MARCH 21 WEBCAST:
LaRouche Declares War on the British Empire
Here is a transcript of the opening address of Lyndon LaRouche's webcast address to an audience in Northern Virgiania on March 21. The event was simultaneously carried on the Internet at www.larouchepac.com, the website of the LaRouche Political Action Committee (LPAC). The complete video is on file. LaRouche's opening remarks were followed by more than two hours of discussion, moderated by LaRouche's national spokesperson Debra Freeman. PDF version of this webcast and discussion, including graphics.
This is going to be a highly structured presentation, because we're dealing with a breaking point in world history, and it can be a breakdown point or an upturn in the process. This is a deadly moment. We've come to a time—you know, lots of people will say, "Why don't you break it down in more simple language, so we can understand it?" I say, "Well, partner, why don't you just sit there and let other people make the decision, then?"
Because this requires some technical competence. We're dealing with a technical question of a present breakdown, and the alternative of a reorganization to survival of the entire world's—the entire planet's!—monetary-financial and physical-economic system! Now anybody who's qualified to stand up and say they know the details and the problems of the world financial economic system and related systems, has a right to speak up. Those who say, it's too much for them to understand, they want it broken down in simple language, should shut up! And listen: maybe they will learn something.
So, we're not going to steer this thing in a direction to appeal to silly populist rhetoric. This is a deadly serious issue. If the United States does not solve the problem, or do its part in solving the problem, then we're going into a dark age. And within a short time, there'll be about 20% of the size of the world's population today still living. So this is a life-or-death question for entire nations and populations. The decision lies primarily with the initiative from the United States, from a U.S. government which is still confused on what to do, although there is more and more agreement about the severity of the issue. So this is serious business, and I shall be precise. And I shall be, when necessary, technical. And if you don't understand it, when we get into the question period, we'll get some of that straightened out.
James Galbraith Speaks Out
Now, the first thing I want to do, in order to set the stage for the discussion, is to acknowledge an important development in terms of a statement by James K. Galbraith, who is the son of the famous [John Kenneth] Galbraith who was an advisor to Kennedy. And because these questions—while other people may have the same kind of formulation of questions that he presents in a recently published piece—nobody else has opened their mouths to say it publicly. And therefore, his questions and my comment on his propositions, are extremely relevant at this point.
Now, here's some of the things he says. I have ten particular comments of mine on his paper, and his paper, of course, is generally available, because it was published by various sources. He says: "Deficiencies of their program cannot, therefore, be blamed on incompetence," speaking of this crowd of White House [economists] and other people. "Rather, if deficiencies exist, they probably result from their shared background and creed—in short, from the limitations of their ideas."
This, I endorse. This is absolutely accurate. The people in there, who are running this operation and making the decisions, are collectively incompetent, because the assumptions they're making, which are based on their past experience and education, are not appropriate to deal with the situation, which has never existed to their knowledge beforehand! No one on this planet has experience, within their lifetime, and within their education, of a problem of the type which we have today. And therefore, they have no competence to present a proposed remedy. Every proposed remedy which has come officially from the White House or other sources, or sidewalk conversation on the side, is totally incompetent. Every press report is totally incompetent. Every statement from governments, on the economic situation, is totally incompetent. And that's the problem we're going to deal with today. So, this is why we don't need sidewalk superintendents on this discussion.
Then, his second—I quote him—his whole statement is published. His second point is, "The deepest belief of the modern economist is that the economy is a self-stabilizing system."
Correct: There is no inherent stability, or stabilizing factor in the present world economy or the U.S. economy, at this time. We've gone through a situation, in which it is now revealed by events, that there is no competence based on experience, of this expertise—university education and so forth—no competence, to even discuss what the problem is. And that's why we're not getting good answers from officials.
My third comment, or his comment, which I comment on: "If recovery is not built into the genes of the system, then the forecast will be too optimistic, and the stimulus based on it will be too small."
Absolutely correct: There is no comprehension of this. What we're dealing with is a world financial breakdown crisis, which is now approaching the point of inflection, at which the flood of money for bailout is engendering a hyperinflation of the type that Germany experienced in 1923. We're in that kind of period, like the Spring of 1923, after an inflationary drive to bail out the German mark, that occurred from the end of World War I until that point, and that period began to take off in a hyperinflationary explosion. And from the Spring of that year, 1923, until October-November of the same year, the German economy blew apart in a hyperinflation.
We, in the United States, and in the world generally, have now reached a point roughly comparable to that. There is no provision in the present system, the present international monetary system, as organized, to prevent a general disintegration of the entire world economy. Which would mean a genocidal collapse throughout the world, which would end up within a generation or so, that where you have 6.5 billion people living on this planet today, you would now go down to less than 2! That's the magnitude of the crisis.
First, the CBO did not expect the present recession to be any worse than that of 1981-82, our deepest post-war recession. Second, the CBO expected a turnaround beginning late this year, with the economy returning to normal around 2015, even if Congress had taken no action at all.
Absolute idiocy—he's right! This is the situation. But wait till you see the ten things I excerpt, put them together.
What the Computers Won't Tell Us
On depth, CBO's model is based on the post-war experience, and such models cannot predict outcomes more serious than anything already seen. If we are facing a downturn worse than 1982, our computers won't tell us; we will be surprised. And if the slump is destined to drag on, the computers won't tell us that either. Baked into the CBO model we find a 'natural rate of unemployment' of 4.8%; the model moves the economy back toward that value no matter what. In the real world, however, there is no reason to believe this will happen" (emphasis added)
Galbraith's point, at this point, should be absolutely clear: Either of these failed White House economic advisors, is systemically and implicitly making a fatal error in judgment. Now you have Larry Summers, who I think probably should be dumped. And Tim Geithner should be allowed to function, at the intellectual level he has, and taken out from under the kind of pressure he's being subjected to now. I think he's probably a viable figure in the Administration for these purposes; but you have to get Summers out, because he's no good. And he's also incompetent in his dealings with people. Then we have to build something with a minimum amount of shakeup for the maximum amount of benefit.
Sixth, again from Galbraith:
This procedure guarantees a result near the middle of the professional mind-set. The method would be useful if the errors of economists were unsystematic. But they are not. Economists are a cautious group, and in any extreme situation the midpoint of professional opinion is bound to be wrong.
No sense of principle, no competence, take the sense of the crowd you're sitting in the middle of, try to find the mid-point, negotiate back and forth, and come up with a solution whether it works or not. And then [they] said, that's the best we could do.
Seventh excerpt from Galbraith:
[T]he initial package was affected by the new team's desire to get past this crisis and to return to the familiar problems of their past lives. For these protégés of Robert Rubin, veterans in several cases of Rubin's Hamilton Project, a key preconception has always been the budget deficit and what they call the 'entitlement problem.' This is D.C.-speak for rolling back Social Security and Medicare, opening new markets for fund managers and private insurers, behind a wave of budget babble about 'long-term deficits' and 'unfunded liabilities.'
[The eighth one:]
The oddest thing about the Geithner program"—and I don't blame Geithner for this program; it was stuffed on him—"is its failure to act as though the financial crisis is a true crisis—an integrated, long-term economic threat—rather than merely a couple of related but temporary problems, one in banking and the other in jobs.
In other words, still, the thinking is a "fix it" mentality. Do what you learned to do, either in universities, which generally indicates you're a complete fraud and a failure, or just what you've learned from the course of professional life.
