Straight Talk with Charles Hugh Smith: Why The Status Quo Is Unsustainable

Hi Tommy:
It’s good to debate the issues, but there are a number of inaccuracies in your characterization of my history and views.

  1. AFSC is not a “Marxist” organization, it is a faith-based group with a long history (Quakers) of aiding people in crisis. Yes, it is anti-war.  Given Ron Paul’s (for example) disavowal of our current wars, labeling Quakers as “Marxist” because they are anti-war is quite a stretch. 

  2. As I have mentioned on several occasions I attended the University of Hawaii. One again, it isn’t adding much to the discussion to broad-brush someone for attending UC Berkeley (even if he didn’t).

  3. I don’t recall setting up the Cato Institute as the “enemy.”  That is your characterization, not mine. I have probably linked to some of their papers. On tax issues, I might have disagreed, or agreed, depending on their specific stance.  The top 1/10 of 1% have seen their tax burdens drop below “middle class” tax rates. Do you think that is “fair”? On what basis? Why do you think the tax rates for those (the top 1%) who own 60% of the financial wealth of the nation have dropped? Could the buying of political influence have something to do with it? I am in favor of those who make $10 M a year paying the same rate as I do making $45K a year. Do you disagree with this? On what basis? Please research tax rates actually paid (not nominal rates) over the past 50 years, with an eye on the rates paid by the top 1% and by those in the upper-middle tax brackets. You will find the super-wealthy are paying lower rates than the “middle class.” If you support this, what is your basis for doing so?

  4. If you consider Glenn Beck a public intellectual, then it’s OK with me. He is certainly raising important issues and perhaps I have misjudged his ideas. 

  5. I am routinely accused of being liberal and conservative in the same week. This refusal to accept various dogmas really bothers some people and it’s easy to see why. If you buy into one ideology or another, then the “correct answers” flow from that belief system. I see very little actual difference in policies under the two ideologies currently on the menu. Both support a global Empire, various active wars, a welfare state (the only disagreements are over who gets more or less Savior State largesse) and corporate cartels.  Neither one offers any recognition that demographics have already doomed their entitlement “solutions.” Neither one has any response to Peak Everything except to borrow more money and hope it all goes away.  That is hardly a strategy or ideology that offers anything positive.

  6.  I think you have misread my writing on Capitalism. I have repeatedly drawn the distinction between “real capitalism” which requires investment of capital and the taking on of risk, and Crony Capitalism which relies on State contracts and management of the economy, and which transfers risk to the taxpayers. (See 'too big to fail" etc.)  Marx failed to offer a workable alternative but  his critique of capitalism remain insightful if we read his work in the context of when it was written, the late 19th century.

For example, he noted capitalism’s tropism toward monopoly and cartels. Most of the mainstream media in the US is now controlled by 5 or 6 corporations.  This is effectively a cartel. Most of the “healthcare” system is owned or controlled by a handful of large companies.  Smaller firms who try to compete in that space find that they are up against a state-supported series of cartels.

I have built businesses from scratch, done millions of dollars in revenues and created jobs for dozens of people. I think that qualifies me for a “working” knowledge of capitalism.

My critique is simple: BOTH State capitalism (the Chinese model) and the Neoliberal (profits are private, losses are for taxpayers, etc.) model of global capitalism have failed on fundamental levels. That this is not yet apparent–well, let’s give it 4 years and see how either model is doing.

I am in favor of “real capitalism” (accumulating capital, investing it, taking a risk for a future gain) and against crony/cartel capitalism. There is a difference.

As someone who is devoutly apolitical in nature, I found nothing political in the article Politics Can’t Fix A Systemic Crisis In Neoliberal Global Capitalism referred to in Tommy’s post. Though I’m sure those who identify with the various political parties would each walk away with a different understanding of that article. It’s funny how our personal and/or collective identities focus our perception.


When I made this video, I received many comments that I was bashing Bush, and many that I was bashing Obama. The truth is that my composition uses an equal number of pictures from both political parties. 

