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‘Dickensian Britain’: Half a million rely on food banks, charities reveal

500,000 people in the UK are resorting to food banks because of squeezes on benefits, wage cuts and the continuing economic downturn, with numbers...

Gina Rinehart Calls For Sterilization of The Poor

Conservative billionaire Gina Rinehart called for the sterilization of the poor today, arguing that the only way to alleviate poverty is...

Radical Remaking of the Economy is Taking Root

It is time for the economy to work for the people, not the elites; it is time for economic democracy. As the school year ends,...

The World’s Richest 8% Earn Half of All Planetary Income

The lead research economist at the World Bank, Branko Milanovic, will be reporting soon, in the journal Global Policy, the first calculation of global income-inequality, and he has found that the top 8% of global earners are drawing 50% of all of this planet's income.

The World's Richest Earn Half of All Planetary Income

May 28, 2013  | ...

Richest 8% Earn 50% of Earth's Incomes

May 28, 2013  | ...

The Public Pillorying of Apple for Legally Reducing Tax Burden

Last week’s show trial of Apple Computer on Capitol Hill ended up being more of an indictment of the Republican Party than of allegedly...

The Public Pillorying of Apple for Legally Reducing Tax Burden

Last week’s show trial of Apple Computer on Capitol Hill ended up being more of an indictment of the Republican Party than of allegedly...

The war on terror and the fate of US democracy

The speech delivered by President Barack Obama at the National Defense University in Washington, D.C. last week has revealed not only a crisis within...

Japan’s Economy Tumbles

“The bankers in Tokyo tell me there is a widespread mindset of panic among institutional holders of Japanese Government Bonds (JGBs) and that can’t...

One Nation, One World

CounterPunch editor Jeffrey St. Clair’s essay, “The Silent Death of the American Left,” succinctly discusses the absence of a left-wing presence and activism in...

The war on terror and the fate of US democracy

  28 May 2013 ...

Sweden Rebellions Reveal Deepening Racial and Class Divisions

Many people in Sweden and across Europe and the world were shocked at the week of unrest which began on May 19 in the...

Aref eyes fair wealth distribution

Iranian presidential candidate Mohammad-Reza Aref outlines his plans to Press TV in an interview whose approximate transcription is as follows: Press TV: I would like...

40 Statistics About The Fall Of The U.S. Economy That Are Almost Too Crazy...

Michael Snyder Economic Collapse May 27, 2013 If you know someone that actually believes that the U.S. economy is in good shape, just show...

The Network of Global Corporate Control: A Giant Bow-tie Structure, A Tightly-knit Core of...

by Stefania Vitali, James B. Glattfelder, Stefano Battiston The structure of the control network of transnational corporations affects global market competition and financial stability....

Qalibaf vows to bring prosperity to Iran

Tehran Mayor Mohammad Baqer Qalibaf, who is running for president in the June 14 election, has pledged to make optimum use of Iranâ„¢s abundant...

The World of Our Children

The front cover of the May edition of National Geographic has an intriguing headline. Just over a large photo of a baby of several...

Marching in Chicago: Resisting Rahm Emanuel’s Neoliberal Savagery

http://www.truthdig.com/report/item/marching_in_chicago_resisting_rahm_emanuels_neoliberal_savagery_20130524/ Posted on May 24, 2013 ...

Apple’s tax dodge: the case for public ownership

  24 May 2013 ...

A fraudulent campaign for “climate justice”

  The “Ecosocialist” conference in New York ...

Poverty skyrockets in US suburbs

  By ...

The social disaster in Tornado Alley

  23 May 2013 ...

‘Multiculturalism failing’: Stockholm suburbs enflamed with riots for days, Swedish PM calls to get...

Hundreds youths hurling rocks, burning cars and smashing windows for the second day in a row in Stockholm say they are protesting against police...

Billionaires Unchained: America is a Democracy of the Wealthy

Billionaires with an axe to grind, now is your time. Not since the days before a bumbling crew of would-be break-in artists set into motion the...

From Reactive to Proactive: The World Social Forum and the Anti-/Alter-Globalization Movement

Given the prevailing research interest on the transition from anti- to alter- globalization, this paper examines where the World Social Forum is situated in...

Flawed Financial System: Governments Held Hostage by the “Too Big to Fail” Banks (TBTF)

The G-7 summit brought up too-big-to-fail (TBTF) financial institutions as a systemic risk to be addressed. The odds are low that any real reform...

Church of Scotland edits Israel report

Church of Scotland report challenging Jews "divine right" to Palestinian homeland unchanged The Church of Scotland's revised report 'The Inheritance of Abraham?' has now been...

Church of Scotland edits Israel report

Church of Scotland report challenging Jewsâ„¢ Ëœdivine rightâ„¢ to Palestinian homeland unchangedThe Church of Scotland's revised report 'The Inheritance of Abraham?' has now been...

Stalemate after elections in Bulgaria

  By ...

The Lotto Symbolizes the False Promises of Barracuda Capitalism

http://www.truthdig.com/report/item/the_lotto_symbolizes_the_false_promises_of_barracuda_capitalism_20130519/ Posted on May 19, 2013 ...

UK MPs set to pocket a £10k pay rise

British MPs have been prepared for a controversial future pay rise of up to £20,000.British Members of Parliament (MPs) have been prepared for a...

Challenging the US Economic Power Sturcuture: Popular Resistance Percolates Throughout the Land

Every week we are inspired by the many people throughout the country who are doing excellent work to challenge the power structure and put...

The Problem With Obama’s Second Term

http://www.truthdig.com/report/item/the_problem_with_obamas_second_term_20130516/ Posted on May 16, 2013 ...

“Secret Negotiations”: The Trans-Pacific Partnership Agreement (TPP): A Corporate Takeover?

By Dave Johnson You will be hearing a lot about the upcoming Trans-Pacific Partnership (TPP) agreement. TPP’s negotiations are being held in secret with details kept secret...

The New Pay-As-You-Go Landscape of American ‘Democracy’

Today, politics is a rich man’s game. Look no further than the 2012 elections and that season’s biggest donor, 79-year-old casino mogul Sheldon Adelson.

The Neoliberal University: Origins and Alternatives.

UK Higher Education (HE) is being transformed. The introduction of tuition fees of up to £9000 per year induces changes across the whole system including the public purpose, administration and culture of universities. In this guest post, Hugo Radice assesses the transformation of HE as part of wider processes of neoliberal restructuring.

Forty years ago universities in the UK were largely self-governing institutions for the higher education of a small élite of some 10% of the relevant age group. Although the chances of attending were heavily biased by secondary education and family background towards the children of the upper classes, fees had been abolished, and means-tested grants were available to all home students. The student movement of the late 1960s had largely subsided, the new universities of the 1960s had revitalised teaching and research, and the graduate job market appeared robust. Today, the universities are in thrall to the state over the content of their teaching and research, as well as their finances; and now that a vastly-expanded sector takes in 40% of the age group, they will graduate into a depressed labour market, as well as facing crippling debt burdens from loans for fees and living expenses.

This transformation has been part of a much wider process of social change, in which the postwar model of capitalism based on an active state, consensus politics and the slow but steady redistribution of income has been replaced by a neoliberal model based on individualism, market competition and the rise of a plutocratic élite. At the heart of neoliberalism lie four key changes in our political economy: privatisation of public assets, deregulation of markets, the rise of finance and globalisation. Universities have been at the heart of this process in many ways.

First, the public purpose of universities has been transformed, from the generation and dissemination of knowledge in itself, to enhancing the international competitiveness of the economy.  Their teaching resources are aimed at the production of a labour force with knowledge and skills appropriate to that purpose; this extends even to the humanities students destined for employment in the media, education and culture sectors. Their research is ever more closely coordinated with the commercial agendas of big business, and expected to have an immediate ‘impact’.

Photo by Morten Watkins
Second, the administration of universities is no longer structured around resourcing and planning real activities shaped by academic communities in the different subject areas, but on the imposition of uniform financial models that centre on individualised rewards and punishments.  These models reflect a general shift in the public sector as a whole towards a ‘new public management’, based on the model of the profit-driven private sector that combines Stalinist hierarchical control and simulated internal markets for resources.

