1776: What Revolution?

We’ve all absorbed the comforting story about our Founding Fathers (cozy word, “fathers,” implying that, like good dads, they had our democratic interests at heart), to wit, that in response to the outrageous cruelty of the British and mad King George in imposing unfair taxes on colonial commerce, the original Tea Partiers responded with protests, revolts, a Declaration of their Independence, and finally a Revolutionary War. And under the paternal guidance of George Washington, Thomas Jefferson, James Madison and others, the colonial cry of “give me liberty or give me death” gave the world the most successful example of rebellion against tyranny ever witnessed. The United States of America thenceforth stood as a shining example of self-government, of “liberty and justice for all”—an example everywhere imitated and envied, an example that has made America the global leader in not just war and peace and freedom but free-market consumerism as well. 

            Now, however, comes a thesis from Professor Gerald Horne that turns this story on its head. What Horne purports to demonstrate in The Counter-Revolution of 1776 (NYU Press: 2014) is that our so-called “revolution” did not overturn a cruel tyranny at all, but rather was a successful attempt to thwart, to counter an anticipated real revolution by America’s slaves. Horne supports his argument with endless accounts of revolts by Negroes (the word came to us from the Spanish word for ‘blacks’) throughout both the mainland colonies and the British sugar colonies in the Caribbean. Our history, of course, either downplays or outright ignores this story, leaving many of us wondering why the slaves didn’t revolt. What Horne demonstrates is that they indeed did revolt on countless occasions in Manhattan, in Rhode Island, in South Carolina, in Virginia and especially in Jamaica, Barbados, Antigua and other British-held sugar slavelands. And it was these revolts, coupled with the increasing indications that Great Britain was moving inexorably towards the abolition of slavery in its colonies, that, according to Horne, compelled the thirteen colonies to take up arms against the mother country.

            This is a stunning re-reading of history, and it deserves to be accurately and engagingly presented. Sadly, Horne’s presentation lacks the style and cogency to turn his book into a best-seller. He broaches all the important events, it seems, but too often his rhetorical skills fail him, and we are left uncertain not only about whether what he asserts is correct, but whether it deserves the importance he ascribes to it. Partly this is due to our mass-mediated numbness regarding death: when we read that a slave revolt ended with only a half dozen settlers killed or a dozen slaves hanged, we hardly respond. We see far more than that in an average shooting rampage by one of our crazed citizens. But partly it is due to the fact that Horne seems to take our knowledge of most of these events for granted, as if we are all historians intimately familiar with Jamaican hill warfare or the outcome of the Somerset case. We aren’t and it is the job of the historian to make sure we are clear about basic facts and crucial events. It is also his job to organize his material for maximum impact, and Horne falls short in that arena as well. The result is that this reader, for one, is not entirely convinced that a slave revolution on the mainland was imminent, nor that it was the chief motivating force for the American Revolution. And given that such a conclusion would be so transformative, that is a pity.

            Still, Horne gives us enough to make us think, enough to make us condemn all those historians in the past who have created the myths we have all been fed, and who have conspired to obscure and hide and falsify the truth: that slavery was pervasive throughout the original thirteen colonies, and that not just the southern colonies but every last one of them was involved in the nastiest business ever concocted on this planet. George Washington was a major slaveholder; Thomas Jefferson, as we’ve learned in detail in recent years, was another major slaveholder, as was James Madison, and most surprisingly, John Hancock—one of Boston’s largest slave owners. And John Adams? He made his fortune as a lawyer for slaveholders in cases against the enslaved. In this light, the fact that the revered Constitution of the United States somehow contains that puzzling and ghastly proviso that slaves shall be counted as 3/5 of a human—able to be counted for representation, but not when it came to the rights so loudly proclaimed—suddenly makes more sense.

            What Horne also does is lay out the main inciting factors leading to the decision to declare independence. There are, of course, centuries of little events that built to the big ones, but the really incendiary actions can be briefly touched on. First was the transfer of the slave trade, and slaves and planters, from the Caribbean islands like Jamaica and Barbados to the mainland colonies like South Carolina and Virginia and Rhode Island (a principal hemispheric slave market). The reason lay in the increasing recognition that the huge ratio of slaves to “white” settlers was very dangerous to island settlers (Jamaica in 1714 had 80,000 Negroes and 2,000 whites). Many Jamaican slaves, known as Maroons, had revolted, slain their masters, and fled to the mountains from which they maintained irregular warfare, proving, eventually, that islands were simply too small and too confined to contain the wrath of enslaved peoples. Second was the increase in the rising merchant class on the mainland, especially after 1688 when, with the change in Britain’s monarchy, the Royal African Company lost its dominance of the African trade to the “free” merchant class. Horne relates this not just to the slave trade but to capitalism itself:

Arguably, it was then that the groundwork was laid for the takeoff of capitalism—a trend in which slavery and the slave trade played an indispensable role. The growing influence of merchants in the aftermath of 1688 turbocharged the African Slave Trade, which allowed for spectacular profits growing from investments in the Americas and the forging of a wealthy class there which chafed under London’s rule….This business benefited handsomely some entrepreneurs in New England—notably in Massachusetts and Rhode Island—where the trade flourished. This region contained the “greatest slave-trading communities in America,” according to Lorenzo J. Greene: “the profits from the slave trade were almost incredible….gross profits [were] sometimes as high as sixteen hundred percent,” as “the slave trade easily became the most lucrative commerce of the seventeenth and eighteenth centuries” (5).

Then there were the continuing revolts by slaves in every colony. Horne touches on the most significant of these in his chapter called “Revolt,” but again, the problem is that we do not get a narrative that convinces us of their importance. We learn that in 1712, there was a major slave revolt in lower Manhattan, with nine settlers murdered and 70 slaves arrested, but this hardly seems the colony-periling event Horne alleges. Horne does succeed, though, in horrifying us with the punishments and responses to this revolt: in New York, “some were burnt, others were hanged and broke on ye wheele.” He also convinces us of the desperation of the colonists to convince European “whites” to migrate to America to raise their numbers relative to rising numbers of slaves. And he also makes clear the terror that seems to have gripped slaveholders in Carolina, where in the same year, 1712, a bill was introduced asking for more severe measures to restrain the “murders, rapines, and inhumanity to which they [the slaves] are naturally prone.” The measure: “every owner or overseer must have his Negro house searched every 114 days for runaway slaves and mischievous weapons.” A similar response occurred in Virginia in 1733, when settlers, alarmed at increasing “insurrections” among Africans, also revised their “insufficient punishments.” One new punishment Horne cites was that recalcitrant slaves had “one ear nailed to the pillory and there to stand for the space of one hour and then the said ear to be cut off; and thereafter the other ear nailed in like manner and cut off”—all this for providing false testimony (86). Finally, Horne tells us, settlers devised another strategy: that every man should “bring his arms to church on Sundays and Holydays lest they should be seized by the Slaves in their absence” (70). Now we perhaps better understand the passion Americans display for their firearms, for when an entire population knows that it is brutalizing another population and therefore fears uprisings by the oppressed, guns in the hands of the brutalizers must seem as innocently logical as aspirin.  

            Finally, Horne provides us with the more immediate causes of the counter-revolution. First was the Stono uprising in 1739 in South Carolina. Here, 29 settlers were slaughtered by Africans, many of them from Angola (leading to the suspicion that since they spoke Portuguese, these slaves must have been in league with the hated Spanish and their nearby stronghold in St. Augustine, Florida.) The suspicion of Spain was not altogether imagined either, because three years later, a Spanish force—including the ultimate horror, hundreds of armed Africans led by African officers—did invade Georgia and South Carolina hoping to eject the English. Fortunately or unfortunately, the Spanish were defeated there, and, within another fifteen to twenty years, ousted from Florida altogether. This, plus the English defeat of the French in the Seven Years’ War (French and Indian War, 1756-63) might have relieved the American settlers because it got rid of safe havens for escaped slaves. But according to Horne, “when pressure was eased on mainland settlers, they seized the opportunity to revolt against the Crown with ample aid from the Catholic powers [i.e. Spain and France].” Then came the two incidents in 1772. One was the Gaspee riot, wherein British officers in Newport, Rhode Island boarded a slave ship, the Gaspee, in response to which 500 settlers rioted, burning a British ship. The case was heard in London, and even worse than the British interference with “free trade” was the fact that “the chief witness against the rioters was a Negro,” Aaron Briggs. Briggs testified that he had seen a slave trader named John Brown (after whom Brown University, to its everlasting shame, was named) “fire a musket killing the captain.” To the settlers, this left no doubt that England, in allowing a Negro to testify against whites, was moving towards the abolition of slavery. The same signal was intensified only days later when James Somerset, a slave owned by Charles Steuart of Norfolk, VA, became the central figure in an abolition case. In December of 1771, abolitionists found Somerset shackled in a ship on the Thames, about to be shipped to Jamaica and sold. The abolitionists drew up a habeas corpus petition demanding that his body be produced in court. In June of 1772, British Judge Mansfield rendered his decision that Somerset must be released. His argument (unaccountably not provided by Horne) said:

