loyalty, Paul O’Neill, George W. Bush’s first treasury secretary, discussed the president’s complete lack of inquisitiveness and pertinent experience and how the president took no interest in discussions during cabinet meetings. He was not reading reports or even short memos sent by his cabinet secretaries; he asked no questions. According to O’Neill, “[The] President was like a blind man in a roomful of deaf people.” O’Neill had previously worked in both the Nixon and Ford administrations. Unlike Nixon and Ford, he found Bush utterly different from them and unresponsive in large and small meetings.9

Any realistic president would try to control the soaring national budget deficit for the long-term interests of the country. For this reason, despite having said, “Read my lips: no new taxes” during the 1988 Republican National Convention, President George H.W. Bush raised taxes in the 1990 budget in order to reduce the deficit. Further, not only did President Clinton balance the budget, his administration had budget surpluses during its final two years. Incompetent persons like Reagan and Bush Jr., on the other hand, dug the nation into massive financial black holes by giving tax cuts to the rich. President Bush’s tax cuts have transformed the January 2001 projected 10-year, $5.6-trillion-dollar budget surplus into a projected 10-year (2005-2014) deficit of $1.9 trillion. When the economy booms and there is a budget surplus, puppet administrations give tax cuts to corporations and wealthy people, claiming that the extra money belongs to all Americans. But when the economy is in recession, they give tax cuts to corporations and wealthy people claiming that they are needed to jump-start the economy. It can be seen in any economic situation, therefore, who puppet administrations really work for, and that the ultimate loser is the average American. Alan Greenspan, then chairman of the Federal Reserve, described the Bush administration as so captive to its own political operation that it paid little attention to fiscal discipline. He also described Bush’s first two Treasury secretaries, Paul O’Neill and John Snow, as essentially powerless.10 Any interest they may have had in a balanced budget was buried by Bush’s allegiance to the nation’s economic elites.

According to Peter W. Galbraith, until two months before President Bush ordered troops to invade Iraq in March 2003, he was unaware that there were two major sects (Sunni and Shiite) of Islam.11 Galbraith is former U.S. Ambassador to Croatia and son of the late economist John Kenneth Galbraith. It seems astonishing that a president would lack this knowledge before taking such an important step. After the 1991 Gulf War, the U.S. had created the northern and southern no-fly zones in Iraq precisely on this basis: The southern zone had been created to protect Shiites from the Hussein regime, which was Sunni.

The president has become famous for being devoid of any interest in newspapers or books. One week before his second inauguration in 2005, Jay Leno, NBC’s Tonight Show host, quipped that Bush would now have his hands on a book for the first time in four years (i.e., on a Bible as part of his swearing-in ceremony). And, although the 9/11 Commission wanted separate testimonies from Bush and Cheney, Bush testified with Cheney in a closed-door session before the commission rather than separately because he is just a puppet and has only limited knowledge about what goes on in his own administration.

During his 2004 election campaign, the “Ask President Bush” forums, which on television looked like freewheeling sessions with the president, were tightly managed by his campaign, with Bush calling mainly on people sitting in sections filled with his most loyal supporters. The tradition of the White House news corps shouting questions at the president has largely faded during his administration because he reacts testily and avoids answering questions put to him. His staff typically sets up events so he does not even have to walk near reporters. During his first term (to be precise, until October 2004), he held the fewest solo news conferences—15—of any president since records started being kept. At the same point in their presidencies, according to research by Martha Joynt Kumar of Towson University in Maryland, Bill Clinton had held 42; George H.W. Bush, 83; Ronald Reagan, 26; Jimmy Carter, 59; Gerald Ford, 39; Richard M. Nixon, 29; Lyndon B. Johnson, 88; John F. Kennedy, 65; and Dwight D. Eisenhower, 94.12

Let us discuss President Bush’s background. He has been, among other things, a failed businessman. In 1977, he started his first oil company, Arbusto Energy, Inc. (“ar-boo-stow” is Spanish for “bush”). His company began active operations only in March 1979, after he lost a congressional race to a Democrat. Because the company was failing, New York investor Philip A. Uzielli invested $1 million in exchange for 10 percent of Arbusto’s far less valuable stock in the name of Executive Resources Corporation, a company headquartered in Panama. Arbusto’s balance sheets showed that at the end of 1981, it had little more than $48,000 in the bank and more than half of its assets consisted of “accounts receivable,” money owed it by others. At the same time, the company owed almost $300,000 in bank loans and close to $120,000 to other creditors. Uzielli had earlier put up $50,000 for Arbusto’s 1980 program in the name of Executive Resources, then headquartered in the Dutch West Indies. Bush said he didn’t know at first that Uzielli was a Princeton classmate and friend of James Baker III, the manager of his father’s (George H.W. Bush) 1980 presidential primary campaign.13