Third, for both staff and students, the culture of universities has accommodated these transformations.  Governed everywhere by quantitative targets and competition for places in ‘league tables’ on everything from graduate employability to research outputs to health and safety breaches, we have meekly accepted that higher education is no longer a cooperative effort to improve our understanding and our work, but about fierce competition with each other for the means to financial security.  Students have been encouraged to see themselves as customers, whose chief goal is to obtain credentials that give an advantage in the job market, rather than to acquire knowledge as such.

Not surprisingly neither staff nor students have accepted these extraordinary changes without demur.  From the notorious Warwick occupation of 1970, in which the university leadership was found to have kept secret files on left-wing staff and students, to the anti-fees campaign of 2010-11 and the recent occupation at Sussex opposing the out-sourcing of services, there have been periodic eruptions of protest.  There has been a steady shift in the political allegiances of academics towards the centre-left, and the growth of serious critical analysis of the changes in the sector, the most recent example being Andrew McGettigan’s The Great University Gamble.

Photo by Morten Watkins
The 2007 merger of the AUT representing academic and related staff in the ‘old’ universities, and NATFHE representing those in the ‘new’ post-1992 universities and the further education sector, has in principle strengthened the ability of staff to resist the steady erosion of pay and conditions. But there remains little by way of analysis, and above all debate, that could provide a long-term basis for an alternative model of higher education. Most academics are preoccupied with day-to-day issues, whether over individual career goals or over collective efforts to preserve some autonomy and self-respect.  In the world outside, press barons and politicians happily stir up public resentment against the sector, based on the fact that both academics and the graduates they train continue to be rewarded with above-average incomes and life chances.

For the most part, our protests are informed by an agreed understanding that higher education used to be much better.  Certainly, there was a time when studying was debt-free, when senates actually decided matters of substance, when research was untrammelled by commercial considerations, and when adult education departments freely disseminated knowledge outside the university’s walls. The 1968 call for ‘red bases’ in the universities appears in retrospect absurd, but surely no more than the idea that they could today become progressive zones based on the disinterested education of society at large, if they have to function within a wider society driven by individualism and the pursuit of wealth. After all, in that wider society socialism of any kind seems to be a dead duck: its communist variant is reduced to the absurdities of North Korea and the dwindling hopes invested still in Cuba; while the compromises that social-democracy has made with the wealthy and powerful have led to repeated electoral defeats and disappointments.

However, from outside the ruling circles of high finance and their cheerleaders in parliament and the media, profoundly radical ideas have been raised during the present crisis on issues such as inequality, poverty, human rights and climate change. The prospects for humanity are increasingly uncertain, and millions are attracted, for want of anything else, towards a politics of fear and exclusion.  The way forward can only be through reasserting the fundamental values of equality and solidarity. We need not only to be against the present order, but positively in favour of a realistic alternative that can attract widespread public support.

Photo by DanielJPHadley

Above all, we need to build this around equality: not of equality of opportunity, which inevitably favours the advantaged, but substantive equality of condition. Education ought to be geared not to the selective allocation of place and privilege, but to the development of skills and capacities for all citizens that would fit them to play a full and equal part, both in production for social needs and in their political determination.  In such a world, universities could truly aspire to be universal, to act as genuinely open-source repositories of knowledge accessible to all.


Note about the author:

Hugo Radiceworked in UK higher education from 1971 to 2008. This blog is based on a longer paper, “How we got here: UK higher education under neoliberalism”, which is due to appear in a special issue of ACME: An International E-Journal for Critical Geographers (www.acme-journal.org) on higher education. The paper is available from the author (h.k.radice@leeds.ac.uk).

Nationwide protests against austerity in Israel

  By ...

UK austerity widens poor-rich gap: OECD

The Organization for Economic Cooperation and Development (OECD) has warned about a worsening poor-rich gap in Britain due to Londonâ„¢s insistence on its austerity...

Detroit’s emergency manager throws down the gauntlet

  15 May 2013 ...

The Triumph of Progressivism: Graduation 2013 and 1968

http://www.truthdig.com/report/item/the_triumph_of_progressivism_graduation_2013_and_1968_20130514/ Posted on May 14, 2013 ...

The Criminalization of Political Dissent in America

In a series of prosecutions, precedents are being established for the criminalization of political dissent in America. Last week, Massachusetts high school student Cameron D’Ambrosio...

Cuts in Social Security and Medicaid Contribute to Further Impoverishing African Americans

Obama administration set to abolish CPI, Cola and slash medical coverage for poor and elderly Massive cuts are being proposed which will impact the way...

Moyers: How Storytelling Is at the Heart of Making Social Change

May 13, 2013  | ...

Spaniards mark movement anniv.

1000s of Spaniards mark indignants movement anniv.Thousands of Spaniards have demonstrated nationwide to mark the second anniversary of the "indignants" movement formed to protest...

US govt behind nation’s wage disparity

The US government plays a major role in wage disparity in the country by contracting out federal jobs to private contractors that pay their...

US surpasses other industrialized countries in infant death rate

  By Naomi Spencer9 May 2013 A new report on motherhood paints a devastating portrait of social conditions for poor women and their babies around the...

Turning “Mirage Recovery” into a Real Economic Recovery

Recently, news reporters have been sounding almost giddy, saying that unemployment is dropping, housing prices are rising and the stock market is growing to...

More Babies Die in America on Their First Day Than Anywhere Else in Industrialized...

According to a new report, first-day mortality rates in the industrialized world are the highest in the United States. May 7, 2013  |   Like this...

Collapse of an Empire: Why America Fell So Far … So Fast

Thomas Edison said, “Dissent is the highest form of patriotism.”  And because I love my country, I frequently criticize America’s shortcomings in the hopes...

Digital Grab: Corporate Power Has Seized the Internet

If your daily routine took you from one homegrown organic garden to another, bypassing vast fields choked with pesticides, you might feel pretty good about the current state of agriculture. If your daily routine takes you from one noncommercial progre...

Marriage Equality is a Matter of Simple Justice, Says Americans United

WASHINGTON - March 27 - The U.S. Supreme Court today is hearing oral arguments in a case about the Defense of Marriage Act (DOMA), a federal law that bars federal government recognition of the marriages of same-sex couples. Yesterday, the justices heard argument in a case dealing with Proposition 8, a California constitutional amendment that removed the right of same-sex couples to marry.

The Rev. Barry W. Lynn, executive director of Americans United for Separation of Church and State, gave the following address today at the “United for Marriage” rally in front of the Supreme Court building.

Said Lynn:

“I am a minister in the United Church of Christ and a member of the Supreme Court bar. Long ago, I gave up thinking I had the gift of prophecy generally and I’ve also given up trying to predict specifically what the justices behind us will do.

“Two groups of Americans have been gathering here for the past two days.  I know quite a few people in both camps. Those who are anti-marriage equality are not all haters and bigots. But – they are all wrong. Their time is past and they know it; polls demonstrate that they cannot even convince their own children they are right. Their ethical analyses and their purportedly moral viewpoints will soon be relegated to the dustbin of human history.

“I oppose the agenda of the Religious Right every day at Americans United for Separation of Church and State, because I know that the United States is not a theocracy; it is not a place where the law reflects some powerful group’s narrow and crabbed view of what any holy scripture allegedly says. It is why we have fought for a separation of church and state – and why we need to get that correct each day.

“We would not have DOMA or Proposition 8 if it were not for the wealthy and powerful sectarian forces that stand behind the rubric of marriage inequality and who treat some to a second-class citizenship our Constitution abhors.

“American history is an interesting thing. Taking the long view, it is crafted by ordinary people like us more than by presidents or senators or Supreme Court justices. And sometimes sooner, sometimes later, we the people tend to get it right. And we – the second camp – are getting it right today: we are standing up for something so fundamental, so real, so remarkably simple that these marble steps cry that we haven’t seen it sooner.

“I have been married to my spouse Joanne for 42 years; we have two great children – one girl, one boy; we are just what one anti-equality speaker on the radio yesterday said was the dream American family. I know how good that feels. Yesterday, I was in tears listening to the dreams of other families, dreams that cannot yet be fulfilled for them because of the very law being debated today inside that building. 

