Israel, the 51st State?

AlterNet / By Alex Kane

 30 COMMENTS

How the GOP Is Courting West Bank Settlers to Vote for Mitt Romney

Republicans are using President Obama's policy toward Israel as a cudgel to score political points and woo Jewish voters and donors.

July 23, 2012  |  

 

Photo Credit: Shutterstock.com

 

 

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Critics of the Israel lobby’s influence in US politics often say, tongue-in-cheek, that Israel should be named the 51st state. But this presidential election season, that sentiment comes close to the reality of how the Republican Party is treating the country. Israel, like the 50 states in the US, will be a source for votes and money and a backdrop for presidential campaigning.

The Republican Jewish Coalition (RJC) has partnered with an Israeli group to encourage Israelis who are American citizens--including West Bank settlers--to vote in the 2012 elections. The effort is also being promoted by a group called Republicans Abroad Israel. The partnership, and presidential candidate Mitt Romney’s plan to visit Israel in late July, makes clear that the Republicans will use President Barack Obama’s policy towards Israel as a cudgel to score political points and woo Jewish voters and donors -- though most American Jews vote Democratic. The politicking about how Obama is an “anti-Israel” president obscures the reality that Obama has not touched the sacrosanct US-Israeli alliance and has continued to lavish aid and diplomatic support to the Jewish state.

Approximately 250,000 American citizens live in Israel--and many of them lean right. According to the Los Angeles Times, 75 percent of Americans in Israel voted for John McCain in the 2008 election, essentially the same share of American Jews who voted for Obama overall.

RJC and a group called iVoteIsrael, whose mission is to encourage Americans who are also Israeli citizens to vote in US elections based on “who will support and stand by Israel,” held a number of events in Jerusalem in early July promoting their campaign. RJC executive director Matt Brooks and Ari Fleischer, an RJC board member and the former press secretary for George W. Bush, were the ringleaders of this effort, and they wasted no time criticizing Obama’s Israel policy.

“The choice is between pushing Israel around as President Obama has done, and Governor Romney, who will stand strong by Israel’s side,” Fleischer told an audience of Israeli-American voters. He also told them that “there is a possibility that a large number of absentee ballots coming into Florida, Pennsylvania and Ohio can make the difference.”

While RJC and Republicans Abroad Israel are clearly partisan, iVoteIsrael claims that its effort is nonpartisan. But the Times of Israel reported that “key staffers [of iVoteIsrael] have been closely affiliated with right-wing parties in Israel, the US and elsewhere.”

iVoteIsrael’s ideology is clearly right-leaning--you only have to look to where the organization’s “regional directors” and “drop boxes” for registration forms are located to find that out. A number of locations iVoteIsrael works from are in illegal Jewish-only settlements that are seen as violating Palestinian human rights and blocking a contiguous Palestinian state. iVoteIsrael locations include Ma'ale Adumim, a major Jewish settlement outside of Jerusalem, and Gush Etzion, another major settlement.

iVoteIsrael’s strategy, and its links to American settlers in Jerusalem and the West Bank, comes as no surprise to MJ Rosenberg, a former employee of the American Israel Public Affairs Committee and a blogger who now criticizes the Israel lobby.

“They’re people living in places the US thinks are illegal,” said Rosenberg, referring to longstanding US policy that Israeli settlements are illegitimate. “Mitt Romney speaks to the settlers, and the Republican Party speaks to the settlers.”

Rosenberg has also criticized iVoteIsrael for what he called an “anti-Arab” videoproduced by the organization. In the video, the narrator warns that “an Arabic campaign poster rallied the Arab New Jersey community” in a close congressional race and defeated a “a defender of Israel.” Congress may not always be “reliably pro-Israel,” so “we Americans in Israel...[can’t] let them win.”