Bush later renamed the company to Bush Exploration, which also failed. Bush Exploration was bought out by Spectrum 7, of which Bush was made chairman and CEO. Spectrum 7 also failed. It reported a net loss of $1.6 million in 1985 and was on its way to losing another $402,000 by mid-1986. It owed more than $3 million in bank loans and other debts with no hope of paying them off in time. He, as the son of the then-vice president, once described himself, “I’m all name and no money.” Spectrum 7 was then bought by Harken Energy in 1986. “One of the reasons Harken was so interested in merging was because of George,” said Paul Rea, a geologist who had been president of Spectrum 7. At that time, billionaire investor George Soros owned one-third of Harken. He was asked years later why such an astute businessman would buy a collapsing Midland oil company, and said, “We were buying political influence. That was it. He was not much of a businessman.” The buyout not only rescued Bush financially, but gave him the collateral for an investment a few years later in the Texas Rangers baseball team, which eventually made him a millionaire. In addition to seat on the board, he received more than $300,000 of Harken stock, options to buy more, and a consulting contract that paid him as much as $120,000 a year in the late ‘80s, when he was working full time on his father’s presidential campaign.14

Bush was able to borrow a total of $180,375 from Harken to buy its stock. The loans were given at a five percent interest rate (in 1989, when he got the loans, the prime rate was 10.87 percent). The loans were nonrecourse notes, meaning if the stock went up, Bush could sell, repay the loan, and pocket the profit; but if the stock went down, Bush could walk away and avoid repayment altogether. In fact, Bush never did repay the loan as the Harken board voted to “forgive” it in 1990. Bush sold all of his 212,140 shares of Harken stock for $4 a share on June 22, 1990, just before the conclusion of a second quarter that produced huge losses. Bush said he made the move because he wanted to pay off a $500,000 bank loan he had obtained in 1989 to buy his slice of the Texas Rangers. “I didn’t need to pay it off,” he said in an interview. “I did it because I just don’t like to carry debt.” Eight days after Bush’s stock sale, Harken wound up its second quarter with operating losses from day-to-day activities of $6.7 million, almost three times the losses it reported for the second quarter of 1989. People came to know about this only on August 30, 1990, when Harken announced that its overall losses for the quarter, including non-recurring expenses as well as operating losses, totaled $23.2 million, which led to its stock price dropping to $2.37 the same day. Nevertheless, Bush claimed ignorance of the company’s finances, even though he had seats on Harken’s three-member audit committee and its eight-member board of directors. The company was forced to restate its 1989 financial results when the Securities and Exchange Commission (SEC) began looking into its earning statements, and its $3.3 million loss became a $12.6 million loss.15 These accounting tricks are identical to ploys used in the Enron scandal, a scam that led to convictions for several of its top officials, including its CEO, Kenneth Lay.

For President Bush, personal loyalty stands above everything, even the country. Colin Powell, who asked him to think deeply before invading Iraq and said that if he did attack, he would “own” it,16 was shown the door in Bush’s second term. Those who were proven wrong about Iraq—including Dick Cheney, Donald Rumsfeld, Paul Wolfowitz, and Condolezza Rice—have either been kept in office or rewarded. Wolfowitz, for example, was made president of the World Bank.

As discussed in chapter 7, most high-ranked American military officers as well as political pundits, including Henry Kissinger, say that a military victory in Iraq is unachievable. President Bush, however, said in December 2005 that he would not withdraw troops until the conditions for victory were right. He said, “We’re not leaving if Laura and Barney [his dog] are the only ones who support me.”17 If a doctor, while treating a patient, had made this kind of statement in spite of medical opinions to the contrary, he not only might have lost millions of dollars in a malpractice suit, he might have gone to prison for a long time.

A person will never go for brain surgery to a doctor who is not a brain surgeon or has no experience in that field. Individuals like President Bush, who knows little about administration, the economy, foreign policy, history, political science, etc., can, however, become what is in effect the CEO of the world’s only superpower. Standards for ascending to the presidency are at odds with what are required for almost all other positions in society; it is in a sense easier to become president than it is to be selected for many other kinds of work. This can occur because of the hundreds of millions of dollars donated by big corporations and wealthy people to presidential campaigns. Their money is used to create massive propaganda barrages that conceal or distort the character and qualifications of a presidential candidate or the implications of his campaign platform. Fault lies with media outlets also. Major television networks and newspapers should take upon themselves the responsibility of exposing persons like Reagan and Bush Jr. if they are unworthy to be president and, in particular, if they might significantly damage the nation through bad policies.