Here you are: You're with a situation, absolutely unprecedented. There has never been in the history, in the lives, of anybody alive today, anything like the present crisis. The last time such a crisis existed in European civilization, it occurred in the 14th Century, and was known as the "New Dark Age." And if you're not willing to think about how a new dark age is organized, as by the Lombard bankers of that period, then you don't understand the present situation. What we have, the way we got into this threat of a new dark age, was by the same methods, used by the Venetians who controlled the process, and were operating through the Lombard banking institutions, in usurious loans. These usurious loans then, like the attempt to bail out now, outran any range of the ability to pay the debts so generated.
So then, when the King of England said he wasn't going to pay on these loans he couldn't afford to pay, a chain-reaction set in, and, starting with the House of Bardi, which was a bank from the tiny city of Lucca, in Italy; and when this bank went down, a chain-reaction was unleashed, in which banks and accounts in France, as well as in England and elsewhere, blew up. As a result of that, within the immediate generation, the population of Europe shrunk by one-third, and the number of parishes in Europe collapsed by one-half. And absolute insanity reigned throughout Europe, at that time. We are in a situation like that, now. That's the threat.
And obviously, there, he's right: We are in a situation—he keeps saying this, in these things I'm pointing to—this thing is beyond the comprehension or the willingness to comprehend, of the leading private and other institutions of relevance of this country. Nobody's proposing anything—nobody wants to even think about proposing something, which goes outside those parameters.
A Fascist Revival in the U.S.A.
Then, the ninth one: "In short, if we are in a true collapse of finance, our models will not serve. It is then appropriate to reach back, past the post-war years, to the experience of the Great Depression. And this can only be done by qualitative and historical analysis. Our modern numerical models"—and statistical models—"just don't capture the key feature of that crisis—which is, precisely, the collapse of the financial system."
Now, the tenth comment is significant because it is a response to a fascist revival in the United States, typified by Amity Shlaes. Amity Shlaes is British-trained and associated with this crowd, the American Enterprise Institute. Now, these institutions, which are the so-called right-wing think tanks, that advise and control the policies of the U.S. government, to a large degree, and actually ran two Bush administrations—and actually three Bush administrations, counting the father's, and not counting the father's two vice presidential terms back in the 1980s.
The problem here is, that these people are fascists. Shlaes is a fascist. Her policy is fascist. Not only is she a liar, but she's a fascist. She's not simply a fascist—she was London-trained to be a fascist—but she's tied to institutions in the United States which were fascist back in the 1920s and '30s.
What happened is exactly this: You had a downturn in policy, starting in 1890, leading up to all the wars we've had ever since, on a world scale. What happened was, that in 1890, the Kaiser of Germany dumped his counselor, Bismarck. Now, this was under the influence of the Crown Prince of England, who actually organized what became World War I. Here was the sequence—and follow through the sequence to get a picture of what we're dealing with, with her and with people like her, who are the right wing in this country that the President and his office have to contend with, in the Congress, like Nancy Pelosi. Nancy Pelosi is part of this fascist crowd that's our problem.
Now, what happened? The British were determined to destroy the influence of the United States, after the Lincoln Administration, and after the 1876 Centennial celebration, to break the influence the United States had, both in defeating the British Empire in the Civil War—because it was the British we were fighting in the Civil War: They organized it, they had their assets and so forth, and they're still there today, some of them.
And then you had the 1876 Centennial celebration: This was the point that the railroad expansion and the other developments from the Lincoln Administration had begun to take hold, and the United States was emerging, not only as a power in the United States, but was being unified for the first time in all history, as becoming a nation within its own borders, and the borders being two oceans—the Atlantic and the Pacific, and the Canadian and Mexican borders. We were unified by the development of transcontinental railway systems, a phenomenon which had never existed before in the history of any part of the world. Around this infrastructure drive, launched actually by the Lincoln Administration, and mobilized for the case of the Civil War, the United States emerged as a great power which could not be defeated in its own territory—for the first time in our existence.
Then, 1876: You had an attendance of people from all over the world, representatives of leading forces in Germany, France, Russia, and so forth. And there was sort of a stock-taking of the effect of this great revolution, which had occurred in the United States during this period; especially the development of transcontinental railway systems.
The End of British Imperial Sea Power
Now the development of the transcontinental railway system was a revolution in economy: From the earliest part of European civilization, until 1876, the world was dominated by sea power. Even in terms of economy. Because maritime power had a greater facility to conduct trade, than any form of inland transport within nations, or within continents.
And what the United States had done, by creating the United States as a continental nation, between the two oceans and the Canadian and Mexico borders, had, for the first time, shown what can be done, in transforming power from predatory maritime power, to the inland power of the sovereign state, in and of itself. And to do this by tying together, through transportation systems, rail systems, to trying to pull together entire continents, for their own internal development! This was a great revolution, in the economic history of mankind.
This was a threat to the British Empire. The British Empire was strictly an empire based on maritime power. The British Empire had not been created as an empire of the king or something of that sort. It was the creation of a company, the British East India Company, which was an empire as a company, which the King of England had little power over, in that century. So you had a private company, a Venetian-style example of this kind of liberalism, which came out of Paolo Sarpi's influence. This kind of empire had taken over the world: It almost destroyed China! And it had almost destroyed the India that it occupied! It destroyed Africa, after 1898, in particular.
As we see in Darfur, today: There's no problem in Darfur, as such. There's a problem there, of two tribes which were between Sudan and Chad. And when Lord Kitchener conquered and defeated the French in North Africa on the Nile system, at that point, the British had power, and the British decided that the tribe, the Fur tribe, would be given this desolate territory, this little area of increasing desolation, rather than the Chad tribe. So, since that time, any time there's any degree of any instability in that area, this conflict between the tribes—with the one based in Chad, the other based in Sudan—continues. And that is the Darfur crisis, which is being played by certain interests internationally.
And our competent people, in the diplomatic service, who understand these areas and have worked this territory, will all tell you, there is no genocide being practiced by Bashir in Sudan. And only people who have no competence, and no competent knowledge of the situation, will think differently: So it's a case of the British Empire.
So, back to this kind of situation: It's the same period, 1890. Now, what had happened is, the British plan was based on the model of what was called the Seven Years War. That is, the power of Britain, relative to the other nations of Europe, had been gained by their orchestrating, they and the Dutch, had orchestrated a state of warfare among all other leading powers of Europe, including Russia, Prussia, France, and so forth. So therefore, a Seven Years War, which is a long war: It's rightfully comparable to what we went through in Iraq recently, because of the lies of Tony Blair—this long war depleted the continent of Europe, and the British stepped in, in February of 1763, and took over, with the Peace of Paris at that time. But who took over? It was the British East India Company! Which then became a power over England, over the United Kingdom, and also became a world empire.
This private company then, operated independently of the control of the King of England, of the government of England, and became the government of England by eating it up. They looted India; they conducted mass crimes against humanity in India. Beginning the 1790s, they had organized the international drug trade, which they had used to destroy China, in large degree, and other parts of the world. The drug problem today, in the world, as continued by George Soros, a British agent, is entirely created by the British monarchy and its predecessor, the British East India Company.
So, this is marching on.
The British Organize the Greatest of All Wars
So now, we've won the Civil War—we've won it against the British Empire! We have not only won the war, we have created the greatest accomplishment in nation-building in the history of mankind. Where, in 1876, people are coming from all over the world, prominent people, to look at what the United States has done. They carry this back to Europe, and begin to do the kinds of things that we did in the United States. It was done in France with the development of the railway system in France on a similar basis. The international railway system, the Berlin-to-Baghdad Railway, the Russian Trans-Siberian Railway: These things were all projects of the type intended to integrate the development of the internal economies of Eurasia, according to this model.
