31 December 2012

Empires of Illusion and the Credibility Trap - First They Come For the Weak

This will be my last post for 2012, excepting the usual chart updates, as we toddle towards yet another artificial crisis, this time the fiscal cliff.

I came across an interview with Chris Hedges by the Canadian Allan Gregg which illuminates Hedges' thesis of the decline of the American Empire and the illusory thinking that accompanies it. Can the shock and meltdown of Karl Rove on election night be any better contemporary illustration of the power of selective thinking to delude a group of seemingly rational people to their own downfall?

Although I differ from Hedges on a number of observations, particularly in degree, history does suggest that at the end of empires, and the accompanying sea change of social organization, there are often remarkable extremes in human behaviour. The almost frenetic preoccupation and stubborn adherence to the Nazi ideology in the latter stages of the war, when it was obvious to any rational observer that they had failed, is illustrative of that point.

I had been particularly struck in my reading some time ago with the 'wolf packs' of Nazis who had raged through Berlin, rounding up old men and boys who had not joined the Volkssturm and hanging them, even while the Russians were shelling the Reichstag. It never made sense to me until today.
"The radio announced that Hitler had come out of his safe bomb-proof bunker to talk with the fourteen to sixteen year old boys who had 'volunteered' for the 'honor' to be accepted into the SS and to die for their Fuhrer in the defense of Berlin. What a cruel lie! These boys did not volunteer, but had no choice, because boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'

When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics. It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us. We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."

Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945
This is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection of guilt. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence.

If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap. It is the impulse for the leaders to keep doubling down in the hope of a win, until exhaustion and collapse.
"Treason doth never prosper: what's the reason? Why if it prosper, none dare call it treason."

John Harrington
How else can one explain the irrational, self-destructive policy impulse? This is why they are metaphorically hanging Greeks and Spaniards and Irish in Europe, as tribute to an unsustainable and corrupt Euro monetary arrangement, with its puppet governments run by the banks.

And this is the US financial system and the American policy discussions today. First they come for the powerless and the weak, whether it contributes anything substantial to the broader resolution of the problems or not. The madness serves none but itself.

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems ot that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery."