Che and Evo: ¡Hasta La Victoria Siempre!

As the wide scale release date for Steven Soderbergh’s new film, Che, starring Benicio del Toro as Ernesto “Che” Guevara, draws near, the second half of the movie, Guerrilla, needs to be placed in a proper historical context.  The first half of the movie has a more accessible plot considering the general populace is more familiar with the Cuban Revolution. But what about Bolivia during Guevara’s involvement there?  What about Bolivia today?  The small South American nation seems to be left out of worldwide political discourse for the most part.  Soderbergh’s biopic about the radical ideologue will certainly increase awareness not only about Che and Marxism, but also his continuing struggle that is embodied by current Bolivian president, Evo Morales.

Che is concerned mainly with two pinnacles of its namesake’s existence.  The first half of the film, The Argentine, covers the Che’s involvement in the Cuban Revolution alongside Fidel Castro.  The latter half, Guerrilla, follows Guevara’s final revolutionary attempt in Bolivia.  His endeavor eventually fails, and he is executed for his subversion.

Guevara’s activities in Bolivia came during a time of quasi-military rule under President René Barrientos of the Revolutionary Nationalist Movement. The Barrientos administration attempted to maintain popular support within the peasantry while blatantly serving foreign interests, mainly the United States.  The president had initially come to power through an armed coup d’état in 1964 while he was serving as vice-president.  He would later be elected with help from the military.

After recovering in Prague from a failed revolutionary effort in the Congo, Che began to meet with Bolivian dissidents in late 1966 or early 1967.  With a band of Cuban soldiers and supplies from Havana, Guevara made his way to the Ñancahuazú region of Bolivia where a military training camp was set up.  There he began to recruit and train Marxist-sympathizing peasants.  The recruiting process was largely unsuccessful given that the Communist Party of Bolivia did not support his guerrilla movement.

In total, a ragged band of about 50 guerrilla warriors began an armed assault against the Bolivian army.  They won a few small victories throughout 1967, but the tide turned against them as Barrientos, with help from the CIA, took a strong stance against Guevara’s efforts.  Guevara’s small forces were quickly encircled by the Bolivian military and subdued in October of 1967.  Che himself was captured and placed in a schoolhouse where he was later executed. Reportedly, his last words were “shoot, coward, you are only about to kill a man.”  The execution had been ordered by President Barrientos himself.

Barrientos’ decisions surrounding the quelling of Guevara’s movement and his local supporters would eventually lead to his political demise.  During the onslaught against Che’s troops, a group of Bolivian miners came out in support of the insurgency.  Barrientos sent soldiers to extinguish this spreading sentiment.  This resulted in the soldiers massacring approximately 30 civilians of both sexes.  His authoritarian actions in both situations led to the loss of what popular support he still had.  In order to regain his popularity, the president took to traveling around the Bolivian countryside and explaining his actions.  While on this journey, Barrientos perished in a helicopter accident in 1969.  The country then plunged into decades of political and economic turmoil that lasted until the early 1990s. The political situation remains unstable even today.

Che’s gift to Bolivia would not be his dream of a violent revolution, but his socially progressive ideals.  He also encouraged anti-capitalist sentiments within the largely indigenous populace.  These concerns would later form the basis for the backlash to neoliberal globalization and neocolonialism imposed by the international community.

Evo Morales was elected to the presidency of Bolivia on December 4, 2005.  Since then he has carried on a legacy that began in his country with Che.  He is the first indigenous president of Bolivia and is seen by many as the first step to throwing off the shackles of Western imperialism.  He raised the minimum wage by fifty percent soon after his election.  In a landmark move, he partially nationalized Bolivia’s natural gas reserves, the second largest in Latin America after Venezuela.  In doing so, he has exponentially increased the amount of capital available to the national government.  This has allowed Bolivia to heavily invest in social welfare programs, which have been largely successful; as of December 21, 2008 Evo Morales has declared Bolivia an illiteracy-free region.

Despite Morales’ success and popularity, in early 2008 there was an autonomy movement in the Santa Cruz regions, the wealthy area of Bolivia, which was instigated by wealthy oligarchs.  This move led to rioting, which was reportably supported by the US ambassador to Bolivia.  The ambassador was promptly expelled from the country for his alleged subversive position. Venezuela’s president, Hugo Chavez, in a show of solidarity with Morales, also expelled the American ambassador to Venezuela.

The US “War on Drugs” has also been a point of contention for Bolivian policy as the coca leaf is a traditional herb used by the indigenous people there as a remedy for altitude sickness and as a mild stimulant.  Morales, a former coca farmer and union organizer, has allowed for more legal production of the plant.  In response to this action, the United States has placed Bolivia on its narcotics blacklist and has stopped all aid to the poorest nation in South America.

All of these events culminated in an unsuccessful attempted coup against the Morales government in 2008.  The coup may have been tacitly supported in my opinion, although not very vocally, by the government of the United States.  Unanimously, the leaders of every South American country came out in support of the Morales government, and Hugo Chavez pledged military support for his political ally.  The coup failed, but some of the regions were granted a level of autonomy as a result of the coup attempt.