The British, then, did the obvious, as they had done with the Napoleonic Wars: To use war on the continent of Eurasia as a way of destroying the ability to resist the British Empire.
So the British were now out to create the greatest of all wars! But there was one thing in the way: The war was to be based on starting a war between Germany and Russia. Now the problem was, that the crown Prince of England was the uncle of the German Kaiser and of the Russian Tsar. And so the problem was to get the Prince of Wales, who was not yet king, to organize a war between his nephews. The way it was supposed to be done, is they were supposed to start a Balkan war, in which the Austrian Kaiser would react, and involve Russia and Germany in this war. And thus, to create a new Seven-Years-War type, by which Europe would be destroyed, and all these American-style projects would be killed.
Because what Bismarck had done, Bismarck had taken the American model, the U.S. model, and with direct discussion with the leaders of the circles around the then-deceased Abraham Lincoln, had made a gigantic reform in Germany, which was considered a great threat to the British, because a continental power was developing, and the British Empire was going to lose power. So they wanted these fellows to kill each other.
Now Bismarck was smart. He was probably one of the greatest statesmen of that century. What he did, as Chancellor, is, he made a secret agreement, as Chancellor, behind the back of his Kaiser, Wilhelm II, with the Tsar of Russia, to agree that if the dumb, stupid, aging Austrian Kaiser, the Habsburg Kaiser, were to start a war in the Balkans, that Germany would not intervene to support the Austrian Kaiser. On that basis, the Tsar of Russia agreed with Bismarck that Russia would not deploy forces to intervene in a Balkan War.
So the British wanted the Balkan war, because that was precisely the method by which they were going to cause the breakup of Europe's development. By a war! They wanted, essentially, a war between Russia and Germany, with France involved as a major factor on the continent. So what did they do? The Crown Prince of England, the Prince of Wales, pressured his nephews to fire Bismarck, in 1890.
What happened that followed? Well, the British went ahead: They organized the assassination of the President of France, Sadi Carnot. They organized the Dreyfus Case. And the Prince of Wales personally negotiated with the Japanese Emperor, for the Japanese Emperor to ally himself as another big empire, with the British, to start a war against China.
So now you have the second phase of the attack on China: The first attack on China was, largely, the Opium War. Now a new attack came, to really break up China, permanently. And! As a result of that, from 1894-1895 on, Japan was permanently involved in breaking up China, until 1945—organized by the British. Now that Bismarck is out, the British start the Russo-Japanese War, and other wars. Then the Balkan wars come.
From the Klan to the Nazis
But in the middle, something else happens: The assassination of the President of the United States organized from Europe, i.e., by British forces—McKinley—brings in a nephew of the Confederacy, Teddy Roosevelt, who's a stinking traitor. And after a spate, they bring in Woodrow Wilson, whose family was behind the Ku Klux Klan! And this same Wilson, from the White House, in the White House, organized a revival of the Klan, on a larger scale than it had ever existed before!
So what you had is now a shift from a patriotic President, McKinley, to a British agent, or a pair of British agents, typified by Teddy Roosevelt and Woodrow Wilson; and also, Coolidge and Hoover later on! So therefore, you had a shift in U.S. policy.
As a result of this process, you had the emergence of a pro-fascist movement in post-World War I Europe. This fascist movement was built up inside the United States under Coolidge, Hoover and so forth. You had an American Liberty League which was organized as a fascist organization. Remember, these Presidents and their circles had supported Mussolini and they supported Hitler. As a matter of fact, Hitler became a dictator, not just a Chancellor, but a dictator in Germany, days before Franklin Roosevelt was inaugurated, actually installed as President.
So, from the time that Roosevelt was President, the financial establishment, the Wall Street establishment in the United States, together with the British, had installed Mussolini in Italy—they created Mussolini; they also installed fascism in Germany, which was organized from London.
So, now we were faced with another kind of Seven Years War, a greater war. And in this United States, this movement, which Amity Shlaes echoes today—she's an heir of this movement; these right-wing attacks on Obama are based on these people. What are they? These people are the people who were the fascists, the Nazis, the pro-Nazis in the United States and elsewhere, back during the 1930s. And they're still the pro-Nazis, today! And that's the kind of problem we face.
I don't know to what degree James Galbraith knows the details of this. But I know it, and a lot of other associates with me know it, because we've done our homework on this thing. We have the documents; we have the proof. The American Enterprise Institute is an echo of the Nazi-supporting organization, back in the 1930s. And you're getting a bunch of people who are a revival of Nazism, fascism, or whatever you call it, today, and that's our big problem. That's the problem that Obama faces! That's what the fight is!
Remember, it was George Bush, the last President, the recent one, whose grandfather Prescott Bush had actually moved the money on orders from his office in New York, to put Hitler into power in Germany! The German Nazi Party was bankrupt, and the Nazi Party was bailed out by Prescott Bush, the grandfather of the just-departed President. And the character of the Bush family, the grandfather Prescott, George I, and George II, were all fascists. And what they represent in both the Democratic Party and Republican Party, to which they have ties, is the same thing.
So when we're talking about this tenth point I picked out: that Roosevelt was under attack by a fascist, pro-Nazi movement inside the United States, called the American Liberty League. And there were various organizations of which the American Enterprise Institute is one!
What happened was, with Pearl Harbor, Nazism was no longer so popular in the United States. And people who had formed these fascist organizations now were looking for a new cover. So, what they did, is, they walked out of the offices they had occupied under one name, and walked into the new offices, with the same people, or combinations of the same people, in new offices and new organizations! And what we have as the right-wing think tanks and some of the major press, which has been taken over in this country by the British interests, are all simply revivals of the same thing, as the pro-Mussolini, pro-Fascist, Nazi organizations, back in the 1930s, back before Pearl Harbor.
And that's the point that we're dealing with: that Roosevelt, as Galbraith can say competently, because of his knowledge of his father's work, there was never—contrary to the lies of Amity Shlaes and her types—there was never any failure on the part of the Roosevelt Administration during the 1930s. There was tremendous pressure on the Roosevelt Administration, coming from fascist elements, including judges of the Supreme Court, to break up the operations of the Roosevelt Administration. And so, for a period of about two years after his reelection, Roosevelt was stuck with this thing about this "Nine Old Men" question; and stuck with that. And therefore, he was set back in his recovery program! But the recovery program was going on, because the work that was being done by the WPA and similar kinds of institutions was making valuable work, which resulted in, at the point of our entry into the war effort, the fact that we had become the greatest industrial machine on this planet.
We were able to win World War II, not because our troops were well-trained—they weren't. They were people like me, who were grabbed up in the draft; and I found myself with something I never thought I would be doing: training troops for World War II! So, we had developed a machine, where our technological superiority, our logistical capability, meant that, even though our troops were not as well-trained, as say, the Germans were—the German troops were much better trained, much better qualified for combat. But we outnumbered them, not only in personnel, we outnumbered them in logistics! Where they had hundreds of pounds, we would go it in tons! We could load the beaches in any part of the world, with the vast production coming from people who had largely been mobilized into industry during the Roosevelt period of the 1930s.
And therefore, what happened was, as a result of this, we entered into a period, in which the United States was going to be destroyed once Roosevelt was dead: Because the United States had destroyed the British Empire's potential for empire, with the Lincoln victory and its sequels, by 1876. Roosevelt, with his leadership, had created a United States which could not be defeated at the time he died. Until Truman took over, and began to take it apart, under orders from the British.