The RJC/iVoteIsrael effort is only the latest ploy to drum up support for Romney on the issue of Israel. Romney, who has boasted about his friendship with Israeli Prime Minister Benjamin Netanyahu, has repeatedly criticized Obama’s record on Israel. He famously said that Obama “threw Israel under the bus” for saying that the 1967 borders (with land swaps) should be a starting point for negotiations between Israel and the Palestinians, despite the fact that this is the international consensus and the position of the US since Lyndon Johnson's presidency. Funding Romney’s super-PAC with millions of dollars is Sheldon Adelson, a right-wing casino mogul with close ties to Netanyahu and an ardent opponent of a Palestinian state. Adelson also sits on the RJC board. And other Romney campaign fundraisers have formerly supported Obama but flipped to Romney over the issue of Israel.

The Romney campaign recently announced that its candidate would be traveling to Israel in late July. A $50,000 per plate fundraiser was scheduled in Jerusalem, but had to be rescheduled because the chosen date coincided with a Jewish day of mourning.

But Romney and the Republican Party’s rhetoric wholly distorts Obama’s record on Israel. While the Obama administration voiced criticism of Israeli settlements in the beginning of his term, that rhetoric has largely disappeared after pushback from the powerful Israel lobby. Ehud Barak, the Israeli defense minister, has said that “the Obama administration is backing the security of Israel...in a way that could hardly be compared to any previous administration.”

Regardless of the facts, the Romney campaign and RJC are trying to outflank Obama on the right on Israel. And they’re stooping so low as to court Americans who live in illegal settlements that stated US policy regards as an obstacle to peace.

Alex Kane is AlterNet's New York-based World editor, and a staff reporter forMondoweiss. Follow him on Twitter @alexbkane.

How Big Banks Victimize Our Democracy

By Bill Moyers
 -
Matt Taibbi and Yves Smith discuss the folly and corruption of both banks and government. Also, Peter Edelman on fighting U.S. poverty.

JPMorgan Chase CEO Jamie Dimon’s appearances in the last two weeks before Congressional committees — many members of which received campaign contributions from the megabank — beg the question: For how long and how many ways are average Americans going to pay the price for big bank hubris, with our own government acting as accomplice?

On this week’s Moyers & Company, Rolling Stone editor Matt Taibbi and Yves Smith, creator of the finance and economics blog Naked Capitalism, join Bill to discuss the folly and corruption of both banks and government, and how that tag-team leaves deep wounds in our democracy.  Taibbi’s latest piece is “The Scam Wall Street Learned from the Mafia.” Smith is the author of ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.

Meanwhile, for anyone who wants to understand why, in one of the richest nations in the world, so many poor people are teetering on the edge, author and advocate Peter Edelman talks about continuing efforts to fight poverty, and what it will take to keep the needs of poor people on the American political agenda. A former aide to Robert F. Kennedy and faculty director of Georgetown University’s Center on Poverty, Inequality, and Public Policy, Edelman’s new book is So Rich, So Poor: Why It’s So Hard to End Poverty in America.

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Is The Occupy Movement Justified?

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By Timothy V. Gatto

Countercurrents.org

We all know that the economy is a mess. The public's perception of how bad the economy really is, and what is in store for us in the future, varies from one individual to another. One continuous perception that is reported on is that during the great depression, the majority view was that things would get better, that manufacturing jobs would come back, and that better times were ahead. These viewpoints are not held, according to different polls, by the American public today.

Americans have seen our manufacturing sector shipped overseas mainly to take advantage of cheap labor and also because of more liberal oversight of government regulations. 

Working conditions are not regulated as much, unions are either non-existent or ineffective, and the cost of doing business is much lower overseas. It is really not too difficult to see why our manufacturing base has been outsourced.

Most corporations are now trans-national. Companies that were once American owned and operated are now have board meetings with board members from every continent. There is no loyalty to any one nation in much of the corporate world. As the global economy changes however, and the United States escapes the financial crisis that is plaguing Europe with the collapse of many EU members economies, it may become an asset to remain in the US.

Asia and Latin America have become players in the new world economy. As Europe gradually becomes fractured, new opportunities appear in nations that have healthy economies such as the BRIC nations (Brazil, Russia, India and China along with nations such as South Korea, the Philippines and others). The competition is fierce. The United States, while still the world's largest economy, can take nothing for granted the way it did in the twentieth century.