The rejection of US authority when viewed with Guevara in mind can be seen as a continuation of his beloved revolution.  Although for now, mass bloodshed has not been necessary to attain progressive goals in Bolivia, the future is uncertain. Recent declines in worldwide commodity prices put many of Morales’ social programs in jeopardy. This has the potential to lead to tumultuous times not only in Bolivia, but also throughout Latin America. Time will tell whether a socialist democracy can survive such an economic shock. As such, history will either view Guevara and Morales as idealistic failures or heroic humanitarians.  As for me, I’ll hope for the latter.

Republicans, Real America, and S&M

John McCain’s arguments about Barack Obama’s tax plan rely upon a misunderstanding of how taxes work, in much the same way intelligent design proponents rely on a misunderstanding of how evolution works in order to get people to believe them. The Internet would call this tactic “FUD,” which stands for “Fear, Uncertainty, and Doubt,” and it is largely the way McCain has run his campaign. By planting fear of Barack Obama (he “pals around with terrorists”), uncertainty about Barack Obama (he’s inexperienced) and doubt about Barack Obama (he hasn’t even done anything significant in his time as a senator) in the minds of American voters, McCain can focus more on the qualities Obama lacks than the qualities that he, McCain, possesses.

On Meet the Press Sunday, McCain said that “CEOs” of companies like FedEx pay a 35% marginal tax rate. This is an intentionally misleading statement; CEOs do not personally pay any taxes for their companies. A “corporation” is created for the purpose of doing business without fear of personal liability. If the corporation incurs debts, then it is the corporation that is liable for those debts; the personal assets of the employees of that corporation cannot take the place of the corporation’s assets.

The separated assets of the company and its employees mean that the company doles out salaries to its employees. The corporation has a payroll, and employees – which includes CEOs and other executive officers – are compensated out of that payroll budget.

CEOs pay 35%? No, “CEOs” don’t pay 35%. Their companies pay 35%. They don’t personally pay anything, except their own personal taxes. A company pays 35% on its revenues. A person pays depending on his salary. Now, a business owner may decide how much to pay himself as an employee, but that does not change the fact that what the business makes and what the owner makes are separate things. As Obama has observed, 90% of small businesses make less than $250,000 and are therefore incapable of paying their owners an amount that would cause the owners’ taxes to go up. How many small business owners do you know who pay themselves more than $250,000? And if a small business owner does personally make more than $250,000, then he can certainly afford the tax increase. That’s the point of a graduated, or progressive, tax: the marginal tax rate increases as income increases because people who make a lot of money can afford to pay more than people who don’t.

The argument behind giving tax cuts to people who make a lot of money is that they are in a better position to take that tax cut money and purchase things or reinvest that money in the economy. This is called “supply-side” economics because it works on the side of people who, theoretically, provide the economy with goods and services; i.e., business-owners. Give business owners more money and they will employ more people – that is to say, people on the “demand side” of the economy. This is often referred to as “trickle-down” economics because the benefits of tax cuts given to the people at the top (in terms of income) will eventually trickle down to the people at the bottom (in terms of income).

Whether or not the trickle will ever come is unknowable. In the last eight years, we’ve seen the wealthiest classes increase in size, while the middle class has decreased in size. In 2007, the median household income in the United States was $50,740. 4% of households made $200,000 or more. 18.9% of households made between $50,000 and $75,000. In 2000, 2% of households made $200,000 or more, while 19% of households made between $50,000 and $75,000. On average, American households as a group have become wealthier, but only a small group of people has actually been the beneficiary of that wealth.

Obama’s plan to “spread the wealth around” sounds very much like the system Marx envisioned: “From each according to his abilities, to each according to his needs.” The question is, what’s wrong with that? To criticize a plan as “Marxist” is to deploy an ad hominem attack, an attack that addresses the person arguing but not the argument itself. Calling a particular tax plan “Marxist” does not address the argument: okay, if it’s Marxist, what does that mean? What’s wrong with that? Conservatives use “Marxist” as a proxy for “bad” without ever mentioning what is actually bad about the plan.

S&M

The “S&M” from the title of this article, as you probably guessed, is not that S&M. It’s socialism and Marxism. The word “socialist” has been bandied about of late with regard to tax plans and bailouts of the banks. Either through willful or deceptive ignorance, the people who throw this word around ignore the extant socialist components of our economy. We have a government that collects taxes at all; we have regulatory agencies that limit the things that businesses can do; we even have socialized health care in the form of Medicaid (government health care for impoverished people), Medicare (government health care for the elderly), and the Veterans Administration. Yes, our American veterans, who spent their lives defending our freedoms, are beneficiaries of socialism! Any veteran can walk into any VA hospital anywhere in the country and get treated. And you, the taxpayer, are paying the bill.

Even Alan Greenspan, champion of capitalism, was hypocritically in charge of a government-chartered bank that holds tremendous influence in the free-market economy. And he never once denounced that institution.

There was a time in American history when the economy was more capitalist than it is today. Do you remember having to memorize, in American history class, all of the various “panics” that occurred from 1789 to 1945? Every ten to twenty years, there was a “panic” that crippled the U.S. economy. Each successive panic resulting in either the passage of legislation designed to stop whatever activity caused the panic or an infusion of cash by the government. The Panic of 1907 was notably stopped by J.P. Morgan himself, whose company injected money into the economy to keep it going. The Federal Reserve Act was passed into law six years later, creating the modern-day Federal Reserve system.

The Federal Reserve System helped put a stop to regular panics, but even more important was the influence of a British economist named John Maynard Keynes. Prior to Keynes, the government was viewed by politicians and policy-makers as just another consumer. The government bought things from private industry, entered into contracts with private industry, and collected taxes. But it was still seen as being on par with a consumer or company. And as such, conventional wisdom dictated that it should act like a private company or citizen. When the Great Depression began in 1929, Herbert Hoover’s response was to cut spending and raise taxes. For an individual, this would seem to make sense: when faced with declining revenue and a worsening economy, cut your spending to save money. Raise your taxes (if you’re the government) to increase the money you can bring in.

But that only made things worse. The government, said Keynes, is far more powerful than any single consumer or corporation. With its essentially unlimited capacity to borrow money, the government can influence the economy in ways that individuals cannot. In a time of crisis, the government should cut taxes and increase spending in order to inject money into the economy. Even though this will cause the government to incur a deficit, it should be done in order to repair the economy. When the economy recovers, the government should decrease spending and raise taxes in order to pay off the debt it incurred during the recession. This process of government intervention is known as Keynesianism, and it has been employed by the U.S. government since World War II. And guess what? No more regular panics. The first economic depression since World War II was the oil crisis of the 1970s, caused by a combination of inflation and recession (something that economists didn’t think was possible, by the way).

These calls of “socialism” fall mostly on ignorant ears. Socialism is already here! If you pay taxes, you’re engaging in socialism. The question is, what degree of socialism are we talking about? Some countries have national monopolies that are endorsed or partly owned by the government. Think of Telefónica in Spain, Petróleos Mexicanos, or Petróleos de Venezuela. The United States would have to go a long way toward purchasing ownership stakes in our industries. Although, at least one industry – the railroads – are partially owned by the government. The U.S. government took control of the railroad system in the late 19^th century in order to cut down on corruption. Today, the government still owns the railroads, but not because of corruption. It’s because the costs of running railroads are so high that railroad companies would go bankrupt without government support.

Socialism is alive and well here, and it’s helping Americans in ways that they may not be aware of.

Cristina’s Folly: A Billion Here, A Billion There

The Economist.com in an October 23, 2008 article entitled Cristina’s looking-glass world reports that Argentina President Cristina Fernández de Kirchner has a plan to nationalize private-pension funds that looks like a cunning, shortsighted effort to stave off another Argentina debt default. While Ms. Fernández claims that she is protecting “our workers and retirees,” many economists and opposition politicians fear that the government’s intention is to raid the pension funds to fill a widening national fiscal hole. The private-pension funds have assets of $30 billion and are the largest investors in Argentina’s depleted capital markets. The demise of the private-pension funds would make it far harder for local firms to raise money.

The concern is that Ms. Fernández is likely to give priority to the short-term claims of the public finances at the expense of impoverishing Argentines and their children in the future. Such a fear of government legally looting of funds designated for other purposes is a problem in the United States as well. For example, currently, Social Security tax surpluses exceed government expenditures on social security, allowing the government to legally loot the surpluses and spend them on non-Social-Security related priorities, thereby depleting Social Security assets, which will exacerbate the projected Social Security deficit in the coming years.

Another issue related to United States policy is Argentina’s agreeing to assume all liability (in the many billions) to citizen pensioners for their pensions. An analogous situation is where the United States through perhaps necessary but socialistic corporate welfare agreed in the Emergency Economic Stabilization Act of 2008 for a bailout of the U.S. financial system. The glib answer is that the U.S. is not economically unstable like Argentina and can therefore afford to take on unreasonable debt in bailouts and unnecessary war and not suffer any adverse credit standing. This road is the economics of the ostrich with its head in the sand. According to Matthew Benjamin, the $700 billion bailout will push the national debt to the highest level since 1954, to more than 70% of GDP. Every citizen’s share of this higher national debt is $37,000 per person.

The late Senator Everett Dirksen of Illinois used to say relative to government expenditure: “A billion here, a billion there, and pretty soon you’re talking real money.” The new spendthrift government motto, while profligately sliding down the bottomless pit of debt expansion with unnecessary war and with bailouts caused by government oversight incompetence is: “A trillion here, a trillion there, and pretty soon you’re talking real money.”