And that's the lesson we're learning today: Is that the United States is the target of the British Empire and what it represents today. That is the enemy! And anyone who thinks differently, goes into the category with Amity Shleezeball [laughter], as being a revival of the same thing as the pro-Nazi sentiment within the U.S. population, back in the 1930s. And that really is what James Galbraith is referring to.
Why Are Almost All Economists Incompetent?
Now, at this point, I think that speaks for itself, but the key point, summing up these ten points that I referred to from his presentation, is that, what he says on economics—and he says it repeatedly as you will note from this—the problem is intellectual, among the professionals in the United States. They've been in university training, which made them incompetent, in the way he indicates: They go by models, by statistical models, and other kinds of things.
For example: I've been forecasting significantly, in terms of the forecasts I've made, since the 1950s. In '56, I forecast what happened in '57, just because I did a thorough analysis as an executive for a consulting firm; and I knew the facts, I knew we were headed for this thing that had happened. Since that time, I've made a number of longer-range forecasts, all of which came true, exactly as I projected them. I've never failed. And, at the same time, every one of these so-called "experts" and university experts, and firms that conduct forecasting, the Wall Street advisors, have all made forecasts—or haven't made them—have been incompetent! Now, why?
And that's the thing, the real subject we get into now. Why are all the economists, apparently, why do they all tend toward utter incompetence in the way that James Galbraith indicates in this report? And I think there are others who would say the same thing, but he has more guts, perhaps, and has put it forward, where others have hesitated to say what they know. The problem is, they all predicate their forecasting and economic policy, on a limited sense of "agreed premises," and "agreed methods." The worst of it is statistical forecasting: Say, "Statistics show us...." "Our statistical model shows us...." This sort of thing. It is all intrinsically incompetent. And before I'll finish this presentation, you'll know why. But that's our problem.
And they all believe in the god of the kind of policy of the Truman legacy: They all believe, the people who say, "Well, Roosevelt made some mistakes"; or "Roosevelt was wrong." Or you get, like Amity Shleezeball, they lie about it. But they interpret it wrongly.
And on top of that, you see, from the advice that they give, if you look at the history of the rise of the U.S. economy, up until the death of Franklin Roosevelt, and you measure this by the relevant criteria; then you take the post-Roosevelt period, under Truman, under Eisenhower, after the killing of Kennedy, there is an accelerating rate of decline in the physical output of the economy, per capita and per square kilometer—physical output measured—up till the '68 breaking point. In 1968, the amount of new construction in basic economic infrastructure fell below the level of attrition in the old investment in infrastructure.
From that point on, when the 68ers, which were already an economic disaster—the very existence of the 68ers was an economic disaster, they're still running the United States today; the people who were throwing bombs in the Summer and Fall of 1968—they're running the economy today, people who think like that. It's their ideology that dominates the economy on everything. And it was a change: We went down. We have been destroying the U.S. economy, step by step, since that time. We've been destroying the world economy. We've exported our industry to people in poorer countries, who don't have the skills that we had. We shut down those industries! We shut down that agriculture! And exported the production, agriculture and industrial production, to other parts of the world! Where they didn't have the skill, and preconditions of infrastructure, for sustaining that kind of investment for their population as a whole. So therefore, we shut down Europe's economy! We shut down the U.S. economy! We looted other countries, to nothing.
And the few countries we built up on this basis of globalization are now a disaster. Take the case of China: China just had a disaster, as a result of the great bonanza it had through shutting down the U.S. and European industries in particular, and transferring the work to cheap labor in China! Now, suddenly, the market for Chinese purchase of what they are producing, has met a sudden collapse, and an accelerating rate of collapse in the China economy! And you will see that in every part of the developing sector which has been the beneficiary of runaway jobs, all shutting down the employment in Europe and North America.
So, in fact, we have been declining. And yet, some people are richer, and some people may not be actually richer, but they get drunk more often—and they feel good. So that's been our trend.
The Greenspan Bubble
So, what we have, we are a dying economy, we no longer have the actual net physical wealth that we used to produce, we have less. But some people have a lot more money!
Why do they have more money? Well, let's think: We had another depression in October of 1987 (by the way, I forecast that one, too). And people said it wouldn't happen, but it did. But at that point, the U.S. economy was about ready to go into a depression: Along came Alan Greenspan, and Alan Greenspan has no morals whatsoever, so therefore, he was able to think of things that decent people would never think of. So he took something that people had gone to prison for, and he made it national policy for Federal Reserve System. It became known in the form of financial derivatives.
So now, what happened is, we built up a grand financial bubble, based on self-multiplying—it's like a fungus: You put a fungus in your bathroom, it grows! The more you fight it, the more it grows, more fungus, a new kind of fungus comes in!
So, what we did, is we built up a tremendous amount of debt. Now, this debt was not debt incurred by production, or by investment in actual production. This was a debt which grew all by itself. Because you invest, and you set a certain amount, and you say, "Okay, this is our yield. So now, we've got this debt which is going to have this following annual yield. Now, let's say, we'll give this debt a life-expectancy of 10 years, 20 years. Now, we will assess the debt, not on the basis of the money that was put up, or was promised"—you didn't put up, but promised; and they'll take the promise of that amount of payment and they will multiply that by factor, and they will come up with saying, this has a "capital value, which should be traded on the market at this multiple price; at a price this multiple or a certain number of years."
So what we've had is: The more this debt grows, the more it grows! So, we have actually a hyperinflationary bubble in financial derivatives and related kinds of nonsense, which had been growing up—and we call this "prosperity" over recent years, since Greenspan's "miracle." This is Greenspan's prosperity. We've built up to the point that the amount of debt outstanding, far exceeded anything that the human race could pay in its entire lifetime.
So then, we have a crash! But when did crisis occur? When did the problem occur? The problem occurred in this case, when they let Alan Greenspan become the chairman of the Federal Reserve System. That's when it happened. You're saying the crisis is happening now: It happened then! That's when you contracted syphilis, buddy! Now, you're feeling the symptoms!
So that's the nature of the problem: What we have today is, the people who think, or are supposed to think, in markets, in firms, and so forth, are totally incompetent relative to the standard of industrial management, say, back 20, 30 years ago. They're utterly incompetent. All they do, is they come into a company, do nothing of any value, bankrupt the place, and walk out with a golden parachute. They have no competence whatsoever. But what you had is a parasitical class, the so-called modern management class, typified by these firms that have been going under, like Goldman Sachs—or Goldman Sucks, if you prefer. And this kind of thing has been going on.
So, we've had a destruction of the U.S. economy, and European economies, by all of these kinds of major changes, or successive changes, which occurred over these recent years. The actual productivity of society has been declining, in real terms, in physical terms—human terms, per capita and per square kilometer terms, over this period. We've had shifts, but the shifts have always been a downshift on a planetary scale. You move jobs to China, you pay less—that's why they move there; you shut down the investment in industry, and productivity in the United States and Europe.
The result is a net shrinking of the physical output of the world economy. But in the meantime, you're calling this a profitable venture; you're capitalizing this financially; you're building up a much larger volume of claimed financial assets, while you're destroying the base. And when the world economy has been going into a negative profit ratio, in terms of physical profit over these years, the result is obvious: You reach a point at which the rate of increase of fictitious value, as against attributable real value, is such that you're about to go under. And that's what happened.