On May 20, 2004, then-House Minority Leader Nancy Pelosi sharply questioned President Bush’s competence as a leader and told reporters, “The emperor has no clothes. When are people going to face the reality? Pull this curtain back.” Conservative sycophants, on the other hand, praise puppets like Reagan and Bush, even placing them ahead of other, more capable presidents in terms of their contributions while in office. In a September 12, 2005, Wall Street Journal article entitled “President Bush Is ‘Average’, but Far From Ordinary,” James Taranto, editor of OpinionJournal.com (the online editorial page of the Journal) ranked Bush 19th among 40 presidents and in the average category, ahead of both his father, George H. W. Bush, and Bill Clinton. In an article published in 2004, Taranto even wrote, “George W. Bush could eventually end up joining the ranks of the greats.”18

Similarly, when noted historian Arthur Schlesinger, Jr., polled other historians in 1996, Ronald Reagan came in 25th out of 39 presidents, putting him in the “low average” category. Professors of history, law, and political science chosen in 2000 by The Wall Street Journal, however, put him in the “near great” category at 8th out of 39.19

Though some pundits would like to place Ronald Reagan in the “near great” category, the truth is that had there been no Japan, which financed the U.S. debt during his tenure of office, Reaganomics would have collapsed. Nor did the collapse of Soviet communism occur because of his policies. Communism has inherent weaknesses, as discussed in chapter 6, and collapsed for economic and financial reasons. Let us see what Henry Kissinger says about Reagan. According to Kissinger:

Reagan knew next to no history. He treated biblical references to Armageddon as operational predictions. Many of the historical anecdotes he was so fond of recounting had no basis in fact, as facts are generally understood. In a private conversation, he once equated Gorbachev with Bismarck, arguing that both had overcome identical domestic obstacles by moving away from a centrally planned economy toward the free market. I advised a mutual friend that Reagan should be warned never to repeat this preposterous proposition to a German interlocutor.

The details of foreign policy bored Reagan. He had absorbed a few basic ideas about the dangers of appeasement, the evils of communism, and the greatness of his own country, but analysis of substantive issues was not his forte. All of this caused me to remark, during what I thought was an off-the-record talk before a conference of historians at the Library of Congress: “When you talk to Reagan, you sometimes wonder why it occurred to anyone that he should be president, or even governor. But what you historians have to explain is how so unintellectual a man could have dominated California for eight years, and Washington already for nearly seven.”20

Reagan did, however, want to avoid nuclear war:

No one could “win” a nuclear war. Yet as long as nuclear weapons were in existence they would always be used….

My dream, then, became a world free of nuclear weapons….21

According to his biographer, Lou Cannon:

Speaking as if he were describing a movie scene, he related a terrifying episode in the Armageddon story where an invading army from the Orient, 200-million strong, is destroyed by a plague. Reagan believes that the “plague” was a prophecy of nuclear war, where “the eyes are burned from the head and the hair falls from the body and so forth.” He believes this passage specifically foretold Hiroshima.22

Reagan came close to realizing his dream of a world free of nuclear weapons in 1986. During the Reykjavik Summit with Soviet general secretary Gorbachev, Reagan committed the United States to destroying all its ballistic missiles and abolishing all nuclear weapons. It was a nightmarish situation for senior U.S. administration officials. The Reykjavik deal failed, however, because Gorbachev linked the deal to a ban on the Strategic Defense Initiative (SDI, also called “Star Wars”), which Reagan resisted. When Gorbachev started insisting on a ban on SDI testing for 10 years, Reagan left the room and the talks collapsed. Years later, when Kissinger asked a senior Gorbachev adviser who had been present at Reykjavik why the Soviets had not settled for what the U.S. had already accepted (the destruction of all ballistic missiles within 10 years and the abolition of all nuclear weapons), he replied: “We had thought of everything except that Reagan might leave the room.”23

The SDI was proposed in 1983 and entailed using ground- and spaced-based systems to protect the U.S. from nuclear ballistic missiles. It is still nonfunctional 24 years later. Emphasis later shifted from national missile defense to theater missile defense and from global to regional coverage. Had Gorbachev known at the time that Star Wars was just a fictional idea and incapable of being implemented, he would have accepted Reagan’s deal, and the U.S. might have had to undergo a disaster worse than the 2003 invasion of Iraq. Without its ballistic missiles and nuclear bombs, the U.S. would have lost its superpower status and its allies and interests would have become more vulnerable to military aggression. Not only was Reagan’s judgment poor, he used to fall asleep during cabinet meetings. Yet, a person of his stature was allowed to become president.

As discussed in chapter 6, Reagan inaugurated the practice of chronic budget deficits out of his desire to give tax breaks to the wealthy. Once the U.S. economy collapses because of huge debt, historians will begin to re-evaluate him, since it was his administration that started the debt problem. In addition, had oil prices increased during the late 1980s, as it has during Putin’s administration in Russia the past few years, or had German banks financed Gorbachev’s perestroika, as Japan financed Reagan’s deficits, the U.S.S.R. and communism would still be with us rather than collapse in 1991.