“You shouldn’t need a theological or a legal degree to recognize one simple equation. All people who are willing to accept the rights and responsibilities of a long-term commitment deserve equal treatment under our Constitution no matter what job they do, no matter what state they live in, no matter who they love. A simple equation of simple justice!

“As I said, I don’t know what this Supreme Court will do in June.  I don’t know whether our side will win or lose or get a mixed message or perhaps get no definitive answers at all. This I do know. If decisions don’t go our way, we will find every other venue in which to make our arguments; and we will return to this court one day.

“Even if we prevail on the arguments of the past two days, our job will not be over. Decisions of this court are not self executing. We will need to be vigilant that every family is accorded whatever rights this Court grants them. Just like Brown v. Board of Education, we will need to be sure that every state, every community, puts the principle into practice and that no one is left behind.

“And we will do that because we have always done that. We do not stop litigating, we do not stop marching, we do not stop debating, we do not stop organizing until we win for everyone."

Americans United is a religious liberty watchdog group based in Washington, D.C. Founded in 1947, the organization educates Americans about the importance of church-state separation in safeguarding religious freedom.

Capitalism in Crisis: Richard Wolff Urges End to Austerity, New Jobs Program, Democratizing Work

Truthout needs your support to produce grassroots journalism and disseminate conscientious visions for a brighter future. Contribute now by clicking here.

As Washington lawmakers pushes new austerity measures, economist Richard Wolff calls for a radical restructuring of the U.S. economic and financial systems. We talk about the $85 billion budget cuts as part of the sequester, banks too big to fail, Congress’ failure to learn the lessons of the 2008 economic collapse, and his new book, "Democracy at Work: A Cure for Capitalism." Wolff also gives Fox News host Bill O’Reilly a lesson in economics 101.

TRANSCRIPT:

AMY GOODMAN: "Anda," music by the pianist, arranger and composer Bebo Valdés. He died Friday at the age of 94. The son of a cigar factory worker and grandson of a slave, he studied classical music at the Conservatorio Municipal in Havana and became a favorite collaborator with the great Cuban singers of his era, including Beny Moré and Pío Leyva and Orlando Cascarita Guerra, along with Americans such as Woody Herman and Nat King Cole, was considered a giant during the golden age of Cuban music. This is Democracy Now!, democracynow.org, The War and Peace Report.

Our guest is Richard Wolff, a professor emeritus at the University of Massachusetts, Amherst, now at New School University, author of a number of books, including Democracy at Work: A Cure for Capitalism.

I want to talk about austerity here at home. This is House Speaker John Boehner speaking last month defending the $85 billion budget sequester cuts that took effect on March 1st.

HOUSE SPEAKER JOHN BOEHNER: The American people know, the president gets more money, they’re just going to spend it. And the fact is, is that he’s gotten his tax hikes. It’s time to focus on the real problem here in Washington, and that is spending.

AMY GOODMAN: House Speaker John Boehner. Professor Richard Wolff, your response? And also, that the Obama administration was warning catastrophe if sequestration took place. It took place.

RICHARD WOLFF: Well, it’s a stunning comment on our dysfunctional government built on top of a dysfunctional economy. Here we are in the middle of a crisis. We have millions of people without work, millions of people losing their homes, an economy that doesn’t work for the vast majority. The United States government is one of the major customers for goods and services in America. Sequestration is simply a cutback in government spending. It doesn’t take rocket science to understand that if the government, as the largest single buyer of goods and services, cuts back on the goods and services it buys, that means companies across America will sell less, and they’ll have less need of workers, and they will lay off workers. So, this is an act that worsens an unemployment that is already severe.

If you put that together with the tax increase on January 1st—and let me say a word about that. We heard a lot of public debate about taxing rich people, not taxing rich people, Republicans and Democrats, but the tax on the wealthy is small compared to the tax on the middle and lower incomes that went up on January 1st. When we raised the payroll tax here in America from 4.2 to 6.2 percent, we raised over $125 billion—huge amount of money, much more than was raised by taxing the rich—and we savaged the middle- and lower-income groups in America, those that in the presidential election both candidates had sworn to save and support. We attacked them, thereby limiting their capacity to buy goods and services because we taxed them more.

You put together the taxing of the middle and lower incomes with the cutbacks of government spending, and you’re going to do what every European country that has imposed austerity has already discovered: You’re making the problem worse. So with all the homilies that Mr. Boehner can put out there about how spending is a problem, this abstract idea doesn’t change the fact you’re making the economic conditions of the mass of people worse by these austerity steps, not better. And that ought to be put as the fire burning at the feet of politicians, so they stop talking these abstractions and deal with the reality of what they’re doing.

AMY GOODMAN: So what do you think needs to be done?

RICHARD WOLFF: A radical change in the policies. And I think it has to go far beyond simply reversing this austerity program, which, again, just for a word about history, back in the 1930s, the last time we had a breakdown of our capitalist system like this, we didn’t have austerity, we didn’t have cutbacks. We had the opposite. Roosevelt, in the middle of the '30s, created the Social Security system, went to everybody over 65 and said, "I'm going to give you a check for the rest of your life." He created the unemployment compensation system, giving all the unemployed for the first time checks every week for a year or two. And he created a public employment program and hired millions of workers. It’s the opposite of austerity. So any politician who says, "We must do this, because there’s no option," has forgotten even the American history of not that long ago.

So, the first thing I would do is go in that direction—not austerity, but its opposite. But I want to go further, because I think our problem is deeper. This crisis wasn’t supposed to happen. When it happened, it wasn’t supposed to last a long time. All of that has been proven false. The problems run deep. And I think what we have to do, and what that book tries to do, is to talk about reorganizing our economy so that for the first time we can say we’re not only going to get out of this crisis, we’re taking the kinds of steps that can prevent us from having them over and over again as our unstable business-cycle-ridden economy keeps imposing on us. So, for me, it’s the more profound change that we finally have to face, painful as it is. After 50 years of a country unwilling to face these questions, I think we need basic change. And that’s what I spend most of my time stressing.

AMY GOODMAN: Before we talk about the basic change, "democracy at work," as you put it—

RICHARD WOLFF: Right.

AMY GOODMAN: —what could Obama do without congressional support right now?

RICHARD WOLFF: Well, I think, in many ways, he could initiate a public employment program. I think it’s long overdue that he find all the ways available to him to say what Roosevelt said—and not that Roosevelt did everything correctly, and not that he’s a genius or any of that, but to take some lessons from those people in our country before who took steps that were successful.

AMY GOODMAN: I mean, Roosevelt didn’t plan on doing this when he first took office.

RICHARD WOLFF: Absolutely. He had pressure from below. The CIO, the biggest union-organizing drive in American history, never had anything that successful before.

AMY GOODMAN: As in AFL-CIO.

RICHARD WOLFF: That’s right. And with the socialist and communist parties, who were strong at that time, working with them, they organized millions of Americans into unions who had never joined a union before, and they pushed from below in a very powerful way. And they changed Mr. Roosevelt, showing that politicians, if subject to pressure from below, can change—same lesson that Cyprus has just taught us yet again. So, my response is: Learn from that. Roosevelt went on the radio to the American people and said, basically, "If the private sector either cannot or will not provide work for the millions of Americans that need and want to work, then it’s my job as president to do it." And he did it.

And I think Mr. Obama could and should overcome whatever has made him hesitate. We in this country not only don’t have a federal employment program, the Republicans and Democrats haven’t even put it on the floor to debate it as an important issue, even though it comes out of our own history. So I would say, put us—put our people to work. They want to work. The Federal Reserve says 20 percent of our tools, equipment, factory and office space is sitting idle, unused. So we have the people who want to work; we have the tools, equipment and raw materials for them to work with. And lord knows we need the wealth they could produce. Put them to work, and make it a national issue that that happen.

AMY GOODMAN: Where does the money come from?

RICHARD WOLFF: Well, Roosevelt went to the wealthy, and he went to the corporations, and he said to them, "You must give me the money to take care of the mass of people, because if you don’t, we’re going to have a catastrophe in this country. We’re going to have a social revolution." My argument is, let’s go back to the same tax rates that Roosevelt imposed, or at least in that neighborhood, which is much higher on wealthy people and much higher on corporations than we have today. That’s what he did. That’s how he funded it.