The eye of the beholder…

I imagine that if aliens traveled to our planet to observe human society and culture, they would have a difficult time distinguishing fascism, communism, and whatever you call the system we have today.  In each system, the wealth and control of resources are concentrated in the hands of a few people or entities.  In each system personal freedom is severely constrained.  The US used to be a much more egalitarian society (not marxist) and in fact a much more capitalistic system.  I am a fervent believer in capitalism, but a believer in  “real capitalism” as you suggest, where there is a level playing field.  In our current system, big corporations buy off the politicians, who in turn write laws in their favor, which in turn crushes the corporations’  smaller compettiors.  Really sounds like Adam Smith’s invisible hand, doesn’t it.  I believe that all the name calling,  “liberal vs conservative, Republican vs Democrat, or whatever” serves to divide and dsitract the populace. 



Thanks for clarifying these issues.  The only thing I would challenge you on is that just because the current “Republicans” call themselves “Conservatives” doesn’t mean they are.  The politicians you describe in your above paragraph aren’t true Conservatives in my book.


  1. I never said AFSC was Marxist because they were Anti-War.  In fact, I never mentioned they were Anti-War at all?  I clearly said they were a left-wing organization that promotes “Social Justice”.  Social Justice is most definately a main part of the Marxist ideology.  Just because they label themselves as Quaker or were once simply a Christian activist group does not negate that fact.  The AFSC has strong ties with extreme Marxist groups like the ACLU and are funded in part by people like George Soros.  While the intentions of the group are honorable, and many people involved with the AFSC have joined simply for good faith or Quaker based reasons, the organizastion itself has morphed into Communist friendly left-wing propoganda tool over the last 30 years without most members even realizing it.

  2. Sorry.  An article said you attended UC Berkeley and I incorrectly repeated it.  Go “Vili the warrior”!!  Go Hawaii!!  =)

  3. No, I’m sorry, I saw it on your website.  Here is the quote: “One of the best studies of corporate welfare in the United States is published by my old enemies at the Cato Institute”  You mentioned similar comments in other articles as well?

3a. The tax rates that have been paid is based on an unfair system in which politicians have used to wage class warfare.  Some of the most wealthy have also been given tax loopholes and ways to avoid paying almost any tax at all.  I do not support any group having an advantage over the other.  I agree with you that people making 10M a year should pay the same rate as those making 45K.  Also, I agree with you saying that one of the only ways to accomplish this is by switching to a consumption based system like the National Sales Tax (NST), or something like the Fair Tax or Flat Tax.  What I’m concerned about is that you suggested that the rich should pay a higher rate.  It’s the same issue I’m concerned with the Fair Tax.  While attempting to help the truly disadvantaged to pay taxes, giving breaks. (a coupon system like in the Fair tax) or having a tiered tax rate system leaves the door open for politicians to wage class warfare once again and the system can quickly spiral out of control. 

  1. Yeah, I thought it was funny reading various comments in which people would call you BOTH a Liberal and a Conservative in the same thread?? LOL!  I thought you were right down the middle in every case.  I think the main source of the confusion when I see conflicting statements from you is when you said above “I see very little actual difference in policies under the two ideologies currently on the menu.”  (With emphasis on the “currently on the menu” part.)  Both political parties support all of the things you mentioned but political parties are very different from the ideology in which they claim to follow.  In fact, Chris Martenson’s guest G. Edward Griffin, (author of “The creature from Jeckyll Island”) interviewed right before you talked about that.  The vast majority of politicians who currently hold office are followers of some form of “Collectivism”.  What is typically argued about is “how much” Socialism is acceptable?  Have you ever heard the term “All bourbons are whiskey but not all whiskeys are burbons”?  As G. Edward Griffin pointed out, not all Republicans are Individualists or even true conservatives and in fact, many are progressives.  Individualism is a philosophy that offers an ideology very different than what is being offered by elected officials today and more along the lines of what the Founding Fathers initiated… Things like personal liberty, accountability, as little interference by the Government as possible, no welfare state, no empire, and no cartels of any kind to name a few.  I think if you seperated the political parties’ ideas from the ideology in which they claim to follow, it would make a lot more sense and clear up any confusion in the future. 