It's a given that both the workers in the U.S. and the employers must face a new reality. The main problem that faces the U.S. is unemployment or under-employment. Young people graduating from college are finding that getting a job is tough. Getting a job that matches their degrees is even tougher. Many people hold the corporate sector accountable for unemployment, but it is much more complicated than that.

The sad truth is that since 1970, the pay of the American working class has been more or less stagnant, while productivity has skyrocketed. This is a new model for Americans. In the past, as a company made money, the workers also made money. This is not the case since the 70's.

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000. ( Crooks and Liars )

The wages of the American worker since the 70's has risen approximately 15% while productivity has risen approximately 82%. Factors such as automation on the assembly line and computers in the personnel department have contributed to this. These factors also can be figured into job losses overall, this means less people on the assembly line and less people in the personnel department means fewer people on the payroll.

According to IPS, American CEOs make 263 times the average compensation for American workers, up from the 30 to 1 ratio in the 1970s. For comparison, the average compensation of a Japanese CEO is less than one-sixth that of their American counterpart and 16 times more than the average Japanese worker.

So who is making money in the world's largest economy? What sector is the wealth going to? 

Here are some facts that The NY Times doesn't put on their front page. In 2007 according to a University of California study, the top 1% received 346% of the income in the US, while the next 19% got 50.5% and the bottom 80% received a huge 15%. That means that the top 20% received 85% of the nation's wealth. The top 1% average $380,354.00 and the bottom 50% averaged <$33,048.

The top 1 percent of earners receive about a fifth of all American income; on the other hand, the top 1 percent of Americans by net worth hold about a third of American wealth. (Note that the top income earners are not necessarily the same people as the top net-worth Americans — after all, lots of high-net-worth people don't work or have much else in the way of sources of new income.) Wealth-related inequality has also been relatively stable over the last few decades, whereas income-related inequality has been growing since the '70s. ( NY Times 3/30/2011 )

That covers income distribution, now let's examine wealth in the United States. In 2007, according to the same University of California paper UI mentioned earlier, in 2007, the top 1% possessed 42.7% of the nation's wealth. The next 19% had 50.3%. That left the bottom 80% of Americans with 7% of the nation's wealth.

In total net worth, in 2007, before the housing crisis , total net worth of Americans broke down with the top 1% having 34.6%, the next 19% with 50.5% and the bottom 80% owning 15%. That's a little better, but not much. In 2009 the top 1% had 42.7%, the next 19% 40.2% and the bottom 80% with 15%.

This last bit of information means that 80% of us share 15% of the total wealth of this nation that the government doesn't own. 15% of all private wealth! Meanwhile, the detractors of the Occupy movement suggest that we all wear tin hats. I beg to differ.

This is information that every person in the bottom 80% should memorize. Every time people ask for information, you should direct them to this article. The figures above say it all. The only way that Americans are going to get a better shake, is to realize that we as a people are being taken advantage of by the same people we make rich. Don't be fooled by the well dressed people on TV in the shows and on the commercials. They portray an America that simply doesn't exist. It's all a ruse to keep us dumb and happy, while the rich get richer and the poor make do with whatever scraps they send our way

Has capitalism failed? You be the judge. It sure shows that the predatory capitalism practiced in the US has left 80% of this nation poor. Don't be fooled by Obama's speeches about fairness to the Middle Class. We have hardly any Middle Class in America unless you count the 19% behind the 1% as "Middle-Class". As George Carlin said;

"The game is rigged folks, you haven't got a chance. They want it all...they want it all. Soon they'll be coming for your social security and you know what? They'll get it They'll take it all!"

That was said in 1999. Everyone laughed. They aren't laughing anymore. The game is rigged and the only way we will unrig it is to make them do so. How will this be accomplished? That is the question of this century. Sooner or later, the people of this nation will realize they are left out in the cold to get by with whatever scraps that are disappearing faster every day, will march on Washington and throw this government out on the streets.

Our public servants, our Representatives and our Senators are bought and paid for by the very same corporate system that has everyone on austerity. They are kept in office by the same corporations that pay their CEO's 263% of the average worker's pay. This is the world you live in. This is the way out. These people are not going to give up their wealth because you vote third party at the ballot box or throw your vote away on the Democrats. We are beyond that point.

Tim Gatto is former Chairman of the Liberal Party of America, Tim is a retired Army Sergeant. He currently lives in South Carolina. He is the author of "Complicity to Contempt" and "Kimchee Days" available at Oliver Arts and Open Press.

Occupy Wall Street May Actually Be Changing Wall Street Firms: Survey

The Huffington Post  |  By Khadeeja Safdar

 Video, Business News, Big Banks, Financial Services Industry, Occupy Wall Street, Occupy Wall Street Movement, Occupy Wall Street Protest, Occupy Wall Street Protesters, Business News

 

Though the Occupy protesters have taken their tents out of Zuccotti Park, they're still making their mark.

The majority of marketing and communications executives at financial services firms said that Occupy Wall Street has impacted their business, according to a study conducted by Echo Research and Makovsky, two research and communications firms. The number one challenge for firms this year is dealing with a negative public perception, according to Scott Tangney, an executive at Makovsky. In recent years past, recovering from the financial crisis superseded that concern.

"Banks and financial services firms have now shifted their focus from liquidity and financial performance to customer satisfaction and their own employees," said Scott Tangney, an executive at Makovsky. "The Occupy Wall Street Movement has indicated to firms where they need to be focusing."

The study’s findings come a little more than one week after Occupy Wall Street protesters were met with arrests celebrating the movement's six month anniversary.

Yet despite all the ruckus caused by the movement, more than 95 percent of marketing executives are blaming their firms' bad reputations on the companies themselves, not the protestors, according to the study.

That's in line with sentiments expressed by Citigroup CEO Vikram Pandit in October, when he said the protesters' sentiments are "completely understandable."
 
Since the Occupy Movement began, the financial sector has faced a slew of other PR debacles. Last year, Bank of America dealt with heavy customer backlash after attempting to impose a debit card fee. Earlier this month, negative public perception became a heightened problem for Goldman Sachs when a former employee wrote a scathing op-ed about the company’s culture in The New York Times.

Still, even with all of these public disasters, the financial services industry may be inching its way back into the good graces of the American public. This year, 46 percent of Americans said they trust the financial services industry, up from only 25 percent that said the same thing last year, according to an Edelman report from earlier this month.

2011, A Year Replete With Revolts, Uprisings And Occupation

By Farooque Chowdhury

[REPRINT]
19 December, 2011

Countercurrents.org


Uprisings, revolts and occupation are keeping their undeniable marks on 2011. In recent times, a year with so much and so wide protests from periphery to world metropolis are rare. In this crises-ridden period, the competition-charged, tumultuous year saw status quo questioned and challenged. In recent times, capitalism with its fundamental contradictions of capital accumulation has never encountered so vigorous and wide social criticism and rejection.


The globe eclipsing status quo has created conditions for protest and uprising, and also trammeled these. With these contradictory acts, status quo has illegitimated itself, and has provided legitimacy to protest and uprising against institutions for coercion and ideological hegemony that capital builds up to dominate public life. As captive of income- and opportunity-inequalities, people in countries are giving tongue to their dissatisfaction with the status quo, its philosophy, policies, politics and economy. As democratic practice, people are dissenting, disapproving and denouncing dominating power’s contempt of life and liberty. People are declining to acquiesce to the destruction of peace on the earth.


People in countries were passing days while corporate personhood was taking control of peoples’ life and bare minimum spaces essential for people’s existence. It was capital’s indifferent campaign to destruct all life on the earth.