The state of slavery is of such a nature that it is incapable of being introduced on any reasons, moral or political, but only by positive law [statute], which preserves its force long after the reasons, occasions, and time itself from whence it was created, is erased from memory. It is so odious, that nothing can be suffered to support it, but positive law. Whatever inconveniences, therefore, may follow from the decision, I cannot say this case is allowed or approved by the law of England; and therefore the black must be discharged. (Wikipedia.)

This decision incensed the colonists in America, who had the temerity to argue that Great Britain was actually treating them like slaves. Countless pamphlets of the time repeated this same argument—ironic in light of the actual slavery they themselves were perpetrating—that the only recourse of colonists being oppressed like slaves was rebellion. One other major element may be said to have lit the fire of revolution: the threat, in November 1775, by Virginia governor Lord Dunmore, to arm Africans in order to suppress the gathering revolt against the British Crown. This, according to Horne, was the last straw, turning even moderates into radicals. As Horne puts it in summary, this decision

solidified opposition to London, ushered into existence a new republic, and ossified for decades to come a caste-like status for Africans, seen widely among settlers as thinly disguised revolutionaries eager to collaborate with foes of all sort to subvert the status quo. Understandably, the only fitting rebuke for revolutionaries bent on abolishing private property—albeit in themselves—was a steely counter-revolution (211).

That is to say, in the eyes of American settlers, African slaves, with London as their abolitionist ally, were planning a revolution against their enslavement and therefore against private property. The revolutionary response of the thirteen colonies was thus a counter-revolution against the slaves and their allies in London who were stirring a dreaded “servile revolt.” What added even more fuel to this fire was another event in 1775, when a debate occurred in Parliament about whether “all slaves in American should have the trial by jury” as a first measure to “extirpate slavery from the face of the earth” and “establish the fundamental rights of liberty to all mankind” (231). This sounds like something our revered Founding Fathers would have said or supported themselves, but instead it enraged them to the point of declaring independence and war on those who had said it.

            The coda to all this comes from one of the great writers of the English language, Samuel Johnson, of dictionary fame. Horne quotes Johnson, a proud abolitionist, as asking, “How is it that we hear the loudest yelps for liberty among the drivers of Negroes?”

            That, in my opinion, is the question that should have been asked more and more urgently, and long before this: How is it that the alleged humanitarians who framed the Declaration of Independence, the Constitution, and the Bill of Rights could rant and rave endlessly about British tyranny and their emotional yearning for liberty when in fact they were sanctifying a system worse than any tyranny and enforced by the most brutal regime of oppression ever devised—one whose effects have hardly abated to this day?  How in the world could they have borne so painful a contradiction? It truly is something to ponder.   

Lawrence DiStasi

Nowhere Left to Go

Ever since the fall of the former Soviet Union, symbolized by the destruction of the Berlin Wall in November 1989, those on the left have faced a dilemma: with marxism and, by extension, socialism discredited, and capitalism reigning unopposed throughout most of the world, including even in China, the left has no direction. Without socialism as at least a beacon to which a humane society can aspire, the left has appeared lost, dazed, and bankrupt of real ideas. Reading Chris Hedges’ recent Death of the Liberal Class (Nation Books: 2010) has crystallized these thoughts for me and given them a historical underpinning. For what Hedges does in his book is trace the beginning of the left’s decline to World War I and its aftermath. Here is what he writes early on: the liberal era, which had been getting stronger in the early 20^th century with the rise of populism, unions, women’s rights, housing for the poor, and socialism as a legitimate political movement,

effectively ended with World War I. The war, which shattered liberal optimism about the inevitability of human progress, also consolidated state and corporate control over economic, political, cultural and social affairs. It created mass culture, fostered through the consumer society the cult of the self, led the nation into an era of permanent war, and used fear and mass propaganda to cow citizens and silence independent and radical voices within the liberal class (p. 7).

Hedges goes on to demonstrate with persuasive detail the sad story of how this happened.