The July 2007 Proposal
Now, in this period, go back to 2007: On July 25, 2007, I gave, in the Washington area, a webcast, at which I indicated and reported that we were on the verge of a process of breakdown of the economy, which would accelerate. At that time, I indicated, pro forma, and in some detail, also, what the measures are which had to be taken, to deal with this crisis. Had those measures been taken, into say, September or October of 2007, we would not have a crisis in the United States, today.
For example: My proposal then was, all right, take the real estate sector: The real estate sector is totally insane, the prices are insane. What we do, is we protect the entire household. We want to keep the people in their homes. So therefore, we put the whole system, the mortgage system into receivership, for protection in bankruptcy. Nobody leaves their home. In the case of difficulty, where the pressure's on, we protect them, by putting them under bankruptcy protection; so that anybody who's living in a home, can not be thrown out of the home because of this mortgage crisis. They stay there.
The other thing, is to maintain the stability of the community economy. You don't want people being thrown out, going elsewhere—you'd get a chain-reaction collapse.
Secondly, there are banks which are actually bankrupt. Now a bank has two aspects: One is its financial stability, and the other is its function. Now you go back to Alexander Hamilton at the end of the Revolutionary War, when the colonies had financed the war effort for our independence. All of the banks of these colonies which had done their patriotic duty, were now essentially bankrupt. And the idea of a Federal Constitution, as opposed simply to the Declaration of Independence, was needed at the end of the war.
So, Hamilton came up with a solution, and the solution was national banking. We would do what we can, to save these banks by giving them government support. We would organize government support through national banking. And it was this agreement on national banking which enabled the adoption of the U.S. Federal Constitution.
So this is a principle, which I used, which is the foundation of the U.S. Constitution—that agreement, on how we deal with this system, where banks who have acted under government control, that is, the government of the struggle for Independence, were now protected for development, to keep a banking system alive in the United States, at that time. And the Constitution was organized around that pivotal issue. So national banking is our natural tendency.
So, what do we do in this case? We say, we put the banks under protection! So now, we put the banks, as well as the householders, mortgage-held householders, we put them into bankruptcy protection, to reorganize the system. And then we start a credit system, to get some growth going, real growth in the economy, which means we have go to negotiate a new international system, a credit system to replace the monetary system which was hopeless. Those were my proposals.
Had we done that by the Autumn of 2007, we would have no crisis in the United States today.
But what did we get? We got "Bailout Barney," Bailout Barney Frank, under a Doddering Senator, from Connecticut. And what they did, is they now bailed out every piece of worthless paper in the world, for their friends—including golden parachutes. What they have dumped, as U.S. obligations alone, on the basis of this crisis, is sufficient to sink the entire world economy, into a bankruptcy of the type experienced by Europe in the 14th Century, but this time, on a global scale.
A Criminal Government
So what we've had is effectively, in effect, a criminal government of the United States, under George Bush, and that criminal policy of government has not been corrected since Obama was inaugurated. And that's the problem.
The problem is, that these economists and others have no sense, of how a competent financial system works. They were capable of operating, when the previously existing system, which they knew the rules of, existed. As long as that system worked, and did not collapse, they thought they knew what to do, day to day, month to month, year to year. But when the system collapsed, they had no idea of what to do about it. And that's where we stand today.
That's what you see with Geithner, as his problem. I don't think he's incompetent, any more than most people are in that field. And I think he could be a very workable Secretary, under the right conditions, if he was given a free hand to follow his own conscience and good advice. But right now, the United States, under the present administration policy, is headed toward a point of outbreak of a hyperinflationary explosion, which would destroy most nations, and most of the world, and the United States included.
So that's where the issue of Galbraith's appraisal comes into play. These guys, who are trying to run the system, have no idea what they're doing. They have no conception of what the problem is, and no conception of what the solution is. And if we don't change that, we're not going to have a nation!
Now, what he puts his finger on, he says: These fellows—and repeatedly, in the points I picked out for comment—he says consistently, and correctly, and he's the first one to say it, from that whole crowd—which I why pick on him, because I know he's a good guy, essentially; that, what he's saying is: You guys, using your various systems, have no idea of what you've been doing, and no idea where you're going. Because you're now faced with a situation for which you have no experience, and no knowledge. And you have no way, on your own, of actually coming up and seeing what the problem is, you're actually dealing with. You're all sticking to some predetermined, estimated system, and trying to impose that on reality. It's like trying to conduct a successful marriage with a dummy in a department store window. No matter how sincere you are, it doesn't function! And that's the problem.
A Deeper Problem: Money and Profit
Now, this comes into a much deeper problem of the same nature. Which is what I now turn to, in a succession of essentially three essential issues which have to be addressed.
What we have to look at, is: Forget the idea of money as such. Money is necessary. It's necessary, because exchanges occur between people, and you have no way, in these exchanges, of directly determining what the value is of something. So therefore, you set up a system which is workable, which uses estimated prices as a measure of value. And you do it in such a way and under such management, that the economy actually grows. But you can not, from a monetary system, determine how an economy should grow.
So we get into this other kind of problem: what is it, what is the physical principle which determines—what determines a successful form of economy? What's the physical principle involved? And the economists, like the ones that we deal with normally, have no idea what that is.
As a matter of fact, things have become much worse, because, as we became de-industrialized, and we broke apart the two sectors, leading sectors of production, manufacturing and agriculture—we have destroyed American agriculture, we've destroyed American industry—in a sense, as a growing operation the way it used to be successfully. And therefore, the people who are managing large corporations, such as, say, General Motors (or were managing it, or something, before, not just stealing from it), were totally incompetent!
Take my generation, for example—my generation was competent. The next generation was not. My generation was production-oriented, agriculturally, industry, infrastructure. My generation was shaped, largely, by the refreshment of the Roosevelt Administration experience: Recovery, agricultural revolution, industrial revolution, technological revolution. We had managers who actually managed, in the sense of increasing the productive power, per capita and per square kilometer, of firms and farms. That was their drive.
From 1968, particularly, from that point on, our productivity was destroyed, and no longer did management have any commitment to maintaining an increase in actual physical productivity in agriculture, industry, or in the actual physical average standard of living. So we've been faking our way on credit since this process.
The question is, what's the remedy? We no longer have the people from my generation as managing these firms. The next generation is not too good, and the generation coming now is absolutely incompetent. How do we rebuild, what the American System represented? What're the principles?
Well, we can say, "industry and agriculture." Well, what about this question of profit? It's necessary, if you're going to have a growing industry, that you're able to produce enough value from that agriculture, that industry, so forth, so that you have something left over for development and expansion of the economy, in the period afterward. In other words, where does real profit come in? Not the money profit; we've seen what money profit is. But the real profit, that is, the physical profit, where you get more out, in terms of production, than what you put in. You get an increase in the income of labor, an increase in the productivity of labor. How do you do that?
Well, you have two things to consider, primarily: You have the overhead expense, but just turn to two things: Look at two factors in agriculture and industry. Look at current operating costs, as what it takes to run the machine that you've got, and how much you have to invest, in the capital funding of the existence of that machine. You apply that not only to industry, privately held industry, for example, and corporations; but you have another, bigger investment. The biggest investment, in any successful economy, is a physical investment, in basic economic infrastructure, which, by and large, is entirely in the public sector, not the private sector. It's in the state, and it's in the nation.
We Need Nuclear Power
This involves, for example, nuclear plants: You can't build a nuclear plant based on a neighborhood. A nuclear plant is, one way or the other—if you're going to have enough of them to do the job, and we do need a lot of them—we need fourth-generation types such as the pebble-bed reactor types. Because with the pebble-bed reactor types, in 1,000 MW, or something like that, we can generate synthetic fuels, we can purify water—we can also develop fuels from that, by producing synthetic hydrogen, or hydrogen-related types of fuels. We can then use these fuels—we don't need to import oil from abroad any more; you're taking a cheap product and you're transporting it around the world, at a very heavy price of transportation, monopolization—that's crazy.