The prevailing system with its all its brutality – poverty, unemployment, wars, intervention, and indifferent elites indulging in luxury and speculation – has provided logic to protest in countries. Working people are being deprived of their rights. Narrowed down space for dissent and curtailed rights have ignited revolts. In 2011, people began resisting mainly through nonviolent protest marches and occupation. Internet based social networking has turned into a tool to communicate and propagate. In 2011, with industrial action, by striking valiantly, labor in scores of countries heroically stood in front of capital. In Third, Second and First Worlds, student activism, their protests and marches, occupations of educational institutions and media centers unmasked the dominating system that does not hide its profit motive in the area of public instruction. In 2011, riot and anarchic acts, only a few in numbers and only in a few countries, reflect dire living condition, and encroached democratic space. These are initiatives by an impatient section to ensure jobs, homes, security and freedom from the tyranny of capital.


The Arab Spring and the Occupy Movement are two key moments in the worldwide protest process in 2011. These are junctures. In terms of magnitude and force, these two surpassed the Seattle Uprising in 1999, the Prague Anti-globalization Protests in 2000 and the Iraq War Protest in 2003. In terms of significance, these two influenced and will influence societies and politics at regional and world levels.


Tyrants, Empire-allies, caricature characters in politics, financial and political institutions, coercive apparatus, all had to face protests by people from Australia to Middle East, from North Africa to North America, from Wukan, a China village, to the US cities, from a mining giant headquarter to ports and auction house. Tunisia, Italy, Malaysia, Morocco, Russia, Bahrain, Greece, France, the UK, backward, conservative societies and advanced capitalist countries, all came under questioning by its citizens. Madrid, Athens, San Francisco, Paris, Philadelphia, London, Leeds, Los Angeles, and hundreds of cities and towns saw protest marches. Election thievery sparked protests, sometimes violent. In 2011, tens of thousands of “mass incidents”, huge demonstrations and protests, reflected undercurrents in today’s Chinese society. Striking oil workers occupied the main square in Zhanaozen, a Kazakhstan town, for more than six months. In the last days in 2011, police firing on the protesting Kazakh oil workers killed at least 10 people. During the last days of the year, protesting people continue making supreme sacrifices in Egypt, a geostrategically important area, where an alliance between retrogressive forces and imperialism has been completed. In Lens Creek Mountain, West Virginia, USA, people marched more than 50 miles to save ecology and a glorious history.


Occupy Wall Street, the Occupy Movement that began on September 17 with a few thousand protesters in New York to condemn greed and capitalism has become a political expression in the entire US, and broadly, a worldwide approach with broad coalitions. In France, Marseille Chamber of Commerce was occupied. In Kerala, India, a soft drink plant was occupied. And, 2011 saw similar many more.


Within days, the Occupy Movement became a world symbol with the universal slogan “We are the 99%”. Jobless and homeless, union members and priests, nurses, teachers and students stood in protest, peacefully marched down streets, built camps with libraries in parks and city squares, tried to make their stand in the face of forced evictions. But capital’s dictatorial force prevailed. Occupy Movement protesters have been arrested, their camps bulldozed.


Occupy Movement campaigned to move homeless people into buildings foreclosed by banks, stood by labor’s struggle, and has tried to widen its support-base. Defying cold, rain, snow falls and evictions in countries, Occupy Movement protesters are still undaunted, and hope to re-occupy public spaces.


Now, it is Occupy Everywhere. It’s a new discourse and dynamics of political action. It is not an isolated act of protest. Rather, it is now a worldwide process, an expression of revolt against capitalist economy and politics.


Labor, either in unions or defying status quoed union leadership, in countries has joined the waves of uprising, and in countries has determined pace of politics for a period, may be for a short one. Labor worldwide is trying to assert its position. In 2011, labor made strikes at Australian coal mines and walked outs at giant Grasberg mine in Indonesia. Chile’s state-owned copper giant, African gold producers, and scores of mine owners in countries had to face labor action in the year.


At least in a country, a new law banning street protest has been enacted. At least a country now plans to use its political power to detain its citizens for indefinite period. Police reportedly went undercover at an Occupy camp to find out protesters’ intentions. Police spies infiltrated protest groups at least in a country. In countries, public servants, hardly a few thousands in number, are wielding the power to define limits of “democracy” for millions, and in actual sense, billions. The year 2011 once again exposed these truths.


