By Şafak Erdem
We conducted a comprehensive interview with Harley Schlanger, Vice President of the Schiller Institute in the US.
In the first part of the interview Schlanger addresses the issues of polarized society, “the party of war”, the differences of the two parties in terms of economic policy, the power of monopolies in economy and politics and the average American’s “troubles”.
American society seems very divided when heading to the elections: The republicans and the Democrats, those for Donald Trump and those for Joe Biden and Kamala Harris. Is that picture accurate or somehow a misconception?
The party of war
Well, it’s certainly true that the US is highly polarized today. But what’s characteristic of it is not so much the old Democrat vs Republican or left vs right. Because you have certain republicans who are neocons, war hawks like Dick Cheney, who is one of the worst of the pro-war people from the Iraq War who have endorsed Kamala Harris. And then you have Democrats like Tulsi Gabbard and Robert F. Kennedy Jr. who have endorsed Trump. So, the actual distinction here is increasingly people who are in favor of war, which at this point the Democratic Party is the party of war, supporting the war against Russia and backing Israel in this war of genocide against the Palestinians. A lot of Republicans unfortunately are still supporters of war, but Trump, at least on Ukraine, is against the war.
The other thing, of course, is that there was a very long attack on Trump from his 2016 election victory. It was called “Russiagate”, the attempt to portray Trump as a Putin puppet. So, the language is very nasty.
The terrible US media
The differences in terms of economics are not so profound. But I think the ultimate difference is that Harris represents the Biden-Obama policy of US intervention around the world as the policeman of the world, where Trump is saying that we shouldn’t be doing that. In fact, he asks “Why spend hundreds of billions of dollars fighting wars that are of no basic interest to the American people when we have people who are hungry, we have bridges collapsing, roads that don’t work?” We have to spend the funds we have for the physical economy of the US. So that’s the difference. Now, how much of that is seen by the average person? Not much, because the media in the US is terrible. The media is basically saying Trump would be a dictator and Harris is a brainless idiot. So it’s very hard for the American people to make heads or tails out of it.
You mentioned that Trump is against war against Russia. What about Palestine?
I think Trump is very highly compromised on the Palestine issue because of his friendship with Netanyahu and also with Israeli developers and Israeli billionaires who have been buying real estate in New York. I’m not sure why Trump is allied so strongly with the Zionists, other than probably the pressure for money and support from the Jewish community in the US.
Harris always says, “I hurt for the treatment of the Palestinian people, and I want more humanitarian aid”. But the US made another shipment of 2-thousand-pound bombs. That’s the hypocrisy of the US. Trump is less of a hypocrite. He simply says to Netanyahu “Go ahead and get it over with it”, whereas Harris and Biden have created a situation where there will be perpetual war until Palestine is left without the Palestinian people.
Against woke culture
You said that the average person is not well aware of that distinction between the two sides. Even so, Trump supporters like Elon Musk emphasize the woke culture spread by the Democrats and Kamala Harris. Is it effective for people’s voting decisions?
I think Trump has a very established position as opposing the identity politics that the Democrats play. And it’s making a difference. Trump is probably going to get more African American votes than any Republican in recent period. He’s up to almost one third of the Hispanic vote in the polls. The Democrats always have counted on the black and Hispanic vote for victory. So, I think some of what he’s saying is getting across, especially on this question of the woke agenda.
Trump and Harris are very vague, in a sense, on the other big identity issue, abortion, because Harris has changed her position. Trump is also changing his position. As you see, there are basically no principles.
The overriding issue is whether you like Donald Trump or not, Trump is a very rough guy. He comes out of the New York City real estate markets. He’s a fighter and he doesn’t mince words. Whereas Harris is playing the role of being for joy and goodness. I don’t know if it’s selling very well.
Differences in economy
You said that there are no profound differences between two parties about the economy. Still, Trump and Musk insistently portray Kamala Harris as a communist. Does it somehow and partly correspond to reality or is it nothing but propaganda?
It is largely propaganda. Harris has gathered a billion dollars from multimillionaires. It would be absurd for a communist. Harris has said nothing about redistribution of resources and things of that sort. So, this is part of the game of American politics, the so-called “left-right dualism”.
The big difference, I would say, in terms of economic policy, is that Trump is in favor of opening the investment, lowering interest rates, making sure that the private sector has the money that it needs to invest. Harris has some kind of vague notion of public investment. But even so, the Democrats used to be very much in favor of the Franklin Roosevelt type policy of government providing funds for infrastructure and industry. And this continued up through the John F. Kennedy administration. Even Clinton to some extent in the 90s had some elements of that. Now that’s not socialism, that’s the old American capitalism that the government controls credit rather than leaving it in the hands of the bankers.
The problem is with the Federal Reserve System, the central bank system. In Türkiye there is a similar thing where the central bank often is at odds with the president. The president wants credit for the fiscal economy and the central bank says, oh no, we have our algorithms and equations, and we have to have austerity. So there are fights over that. I think Trump wants to have an investment policy that puts people to work building things. And that’s where the Musk element comes in. The Democrats on the other side don’t trust the private sector.