And in case our politicians are worried, let’s remind them: Mr. Roosevelt, who took those daring steps, was re-elected to be president four consecutive times, the most popular president in American history. It’s not a dead-end political decision. It’s the best decision a president could make to leave his legacy in history, that, we are told, our presidents care so much about.

AMY GOODMAN: We’re talking to Richard Wolff, author of Democracy at Work. Again, before we talk about "democracy at work," I wanted to go to a recent hearing in Washington. Executives with the banking giant JPMorgan Chase appeared before a Senate panel earlier this month to answer questions around so-called "London Whale trades" that cost the bank more than $6 billion and derailed financial markets worldwide. This is Arizona Republican Senator John McCain criticizing JPMorgan’s actions.

SEN. JOHN McCAIN: JPMorgan completely disregarded risk limits and stonewalled federal regulators. It is unsettling that a group of traders made reckless decisions with federally insured money and that all of this was done with the full awareness of top officials at JPMorgan. This bank appears to have entertained—indeed, embraced—the idea that it was, quote, "too big to fail."

AMY GOODMAN: Ashley Bacon, JPMorgan’s interim chief risk officer, testified at the same hearing.

ASHLEY BACON: I don’t think it is too big to fail. I think there’s further work that needs to be done to demonstrate and document that, and it’s in process. I’m not leading that process or deeply involved in it, but I think it is—it’s something that needs to be demonstrated to everybody’s satisfaction.

AMY GOODMAN: That was Ashley Bacon, JPMorgan’s interim chief risk officer. Can you explain what took place here and what is happening?

RICHARD WOLFF: Yes. On the question of "too big to fail," there really isn’t much to say. In 2008, our banks failed—all of them—the way the Cyprus banks failed and for very similar reasons. They took in a lot of depositors’ money, and they made risky bets they shouldn’t have made, and they failed, and so they didn’t have the money to honor their obligations, and they turned to the government for a bailout. And when the government hesitated, because it’s public money to bail out a privately failed bank, they were told, in another kind of blackmail, "We’re too big to fail. If you don’t bail us out, we will collapse and take the entire economy with us." And that was a persuasive argument. Particularly after they allowed Lehman Brothers to fail and that nearly did take the economy with it, that was a convincing argument.

You would have thought they had then learned the lesson about the problem of a too-big-to-fail financial institution. If you thought that, you would have been wrong, because the same banks that were too big to fail in 2008 are, all of them, bigger today. So we didn’t learn the lesson. We didn’t break up the banks. We didn’t limit, control their growth. They’re bigger now than they were then. And in a sense, maybe shame on them the first time, but having allowed this to happen, it’s shame on us.

Number two, we seem to need, as a nation, to believe that we have the power to control, limit or regulate, whether it’s the Glass-Steagall Act that came out of our disaster of the 1930s or the Dodd-Frank Act, which came out of the disaster that started in 2008. We seem to want to believe we can leave in place private banks, no matter how big they are, and hedge them about with regulations. The proof of the Whale trades in London, the proof of everything we know, is that these banks have the money, the staff, the resources to work their way around the regulations at least as fast as we impose them on them. That’s what these hearings fundamentally show. They can make trades that are too risky. They can lose wild amounts of money. They can turn to the government and demand to be helped and bailed out each time. And they get it. We are telling them, in a classic example, "Look, do whatever you want. You don’t have any risk of fundamental failure and punishment." Regulation doesn’t work, because we believe in place an entity, a large corporation, with the money and the incentives to get around it.

AMY GOODMAN: Interestingly, Jamie Dimon, the head of JPMorgan Chase, did not testify. He was brought before the Senate, what, about last June, where the senators were asking him for advice. And then, when you looked at the senators on the Senate committee and how much money JPMorgan Chase had given each of them, we’re talking about millions of dollars went to many of them.

RICHARD WOLFF: When I say that the big corporations, particularly the banks, have the resources and the incentives, I’m being polite. Yeah, part of the resources are going into literally making sure that the political regulator is a good friend and understands the complexities. In simple English, they are buying their way into the situation we watch, which is: "We will pretend to be regretful. You will pretend to be protecting the public. You will make regulations that we help you write so that we can get around them." It is something that ought not to be allowed to continue, because we’re living the economic crisis that comes from that way of doing business.

AMY GOODMAN: What lessons have been learned since 2008? And today, could the U.S. see the same situation as Cyprus?

RICHARD WOLFF: Absolutely. We have banks that are literally telling us, because we know from our controls that they are trying, even, to regenerate it. They’re trying to get people to borrow more money again. We’re not changing the wage structure of America, which means that Americans are required to go into debt to supplement their wages. You know, the irony is, we are trying, in the language of some of these folks, to kickstart our economy, to get it going again. But the problem is, our economy was a train heading into a stone wall in the first years of this century, and if we get our economy going again, without fundamental changes, what we’re doing is putting that same train back on the track heading towards the same wall. Cyprus shows us what’s happening.

But we don’t have to take just small countries. Take Great Britain, our classic ally. Their economy is now in the second or, in some people’s minds, the third recession within the crisis since 2007. They are following an austerity problem—process exactly like that supported by Mr. Boehner, and the economic downturn in Great Britain is catastrophic for that society. And so, we have this image of a future for us, if we don’t make fundamental change, but everyone wants to put it away and pretend that we can let it go by itself or a few regulations will solve the problem. They haven’t. They’re not doing it now elsewhere. That’s not a strategy we should pursue in this country, either.

AMY GOODMAN: When we come back, we’ll talk to Professor Richard Wolff about the alternatives, about, well, what he’s put forward, Democracy at Work: A Cure for Capitalism. This is Democracy Now! We’ll be back with Professor Wolff in a minute.

[break]

AMY GOODMAN: We continue with Richard Wolff, professor emeritus of economics at University of Massachusetts, Amherst, visiting professor at New School University here in New York, does a weekly program on WBAI in New York called Economic Update every Saturday at noon. His latest book is Democracy at Work: A Cure for Capitalism. So what exactly do you mean by this?

RICHARD WOLFF: What I mean is a change in the enterprises that produce the goods and services we all depend on and provide the jobs we all need and want. I think those have to be, in a fundamental way, democratized. So let me begin in that way.

We live in a country that says it goes to war around the world to bring democracy and that its central, most important political value is democracy. If you believe that—and I am a fervent supporter of democracy, and obviously you are—you’ve named your program that way—then we ought to have democracy in the place where we as adults spend most of our time. Five out of seven days we go to work. We walk into a place where we use our brains and our muscles eight or more hours, five out of seven days. If democracy is an important value, it ought to be right there, first and foremost. But we don’t. We basically have a situation where, for most of us, we go to work in a place where the decisions that are made are made by a tiny group of people. The major shareholders who own the block of shares in our system select a board of directors, 15 to 20 people, and they make the basic decisions: what to produce, how to produce it, where to produce it, and what to do with the profits. The rest of us must live with the results of that decision.

So if that tiny group of people make a decision to close the factory in Cincinnati or the office in Atlanta and move to Shanghai, the chips fall where they may. If they decide to use a toxic technology that’s not good for the air and water but is good for the profits, they do, we live with the results. And when they decide to take the profits of their business and to give enormous pay packages to a handful of top executives and big dividend payouts to their shareholders, which of course they do, since they’re in a position to do it, and the rest of us suddenly have to take out absurd debts to get our kids through college, then that’s the inequality of income and wealth that we have in America.

So, I look at this decision-making apparatus, I say, "Why are we surprised that they make the decisions the way we do—they do?" We all live with the results, and we have no say in how those decisions are made. It’s not democratic. That’s the first thing. But the second thing is, we’re now in five years of economic crisis that indicate that way of organizing the decisions doesn’t work for the mass of people. It works for them. The stock market’s back. The profits of big corporations are back—surprise, surprise—given who makes the decisions. But we are left.

And so, for me, the solution is, let’s face this. Let’s build an option, a real choice for Americans, between working in a non-democratic, top-down-organized capitalist enterprise or in what, for lack of a better term, we can call "cooperatives," workplaces that are organized democratically. I think we’ll have less inequality of income, we will have less pollution of our environment, and we’ll have less loss of jobs out of the country, if those decisions were made by the people, as they should have been from the beginning, who will not make the kinds of decisions that got us into the mess of economic crisis that we’re in now.