            To begin with, Hedges makes clear that the liberal class—including the media, the church, the university, the Democratic Party, the arts, and labor unions—has, or should have, an important function in a democracy: it “functions as a safety valve. It makes piecemeal and incremental reform possible. It offers hope for change…It endows the state and the mechanisms of power with virtue” (p. 9). But when the liberal class is cowed into submission by repression, or is bought off by corporate money and power, it retreats into narrow specialization, a cult of the self, and endless discussion. This is exactly what happened, Hedges demonstrates, in the period during and after World War I. The irony is that the crippling of liberals was done by one of the arch liberals of the time, President Woodrow Wilson. Wilson had to find a way, in 1917, to get the American public to favor joining a war that had already gone on for three bloody years in Europe. It was a war that over 90% of Americans wanted no part of, seeing it primarily as a “rich man’s war” promoted mainly by bankers to salvage the loans they’d made to allied nations and by corporations manufacturing munitions. In order to effect the massive opinion shift that was needed—i.e. from isolationism to war mania—Wilson agreed with several advisors to implement, a week after he declared war on April 6, 1917, a massive public relations campaign: he set up the Committee for Public Information or CPI, commonly known as the Creel Commission after its head, George Creel. Creel and his huge committee employed writers, artists, filmmakers, poster designers, and over 7500 speakers to turn public opinion against the evil “Huns” and in favor of “saving democracy.” One example of the Commission’s work was the poster, still famous today, of Uncle Sam pointing his finger with the words, “I Want You.” Creel himself considered the CPI “a vast enterprise in salesmanship, the world’s greatest adventure in advertising.” The words, from his 1920 memoir, How We Advertised America, were prophetic, for not only did the Commission succeed in drumming up massive support for the war and violent hatred towards Germans, both abroad and in America, but it also prefigured the imminent rise of mass advertising, mass propaganda, and the consumer culture that has dominated America ever since. Indeed, as I have noted elsewhere, Edward Bernays (nephew of Sigmund Freud) went straight from his post in the CPI to becoming a major figure on Madison Avenue, advocating the same mass propaganda tools for commercial advertising that he had used to promote the war. As Bernays noted in his seminal book, Propaganda (1928), “It was, of course, the astounding success of propaganda during the war that opened the eyes of the intelligent few in all departments of life to the possibilities of regimenting the public mind” (Hedges, p 80; emphasis added).

            The effect of all this propaganda, and its adoption by corporate America, was not only the emasculation of the liberal class, but its co-optation into accepting the idea that the proper function of an American was not to be an active informed citizen, but to consume. Progress, which liberals had earlier located in the improvement of life for the disadvantaged and an ever-more direct voice for the masses in government, had become technological progress: the steady production of consumer goods allegedly designed to make life easier and more pleasant. The emotional appeals that had worked so well to move public opinion about the war were now employed to induce Americans to want what they did not need, and to consider the satisfying of such created desires the be-all and end-all of existence. As Hedges summarizes it,

            The war destroyed values and self-perceptions that had once characterized American life and replaced them with fear, distrust, and the hedonism of the consumer society. The new mass propaganda… effectively vilified all who did not speak in the language imparted to the public by corporations and the state. For these reasons, it presaged a profound cultural and political shift. It snuffed out a brief and robust period of reform in American history, one that had seen mass movements, enraged at the abuses of an American oligarchy, sweep across the country and demand profound change. The rise of mass propaganda, made possible by industrial warfare, effectively killed populism (p. 62)

From then on, according to Hedges, with the brief exception of a period of populism during the Depression-era 1930s via such organizations as the Works Progress Administration (WPA), the liberal class became a handmaiden to the power elite. Even the counterculture of the 1960s, according to Hedges, aside from its mild successes in protesting the Vietnam war, retreated into the hedonism and disengagement that was initiated by the Beats, and really goes back to the liberal retreat in World War I. As Hedges puts it,

The counterculture of the 1960s, like the commodity culture, lured adherents inward. It set up the self as the primary center of concern. It, too, offered affirmative, therapeutic remedies to social problems that embraced vague, undefined, and utopian campaigns to remake society. There was no political vision (p. 110).

The churches, the universities, the unions, and the Democratic Party had and have a similar lack of vision, a similar preoccupation with the self, a similar impatience with the long hard work of political change, and a similar tendency to be bought off by power. Induced or seduced to count on “the state as an agent of change,” they ended up “abetting the consumer society, the cult of the self, and the ascendancy of the corporate state” (p. 110).