Why not produce hydrogen-based fuels in every community? Or every large community? What does it take? Well, you've got a 1,000 MW reactor, of a pebble-bed type, and you can generate a lot of byproducts from that, just apart from the electrical power, industrial power, industrial forms of heat, similar kinds of heat. You can produce synthetic fuels, gaseous fuels. They're better for airplanes and air transport than these kinds of fuels.
You also can take the waste heat from the reactor; you take the various levels of heat coming out, you measure everything in energy-flux density, the concentration per unit of area, or unit of weight of the power, what the role of the temperature. And you go from the highest temperature, which, from a standpoint of physics, of the Periodic Table, is a place where you really do the things like transmutation of materials; all the way down through various chemical processes, down to using the waste heat as a way of providing the heat for a community, heat power. You could even provide a survey through a whole area of say, a community; and the very lowest grade of heat, you get enough heat out of that to heat a house, or cook a meal.
So therefore, by using a central heat system through nuclear power, you can go all the way down to the requirements of the lowest level of life, and simplify life for people. Which means, when you simplify life, you make the cost of production cheaper; you increase the productive power of labor. You're able to produce with high-temperature reactions things you could never produce with low temperatures. This idea of using solar, wind—what? from the mouth of a politician? It's nonsense, right?
So, we could do this thing.
So the question is, what's the process by which we take the total population which will tend to increase, and how do we increase the productivity of that population at the same time as raising the effective standard of living, in terms of what it means to live, at the same time? That means that you have to have a transformation in the physical principle of economy. And the first thing, is you go to a higher temperature reaction, like nuclear power.
We started out burning brush—or burning down the neighbor's house, or something like that. We went up to using charcoal, which is a better fuel than wood. We went from there to other sources of power, up the scale, to natural gas, and so forth. Then we get to the point, we seemed to reach a level. Then we come in with nuclear power: We come in through orders of magnitude greater density of power, higher temperatures. We can do things we could never do before. Then we come in with the prospect of thermonuclear fusion, which is a 1,000 times or more the efficiency and power represented for the same quantity of calories that you get from even nuclear fission.
So, by going up the scale of technology, and science and technology to higher levels of productivity, as long as you keep this factor of the development of the intellectual powers of the labor force moving upward, the labor force will produce innovations, which will increase the productive power of labor, if you invest in them. So therefore, society's policy should be to do that.
The Difference Between Man and Beast
The other side of the policy is, the difference between man and beast, the idea of the difference of the Noösphere from the Biosphere. That is: What's the difference between the human species and an animal species, per square kilometer, for example? No animal can invent an idea, a concept. Only human beings can invent concepts corresponding to the equivalent of physical principles. So therefore, the real source of increase in power, or increase in income, in wealth, real wealth, is the increase in the productive powers of labor, through the equivalent of scientific progress and investment in scientific progress.
Now, the other side is, we're living on a planet which has a very interesting phenomenon, and this is the tough one which I have to present to you, even though it may seen technically challenging: There's a fellow called my dear friend from Russia, V.I. Vernadsky, the man who developed the concept, among other things, of Biosphere and Noösphere, of living processes as against non-living processes, of the processes effected by the human mind, which no animal can replicate. Now, in the animal kingdom—you don't measure animal kingdoms in terms of species as such; you measure the animal kingdom's productivity and potential productivity in terms of groups of living species, and how they interact. This group has then a certain potential for its population, as a whole.
Generally, what happens is, in the animal systems as such, systems tend to equilibrate; that is, they reach a certain level, and they level off, the countervailing effects. With man, this is not the case. Just compare human beings with baboons, or with higher apes. What's their population? They're individuals, they look like a typical politician. Why can't they do the same kind of thing?
But only a human being, only the human mind, is capable of generating an increase in its population above a fixed level of the type you get for any animal species in a specific habitat: only man can do that. This is done by the human mind, because the human mind, unlike any animal mind, is capable of making the equivalent of fundamental discoveries in physical principle, or the equivalent kinds of discoveries. The discoveries are typified by physical science on the one hand, and by Classical artistic composition, on the other. Both are significant: One, physical science applies to things that man operates on. Classical culture pertains to those kinds of activities which operate on the development of the human mind, and the forms of cooperation among human minds.
So, these two things which people do, and no animal can do. Some animals can imitate people, but they can't generate what they imitate. They can imitate it, but they can't generate it. Only the human species is creative in that sense.
Now, living processes are also creative, but there's no consciousness involved. For example, you had once, in Australia, for example, you had all these funny species, pouch-bearers. And then, when mammals came in, the poor marsupials were crowded out, because they were inferior in their performance in their habitats. But this advancement from marsupials to mammals, was an fact of evolutionary development among living species, going upscale. And since Australia was cut off from the parts of the planet where this development was going on of mammals, they were stuck with marsupials. And then when the rabbits came in, which were not marsupials, then Australia had a problem with all the rabbits, which ran loose with no natural opponent.
So, you have a potential development of living species on the planet. There is positive evolution in living species. But this is not deliberate. This is the development process which is built into the anti-entropic tendencies characteristic of living processes.
Now, so therefore, you have three layers in the planet and in the Solar System you have to deal with, in physics. One: are those products which are characteristically not products of living processes. Non-living material. Then you have another character, which has two components; it has, first of all, living processes, and byproducts of living processes. That is, these things may be technically dead, not living, but the forms they take chemically, in terms of the Periodic Table and similar criteria, exist only as byproducts of living activity. Thirdly, you have another thing, which exceeds all potential for either the abiotic domain or for the Biosphere, which is called the Noösphere: Mankind.
So, what happens is—get the picture: You have the planet Earth. The planet Earth has a mass which is about the same amount, or in the same range, at least in rations, that it was when the planet was created, as a product of spinning-off of material from the Sun, into an orbital pathway, probably by induced fusion, with polarized fusion. That is, the Sun, the hot little Sun is spinning around fast, up there, all by its lonesome. And it develops a plane, a planar mass, which surrounds the Sun from which this is spun out, this mass. The radiation from the Sun, hitting this mass reaches the higher equivalent of temperature than in the Sun itself; so this mass goes under a transformation.
Now, you can see it, in terms of the Periodic Table, that is, what are the elements you find in the Sun? And what are elements you find in the material in the planetary system which was produced by the Sun? So the Periodic Table of the planetary system is higher in its development than that of the Sun itself. So there's a development process.
Now, the result is, we're on a planet—Earth—after all these processes that'll add up to that point. And the mass of the planet Earth is relatively about the same it was when it first became a planet. But now, you have three categories of composition of this mass, at least on the surface part of the mass, of this planet. One is the mass of the planet as a whole. Now, it's divided into three components. One component is the abiotic component, presumably the most primitive type of component. The second type is the Biosphere: those elements which were either living processes, or existed only because they are products of living processes. A third—you have a third one, which is the part of the planet's weight which is attributed only to human activity—human beings and human activity.
Now, among the three, the rate of increase of the Biosphere is increasing relative to the total weight of the planet; and the rate of increase of the human area, the Noösphere, is increasing more rapidly than the Biosphere. Those are the conditions for successful life of mankind on this planet. The Biosphere must be increasing, but the Noösphere, the sector which pertains to human activity and human products, must grow more rapidly than the Biosphere.