Puppet administrations gouge the nation by all means, and the United States will suffer for decades because of their misdeeds. Here we can discuss some of the misdeeds that have occurred under President Bush’s auspices. In several important posts, his appointments resemble thieves hired to police the country’s finances.

According a 2006 study by Joseph Stiglitz, a Columbia University professor who won the 2001 Nobel Prize for economics, and Linda Bilmes, a Harvard lecturer, the real cost of the Iraq War is likely to be between $1 trillion and $2 trillion, up to 10 times more than previously thought. The study expanded on traditional estimates by including such costs as lifetime disability and healthcare for troops injured in the conflict as well as the impact on the American economy.24 President Bush’s reckless adventure on behalf of the neo-cons will in the end cost the nation dearly.

Many of those chosen to work for the Coalition Provisional Authority in Iraq have lacked vital skills and experience. Twenty-four-year-old Jay Hallen, who had never worked in finance but had applied for a White House job, was sent to reopen Baghdad’s stock exchange. The daughter of a prominent neoconservative commentator and recent graduate from an evangelical university was tapped to manage Iraq’s $13 billion budget, even though she lacked any background in accounting. To recruit people, resumés were sought from the offices of Republican congressmen, conservative think tanks, and GOP activists. They discarded applications from those they deemed ideologically suspect, even if the applicants possessed Arabic language skills or postwar rebuilding experience.25

When hurricane Katrina devastated New Orleans in August 2005, five of eight top Federal Emergency Management Agency officials had no experience in handling disasters. FEMA’s top three leaders—Director Michael D. Brown, Chief of Staff Patrick J. Rhode, and Deputy Chief of Staff Brooks D. Altshuler—were hired on the basis of ties to President Bush’s 2000 campaign, and two others were filled by a former Republican lieutenant governor of Nebraska and a U.S. Chamber of Commerce official who was once a political operative. Before joining FEMA, Brown was commissioner for the International Arabian Horse Association. It should have been no surprise that when the hurricane struck, FEMA was unable to be effective initially, and FEMA director Brown was forced to resign for his inaction.

Bush signed the $400 billion Medicare reform bill in December 2003, claiming it to be the greatest advance in health care coverage for America’s seniors since the founding of Medicare. It would add a prescription drug benefit, provide billions of dollars in subsidies to insurance companies and HMOs, and take the first step in allowing private plans to compete with Medicare. Republican House leaders had difficulty in getting the bill passed as it initially lost the vote 216 to 218, but after last-minute calls by Bush and a three-hour-long poll, it passed by a vote of 220 to 215. The Senate approved it 55 to 44. A month later, however, the government’s chief analyst of Medicare costs, Richard S. Foster, a nonpartisan Department of Health and Human Services official, alleged that the actual cost of this reform would be $534 billion instead of $400 billion. In the spring and summer of 2003, he was repeatedly threatened by Thomas Scully, chief administrator for the Center for Medicare and Medicaid Services, that he would be fired if he submitted his revised data to members of Congress. Scully was the CEO of the American Federation of Hospitals before Bush appointed him to this post. The White House finally accepted the Foster calculations late in January 2004, and, according to officials, the White House had known of this estimate for several months. The affair caused an outcry from conservative Republicans and Democrats because the legislation would increase the budget deficit. Bush had signed the bill on December 8, 2003, however, and 10 days later Scully became a million-dollar lobbyist with the insurance industry after getting a waiver from Health and Human Services Secretary Tommy Thompson.26

Bush also appointed Edwin G. Foulke, Jr., as head of the Occupational Safety and Health Administration. OSHA was created under President Nixon in 1970 after congressional hearings exposed dangerous workplace conditions. The agency is mandated to set and enforce safety standards as well as detect health hazards before they can take a toll on workers. According to public health experts, since Bush became president OSHA has issued the fewest significant standards in its history. It has imposed only one major safety rule, and the only significant health standard it issued was ordered by a federal court. Dr. David Michaels, an occupational health expert at George Washington University, said, “The people at OSHA have no interest in running a regulatory agency. If they ever knew how to issue regulations, they’ve forgotten. The concern about protecting workers has gone out the window.” The new stance of OSHA is entirely because of Mr. Foukle, who has a history of opposing regulations produced by the agency. He has also been a member of a law firm that advises companies on how to avoid union organizing. Representing the United States Chamber of Commerce, he has testified several times before Congress to promote voluntary, instead of mandatory, OSHA compliance programs. He also opposed ergonomics standards. As a member of an independent agency that reviewed OSHA citations in the 1990s, he led a successful effort to weaken the agency’s enforcement authority.27