  2. Thank you for the clarification.  I think you do understand Capitalism and I offer my apology saying you did not.  Most of the confusion was from what I mentioned in the previous point.  Again, I agree with most of what you said in the main article anyway and I appreciate you attempting to clear up any confusion.

I just wanted to comment that you are one of my favorite writers, and I really like the way you think.

I’m interested to hear more from you in the future about alternatives to the current system. I’m particularly curious about what you wrote regarding people going outside the system to create new and better systems. One of the issues I have with the “prepper” movement is that it seems too focused on preparing for the worst without focusing on how to create a better society.

I feel that there is opportunity here for building something from the ashes, and I would like more writers like you to share positive visions so that we can start to look towards something…rather than hunkering down in fear in our proverbial bunkers. Not all econobloggers need to be writing about that, but you seem to have a unique perspective and an underlying optimism, and so I just wanted to say I’m eager to hear more.

PS Note to TommyLee…I think you’ve been indoctrinated too much on the far right side of the thought spectrum. “Social Justice” certainly has liberal connotations, but it doesn’t mean Marxism. It could simply mean, “let’s try to get together and help poor communities become more empowered” - and this can be done through non-governmental means, such as, hmmm, a Quaker organization.

Additionally, while I am primarily a libertarian and feel we should have limited government, I also believe that people who want to get together and create private, voluntary communes should do so. I also support worker-owned companies…once again, these can be voluntary, and not pushed on you by a government. We need to make a distinction between voluntary, intentional communities and government-forced communities. I am all for co-ops. I just don’t want the government to force me to be in one. See the difference? So an interest in social justice does not necessarily equate with wanting America to become a communist country.




[quote=soulsurfersteph]PS Note to TommyLee…I think you’ve been indoctrinated too much on the far right side of the thought spectrum. “Social Justice” certainly has liberal connotations, but it doesn’t mean Marxism. It could simply mean, “let’s try to get together and help poor communities become more empowered” - and this can be done through non-governmental means, such as, hmmm, a Quaker organization.
Additionally, while I am primarily a libertarian and feel we should have limited government, I also believe that people who want to get together and create private, voluntary communes should do so. I also support worker-owned companies…once again, these can be voluntary, and not pushed on you by a government. We need to make a distinction between voluntary, intentional communities and government-forced communities. I am all for co-ops. I just don’t want the government to force me to be in one. See the difference? So an interest in social justice does not necessarily equate with wanting America to become a communist country.


I fully agree that it is someone’s perogative to form a co-op or anything they want to as long it’s not forced upon me.  I understand that it seems like I may sound like a Marxism alarmist who has been indoctrinated and sees the Reds hiding under my bed… LOL!  Social Justice is a concept that has been talked about going back all the way to the days of the Philosopher Plato.  While the term Marxism is fairly recent, Social Justice is a key tenet of it, whatever name that ideology formally went by.  Looking up different definitions online, you’ll find Marxism as the common theme. 


P.S. and TommyLee Rocks!! =)

+1, This thread is better than a soap opera, and there’s no commercials! Thanks all, and keep it coming.
       Now back to our previous programming.Wink

Hi everyone, and it is a pleasure to discuss issues without being called a moron or “phony intellectual” (a commenter’s taunt on Zero Hedge)–to which I reply, isn’t that a redundancy? :slight_smile:  Thank you, Tommy for your clarifications and comments on Fair Tax ideas.  We are in a real pickle here re: the increasing concentration fo wealth and thus political power in this country. The Founding Fathers were concerned about this–the possibility of a quasi-Nobility–but they could not have foreseen how elections now cost millions of dollars and this is the “opening” that enables special interests to dominate the political sphere and divert State-controlled income streams to themselves.
Since I’ve written several thousand entries in 5 years I can’t recall what I said about the Cato Institute, but perhaps I was trying to be amusing in that jibe… I readily confess to shifting my views as I learn more, and I am swayed by readers’ arguments against my positions.