In 2011, by violating fundamental rights of people, and even by violating bourgeois democratic norms, ruling classes in respective societies have quashed its claims to rule, have confirmed its void moral standing, and have provided people the logic to reclaim fundamental features of bourgeois democracy and public spaces. In 2011, ruling machines in countries are breaking its laws the machines are committed to safeguard, and breeding contempt of the laws enacted to secure existing property relations and perpetuate dominance over people. In countries, honesty is an abandoned concept within forces of and institutions for hegemony. So, the logic to reclaim comes from Abraham Lincoln. In 1858, Abraham Lincoln said while debating Stephen Douglas: “We the people are the rightful masters of both Congress and the courts, not to overthrow the Constitution but to overthrow the men who pervert the Constitution.”


In 2011, capital’s “holy” alliance is being exposed. States with their inherent inefficiency and incompetence continue to stand as inefficient and incompetent. With their monopoly of coercion states are attaining mistrust of its citizens.


In 2011, main stream media got exposed as a tool of capital. MSM’s acts appeared deep rooted conspiracy, often a conspiracy of silence, to the protesting people. It tried to keep silent on the Occupy Movement. Its “shrewd” tact to ignore people’s struggles ultimately breached its credibility, and to regain credibility, it had to provide information, sometimes disinformation or misinformation.


In 2011, the dominating economy’s incapability is being exposed as it continues to snatch away social safety arrangements, as it fails to provide bare minimum livelihood space to citizens, and as it fails to balance its competing interests. In a continent, dominating capital stands on the brink of falling apart as its powerful parts fail to resolve fatal competition.


In 2011, like past years, states, huge in number, continue to serve their masters – capitals, monopoly finance capital, speculator capital, ecocide capital, war capital. With demagoguery and outright falsehood, with a state of war or a threat of war, with justification to torture and murder, states fomented protests, revolts and occupation in 2011.


Status quo is engaged with full force in stopping peoples’ legitimate claims on economy and politics. In 2011, societies are on the border of bankruptcy, societies are faltering with burden of seemingly endless mal-governance, lumpenocracy, immense corruption and hopelessness. Dominating classes’ historical role has brought the societies to this limit. The dominating classes have initiated the process of destruction of these societies. In countries, people found no other way but protest and revolt in 2011 as speculators and bankers shape economy and trample sovereignty, polluters define limits of livable environment, and tyranny encroach public spaces. All Tyranny depends on deception, hypocrisy, economic and political power, and compels people to resort to revolt. The year, as a reaction, demonstrates force and power of revolt. The year is witnessing unimaginable riches and military might, but finds it imprisoned to the desire to use the power in the interests of absolute minority section in societies. People find them encountering tyranny and oppression in the guise of status quo in 2011.


“No nation”, as James Madison said in Political Observations in 1795, “can preserve its freedom in the midst of continual warfare.” But, the world is experiencing continual war waged by dominating capital. The year 2011 with pain and tears is going through this war. It is war for resources and cheap labor being waged in lands around the globe, it is war for thievery, it is wars declared and undeclared, and it is age-old war waged by a minority class against the majority classes. Under the endless sky, it is being waged in politics, in diplomacy, in economy, in propaganda, in ideology and education. It is being waged in the squares of the cities, in slums, on waste dumping grounds, with public properties being sold in market, in factories and workshops, in ports and offices, in degraded educational institutions and hospitals without any ribbon of hope, in all public spaces.


In countries, people are now no more wandering, no more having aimless moves in 2011. In countries, people are now striving to transform politics, taking initiatives in politics with limitations imposed by a period and respective societies. Despite the fact, protesting people, revolting people, not individuals, have initiated a process to reclaim their space, their land, to reiterate

This land is your land,

This land is my land

This land is our land.


Dhaka-based freelancer Farooque Chowdhury contributes on socioeconomic issues.