            When it comes to solutions for us today, Hedges does not hold out much hope. Though he himself has become one of the more radical activists in the nation, suing the government recently in a challenge to the National Defense Authorization Act of 2012 permitting indefinite detention, he refuses on principle to advocate or engage in violence. Indeed, he is clear that since the flaccid liberal class lacks both the capacity and the imagination to lead the revolt he sees as necessary, “revolt…will come from the right, as it did in other eras of bankrupt liberalism in Nazi Germany, fascist Italy, and Tsarist Russia” (196). Still, for Hedges, an acceptable, and perhaps sole form of revolt for radicals on the left remains: refusal and noncooperation. Even knowing that reform of the system as it now stands is hopeless; even convinced that corporate money has bought off all the democratic levers of legislation and power, including the current political operatives up to and including Barack Obama; even so, Hedges still counsels that those of good conscience must act, rebel, resist, despite the minimal chances for success:

            Acts of resistance are moral acts. They take place because people of conscience understand the moral, rather than the practical, imperative of rebellion. They should be carried out not because they are effective, but because they are right. (205).

            This leads us to the dilemma stated at the beginning. With the actions of states becoming ever more viciously repressive, with the world on the brink of mass extinctions, global warming, and a thousand other insults due to the piratic and exploitative practices of corporate capitalists on a global scale, where can the left go? What direction can there be for people with vision, with a conscience? For Hedges, the answer lies not in revolution, which seeks to create a new power structure (and all revolutions in recent history have proven to be as corrupt as what they replaced), but in rebellion; rebellion as a continuing revolt against power. Basically, if I understand him correctly, this means refusing to submit. It means rebelling to assert, if not our power, at least our humanity. I have written about this before, as a comment on one of my favorite literary creations, Melville’s Bartleby the Scrivener. Bartleby’s inimitable and unforgettable explanation for his refusal to move out of the office he’d been asked to leave because of his total noncompliance (he stopped working or leaving after office hours, but would only sit facing the wall), was:  I prefer not to. It is clear that Melville was using him as an example of someone who simply refuses, without seeking agreement or mercy or sympathy or anything else, to cooperate with business as usual. The great contemporary philosopher, Slavoj Zizek, refers to something similar as ‘Bartleby politics.’ Here is how Hedges puts his version in ending his cri du coeur:

            The indifference to the plight of others and the cult of the self is what the corporate state seeks to instill in us. That state appeals to pleasure as well as fear, to crush compassion. We will have to continue to fight the mechanisms of that dominant culture, if for no other reason than to preserve, through small, even tiny acts, our common humanity…As distinct and moral beings, we will endure only through these small, sometimes imperceptible acts of defiance. This defiance, this capacity to say no, is what mass culture and mass propaganda seeks to eradicate. As long as we are willing to defy these forces, we have a chance, if not for ourselves, then at least for those who follow. As long as we defy these forces, we remain alive. And, for now, this is the only victory possible. (217)

Whether others will agree with him is not at all certain; the incentives to simply ‘cultivate one’s own garden’ are compelling. What everyone must take account of, however, is Chris Hedges’ singular gift for laying out the problems we all face, and his urging to us all not to yield to either cynicism or false hope, but to rely on that basic human gift that endures when all else fails: defiance, the ability to say NO. After all is said and done, it is that which terrifies those in power. It is that which, if there is to be salvation, will comprise it.  

Lawrence DiStasi

Memorial Day Blues

I don’t know what has me more gloomy: the rampant hypocrisy of yet another Memorial Day (originally enacted after the Civil War so Americans could decorate the graves of fallen soldiers), or the vicious narcissism and waste of life in Isla Vista at the hands of yet another lunatic with a gun. The latter was a young man, Eliot Rodger, from an affluent family—his father is in the movie business—who advertised on youtube about his plans to kill young women he believed had spurned him all his life. He allegedly died a virgin because women—no, not just women; beautiful women of the kind he seemed to think inhabited sorority houses—wouldn’t give him a tumble. He ranted about this both in his youtube video and in his lengthy manifesto. Poor me; I can’t get laid. And therein lies the key to the whole thing: this was a young narcissist of the type America now specializes in, whose thought process seems keyed to the internet and his fantasy that there are all these beautiful women out there who should want to bed with him, but somehow don’t. Of course, the fact that he apparently had no measurable ability to relate to actual people didn’t seem to enter his calculations. His lack of success was simply due to the misperceptions of women, who didn’t see what a great guy he really was, and instead gave themselves to inferior alpha males who never treated them well. Eliot would have, if only they’d given him a chance. But they didn’t, so now he had to kill as many as he could.