Philip A. Cooney, another Bush appointee, had to resign in June 2005 after The New York Times reported he had altered several scientific reports in order to downplay links between greenhouse gas emissions and global warming. Cooney had been chief of staff for the White House Council on Environmental Quality, the office that helps devise and promote administration policies on environmental issues. In handwritten notes on drafts of several reports issued in 2002 and 2003, Mr. Cooney removed or adjusted descriptions of climate research that government scientists and their supervisors, including some senior Bush administration officials, had already approved. In many cases, the changes appeared in the final reports. He also once led the oil industry’s fight against limits on greenhouse gases. Before joining the White House in 2001, he was the “climate team leader” and a lobbyist at the American Petroleum Institute, the largest trade group representing the interests of the oil industry. A lawyer with a bachelor’s degree in economics, he had no scientific training. In its reportage, The New York Times published examples of Mr. Cooney’s editing, presented below. The first is the unedited version, “Strategic Plan for the U.S. Climate Change Scientific Program” Draft Text, Oct. 2002”:28

Warming will also cause reductions in mountain glaciers and advance the timing of the melt of mountain snow packs in polar regions. In turn runoff rates will change and flood potential will be altered in ways that are currently not well understood. There will be significant shifts in the seasonality of runoff that will have serious impacts on native populations that rely on fishing and hunting for their livelihood. These changes will be further complicated by shifts in precipitation regimes and a possible intensification and increased frequency of extreme hydrologic events. Reducing the uncertainties in current understanding of the relationships between climate change and Arctic hydrology is critical….

Public Review Draft, Nov. 2002:

Warming could also lead to changes in the water cycle in polar regions. Reducing the uncertainties…. [altered text in italics]

Final Report, July 2003: This paragraph does not appear in the final report.

According to Rick S. Piltz,

Each administration has a policy position on climate change. But I have not seen a situation like the one that has developed under this administration during the past four years, in which politicization by the White House has fed back directly into the science program in such a way as to undermine the credibility and integrity of the program.

Mr. Piltz was a senior associate in the office that coordinates government climate research. He resigned in March 2005.29

The status of democracy is more or less similar in other countries as well, and we are going to discuss it in two countries—Russia and India. Vladimir Putin, a little-known KGB spy, was suddenly anointed president of Russia by Boris Yeltsin and his cohorts just because of his one virtue, loyalty. He once helped spirit his former boss, St. Petersburg mayor Anatoly Sobchak, out of the country at a time when prosecutors were bearing down on him. That move made an impression in the Kremlin, where Yeltsin’s advisers worried about retribution for their corruption after he left office. During a dinner when Igor Malashenko, a television executive who helped Yeltsin win reelection in 1996, asked Valentin Yumashev, a Yeltsin aide, “How can you trust him [Putin]?”, Yumashev answered, “He didn’t give up Sobchak. He won’t give us up.”30 Putin’s first act in office was to sign a decree granting Yeltsin and his family immunity from prosecution.

Boris Yeltsin and his cohorts dissolved the Soviet Union in 1991 in order to get rid of its general secretary, Mikhail Gorbachev, and to privatize—illegally as it turns out—the massive wealth of the state economic apparatus. Russian privatization during 1995 and 1996 was a shameless and criminal activity, used in part to finance Yeltsin’s re-election campaign when his popularity plummeted. A corrupt group of businessmen, later known as the “oligarchs,” were able, because of Yeltsin, to acquire control of tens of billions of dollars worth of natural resources, mainly the oil and gas holdings of the Russian state. The best estimates are that about $100 billion dollars’ worth of oil, gas, and other valuable commodities was transferred to private hands in return for perhaps no more than $1 billion in receipts taken in by the treasury. Billionaires were created virtually overnight.31

To repay their benefactors, the new oligarchs gave a few hundred million dollars to Yeltsin’s re-election campaign. In opinion polls, Yeltsin had been trailing far behind most of the other candidates, and his popularity rating had been below 10 percent for a long period. Gennady Zyuganov, an ex-communist leader whose KPRF party had just won the December 1995 legislative elections, was leading the polls. But after getting millions of dollars from the oligarchs, Yeltsin flooded the mass media with his ads, a feat Zyuganov was unable to match. Yeltsin ultimately won the elections, and anointed Putin his successor to save himself and his cohorts from prosecution. As a result of this corruption, the 36 richest men and women in Russia came to be worth about $110 billion, or 24 percent of the nation’s GDP in 2004.32

India has also known its share of moral rot in high places. Until 2000, Bihar was the second most populous state in India, with more than 100 million people; it is now the third most populous after bifurcation in 2000. Bihar is the place where Buddha, founder of Buddhism, obtained enlightenment. Mahatma Gandhi started his Indian political career in Champaran, a small town in Bihar. Vikramshila University (5th to 12th centuries) and Nalanda University (founded in the 8th century) were among the oldest and best centers of education in ancient India. In their heydays, they accommodated over 10,000 students and 2,000 teachers. The last Tirthankara, or God-realized preceptor, of Jainism, another Indian religion, was born in the ancient city of Vaishali in Bihar. The 10th guru of the Sikh religion, Guru Gobind Singh, was born in Patna, the capital of Bihar. The state also traditionally sends the second highest number of successful candidates into the prestigious Indian Administrative Service, India’s civil services corps. I am from Bihar.

