Promoting Plutocracy: U.S.-Led Regime Change Operations and the Assault on Democracy

January 11, 2015

By Stephen Gowans

Chapter 1. What the West’s Position on Iran Reveals about its Foreign Policy
Chapter 2. Democracy
Chapter 3. Foreign Policy and Profits
Chapter 4. The State in Capitalist Society
Chapter 5. Concealing the Influence of the Corporate Elite on Foreign Policy
Chapter 6. Syria: Eradicating an Ideological Fixation on Socialism
Chapter 7. Ukraine: Improving the Investment Climate
Chapter 8. Kosovo: Privatizing the Economy
Chapter 9. Afghanistan: Investment Opportunities in Pipelines and Natural Resources
Chapter 10. The Military-Industrial Complex, Foreign Aid and Marionettes
Chapter 11. How Foreign Policy Hurts Workers
o Divide and Rule
o Socializing the Costs, Privatizing the Benefits
o The Assault on Substantive Democracy in Korea
o The Terrorism of the Weak
o Bulking Up the Police State
o Obviating the Terrorism of the Weak
Chapter 12. The West’s Foreign Policy Priorities

Do As We Say

Jobs—which people desperately need—are promised as the fruit of indulging “job creators,” by giving them what they want. Cheap labor. Low taxes. Bare regulation. No obligations.

Needing jobs, wage-earners are inclined to go along.

The threat of joblessness is even used as a cudgel to bully employees into voting for the employer’s preferred political candidate. David Seigel, CEO of Westgate Resorts, makes an eloquent—though unintended—case for why enterprises ought to be brought under public control, and not left in the hands of private tyrannies. In a memo to his 7,000 employees, Seigel wrote:

“The economy doesn’t currently pose a threat to your job. What does threaten your job, however, is another four years of the same presidential administration. If any new taxes are levied on me, or my company, as our current president plans, I will have no choice but to reduce the size of this company.” (1)

Seigel is over-reacting to how an Obama victory, if it happens, will affect him and his fellow executives. Obama threatened in 2008, as he has in 2012, to raise taxes on millionaires and billionaires. He has yet to keep his 2008 promise. If he wins, it’s doubtful he’ll keep his 2012 promise.

Still, Seigel’s attempted extortion is a real-world version of a satirical oil company ad Saturday Night Live ran many years ago. “Do as we say,” the ad warned, “and nobody gets hurt.”

The Canadian government, too, is in on the game, but uses a carrot (do as we say and you’ll find work) rather than a stick (vote as I say or you’ll lose your job.) What the Canadian government wants Canadians to do is welcome foreign investment (though, as we’ll see, not all of it), in order to enjoy a bounty of jobs.

Capital is not scarce in Canada, which makes the emphasis on foreign, rather than domestic investment, a bit odd.

What’s more, the keen courting of private investment by governments, and the complete exclusion from consideration of public investment, is odd too, since there’s nothing inherently superior about private investment. Indeed, for the bulk of us, it’s unquestionably inferior.

Public investment means that productive assets can be used for public purposes—redounding to the benefit of all, rather than the welfare of a wealthy few. And, a job created by public investment is as much a job as one created by private investment.

So, why the emphasis of private investment?

Because it isn’t good for people with gobs of private capital to invest. And they wield enormous political power.

Private investors use their wealth to dominate governments, through lobbying, the funding of political campaigns, control of the mass media, and by placing themselves—and their loyal representatives—into key public sector jobs.

This is no less true in Canada than the United States. Anyone who has read The New York Times recently will have come across dozens of stories about the super-rich making major political campaign contributions, and about the domination of Congress by millionaires and the paucity of anyone with a blue-collar background in public life. The investing class dominates the state, and public policy reflects its interests. (2)

All to say that government officials, in either the United States or Canada, aren’t creating “business-friendly” conditions in order to create jobs, much less well-paying ones. They’re doing so to enrich private investors, who have their ear, who lunch at the same clubs, studied at the same exclusive schools, and travel in the same circles.

This is clear in Ottawa’s recent decision to block the Malaysian oil company Petronas from buying Canadian gas producer Progress Energy Resources Corp, despite touting the benefits of foreign investment, declaring Canada “open for business,” and promising a bonanza of foreign investment-generated jobs.

The problem is that Petronas isn’t owned by super-wealthy private investors. It’s owned by the Malaysian state. And that, apparently, makes all the difference. “The concern,” revealed an unnamed Canadian government source, “is making sure we’re not allowing Canadian resources to become part of another state’s geopolitical goals.” (3) So much for jobs.

We might wonder, however, why there’s no equivalent concern in Ottawa about not allowing Canadian resources to become part of the profit-making goals of private investors. After all, the point is that Canadian resources aren’t being used for the benefit of Canadians en masse, whether they’re in the hands of a foreign state-owned oil company, or a private one.

The reply might be that private investment creates the benefit of jobs for Canadians without at the same time serving another state’s geopolitical goals.

However, the question of whether jobs are created depends on the nature of the investment. Greenfield investment—the building of new factories, the opening of new mines, the creation of new oil fields—creates new jobs. Brownfield investment—transferring ownership from one set of hands to another—does not. On the contrary, brownfield investors often restructure the companies they buy, a process which almost invariably leads to the sacking of thousands of employees. As it turns out, the blocked Petronas deal was more of the brownfield than greenfield sort.

Of course, that’s not why Ottawa blocked the deal. As an instrument of private wealth, the Canadian government looks after the interests of private investors as a class. And if that means reserving Canada’s natural resources as an exclusive sphere for the enrichment of private investors, while duping Canadians into believing that handing over the country’s resources to private wealth on favourable terms will relieve them of the miseries of actual or threatened unemployment, so it will be.

But this is hardly a favourable arrangement for the bulk of Canadians, who can own, develop and benefit from their resources collectively. They don’t need rich foreign investors to create jobs.

Does David Seigel ever wonder that one day the majority from which he and his cronies have squeezed their millions and billions might tell him, “Do as we say and you won’t get hurt?”

1. Steven Greenhouse, “Here’s a memo from the boss: Vote this way”, The New York Times, October 26, 2012.

2. On the severe underrepresentation of people of blue-collar backgrounds in US public life see, Nicholas Carnes, “What millionaire are you voting for?” The New York Times, October 13, 2012.

3. Steven Chase and Shawn McCarthy, “Conservatives work to clarify foreign takeover policy”, The Globe and Mail, October 23, 2012