            Actually, I thought that was pretty much the case until I read a piece today by Igor Volsky, originally on Think Progress, reprinted on Reader Supported News: “Behind the Sexist Ideology That Preoccupied a Mass Murderer.” In it, Volsky introduces us (me at least) to some of the websites that Rodger apparently visited, and they are both pathetic and horrifying. The websites are known as PUAs (pick up artists), and they allegedly give guys tips on how to pick up beautiful women. To call such websites misogynistic is to understate the case by eons. I hesitate to even repeat some of the ugly garbage posted on these sites, but just to give one example, a site called puahate.com, a site we are told Rodger used, advises men what to do

“if you have an average jaw,” and encourages users to “rate Johnny Depp´s eye area on this pic.” Others even upload pictures and elicit tips from the community for how to alter their appearances in order to maximize their chances of meeting and having sex with beautiful women. (Reader Supported News, 25 May 14).

Nor is this the really offensive stuff. But then, we’re talking here about a young man who committed the most offensive act of all: out of his frustration (“You girls have never been attracted to me. I don’t know why you girls aren’t attracted to me. But I will punish you all for it..”), he packs his glock and goes on a rampage, shooting two sorority girls at random and then a couple more random shoppers at a convenience store before he kills himself.

            One hardly knows what to comment on first. Is this how today’s young men actually think they can find women? Apparently. And it’s all about appearance, not in person where other senses besides vision come into play (not to mention qualities of mind or spirit), but on a screen. It’s hard for someone in my generation to believe. Appearance, of course, has always been important initially in the pickup game, but now it appears to be the whole issue. Everything, in our modern version of the late Roman empire, is in the open. How do you get laid? What leads women to the sack? It’s everywhere. Biology courses teach us that strong jaws and broad shoulders attract women, hence the preoccupation with those. And TV sitcoms try to rival each other in the casual vulgarity they portray, constantly dramatizing women ogling men’s asses and openly conveying their constant concern to bed someone, anyone. The internet just multiplies this, as in this quote, in response to the murders, from what is characterized as the “anti-PUA community:” “Nobody gives a shit about some socially deprived, narrow-clavicle twink with a delusional sense of self. He’s a poser.” It’s the language that stuns me. It is blunt and cruel and without even a hint that there are human beings involved. This is because with the internet, we have a medium for expression that provides anonymity to those who wish to insult, ridicule, or linguistically savage anyone who violates their own sense of narcissism.

            And this is not even to point out the other social aspect of this situation: the way law enforcement works in America. The police were apparently tipped off by one of Eliot Rodger’s family who were alarmed that he was giving off dangerous signals (especially the youtube video). They asked the police to look in on him, which they did. But he was such a nice young white boy, well-spoken and obviously from a fine family, that he convinced them he had no problem. They left, reporting that he didn’t seem to be about to harm himself. Yes, this was their sole concern: the white boy might harm himself, never, apparently, even considering that he might be a danger to others. So they left him with his guns until he went out a bit later (after slicing up his two roommates) and killed four more innocent people. Now imagine if this young man had been black or latino. What would the Isla Vista police have done in that instance? Why they’d have had him up against the wall, or perhaps, suspecting a move for a weapon, would’ve shot the poor bastard. But jolly Rodger was polite and well-spoken and white, so he was given a pass, which he used to slaughter those he thought had “dissed” him.