AMY GOODMAN: In June, you wrote a piece, Richard Wolff, in The Guardian called "Yes, There is an Alternative to Capitalism: Mondragon Shows the Way." Mondragon, Spain’s renowned co-op where all enterprise is owned and directed by co-op members. At the Green Party’s convention last year, the keynote speaker, Gar Alperovitz, said the Mondragon model is being replicated here in the United States. I want to just turn to a clip of what Gar Alperovitz said, the professor of political economy at the University of Maryland.

GAR ALPEROVITZ: So, in Ohio, the idea of worker ownership is a bigger idea. Lots of people understand it. And in Cleveland, building on the Mondragon model—some of you know about the Mondragon model—and other ideas, there are a series of worker-owned, integrated co-ops in Cleveland in a neighborhood where the average income is $18,000 per family. And they have got these co-ops, not just standing alone, but linked together with a nonprofit corporation and a revolving fund. The idea is to build the community and worker ownership, not just make a couple workers richer, to say the least, not rich, but to build a whole community, and to use the purchasing power of hospitals and universities—tax money in there—Medicare, Medicaid, education money, buy from these guys, and build the community. That model—and it’s the greenest for—one of the things is the greenest laundry in that part of the country, that uses about a third of the heat and about a third of the electricity and about a third of the water. They’re on track now to put in more solar capacity that exists—one of the other worker-owned companies—that exists in the entire state of Ohio. These are not little, dinky co-ops.

AMY GOODMAN: That was Gar Alperovitz talking about the Mondragon model here. And when we were in Spain, Democracy Now! went to Mondragon and interviewed one of the cooperative members, and we’ll link to that at democracynow.org [ Click here to watch the interview with Mikel Lezamiz, director of Cooperative Dissemination at the Mondragon Cooperative Corporation in Spain’s Basque Country. ] But, Richard Wolff, talk about that model and what’s happening here.

RICHARD WOLFF: Well, the model of Mondragon is so interesting, not only because it’s a real co-op, where the workers make the decisions—what to produce, how, where, what to do with the profits. And just to mention one of their achievements, they have a rule that the highest-paid worker cannot get more than a maximum of eight times the lowest. In our society, it’s typical in our large corporations that the CEO gets 300 to 400 times what the lowest worker. So, for those of us that are interested in a less unequal society than what we have here in America, the lesson is, if you cooperatize your enterprise, that’s a sure route to get there. And we haven’t found any other route that is just as effective.

So, the importance of Mondragon is, they start in the middle of the 1950s with a Catholic priest, Father Arizmendi—I always have to remember it—with six workers in the north of Spain, desperately trying to overcome the unemployment there. And here we are over a half a century later. Having to compete with countless capitalist enterprises, they won that competition. Trying to grow, they have a growth record that would be the envy of any capitalist corporation. They went from six workers in 1956 to 120,000 workers today in Spain.

AMY GOODMAN: And they are making?

RICHARD WOLFF: And they are making everything. They make dishwashers. They make clothes washers. They raise rabbits on farms. They do high-tech research, together with General Motors and Microsoft as some of their partners there. They do an immense array. They’re really a family of 200 to 300 co-ops that are united within the Mondragon cooperative corporation. So they’ve shown the ability to grow. They’ve shown the ability to adapt. They’ve shown their competitive power. They have—excuse me, they’ve shown all the different ways that a corporation can develop without a top-down hierarchical, undemocratic structure. So we don’t have to choose between effectiveness, growth, job, security, and a cooperative structure. The cooperative structure can be a way to get there.

Here in the United States, we have lots of such co-ops developing. There’s one even named after Father Arizmendi in California in the Bay Area. There are six Arizmendi bakeries and coffee shops that were set up on that model. They started with one; they’re now six. Hint: They’ve grown. And you can do this. And all over the United States, there are these efforts, often done by people who want a different kind of life. They want to be in charge of their own job. They want to have a sense of control and a sense that they’re not just a drone doing the work, but they’re part of the folks who design and direct. It brings out new capacities. It makes you more happier to go to work. It’s a more satisfying job life than you would otherwise have. So I think it recommends itself on all kinds of levels.

One other example, we can learn something from a country called Italy that we admire for its cuisine and its lovely countryside. They have a law there, passed in 1985, called the Marcora Law after the name of the legislator. Here’s what it does. It offers a choice to unemployed workers. You can take a dole every week, an unemployment check, the way we do in this country, or you have an option, an option B that we don’t have. If you get at least nine other workers to make the—unemployed workers, like yourself, to make the following choice, here’s what you can get. As a lump sum, you can get your entire unemployment program of two years of checks in your hands right at the beginning; you have to have nine other workers or more, and you have to use that money as the start-up capital for a cooperative enterprise. The idea of the Italian government was, if we give workers this to set up a job and an enterprise, they will be much more committed to it than they would if they didn’t have that role.

AMY GOODMAN: How do they know they’ll do it?

RICHARD WOLFF: They don’t. But they know those workers have an incentive, because if they don’t make that work, they can’t go back and collect unemployment. That’s what they got. The government doesn’t spend much more money than it would have anyway, but it creates jobs, and it creates workers committed, because it’s their enterprise, to make that work as their personal solution and as a way not only for them to survive, but for the whole of the Italian society for the first time to see what it’s like to have an enterprise where you run the affair.

You know, here in America, we want to believe in freedom of choice. Let’s give our people freedom of choice. They can have the choice to go work in a top-down, capitalist enterprise—what we’re used to—but if we develop the alternative, really a program of co-ops around the country, then American young people and older people could say, "What would it be like to work there? Let’s see what that’s like." And then we would have the choice we do not have in this country now.

AMY GOODMAN: Professor Wolff, before we end, I want to turn back to the crisis in Cyprus and relate it to what’s happening here. Bill O’Reilly of Fox News warned his audience last week that Cyprus and other European countries are facing economic hardships because they’re so-called "nanny states."

BILL O’REILLY: Greece, Italy, Spain, Portugal, Ireland, now Cyprus, all broke. And other European nations are close. Why? Because they’re nanny states, and there are not enough workers to support all the entitlements these progressive paradises are handing out.

AMY GOODMAN: That’s Bill O’Reilly of Fox News. Richard?

RICHARD WOLFF: You know, he gets away with saying things which no undergraduate in the United States with a responsible economic professor could ever get away with. If you want to refer to things as nanny states, then the place you go in Europe is not the southern tier—Portugal, Spain and Italy; the place you go are Germany and Scandinavia, because they provide more social services to their people than anybody else. And guess what: Not only are they not in trouble economically, they are the winners of the current situation. The unemployment rate in Germany is now below 5 percent. Ours is pushing between 7 and 8 percent. So, please, get your facts right, Mr. O’Reilly. The nanny state, you call it, the program of countries like Germany and Scandinavia, who tax their people heavily, by all means, but who provide them with social services that would be the envy of the United States—a national health program that takes care of you, whether you’re employed or not, and gives you proper healthcare. In France, for example, the law says when you go to work, you get five weeks’ paid vacation. That’s not an option; that’s the law. You get support when you’re a new parent for your child care and so forth. They provide services. And they are successful in Germany and Scandinavia, much more than we are in the United States and much more than those countries in the south.

So they’re not broken, the south, because they’re nanny states, since the nanny states, par excellence, are doing better than everyone. The actual truth of Mr. O’Reilly is the opposite of what he says. The more you do nanny state, the better off you are during a crisis and to minimize the cost of the crisis. That’s what the European economic situation actually teaches. He’s just making it up as he goes along to conform to an ideological position that is harder and harder for folks like him to sustain, so he has to reach further and further into fantasy.

AMY GOODMAN: In our last minute, other cures for capitalism, as you put it?