Laloo Yadav, considered India’s most corrupt politician, ruled the state from 1990 to 2005. When he was arrested by the Central Bureau of Investigation (the CBI, which is the Indian equivalent of the FBI), he made his illiterate wife head of the state in 1997. She ruled until the 2005 elections, when his party failed to get a majority. The notorious “Fodder Scam,” which involved several ministers, including three chief ministers, and senior state bureaucrats, took place during his time in office. By billing the state animal husbandry department for fictitious products and services, participants were able to appropriate more than 950 crore rupees ($210 million) illegally from the departmental budget. This scam allegedly started in the early 1980s and continued until 1996; a majority of witnesses to it were killed under mysterious circumstances.

During Laloo’s 15 years of misrule, Bihar went from the top 10 to the bottom-most in all regards—per capita income, illiteracy, and production of electricity—when compared to other states. It is now the joke of the entire nation. If law and order deteriorates in any corner of India, people say that it is “becoming Bihar.” Bihar also has highest number of kidnappings of any state, mostly for ransom. Visitors are advised not to travel in its interior regions. In some places even police dare not enter. Murder is committed almost every two hours, a riot every hour, and eight kidnappings and three rapes occur daily. One official has reported that of the 115,216 cognizable offenses recorded between January and December 2004, there were 3,861 cases of murder, 1,297 dacoities (gang robberies), 9,199 riots, 2,977 kidnappings, including 411 for ransom, 1,063 rapes, 2,162 road robberies, and 57 cases of bank dacoities and robberies.33 Per capita income is one-third the national average, and the state is worst in almost all categories—per capita development expenditure, literacy rate, per capita GDP (one-third of the national average), poverty (more than 42 percent of the population lives below the poverty line, with the national average being 26 percent), schoolgirl dropout rate, and corruption. Among the least developed states of India, Bihar has a per capita income of $94 a year, against India’s average of $255. In spite of this, Laloo won elections for 15 years because he was able to cobble together a vote bank called “MY” of Muslims and Yadavs, an Indian caste. He is now an influential central government minister because the ruling coalition would lack a majority without his party.

All states of India have similar problems, though not to such an extreme. More than half of elected officials are noted criminals, at both the state and central levels. Almost 99 percent of Indian ministers would go to prison if corruption and criminal charges were investigated impartially and vigorously by governmental offices with the same integrity as the U.S. Department of Justice and FBI.

People in India, especially in the north, vote for members of their own caste. In the 2007 general elections in Uttar Pradesh (UP), India’s most populous state, the Bahujan Samaj Party (BSP), a lower-caste or dalit party, won the majority of seats by cobbling together a coalition with upper-caste Brahmins. During the elections, BSP leaders adopted the slogan “Brahmin shankh bajayegaa, Haathi chaltaa jaayega” (Brahmins will blow the conch shell and the elephant [BSP’s election symbol] will walk). Until a couple of years ago, however, the BSP used the slogan “Tilak, taraazu aur talwaar, inko maaro joote chaar” (You should beat Brahmins, Vaishyas [the business caste], and Kshatriyas [the martial caste] with four shoes). An MY (Muslim-Yadav) coalition had won in the previous 2002 elections, but in 2007 the BSP won because of better caste arithmetic.

Elected leaders have destroyed these two states—Bihar and Uttar Pradesh—to such an extent that they are now called the “Wild West” of India. The situation is more or less similar in other states in India as well. Indian democracy is a complete failure even after 56 years.

George W. Bush is the Laloo Yadav of the United States. He won elections by cobbling together the vote banks of the “Bible Belt” states, conservatives, and big corporations. Like the Yadavs, Bush knows nothing about the workings of government and has severely damaged the country for the next several decades.

Out of 163 countries, the U.S. ranks high, at 20th, with 7.3 points in the 2006 Berlin-based Transparency International Corruption Perceptions Index (CPI). Countries like India, China, Mexico, and Brazil rank low, at 70th, with 3.3 points. The higher the points, the less is the corruption. The index defines corruption as abuse of public office for private gain and measures the degree to which corruption is perceived to exist among a country’s public officials and politicians.