            Memorable. On Memorial Day it’s memorable because the day is about remembering our dead. Our war dead and the wars that killed them. And what I’ve been trying to do all day is remember a war in recent years—anything after World War II—that could possibly have been worth dying for. There was Korea, a set-up job if ever there was one. MASH pretty much put an end to that one. And there was Vietnam (with a bunch of ‘little’ wars in between, against the little brown people in Central America making things difficult for United Fruit and our friendly dictators), a war that couldn’t even come to a proper conclusion. A war in which our soldiers were so disenchanted they began to ‘frag’ the officers supposedly leading them into glorious battle and honorable death which ended up, honorable death, in that ugly but apt word “wasted.” And more recently we’ve had Iraq (I & II, each one cheered on by a President named Bush), and of course Afghanistan, and perhaps soon, Syria and Ukraine. Can anyone cheer for any of those wars, even in retrospect? Truth is, our leaders don’t even try anymore. So what we get is hypocrisy and transparent cant about those who fought them—our presidents dutifully making their trip to Arlington to plant a wreath at the tomb of the Unknowns, and making comforting noises about how much we appreciate the sacrifice of our noble warriors. But do we? Does anyone who hasn’t lost a family member? It’s doubtful. Like Eliot Rodger, we’re all narcissists, concerned only about the beer we’ll drink and the hot dogs or hamburgers or steaks we’ll eat and the music we’ll listen to and the good life we’re convincing ourselves we’re living. And the hope that somehow, the American empire will continue for a little bit longer so our whole world order doesn’t collapse in on us, as it threatens to at every moment. At which point, perhaps, we will begin to realize that it isn’t just Americans whose death deserves the sad sound of the bugle’s taps, but all the deaths in all the wars we’ve perpetrated over the years. The millions displaced in Iraq. The multi-millions slaughtered in Vietnam. All so that our lifestyle—and especially the lifestyles of the rich and famous we admire—can be maintained in the manner to which they and we have become accustomed. And which somehow, while we’ve been looking the other way, have turned into vulgar comedies and ugly websites and nauseating banter that have reduced life to its most vicious and superficial form of exchange. Alas poor America. Alas poor Eliot Rodger. Alas the poor wasted dead.

Lawrence DiStasi

            

If It's Wall Street, There's a Scam

When I was a kid, I used to watch my father as he tried to handicap horse races to pick a winning horse. I loved it because I loved the way race horses looked and ran (still do), especially when he’d take me with him to the track. Along the way, I learned about some of the scams that were used in the racing game, the most crooked being “past posting.” This was done by some bettors connected enough to afford high-speed telegraph or phone lines wherein they would get the news of a race’s winner instantly, and then rush their bets to the bookie before he knew the horses were at the post (starting gate). If you didn’t get caught, you couldn’t lose. The smarter bookies, of course, refused late bets, but enough accepted them to make past-posting a going, if highly illegal (and sometimes dangerous) business.

            It turns out that what has been happening on Wall Street in the past few years bears more than a little resemblance to past-posting. It’s called “front-running” and it’s the subject of Michael Lewis’ latest book, Flash Boys (Norton: 2014). Front running is done by “high-frequency traders” (HFTs), who manage to glean early information about trades from various sources, usually an exchange (there are now at least 13 stock exchanges operating in the United States) and then take advantage of that knowledge to buy or sell stocks on another exchange before the usual market can even operate. This ploy only makes them a few cents on each stock, but when multiplied by the $225 billion in stocks traded every day on the U.S. stock market, that comes to as much as $160 million a day in foolproof, no-risk profit.

            Lewis’s story involves one trader, Brad Katsuyama, who, being a Canadian working for the Royal Bank of Canada, has a different set of ethics than your usual American trader. He was puzzled by the “disappearance of the market” when he placed an order, but once he found out what was happening—and it took him a very long time to figure out why his trades were ‘disappearing’ when he pushed the usual ‘execute’ button, and who was doing the scamming and, especially, how it was being done—Katsuyama made a stunning decision. Rather than join the scam to enrich himself, which he could easily have done, he decided to educate his investors about how they were being screwed. The story is long and complicated and involves several of the new stock market ‘geeks’ Katsuyama hired to figure things out, figure a way to defeat the scam, and eventually start a new and honest stock exchange named IEX, but it comes down basically to the aforementioned “past posting” and speed. The speed is the time it takes for computer signals to travel along fiber-optic cables, approximately light speed, from the order desk of a broker to the stock exchanges. What almost no one knows is that though Wall Street seems to be the center of the exchanges like the New York Stock Exchange, actually today’s exchanges, all electronic, are located in northern New Jersey. The key here is that it takes time, even at light speed, to get from a broker’s computer in or near Wall Street (or even farther away in Kansas) to the exchanges across the Hudson River. Distance is crucial, because milliseconds are also crucial. Once he found this out—and again, it took years and some of the smartest minds in the business to put it all together—Katsuyama understood what the scam involved.