RICHARD WOLFF: Well, I think that there’s a set of fundamental reorganizations. When you have a private banking system in the United States, the way we did up until, say, the 1970s and '80s, you had it in a position relative to the economy that made a certain sense. But over the last 30 and 40 years, for a whole host of reasons, we have made debt a central part of the economy. Today it is not unusual for a person who goes into a grocery store to get a bottle of water to use a credit card, basically to make a loan in order to buy that bottle of water. Everything that consumers do is now mediated by debt. Everything corporations do, and as we look around the world, the governments are in debt. Debt is everywhere. It has become the water we swim in, the air we breathe. That puts the banks in an unbelievably powerful position, because they're the repository of the means to borrow. If we’re going to make an economy dependent on debt, we can’t leave the power to control that—

AMY GOODMAN: We have 10 seconds.

RICHARD WOLFF: —in the private hands of banks. Either we don’t become a debt-ridden country, or we make borrowing and lending a social program. We can’t allow private banking. It doesn’t work. It needs to be changed.

AMY GOODMAN: Richard Wolff, I want to thank you for being with us. If you’d like a copy of today’s show, you can go to our website at democracynow.org. Richard Wolff is professor emeritus at University of Massachusetts, teaches at New School University.

Free Trade and Unrestricted Capital Flow: How Billionaires Get Rich and Destroy the Rest...

Paul Krugman makes a point in this post about Cyprus that I’d like use to make a broader and more important point. His point is that Cyprus is already off the euro and has created its own currency, the Cyprus Euro, which at the moment is pegged to the other euro at 1:1. Why is a euro in a Cyprus bank different from other euros? Because you can’t move it freely, so it has less real value. (Read here to see why he thinks that; also here.)

My point, though, is a little different. My point is about unrestricted free trade and capital flow in general and why understanding both is crucial to understanding:

▪ The neoliberal free-trade project, and
▪ Wealth inequality in America

But don’t let your eyes glaze over; this is not hard to understand. It just has a few odd terms in it. Please stick with me.

There’s a straight line between “free-trade” — a prime tenet of both right-wing Milton Friedman thinking and left-wing Bill Clinton–Robert Rubin neoliberalism — and wealth inequality in America. In fact, if the billionaires didn’t have the one (a global free-trade regime) they couldn’t have the other (your money in their pocket). And the whole global “all your money are belong to us”  process has only three moving parts. Read on to see them. Once you “get it,” you’ll get it for a long time.

What does “free trade” mean?

In its simplest terms, “free trade” means one thing only — the ability of people with capital to move that capital freely, anywhere in the world, seeking the highest profit. It’s been said of Bush II, for example, that “when Bush talks of ‘freedom’, he doesn’t mean human freedom, he means freedom to move money.” (Sorry, can’t find a link.)

At its heart, free trade doesn’t mean the ability to trade freely per se; that’s just a byproduct. It means the ability to invest freely without governmental constraint. Free trade is why factories in China have American investors and partners — because you can’t bring down manufacturing wages in Michigan and Alabama if you can’t set up slave factories somewhere else and get your government to make that capital move cost-free, or even tax-incentivized, out of your supposed home country and into a place ripe for predation.

Can you see why both right-wing kings (Koch Bros, Walmart-heir dukes and earls, Reagan I, Bush I and II) and left-wing honchos (Bill Clinton, Robert Rubin, Barack Obama) make “free trade” the cornerstone of each of their economic policies? It’s the song of the rich, and they all sing it.

I’ve shown this video before, but it bears repeating. When you think about “free trade,” you probably think of the Walmart heirs (or Apple owners) wallowing in wealth from the world’s slave factories. But it’s a joint project by all of our owners (sorry, major left- and right-wing campaign contributors and job creators).

This is Barack Obama making his case for campaign funding to Robert (Hi “Bob”) Rubin and others in 2006:

Brand-New Senator Barack Obama, 2006
The opening of Robert Rubin’s Hamilton Project Thinktank

At 1:20: “The forces of globalization have changed the rules of the game,” and at 5:52: “Most of us are strong free-traders.” (His “yes-but” to Rubin in that second segment is an appeal to actually do the worthless retraining for non-existent jobs that Clinton earlier supported but never did. See? Pushback. Independence.)

Three things to note:

1. The “forces of globalization” he refers to are not acts of god, whether Yahweh, Juno or Joxer. They were created by the Clinton- and Rubin-crafted CAFTA and NAFTA treaties. If a god did it, that god also caused a certain blue dress to need a dry-cleaning it never got.

2. If Obama doesn’t say what he just said in that room, he doesn’t get a Rubinite dime for his next political campaign. Period. This is his application speech.

3. Never forget that if Oklahoma knuckle-dragger Sam Walton were in that room, or not-America-first Steve Jobs, Obama would say those same words. “Most of us are strong free-traders.” It’s the tie that binds the left and the right. Bind yourself to Obama economically, and you’re tied to the Waltons. Period.

Bonus points for noting that the push to roll back social insurance is part of the NeoLiberal agenda, for example at 1:30 and elsewhere. It’s why we have the Obama Grand Betrayal, the Catfood Snack That Won’t Go Away (do click; there’s a kitty inside).

Finally, listen again to his opening praise of “Bob” Rubin and the others in the first 30 seconds or so. When Obama says that the men he’s praising have “put us on a pathway of prosperity,” what he means is that they’ve put themselves on a path to prosperity. This is wealth inequality in action, wealth inequality on the hoof. Those slave-wage jobs in China (or Indonesia or the Philippines) replace the unionized, high-paying wages you don’t have and will never get back; the men in that room, including Obama, are the reason; and “free trade” is both the cover story and the tool (more on that duality below).

Never forget — “Free trade” is a bipartisan, hands-across-the-aisle screwage of American incomes and wealth. It’s the necessary cornerstone of both left-wing and right-wing economic policy. Period.

The three tools of wealth extraction

Free trade is a primary tool of wealth extraction. What are the others?

Recall that corporations aren’t actors per se, they are machines by which wealth is vacuumed from workers and consumers into the hands and pockets of the corps’ true owners, the CEO and capital class. As we’ve said before:

(1) Corporations are not people, and they don’t have ideas or will. They are empty vessels. If you took a neutron bomb to the home office of MegaCorp.com and let it rip, the building, filled to the brim with inventory and IP, would be empty of humans and a dead thing. You could wait for weeks for the offices to act; they wouldn’t.

(2) This is especially true today, since the corporation now serves a different function than it was designed for. At first, a corporation served to make its stockholders moderately wealthy — or at least wealthier.

Modern corporations serve one function only — to make the CEO class obscenely rich.

The looting of global wealth into the hands of the capital and CEO class is a simple two-step process: Corps use free trade to loot the world. CEOs then loot the corps and live higher and better than the kings and presidents they control.

Yes, “kings and presidents they control.” The only thing needed to make the looting worldwide is government protection. If the capital class doesn’t control government, they can’t institute … global free trade regimes. And there you have it. So what are the three tools needed by the capital-controlling class?

  • CEO capture of corporations
  • Wealth capture of government
  • A global free-trade regime

And that’s all it takes. With those three tools in your pocket, you can loot and own the world, literally.

Hmm, we have all three now. “Mission accomplished,” as they say in private jet circles.

Free trade keeps the rest of the world in crisis

And now we come back to Krugman. A direct consequence of a world in which capital flow is completely unrestricted is constant economic crisis. The Professor explains that well in the context of the Cyprus problem (my emphasis and some reparagraphing):

Whatever the final outcome in the Cyprus crisis … one thing seems certain: for the time being, and probably for years to come, the island nation will have to maintain fairly draconian controls on the movement of capital in and out of the country. …

That’s quite a remarkable development. It will mark the end of an era for Cyprus, which has in effect spent the past decade advertising itself as a place where wealthy individuals who want to avoid taxes and scrutiny can safely park their money, no questions asked. But it may also mark at least the beginning of the end for something much bigger: the era when unrestricted movement of capital was taken as a desirable norm around the world. …

Then he compares the era of capital control to the era of capital freedom:

It wasn’t always thus. In the first couple of decades after World War II, limits on cross-border money flows were widely considered good policy; they were more or less universal in poorer nations, and present in a majority of richer countries too. Britain, for example, limited overseas investments by its residents until 1979; other advanced countries maintained restrictions into the 1980s. Even the United States briefly limited capital outflows during the 1960s.