Monopolies prevail
And in many cases, I don’t trust the private sector either, but not for the reasons of the Democrats. The problem with it, in our view, is that large deregulations contribute to the buildup of cartels, the larger industries squeezing out the smaller. Most innovation in the past in the US came from smaller companies, from entrepreneurs and investors. Now it all goes into super companies that are pretty much monopolies. And the same thing is true of the military industrial sector. Boeing, Lockheed and Donald Douglas and so on, they get all the money they want for wars, but you can’t get credit for upgrading the steel industry or building bridges in a town.
There’s no proposal from Harris or the Democrats that the government take over industries, which is what socialism would be. They just don’t care. They don’t have a strategy at all. They have this pay-as-you-go, which means for infrastructure that you don’t build something new unless you can make money from it or cut money from something else. That doesn’t work. You need bridges, and you need power, you need electricity, and that’s where government regulation is important, and Trump understands that. For example, Trump realized that getting rid of the old banking rules from the depression, from Franklin Roosevelt, was a mistake. But he didn’t fight to reinstate the regulation and here is where the fog comes in.
Maybe in the lack of any communist or socialist parties, they prefer to accuse Harris of communism? Do you foresee any possibility for a “third option” for American society?
Well, we need it. And that’s what the Democratic Party used to be. But the Democrats got taken over by big money in the 80s and 90s. And as a result, you had the neocons on the one side, the Republicans, the hawks, like Cheney, Wolfowitz, George W. Bush, who were very much in favor of the military and total free market. And the Democrats abandoned the idea that the free market allows for monopolies and squeezes out the little guy. The Democratic Party now is totally committed to this idea of supporting the corporate cartels.
Bailing the banks out
I’ll give you an example. In the crash of 2008, it was foreseeable. Lyndon LaRouche warned that this was coming. That is what happens when you take away banking regulation. Commercial banks could use their depositors’ money to invest in speculation, building up a mortgage-backed bubble. And under the old regulatory system, that wouldn’t have been allowed. Debt grew bigger and bigger and bigger, and people were less able to pay the mortgages. It was clear that the mortgage-backed security bubble would pop. Now, if we had a decent government, whether it’s socialist or just favoring working people, it would have held the banks, hedge funds and the financial institutions responsible for the Ponzi scheme, and it wouldn’t have bailed them out. And it would have protected people to keep them in their homes. Instead, first Bush, and then Obama, the Democrat, sided with the banks, put out 27 trillion dollars to bail out banks. Not a single banker went to jail. And 7 million families lost their homes. And that was under Obama. Is that socialism? That’s where you see the runaway rhetoric that is divorced from reality.
What we said at the time is to implement the “bankruptcy reorganization”. This is in the law. If you owe more debt than you could possibly cover, you go through a reorganization, and if you can’t show that you can come out of that, then you’re shut down. This is what China is doing with its real estate sector. They’re jailing bankers who did these things in China and they’re starting to straighten out the situation. In the US, we just gave them more money and that’s what led to inflation.
And what about today and the near future? The US has much more debt than the previous crisis. Some claim that there will be a new crisis.
There already is a crisis. And the first area is the commercial real estate sector.
You know, companies used to have large sales forces and places where people could go shopping. Now with the Amazon just-in-time economy, people hire delivery services to make their orders. So, all these huge shopping centers are now empty, but there’s still debt on them. And so, the actual government debt now is estimated at 34 trillion dollars. Private sector debt is closing in on 30 trillion dollars.
“The average American is in trouble”
In the old days, what used to happen to a corporation that is not making enough sales to cover its debt? It used to be put through bankruptcy reorganization. Today, what they do is give them more money. They extend more credit. That doesn’t solve the problem, it just moves it down the road a little bit. I often say it’s like paying for a mortgage with a credit card. You’re ending up owing more money than if you just moved out and sold the place. So, the commercial real estate market is in trouble. The average American is in trouble. Many people are living on credit card debt because they are not making enough income.
The banks, Jerome Powell and the Federal Reserve are trying to get Harris elected so that they can lower interest rates and have more credit available. In this way, they want people to pay off their old debt. But does that solve the problem? Of course, no.
That is nothing new. The US, for a long time, had divorced from the understanding that unless you’re producing goods, unless you’re producing something that increases the value added in the production process, you end up with more and more debt. That’s why we watch the BRICS Summit in Kazan in Russia very closely. They’re basically saying we need to move away from this funny-money paper system of the West, the dollar system, and move towards some kind of backing to financial transactions, whether it’s commodities, gold or oil.
This is what has the Western governments totally upset and so there is a real danger of a blowout. I believe that’s why the US is backing the war in Ukraine against Russia. But the irony is they’re so stupid that they’ve made Russia stronger with sanctions and have isolated the US and Europe.