            A big investor like a mutual fund will place a buy order with a broker (or a Wall Street bank) for, say, 100,000 shares of Apple stock. Because of the latest rules from the SEC, that broker must seek the NBBO (National Best Bid and Offer) to match the order with a seller, and so is required (usually) to send it to all thirteen stock exchanges. The problem is that the exchanges are located in different places and so the order reaches them at different times (differing by milliseconds). But one exchange, BATS (Better Alternative Trading System, created by high-frequency traders) has its computer center in Weekhawken, just feet from the Lincoln Tunnel where the fiber-optic cables emerge from New York City. High-frequency trading firms located inside BATS thus get information about large trades first—again, by milliseconds. This is not the only place they get information, but let’s stay with this for now. They get advance information on stock prices by placing standing orders for 100 shares of every stock on the exchange (this costs them, as does placing their machines right next to the exchange computers, but it’s well worth it)—which allows them to legally find out who is trying to buy or sell what before anyone else. Once they know, they can then “front-run” buys or sells for the same stock on other exchanges, taking advantage of small price fluctuations, so they can either sell at a higher price or buy at a lower price than anyone else. Of course, they use high-speed computers to determine all this, and algorithms and fancy computer code, all of which work in milliseconds to give them risk-free buys and sells before the original stock order even gets posted. This might not seem to give them enough time to do any damage, but consider that shifts in the price of any stock (volatility) have become greater and greater, and have created risk-free opportunities for fast traders. One study showed that the price of Apple stock shifted 55,000 times in a single day. As Lewis puts it,

That meant there were 55,000 times a day a high-frequency trader could exploit the…ignorance of the wider market. Fifty-five thousand times a day, he might buy Apple shares at an outdated price, then turn around and sell them at the new, higher price, exploiting the ignorance of the slower-footed investor on either end of his trades. (99)

That “slower footed investor,” by the way, is often a mutual fund operating on behalf of the retirement funds they invest for unions, or cities, or other ordinary people who have their life savings involved.

One way Katsuyama found out what was happening was by having his computer geek set up a trading program in such a way that all of his orders reached all thirteen exchanges at the same time. When this happened, his trading orders functioned normally (as opposed to when they all reached exchanges at different times) and were executed instantly at the best price, as they should. Katsuyama called this program Thor and thought he could use it to both expose the scam and cause traders to flock to his bank. He was wrong. The HFTs figured out what he was doing quickly. More seriously, when he met with SEC regulators to tell them about the scams and how Thor was able to stop the unfair practices of HFTs, one of the staffers shocked him with this statement: What you are doing is not fair to high-frequency traders. You’re not letting them get out of the way (105). As Lewis explains, “the SEC staffer argued that it was unfair that high-frequency traders couldn’t post phony bids…that Thor forced them to honor the markets they claimed to be making.” The footnote to this mind-boggling comment from a government regulator charged with protecting the fairness of markets is that most of these young SEC staffers knew where their future bread would be buttered—working for the very thieves they were reluctant to expose or regulate. Over 200 SEC staffers since 2007 have left government to work for HFTs, including the associate director of the SEC’s Division of Trading and Markets, Elizabeth King. King took a job with Getco, one of the very largest and most profitable high-frequency trading companies.

There is more detail to this revelatory book, not least the fact that Brad Katsuyama elevated himself almost to superhero status by actually succeeding in opening a new stock exchange, IEX, that actually reflects true markets and has begun to make a difference. Whether it can fully stop the scam, however, is something else again. When there is this much money to be made, the collusion spreads and expands and morphs into all sectors of the market. Thus, many of the big Wall Street banks operate what they call dark pools, essentially their own private exchanges that engender trades without any transparency whatever. No one can see who trades what, who buys, who sells, or at what price. More and more of the trading goes on in these dark pools (“Collectively, the banks had managed to move 38% of the entire U.S. stock market now traded inside their dark pools” 224), and it is clear that high-frequency traders have been able to buy access to many of these pools so that they can expand their nefarious business. Moreover, what Lewis reveals about the SEC and their so-called regulators seems to be a fair indication that meaningful regulation will not be forthcoming any time soon. And finally, Lewis notes that Brad Katsuyama, like all superheroes, has a weakness: “his inability to imagine just how badly others might behave.” That is,

He had expected that the big banks would resist sending orders to IEX. He hadn’t imagined they would use their customers’ stock market orders to actively try at their customers’ expense to sabotage an exchange created to help their customers. (225)

That is really the problem at the heart of Wall Street and our economy in general. As one of Brad Katsuyama’s new hires put it, “The game is rigged.” But most ordinary citizens have an inability to imagine that. Most of us still believe that, by and large, commerce proceeds generally under the same set of rules and ethics that personal lives do. People obey stop signs and stop at red lights. People shrink from exploiting children and stealing from their friends and neighbors. What Wall Street and the banditry of the last few years has shown us, however, is that maintaining those beliefs in the face of the evidence now before us could leave us all sunk in a new dark pool that has no bottom at all. 

Lawrence DiStasi