But like all good things, that changed:

Over time, however, these restrictions fell out of fashion. To some extent this reflected the fact that capital controls have potential costs: they impose extra burdens of paperwork, they make business operations more difficult, and conventional economic analysis says that they should have a negative impact on growth (although this effect is hard to find in the numbers). But it also reflected the rise of free-market ideology, the assumption that if financial markets want to move money across borders, there must be a good reason, and bureaucrats shouldn’t stand in their way.

What marks the difference between those two eras, the era of capital control and our current free-trade era? Near-constant economic crisis:

[U]unrestricted movement of capital is looking more and more like a failed experiment. It’s hard to imagine now, but for more than three decades after World War II financial crises of the kind we’ve lately become so familiar with hardly ever happened.

Since 1980, however, the roster has been impressive: Mexico, Brazil, Argentina and Chile in 1982. Sweden and Finland in 1991. Mexico again in 1995. Thailand, Malaysia, Indonesia and Korea in 1998. Argentina again in 2002. And, of course, the more recent run of disasters: Iceland, Ireland, Greece, Portugal, Spain, Italy, Cyprus.

Notice the date of change? “Since 1980, however…” Him again. This is not just a coincidence. The Reagan era didn’t just initiate national looting, but international looting as well. Krugman ties these crises, here and elsewhere, to large and unrestricted inflows of capital, followed by large and unrestricted outflows that create economic bubbles, then leave them thoroughly deflated:

[T]he best predictor of crisis is large inflows of foreign money: in all but a couple of the cases I just mentioned, the foundation for crisis was laid by a rush of foreign investors into a country, followed by a sudden rush out.

The rest of the piece shows that this idea doesn’t originate just with The Professor; it’s widely held by many not paid by Money to represent it in the court of public opinion.

There’s an opportunity in Spain, let’s say, to take advantage of cheap labor and prices. Money flows in, builds huge capacity, then flows out as soon as it finds better opportunity elsewhere. What’s left behind? The Spanish in a crashed economy, and in a world in which the holders of their debt (German bankers et al) are using the EU (remember, capture of government) to make sure that creditors are made whole at the expense of whole populations.

Kind of like how Walmart comes into a town, builds a huge store, drives all the other retailers out of business, then leaves as soon as the low-wage-earners in that town can’t keep the store more profitable than other stores in the state.

What’s left? The wreck of an economy. Where’s the money? In the pockets of the Walton family, ‘natch. Win-win for someone (but not for you).

Your “economic crisis” is just their “cost of doing business”

Keep in mind, the purpose of unrestricted “free trade” is to advantage the holders of capital over everyone else on the planet. Great wealth insulates these men and women from crises, so even global economic crisis is just the externalized price (that we pay) for their wealth extraction enterprise — just like a burdened health care system is the externalized price (that we pay) for wealth extraction by billionaire owners of tobacco companies from the constant stream of lung cancer patients.

What’s “a world in constant crisis” to them? Just the cost of doing business. Nothing personal. It’s just business.

Is free trade an ideology or a tool?

One last point. Framing free trade as an ideology may be technically correct in a few cases — there are true believers in almost anything (I believe in kittehs) — but if “free trade” weren’t a money machine for the wealthy, you’d never hear of it. Crickets, as the kids say.

Put simply, the reason you heard Barack Obama tout “strong free trade” with Robert Rubin in the room, is that bankers like Robert Rubin grow obscenely wealthy by financing billionaire store-owner Billy-Bob Walton’s slave factories in Asia.

And non-millionaire Barack Obama wants millionaire Bill Clinton’s post-presidential money — $80 million and counting. (Click the link for a stunning connection between public policy — in this case, the repeal of Glass-Steagal — and a post-presidential payday.)

Obama may not say he wants “Clinton money.” He might even know it, in that self-blind sense of “know.” But I’ve met lots of drunks who’ve explained themselves so long, they really do “know” they’re just “prone to be ill in the morning.” Right. Occam’s Switchblade, Upton Sinclair edition:

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

“I’m doing it for the kids,” Obama edition.

Bottom line

The bottom line is simple: A “free trade” system is a regime in which capital always wins, everywhere. It’s the tool by which global wealth is extracted. It’s supported by both parties. The Democratic Party version is called NeoLiberalism. “NeoLiberal” means not-FDR-liberal in the same way that Tony Blair’s “New Labour” means not-Clement Attlee-Labour. Because, framing counts on CNN, and it’s always opposite day there.

And Barack Obama, Bringer and Betrayer of Hope and Change, is the lead NeoLiberal warrior, the point of the spear until 2016, at which point he’ll pass the torch to another testosterone-branded neoliberal, retire into the sunset of global acclaim, create his Foundation for NeoLiberal Love and Global Kittens, and collect his checks. (Or not.)

My suggestion, given the above — don’t help him. You have enough on your conscience, if you’re at all like the rest of us. Unless, of course, you like your economic crises served always on tap. In which case, do sign up.

Cyprus Small Part of World of Tax Havens

WASHINGTON - March 26 - JAMES S. HENRY, jhenry at sagharbor.com
Available for a limited number of interviews with major media, Henry is lead researcher for the report “The Price of Offshore Revisited” from the Tax Justice Network. Last year they estimated that total wealth in tax havens was between $21 trillion and $35 trillion dollars. He said today: “Cyprus is in crisis because its banks heavily invested in Greek bonds and Greek bondholders took a hair cut. It’s not because Cyprus is worse than other tax havens as many seem to be claiming. We found that it’s the 20th least transparent tax haven. So today is a good day for bankers in Switzerland, Belgium, Luxembourg, Germany and the UK. Cyprus is in effect a victim of the ‘finance curse’ in that its economy was so dependent on the financial sector.

“There are several aspects to the Russian story that haven’t been fleshed out, including the Russian Gazprom eyeing energy reserves off of Cyprus. Another major aspect of the story that’s been largely overlooked is that whatever happens to the financial sector in Cyprus, it’s still a large corporate haven; they only have a 10 percent corporate tax rate. This tax haven model of ‘development’ needs to be seriously questioned. Tax havens are a major source of economic inequality and global poverty. They prevent local governments from effectively taxing wealthy individuals and corporations.

“In terms of the bigger picture, Cyprus is small; the issue is the state of the economy in Italy, Greece, etc.”

Henry is a regular contributor to The Real News, see his latest interview: “Cyprus Crisis Reveals Shadowy World of Tax and Money Laundering Haven.” He has also written for Forbes, the Wall Street Journal and other publications.

Henry was also just featured in “The Tax Free Tour” — a new in-depth look at global tax havens from Dutch Public TV that, among other things, answers the question: How does Apple only pay 1.9 percent on its overseas profits when the U.S. corporate tax rate is 35 percent? Also, see taxodus.net — an online game about global tax dodging. Henry is former chief economist at the international consultancy firm McKinsey & Co.

Economics and the Twin Horsemen of the New Apocalypse

What is the purpose of the economy?

When you get down to it, this is the question of our time.

How we answer it determines whether we will be able to sustain civilization as we know it beyond the mid-century.

Yet most of economics concerns itself with what an economy does, not what its goal is or ought to be.  For example, much of economic policy can be summed up in the words of Harvard economist, Dani Rodrick, who distilled economic development down to the a three word mantra, "stabilize, privatize and liberalize."

To what end? That question isn’t even considered. The implicit assumptions, of course, are maximizing economic growth and creating more wealth. 

These two unexamined assumptions are the twin horsemen of the new apocalypse.

People generally have a sense of what is meant by growth, but the concept of what constitutes wealth is a bit more elusive.  Most definitions offered by economists can be represented by a statement like this: those material things which are produced by labor, can satisfy human wants, and must have an exchange value.  Note that money – or currency – is not wealth in this definition.  But, the exchange value we use to measure wealth is money.

Whether that growth is distributed fairly and whether it exceeds the capacity of the environment to sustain, is either assumed away by the Invisible Hand, or dismissed disdainfully by economists as the province of philosophers and other soft academics in squishy social disciplines.

In fact, many economists—schooled by the most popular text in the discipline, Paul Samuelson’s Economics, or one of its many newer incarnations—take pride in saying that their discipline is non-normative—that is, amoral.  Not immoral, but operating outside the context of values, ethics and morality. 