How does this occur? Well, you have a principle: It's called the law of zero growth. Of entropy. And there is no "law of entropy." Entropy is not a characteristic of the universe. It certainly is not a characteristic of the Solar System. You start with the Sun—a lonely Sun, spinning crazily, looking for a mate, hmm? Out there in space, all by its lonesome, in a fringe area of our galaxy, in the Milky Way. And it gets hotter and hotter, and it begins to spin off material, and it begins to lose its rate of rotation as it spins off material, it sheds some of its own material to try to slow down. In this area where it sheds materials, suddenly, this thing is going into creating new, higher orders in the Periodic Table—as we call it, retrospectively. This material is spun out, it's spun out into pathways, which correspond to the pathways seen by Kepler, in defining the principle of universal gravitation.
In this process, evolution is occurring. Abiotic evolution in the process. Then forms of life emerge. They probably emerge in most parts of the Solar System. Species emerge and develop; they go to higher levels, as the Biosphere. Then, mankind's intervention transforms the whole process, so that we have material which comes from the Sun, largely, which has now gone through this process into planetary orbits. We've landed on Mars and the Earth, in particular, which are very susceptible of being places for life to have existed at one time or another. We have an emergence of a Biosphere on the planet, and probably, we still have a remnant Biosphere on Mars, but a Biosphere on the planet. The Biosphere undergoes evolution; into this process of evolution of Biosphere, mankind suddenly appears, somehow or other. We're not quite sure how that happened, but mankind is there. Mankind now takes over, and mankind has a characteristic which is not characteristic of the others.
Mankind's Conscious Evolution
All three phases are subject to evolution, anti-entropic evolution. Organization in the system is subject to anti-entropic evolution. It's a characteristic lawfulness of the universe, contrary to the Olympian Zeus and his orders. But then, mankind introduces conscious evolution. Mankind, as a species, changes its characteristics, as a living creature, through self-development, intellectually.
What's wrong then with the economy? The economists all assume, most of them assume today: Statistical economics presumes an absolutely abiotic economy! There is no mathematics, there is no principle taught by these economists, which requires the existence of living principles! And when you look at some of the accountants, you realize they are not really alive!
The second layer, you have processes which are alive, which are willful in some ways, but they have no independent will. They have only the ability to adapt to a form of behavior which has willful form. But they can not innovate from within themselves, an absolutely new kind of behavior. Only the human species can do that. And the human species is now driving the evolution of the planet! We are not subjects of the planet: The planets are subjects of us! Because the greatest rate of change in the planet is occurring through the human mind, not through so-called natural processes otherwise.
Now! How does a human being function? You know where the apes are, these days, and some people think we're apes. Some people are credibly seem to be apes. Some are politicians; we don't put them into zoos, we put them into Congress.
But the difference is that the human being is able to willfully transform human behavior, including mass human behavior, in such a way that the power of mankind to exist and to increase his population is inherent in the nature of mankind. What this takes the form of, is the development of the conscious emergence of willful forms of development, what we call scientific revolutions or the equivalent, artistic behavior, Classical artistic behavior—the same thing. We create, the human mind creates in society something that makes a human being implicitly immortal. Yes, the body dies. But the effect of ideas, which are creative ideas of mankind, is immortal.
What do you do in science? In competent science instruction, you relive the act of experiencing a discovery. You don't take little kiddos and stick 'em into university and say, "Learn this, learn this, learn this!" What you do, is, you put them in a special hot-box, and you say, "Discover this! We won't tell you how you do it. We'll give you the parameters, of your job. And you figure out and fork out the answer." All you do, is you put these questions in a certain sequence which makes sense, and therefore you assume that the young kiddos can make these discoveries, one after the other.
So in our case, we, through willful increase in the equivalent of scientific knowledge and Classical artistic knowledge, because that pertains to the way people organize with respect to people—people-to-people relations—are creative in terms of artistic development, Classical artistic development. So, now the human species willfully—by going to higher orders of magnitude, in both in physical action on the planet, and in terms of the way we organize relations among human beings, as in Classical artistic composition—mankind is increasing its power in the universe.
That's how we're able to sustain 6.5 billion people on this planet today. We don't have a billion baboons. We don't have even 100 million higher apes, but mankind looks like a monkey, and sometimes behaves like one. But mankind has changed the nature of Man himself through creativity, and is changing Earth, and actually changing the universe implicitly. Not as something on Earth, not as a product or a secretion of the Earth, but as a power—which we demonstrate by space activity—a power which is capable of transforming the solar system and going beyond. And perhaps that's part of our mission for being human.
So what Galbraith is saying, in a sense, he's saying we are not—we're limiting ourselves to certain bounded assumptions which are not appropriate for our problem. And what is the key? The teaching of the so-called principle of entropy is the killer. Every part of the universe says the universe is not entropic. The universe is self-created; all processes in the universe express continuing creativity. Mankind is a case of conscious creativity—willful conscious creativity.
The Principle of Creativity
And we say that mankind should not be creative. We have the green policy—carbon, carbon, carbon. We have that kind of policy, which is the denial of creativity. When you raise this question, they say "No, no, the law of entropy! The law of entropy!" There is no law of entropy. What you see is where creativity has demonstrated, in U.S. history, and European history, and elsewhere, that Man's creative powers are the way in which Man solves his problems, by which Man advances; by which the condition of the planet advances, and will continue to advance.
And that's what an economy should be. The first principle of an economy is the principle of creativity—of individual, intellectual creativity. Both on the one hand, creativity in dealing with things which are inferior to us, in terms of species, and secondly, with respect to creativity in relationships among human beings, and within the organization of human process itself. And that's what's been missing.
There is no provision for creativity per se, in the economic policies of the United States today. We have a green policy, which is going backwards, getting back to the ape as quickly as possible; and that's what the problem is, and that's what I deal with in my work. And that's what's lacking in our economic policy.
We never really developed a good understanding of the implications of creativity per se, of human creativity. We developed a good approximation. We liked to promote young people, formerly, in becoming achievers in science and related kinds of knowledge. We would be able to recognize, by certain standards we developed, what was progress and what was not. We called this improvement from one layer to the other of progress; we called it creativity. Now, that was not false, but it was not accurate either, because it did not go to the question of principle of creativity itself. But nonetheless, we had the approximation.
So now what are we going to do? We say, "Where are we going?" Well, how do we say where we're going? The planet is going negative; we're dying as a planet. The people who are running the planet don't know what creativity is anymore. How do we expect to organize a recovery, at least a prevention of the collapse of the system the way it's going now? We have to have a consciousness about creativity.
Now, the issue of nuclear power is the test case. The only way that mankind is going to be able to continue to live successfully on this planet, is by going through the stages of fission, the development of fission technologies and thermonuclear fusion. That's the standard; it's not the only thing, but it's the standard. Also, a deeper insight into what was defined as the biosphere by Vernadsky. To think in those directions, instead of taking the happenstance of good ideas, and arranging them in a certain sequence, we've got to have more insight into what the connection is among these successive stages that we recognize individually as being advances. We have to order society so that we have, for example, investment of any significance today, as we become more dense in our intensities, more capital intensive. We have to make investments which are in the order of a hundred years.
For example, a mass transportation system and great water systems, are 100-year investments. Other investments, like a nuclear power plant, is at least a 50-year investment. You can't go much better than that these days; maybe we can later. But all these things involve investments which are measured on the scale of either a generation, or a multiple number of generations, or at least, a half generation. An investment in a plant or an industry is a half-generation investment in terms of its basic cycle.