I think the idea is correct about voluntary organizations (and perhaps especially faith-based ones) playing a major part in the future.  Perhaps we can clarify one part of “social justice”–when it is a code-phrase for lobbying the Savior State for more money, I am against it because it’s just another form of unhealthy dependency on the Central State.  When it means restraining the State’s oppressive powers, or promoting self-help, or providing charity to those in need then I am in favor of it.

I think we may have to rely more on charity and volunteerism in the years ahead.  I have this fantasy in which I can sign up to fill potholes in my city. One city employee would bring the hot asphalt and a few volunteers would do the work.  It’s a fantasy because public-union employees would not allow it now, nor would the city attorney–too risky. I suspect those concerns will go by the wayside within 5 years.

I titled one recent post Oversupply of Old Failed Ideas, Undersupply of New Pragmatic Ideas (July 16, 2010) because that’s what I see in general: old failed ideas being floated daily (Keynesian borrowing, the masking of crony Capitalism behind phony “reforms” such as Obamacare, etc.) and very very few new pragmatic ideas.  Clearly, we need to completely remake education and healthcare–they are simply unaffordable in their current states, and little tweaks here and there will not fix them. Ditto energy, food, etc. etc.  Parallel, transparent, non-State, opt-in structures seem to offer the best hope.

Another fantasy of mine is to volunteer at a free university. Some fee would be required to rent and heat the space, but the staff would be mostly volunteers. The cost would be nominal, no loans allowed, cash only. Much of the curriculum would be online, but interaction is also necessary for learning. That model is “impossible” now and the gatekeepers of the current system would of course reject it, but between having no university that is affordable to non-Elites and one that is opt-in, voluntary, very low cost, transparent and self-organizing within a core heirarchy, which one would you rather have for your community and child?

That’s the value of forums such as this one on We need to share radically pragmatic ideas, which tend not have ideological spins.

Thank you to everyone who took the time to comment.

Charles, I agree with you on the volunteerism. It’s funny how some people are very much against it though - I got into real trouble once on Facebook on a thread about library closures when I suggested that people who want libraries need to band together and create a volunteer, non-profit library without expecting the government to do it (because governments are going broke!) Boy, I got a lot of hate directed at me over that simple logic. 
There does seem to be some sort of infestation of leftist thought with the notion that the government should do everything. I’m all for many leftist causes (heck I was a Democrat for most of my life up until recently; now I support neither major party), but I just don’t get so many Democrats are so gung-ho over the government doing everything. I thought the hippies were supposed to be anti-establishment?

Quite a few of the Democrats I know rail against the greedy Republicans, but when you ask them what specifically they are doing to make the world a better place, they don’t have an answer. A good number of the angriest Democrats I know don’t volunteer, don’t donate their money, and ironically, don’t even canvas for their Democratic candidates! They just get angry and complain about the government not fixing everything.

I feel the right and left could come together if we realized that “we the people” extends beyond the government and that we can get together to make a difference now. We don’t have to wait for Congress to fund something - if you want some improvements in your neighborhood, then go do it. What are you waiting for?

This all ties back in to your comments about Americans being stuck in adolescence. We’re entitled but not willing to step up and take responsibility. 

Thank you Charles Hugh Smith.
I would just like to add my thanks to the heap of well deserved appreciative comments, not only for the original contribution but also for taking the time out for continued participation. Your presence here is a great asset and quite enriching.

And thanks again Adam for the brilliant series.