The U.S. ranks high in the CPI because the number of cases of individual corruption is low and because the probability that a corrupt person will be caught is high. In Third World countries like India, China, Mexico, and Brazil, to compare, the chance that a corrupt person will be convicted—even after his misdeeds get national headlines—is remote. We can study two cases here. In May 2003, the U.S. Air Force announced that it would lease 100 KC-767 tankers for air refueling purposes from Boeing after Boeing won the selection process. The cost of the entire project was $23.5 billion. Senator John McCain, however, questioned the high price of the leasing program. Then, in November 2003, the Air Force modified the agreement and agreed to purchase 80 of the aircraft and lease 20 more. But the next month, the Pentagon announced that they had frozen the program and started investigating allegations of corruption against one of their former procurement staffers, Darleen Druyun, who had joined Boeing as a deputy general manager of its missile defense systems with a $250,000 salary and a $50,000 signing bonus. Druyun had previously been the Air Force official who for 10 years decided how much the Air Force should pay for bombers, fighters, and missiles. Senator McCain, who uncovered incriminating e-mails in an investigation of the tanker deal, had this to say: “Her job was to get the best possible price of the product for the American taxpayer. Instead, obviously she drove the price up to get the best possible deal for Boeing Corporation.” An audit by the Congressional Budget Office found the tanker deal would have overcharged taxpayers nearly $6 billion. Druyun pled guilty to inflating the price of the contract to favor her future employer. She was sentenced to nine months in jail for corruption in October 2004. Boeing CEO Phil Condit and CFO Michael M. Sears both had to resign.34

A similar episode took place in India. When the Indian government had a foreign exchange reserve problem in 1991 and had to go to the IMF for a loan, it was required to open its oil industry up to the private sector. In 1994, it awarded 60 percent equity of the multi-million-dollar Mukta-Panna oil fields to a consortium of Enron and Reliance Industries, Ltd. (RIL), which is India’s largest private sector company. Enron and Reliance obtained a 25-year production-sharing contract for the oil fields, which had already been discovered and developed by the Oil and Natural Gas Corporation (ONGC), an Indian government firm.

This deal was later challenged in a writ petition filed in high court alleging irregularities in the contract. The petitioners cited a report of the comptroller and auditor general of India that pointed out several contract irregularities. In particular, it stated that the oil fields had been handed over to the consortium at a throwaway price. They contained about 200 million barrels of oil at that time worth $20 a barrel, or $4 billion total, but were sold for just $3.44 million—0.086 percent of their value. The sale price failed to cover even the costs of past investments made by the ONGC for exploration and development, which came to $694.44 million.35 It was also alleged that the estimate of the size of the reserves had been downgraded to one-fourth (from 55 million tonnes to 14 million tonnes) by an officer of the ONGC, who like Darleen Druyun, joined the corporation benefitting from his malfeasance, in his case RIL, immediately after the contract was awarded.36

The government’s oil bills multiplied dramatically in size in consequence. Prior to the contract, the ONGC, being a national oil company, had been selling oil to the government at $8 per barrel, an administered price. The government is one of the largest consumers of oil in the nation. Immediately after the consortium took charge, the price skyrocketed to $24 a barrel, $4 above the international price.37 It was alleged that the petrolem minister, Satish Sharma, had been paid about $926,000 in bribes for awarding this contract to these companies. Although Y.P. Singh, superindentent of police of the anti-corruption unit of the Central Bureau of Investigation conducted the inquiry into this deal and recommended filing a case against the contract, no case was ever filed. Further, when the high court and later on Supreme Court of India asked the CBI about one of Singh’s important files, the CBI was unable to locate it. The Court indicted the agency for this “neglect,” but upheld the contract. The CBI was also criticized for the manner it investigated allegations of irregularities in the award of the contract.38 RIL’s chairman, Mukesh Ambani, is now the richest man in India and is worth about $50 billion; his brother, Mukesh Ambani, is worth $29.4 billion.39

In countries like India, investigative agencies like the CBI can easily be manipulated by the ruling party, making the likelihood that corruption cases involving politicians, millionaires, and billionaires will go to court minimal. Prime Minister Rajiv Gandhi lost the 1989 general elections because of allegations of kickbacks in the purchase of a field howitzer from Bofors, a Swedish company, but even after two decades indictments have failed to materialize. Political pressure has been applied on the CBI to remain inactive in the case, though the scandal is still in national headlines and haunts the Gandhi family.