Give Karl Marx a Chance to Save the World Economy : Information Clearing House News

Give Karl Marx a Chance to Save the World Economy :  Information Clearing House News

By George Magnus
[REPRINT]

August 29, 2011 "Bloomberg" -- Policy makers struggling to understand the barrage of financial panics, protests and other ills afflicting the world would do well to study the works of a long-dead economist: Karl Marx. The sooner they recognize we’re facing a once-in-a-lifetime crisis of capitalism, the better equipped they will be to manage a way out of it.

The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw.

Consider, for example, Marx’s prediction of how the inherent conflict between capital and labor would manifest itself. As he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.”

The process he describes is visible throughout the developed world, particularly in the U.S. Companies’ efforts to cut costs and avoid hiring have boosted U.S. corporate profits as a share of total economic output to the highest level in more than six decades, while the unemployment rate stands at 9.1 percent and real wages are stagnant.

U.S. income inequality, meanwhile, is by some measures close to its highest level since the 1920s. Before 2008, the income disparity was obscured by factors such as easy credit, which allowed poor households to enjoy a more affluent lifestyle. Now the problem is coming home to roost.

Over-Production Paradox

Marx also pointed out the paradox of over-production and under-consumption: The more people are relegated to poverty, the less they will be able to consume all the goods and services companies produce. When one company cuts costs to boost earnings, it’s smart, but when they all do, they undermine the income formation and effective demand on which they rely for revenues and profits.

This problem, too, is evident in today’s developed world. We have a substantial capacity to produce, but in the middle- and lower-income cohorts, we find widespread financial insecurity and low consumption rates. The result is visible in the U.S., where new housing construction and automobile sales remain about 75% and 30% below their 2006 peaks, respectively.

As Marx put it in Kapital: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses.”

Addressing the Crisis

So how do we address this crisis? To put Marx’s spirit back in the box, policy makers have to place jobs at the top of the economic agenda, and consider other unorthodox measures. The crisis isn’t temporary, and it certainly won’t be cured by the ideological passion for government austerity.

Here are five major planks of a strategy whose time, sadly, has not yet come.

First, we have to sustain aggregate demand and income growth, or else we could fall into a debt trap along with serious social consequences. Governments that don’t face an imminent debt crisis -- including the U.S., Germany and the U.K. -- must make employment creation the litmus test of policy. In the U.S., the employment-to-population ratio is now as low as in the 1980s. Measures of underemployment almost everywhere are at record highs. Cutting employer payroll taxes and creating fiscal incentives to encourage companies to hire people and invest would do for a start.

Lighten the Burden

Second, to lighten the household debt burden, new steps should allow eligible households to restructure mortgage debt, or swap some debt forgiveness for future payments to lenders out of any home price appreciation.

Third, to improve the functionality of the credit system, well-capitalized and well-structured banks should be allowed some temporary capital adequacy relief to try to get new credit flowing to small companies, especially. Governments and central banks could engage in direct spending on or indirect financing of national investment or infrastructure programs.

Fourth, to ease the sovereign debt burden in the euro zone, European creditors have to extend the lower interest rates and longer payment terms recently proposed for Greece. If jointly guaranteed euro bonds are a bridge too far, Germany has to champion an urgent recapitalization of banks to help absorb inevitable losses through a vastly enlarged European Financial Stability Facility -- a sine qua non to solve the bond market crisis at least.

Build Defenses

Fifth, to build defenses against the risk of falling into deflation and stagnation, central banks should look beyond bond- buying programs, and instead target a growth rate of nominal economic output. This would allow a temporary period of moderately higher inflation that could push inflation-adjusted interest rates well below zero and facilitate a lowering of debt burdens.

We can’t know how these proposals might work out, or what their unintended consequences might be. But the policy status quo isn’t acceptable, either. It could turn the U.S. into a more unstable version of Japan, and fracture the euro zone with unknowable political consequences. By 2013, the crisis of Western capitalism could easily spill over to China, but that’s another subject.

(George Magnus is senior economic adviser at UBS and author of “Uprising: Will Emerging Markets Shape or Shake the World Economy?” The opinions expressed are his own.)