I’ve been a regular visitor of Smith’s website since I discovered it a couple months ago, and appreciate the caliber of his intellect, however I find multiple faults in his reasoning in this article. One of which is maintaining the interconnectedness as a problem solver in the future he optimistically assigns a high value to. Another is that like everyone he is a product of his environment, and though his ability to think outside the box is exceptional, he views reality through the environment that surrounds him and his personal nature. He is obviously a hardworking, industrious, intelligent man, and probably a good man too, and will have the subjective tendency to view life from that (“his”) reality. We all view the world from our own eyes, and tend to project our nature and personality in our perceptions of the world around us. In short, he is optimism is due to his projecting his character traits, though laudable, to his fellow citizens. People in the US have been trained from adolescence to have faith, ie., magical thinking. Our evolutionary biological programing is to be social animals. This human trait has been ceaselessly been exploited by our leaders which makes independent critical thinking in matters concerning the herd exponentially more difficult. Like a group of chimps, or baboons we all via for status within the group, but when the alpha chimp or baboon leads the way across a dangerous territory to obtain food or some other need, all follow automatically. It is the reason we accept was is obviously not real. Faith in gods, country, that we are special, ideology are all sacrosanct and heavily promoted. This includes our leaders. We Americans are gods chosen. God likes us more than them. Faith, in the fundamentalist fashion of religion, economics, government, or some ideological doctrine held as sacred, has to be one of the most pernicious influences still facing humanity. Faith is a rejection of reason. Faith is not only tolerated without scorn, but holds a place of esteem in our culture. Faith is what permits bigotry, racism, and fascism. Faith permits the horrors of war. Faith promotes intellectual apathy and cowardice. The cultural permissibility of faith removes individual accountability to ones own conscious by replacing morality achieved with reason and logic with the chaos and intellectual anarchy derived from emotions associated with misplaced fear. Faith in our governments, in our economic ideology, and our system of laws, has permitted and even encouraged the squandering of the earths resources. Add to that the consequences of our faith in technology, faith which will overcome the near term, exponential depletion in production of multiple resources that support the nearly 7G people on the planet, the price for our faith is, and will be the depletion of our species by billions in number.
Mr. Smith fails to realize how selfish, ignorant, and brainwashed the public is. When the shit hits the fan they won’t suddenly wake up and spontaneously reason everything out. The won’t know why, or what to do then either. They will be just as gullible to charlatans as they are now. They won’t listen to reason from someone like him that can explain everything because they have to be told the what and why by authority figures. We are talking about millions of people that have no integrity, as proven by their acceptance of torture.
Our economy is a Ponzi scheme true? Our leaders are all criminals true? Let’s not pull punches. Congress supports war crimes, torture, murder, systemic fraud true? Our institutions are corrupted with voodoo math. There is no rule of law because there is no accountability. Our entire government is fraud, lies, and secrecy. Ponzi schemes always run until they crash true? Can anyone explain why the Ponzi scheme that is our economy will not end in a crash? Won’t the fraud continue until every trick and delay have run out? Our banks and government are insolvent true? Not only the Federal government, but many states and municipalities can’t service their debt true? With the massive growth of “state” security and the laws that have been passed recently, as well as there being no rule of law, isn’t a police state already in place? With a collapse in the banking system that must come, won’t commerce cease without digital dollars to pay for virtually every tractor trailer, and train load of merchandise? Does anyone believe that there is anyway that America can support it self? There is no amount of factories that could be built in the US to service the debt. Even if they were already here and built. Why do we have military installations all over the planet if not to use them? Will the elite let the various states and municipalities fail that are doomed to bankruptcy in 2011? Is there any way to stop financial failure without collapse or war? I don’t see it.
Anyone that thinks concentration camps here in America are not possible is a fool. Don’t think so? Just think about the million or so Iraq’s that are now dead and all the horrors that were showing up at the Bagdad Morgue our government is responsible for and lets not forget M. Albrights response that she thought 500,000 Iraqi children under 5 dieing due to US santions was “a price we’re willing to pay.” Our leaders are ruthless sociopaths. Don’t let there nice suits smooth talk fool you. Our controllers don’t give a shit about us, our soldiers, or excess people, or anyone anywhere that threatens their control. The citizenry, including our armed forces already accept mass murder and torture. Does anybody really believe there is any difference to killing “them” as us, when as simply as the government just declaring that us are now them we wouldn’t herded up? What does everybody think all these people (from Washington Post) are going to do when the shit hits the fan? Go home? Join the unemployed?
Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States.

  • An estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances.
  • In Washington and the surrounding area, 33 building complexes for top-secret intelligence work are under construction or have been built since September 2001. Together they occupy the equivalent of almost three Pentagons or 22 U.S. Capitol buildings - about 17 million square feet of space.