So therefore, we have to look into how do we look forward? We don't say, how do we react to what happened yesterday; how do we react to what we must achieve 50 years from now? How do we react to the obligation to reach that 50-year point ahead? And do it in such a way that we know we're going to progress. And that's where the problem lies. We don't have a conception of what it is to be human; really. We know what human is, as we meet people on the street, or in life generally. We can tell the difference between a monkey and a man. We still can do that; that hasn't been taken away from us yet. But we don't have a conception, and we're not taught those conceptions in universities today, which, even in former times, tended to guide us as to what progress was. And to recognize what the lack of progress represents.
Now we think the lack of progress is a virtue. Going backwards is a virtue; going back from the steam engine, back to a solar collector or something, which costs more to build than you get out of it, in point of fact.
So, therefore, we have lost that. What we lack is economists and statesmen who are able to do more systematically than we've done before, what the greatest statesmen did in the past, as the work of the United States, which led to this great revolution in the middle of the last century—or the previous century—I'm getting getting a little bit old now. I've gone through another century since I was born.
Thinking Centuries Ahead
So that's our situation. We don't have a sense of even the ordering of this kind of progress, the imagination that we used to have as an inspiration, which became known as the American method. We've gone backward, but that's not even good enough. We need a much more systematic conception.
For example, we have to think about how we develop the infrastructure of the planet. That's a 100-year to a 500-year investment. We have to think ahead, centuries, because we're going to transform this planet physically, its characteristics of its surface, physically. We're talking about investments which are four to five generations or more in advance. We cannot step on our own feet all the way, so we have to have a policy which we know will stand up scientifically for these kinds of advanced periods. We don't have it.
And that really is the point of Galbraith's point. We have to look beyond the reality of our immediate experience, and our past experience. We have to say, the present lessons and experience are not reliable for us; we have to look further into the future, and that's what's lacking. We have to define from the level of the Federal government. Because the United States as a nation is going to have to commit itself to certain long-term changes in policy.
How are we going to get rid of the garbage? We've got a lot of garbage of various kinds. How are we going to build the kind of systems that we know will stand up 100 years from now, or 200 years from now, as sound investments in building the future? And we have to have economists who think in terms of these kinds of conceptions, who think as the example of the work of Vernadsky typifies. We can look to the future, we can have a sense of what is a sound direction to go in now, as to the effect it will have on the future. And we have to go with the idea that this has to be coupled with an increase in the productive powers of labor, so that in respect to human needs, we are able to increase the rate at which we advance in capacity to meet human needs.
This is typified for us by the case of Africa. I looked recently at a study on Africa, which was done from the level of helicopter flights. And they took the entire continent of Africa and gridded it. And you had a shot of each grid, as you flipped these big charts, grid after grid. And what do you see? What you see is the most atrocious lack of development imaginable. When you see it in this form, you want to vomit. Where's the railroad? Where's the highway? Where's the city? Where are all the things we know that are required for a European standard of living? The thing's horrible! Just a few areas are developed as local areas for some parts of the population.
Africa has been looted! It's ruined! The British Empire has committed one of the greatest crimes of its existence, in its damnation of Africa. We've got to get the British out of Africa, otherwise the Africans can't live there. The British are the disease. Get the British out, and the disease may be cured.
But, that's our problem. We don't think in these terms. We don't think in the terms of the future, and that's, that's my business. But because I can do that, in my own way, and have done it in my own way, and I've been successful in forecasting on this basis of this, and knowing what the effects are of not doing it, I know it can be done. And what the problem is, as Galbraith has put it forward: The problem is that there's another part which we neglected. The part we haven't touched; the part we've overlooked by our existing assumptions. And what this President needs, is an economic policy with a vision of the future.
What does that mean, in a sense? Most of our investment today, in the future of the United States, will be capital investments in basic economic infrastructure. We have to take, for example, the water system of the central United States; that is, the area which has the Mississippi running down through the middle, and you have the Rocky Mountains on the one side, and the Alleghenies on the other. It's the major system of the United States. Coming out of the Great Lakes and downward, this movement of water. Now, managing this movement of water, and also making sure that we have water tables which are up to standard. That is, refilling these water tables and maintaining them, is crucial. So, there is no question that we should be investing in a long-term commitment for what we have been neglecting in terms of this system—the river system, the water system, the aquifers—between the Alleghenies and the Rockies. We should be doing that.
All these cars driving around where they are, it's insane; it's insane. The economy has gone backward as a result of all this mode of travel on highways as a way of living. We need mass transportation; we need a system of mass transportation which is efficient, and clean. We can have it. Okay, what's a safe investment for the next 50 years, the next 100 years? We need new power systems, a safe investment for the next 100 years. A series of these investments, to change the character of things. We need to rebuild and reorganize our cities. We need to stop the big, giant corporations which are failing us now, like General Motors. We need to promote smaller corporations, which may be corporate in form, but we distribute these more readily, so that every part of the country has a number of industries in each area, which are its characteristic industries, and people don't have to commute two hours a day each way, to get to and from work, or other conventional travel. We can make those kinds of decisions. We know we need power; we know we need high-density power. We know we have a water shortage; we're running out of fossil water. We know the aquifers are being collapsed. And it's from the industries that you generate, by dealing with these problems of infrastructure, that you create the new industries that you need.
In other words, you don't start creating industries. What you do is, you take the major infrastructure which you need in order to develop the industries, and you use the development of that infrastructure with the intent of promoting the possibility of the effects you are trying to create. And that's the way we have to go. And we have to go that way, based on the fact that we're raising the level of technology, we're raising the scientific level of technology, and the application of technology, constantly. And if we're doing that, that means that we know in advance that we're going to be increasing the amount of product we produce, relative to the product we consume. You know that you're building in a physical profit into the operation of the U.S. economy, and you can do the same thing on a world scale.
Stop the Bailout!
And the Administration should be able now, with people who think, as implicitly Galbraith indicates, a policy which is based on the assumption of growth of technological progress, scientific and technological progress. We can do that. And if the Administration cuts all the crap out, takes all the crap out of its budget; puts these things through bankruptcy reorganization: Don't try to bail them out! Stop the bailout! We can do that, what our job is. And what my concern is, is to guide the present Administration away from these swamps which it is being pushed into, and take this view that the Obama Administration, can now use the fact of the crisis, to put through the kinds of policies, long-term policies which can only be put through in this way, through a sense of crisis.
The American people, by and large, have no love for Wall Street. They have almost no love, or negative love, for what's in the Congress right now. The hatred of operations on the Federal level is beyond belief, and it's increasing at an accelerating rate. Ordinary people out there are ready to kill, because nothing is working. Everything that's valuable to them, is being taken away from them; they're being robbed, and they can't trust anybody. And if the President of the United States can demonstrate that he can be trusted, and trusted in terms of taking forms of actions which are going to change the direction in which we're going now, he will have full support.
I think that's what Galbraith is saying, in one sense or another, and I give him credit for being the first in his position to say it. And on that basis, I think we can win; I think we can beat this thing. It's our last chance, and I'm determined you're going to take it.
 Galbraith's 10th comment:
[Roosevelt's] government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown. It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.
In other words, Roosevelt employed Americans on a vast scale, bringing the unemployment rates down to levels that were tolerable, even before the war—from 25 percent in 1933 to below 10 percent in 1936, if you count those employed by the government as employed, which they surely were. In 1937, Roosevelt tried to balance the budget, the economy relapsed again, and in 1938 the New Deal was relaunched. This again brought unemployment down to about 10%, still before the war.