In the U.S., the FBI and the Department of Justice are generally impartial, and corrupt politicians do receive prison terms. Randy Duke Cunningham, for example, a Republican member of the House of Representatives from 1991 to 2005, is serving a sentence of eight years and four months after he pled guilty to federal charges of conspiracy to commit bribery, mail fraud, wire fraud, and tax evasion. But when the Republican Party was controlling both the House of Representatives and the Senate from 2001 to 2006, the Bush administration tried to politicize the Department of Justice. It was alleged that the administration fired attornies when they refused to investigate Democrats on the eve of elections. It was also alleged that one important critierion for hiring in the department was how well applicants passed conservative litmus tests. Investigations by the Democrats when they gained control of Congress brought these charges to light and led to the resignations of Alberto Gonzales, the attorney general, and several other senior officials in the Department of Justice.

Although individual corruption is low in the U.S., as the probablity a person committing an illegal act will be caught is high, a corrupt political-business nexus does exist, but of a different type. Because a politician needs a lot of money to run for an elected post, s/he has to accept donations from multinationals and the ultra-wealthy. Once elected, s/he works more for these multinationals and the ultra-wealthy, and less for the benefit for the average citizen. Though politicians receive only peanuts—a few thousands of dollars—in donations, their benefactors get millions, if not billions, of dollars from them in budgets and other government provisions. This type of corruption is similar to that described in India (the award of the oil fields), except that in the U.S. politicians legally give government funds to multinationals and the ultra-wealthy via legislative procedures. Nevertheless, in spite of this superficial legality, this is money that should go the development of the country, decreasing the budget deficit, or paying down the national debt, instead of to those who are already well-off. Although Republicans are at the forefront of this type of corruption, most Democrats also have to engage in it as they need money to get elected. This is one of the main reasons why large coorporations have been successful in sending millions of jobs overseas irrespective of whether the presidency and Congress are controlled by Republicans or Democrats: They have purchased the collusion of political office-holders even before they take office.

In the 2004 presidential elections, George W. Bush and John Kerry raised $367 million and $328 million, respectively, whereas for the 2000 elections these numbers for Bush and Al Gore were $191 million and $132 million, respectively. The amounts required will surpass half a billion dollars in the 2008 campaign. To obtain a governorship or senator’s seat, a candidate needs to raise anywhere from 10 to 20 million dollars. These amounts increase exponentially yearly, and hence an honest person is unable to contest and win an election.

Previously in this chapter, we noted the 2003 Medicare reform bill and how a corrupt bond between politicians and insurance lobbyists defrauded the U.S. government and ordinary citizens of $134 billion. Republican Party tax breaks to the ultra-wealthy and big corporations and Bush appointments of people like Edwin Foulke and Philip Cooney fall in the same category. Other legislation, as well as as government contracts, have been corrupt as well. In addition, according to the nonpartisan Congressional Budget Office, Republican Party negotiators from both the House of Representatives and the Senate, meeting behind closed doors in December 2005, agreed on a change to Senate-passed Medicare legislation that will save the health insurance industry $22 billion over the next decade. Initially, the Senate version would have targeted private HMOs participating in the Medicare program by changing the formula that governs their reimbursement, lowering government payments to them by $26 billion over the next decade and saving the government—and thus taxpayers—a significant sum of money. But after lobbying by the health insurance industry, the final version included a critical change that eliminated all but $4 billion of the projected savings.40 Halliburton, Vice President Cheney’s former company, for example, has made tens of billions of dollars at taxpayer expense by being awarded no-bid contracts in Iraq. These examples are just the tip of the iceberg. If people want democracy in its present form—“one person, one vote” in theory but closer to “one dollar, one vote” in practice—they should understand the price they pay. It can probably be measured in many, many dollars per person, as well as the cares and anxieties that economic insecurity brings to the ordinary family. Perhaps someday someone will develop a “COD”—cost of democracy—index, if they haven’t already; the statistics compiled by organizations that measure unfair tax breaks for corporations and the wealthy would be a good place to start.

It is an irony that for-sale politicians get only peanuts for their betrayal of the democratic trust compared to the millions and billions of dollars wealthy tycoons and multinationals get in return; for the latter, investing in the political process might be better than investing on Wall Street. They are parasites lodged firmly in the body politic, however, looting government funds, the nation’s resources, and the pockets of ordinary Americans with the help of their political cronies. The 1776 American Revolution, the 1789 French Revolution, the 1917 Bolshevik Revolution in Russia, and the 1949 Communist Revolution in China exploded when people faced similar situations in the past. At those times, kingdoms instead of democracies were the object of revolt. The days of violent revolution are gone, however. We are in the digital age, and the time has come for an intellectual revolution that will unburden us of the drawbacks of democracy. Its present form is a disfigured caricature of what it could be, be it in the U.S., the world’s wealthiest nation, in India, the world’s most populous democracy, or anywhere in between.

Part 3: Capitalism

Copyright The author 2011

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