Moreover, because the discipline is intent on being a quantitative science, economics as a field discarded the essence of what an economy should be about in exchange for the ability to “hide in thickets of algebra” as Joan Robinson put it.  A classic example of Whitehead’s Fallacy of Misplaced Concreteness, in which the abstract ideal is treated as the tangible reality.

For the last 50 years we’ve been steering our national economy, as well as international economic policy, by this amoral, future blind, compass.  No other discipline dominates political theory and practice as much as economics. 

Which goes a long way toward explaining exactly why our economy is so unjust and our ecosystem is in imminent danger of collapsing.

Nobel prize winning economist Joseph Stiglitz captured this failure when he said:

We always want to keep in mind what the function, the purpose, of the economy is. […] the purpose of an economy is not producing GDP. It is increasing the welfare of citizens, and it is increasing the welfare of most citizens. And the American economic system has failed, and failed very badly.  

Let’s examine the two assumptions: 1) the purpose of an economy is to create more wealth and 2) wealth is measured by currency.

As Robert Costanza pointed out, the annual value of just 17 ecosystem services  (PDF) exceeds the value of the entire human economy, yet that value is treated as an externality – that is, these services are not even priced in the market.  So our definition of “wealth” leaves out debts that exceed the entire income stream from the human economy.

And Costanza’s work was done before we had a good understanding the extent of climate change and the enormous costs it imposes upon us.

So in essence, we are liquidating the real basis of wealth, natural capital, and counting it as wealth creation.  So much for wealth.

Now, let’s look at currency.  As Chris Martenson puts it, money is not wealth, it is merely a claim on wealth.  But it can grow indefinitely while the world is finite.  So we end up with a claim on wealth that far exceeds any available wealth.  Which is debt. 

If the function of an economy is merely wealth creation, then we need to redefine wealth, or it is self-terminating.  Oh, and it will take us along for the ride. 

We can see the bow wave of this destruction with climate change, ocean acidity, accumulated toxins, depleted resources. 

The real purpose of an economy has to be something much different that what we use to formulate policy.  Joseph Stiglitz’ purpose—increasing the welfare of most citizens—had it half right.  A billboard spotted in Johannesburg, South Africa during the World Summit on Sustainable Development probably made as good a statement on the appropriate goal of the economy as any:  “Enough for everyone, forever.”

An economy designed around this goal would look completely different than today’s “Everything for a few, right now,” economy does.

It would steward ecosystem services and resources using taxes, subsidies, tariffs, and property rights.  The idea of distributional equity would not be a blasphemy, but a pragmatic response to the natural tendency of capital to get concentrated in the hands of the few, and a recognition that a market economy can’t function without generalized prosperity.

Co-ops and employee-owned companies would be the most common ownership model; CEOs wouldn’t get 800 times the minimum wage.  There’d be no Bill Gates making some $218,000 and hour.  Fossil fuels would be heavily taxed, and the revenue they generated would help fund a low cost transition to a carbon-free economy.

The daily business report would feature an index based on environmental health and resource stocks, not the Dow Jones Index of paper stocks.

But we’re not likely to see such an economy.  Both major parties are busy trying to maximize paper currency at the expense of natural capital—the source of real wealth.

John Atcheson

John Atcheson is author of the novel, A Being Darkly Wise, an eco-thriller and Book One of a Trilogy centered on global warming. His writing has appeared in The New York Times, the Washington Post, the Baltimore Sun, the San Jose Mercury News and other major newspapers. Atcheson’s book reviews are featured on Climateprogess.org.

Level of Income Growth for Most Americans Over Last 4 Decades Is Shockingly Low

Level of Income Growth for Most Americans Over Last 4 Decades Is Shockingly Low

Posted on Mar 25, 2013
Flickr/401(K) 2013

If this viral video on wealth inequality in the U.S. wasn’t enough to convince you that something is very wrong with our economic system, then perhaps a new analysis of data that shows the disparity between income gains of the top 10 percent of taxpayers versus those of everyone else will.

According to Pulitzer Prize-winning journalist David Cay Johnston, who got his figures from an analysis of the latest IRS data by economists Emmanuel Saez and Thomas Piketty, income grew a jaw-dropping $59 on average for the bottom 90 percent of Americans between 1966 and 2011 (adjusting the income for inflation, of course). Income for the top 10 percent, on the other hand, rose from an average of $116,071 to $254,864.

To put that in perspective, Johnston says that if you were to plot the numbers on a chart, with $59 representing 1 inch, the line for the top 10 percent would go up more than 163 feet. If you compared the vast majority’s income growth with that of the top 1 percent, the line on the chart would extend 884 feet. And if you measured it against the top 1 percent of the top 1 percent, well ... that would require a really, really big chart, as the line would be nearly 5 miles long.

David Cay Johnston at Tax Analysts:

Those at the top are pulling away from everyone else not because of hard work, but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.

The median wage has been stuck since 1999 at a bit more than $500 per week in real terms and job growth has lagged far beyond population growth. But capital gains and dividends have soared, a new Congressional Research Service study shows. And, of course, the rich get most of that income.

...The Saez-Piketty analysis shows the concentration of growth at the very top increasing. That is bad for tax revenue and bad for social stability. The drop in incomes among the vast majority holds back economic growth, because there is just not enough aggregate demand to support creating enough new jobs to keep up with population growth.

And who was hit hardest by the new federal taxes that took effect this year? The vast majority.

Read more

(h/t Think Progress)

—Posted by Tracy Bloom.

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Call It What It Is: A Class War

Call It What It Is: A Class War

Posted on Mar 22, 2013

By David Sirota

When it comes to the Republican budget proposal that passed the U.S. House this week, I agree with those who find it strange that anyone sees the initiative as a serious attempt to “grow the economy,” as Rep. Paul Ryan (R-Wis.) claims. I also agree that the overwhelming barrage of reports that accompany such an initiative render most non-political junkies confused, bored or both.

However, all of that doesn’t mean the proposal Ryan spearheaded is unimportant, nor does it mean that there are no worthwhile analyses to explain that significance. On the contrary, the proposal is quite important because it endorses an economic war waged by the upper class against everyone else. Two simple studies make this war painfully obvious.

To properly contextualize those studies, first keep in mind three facts: 1) According to Nobel Prize-winning economist Joseph Stiglitz, “The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year” and control 40 percent of the nation’s total wealth 2) The bottom 80 percent of Americans own just 7 percent of the nation’s wealth and 3) Stiglitz notes that “while the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.”

Considering this, it is no surprise that the United States is one of the industrialized world’s most economically unequal nations. Just as unsurprising is International Monetary Fund data showing that such acute inequality reduces macroeconomic growth. In light of that, any proposal purporting to create what Ryan calls a “pro-growth economy” should, in part, include policies that aim to make the United States less stratified.

That brings us to the first report on Ryan’s budget, courtesy of the Center on Budget and Policy Priorities (CBPP).

As that watchdog group shows, the allegedly “pro-growth” GOP proposes no big cuts to corporate welfare or other subsidies that enrich the already rich. Instead, the party proposes that 66 percent of the cuts come from “programs that serve people of limited means.” Yes, that’s right—the “pro-growth” GOP is proposing to primarily cut the programs that reduce economic inequality and, thus, spur economic growth.

Where do much of the savings generated from those cuts go? That gets us to a report by Citizens for Tax Justice. The nonpartisan group discovered that after a decade of trickle-down tax cuts delivered more economic inequality and historically weak macroeconomic growth, the GOP is now proposing a budget whose centerpiece is a proposal to give those with an “income exceeding $1 million (an) average net tax decrease of over $200,000.”

Taken together, these two analyses spotlight the self-evident moral argument against such a budget. With all those aforementioned facts showing the rich getting richer and everyone else getting hit so hard, how heartless does a political party have to be to propose this kind of budget blueprint?

That however, is the wrong question, because this isn’t about morality; it is about ideology and more specifically, an ideological commitment to a class war.

Supercharged as it is, that phrase—“class war”—is appropriate and accurate. As the data prove, the GOP and its financiers are so committed to a class war that the party is willing to put forward a budget proposal that quite clearly preferences fighting that war over doing what’s actually necessary (read: addressing inequality) to fix the economy.

That may not make for a proposal that is a serious attempt to address America’s problems, but it does make for one that is significant in how honestly it states the Republican Party’s true long-term goals.


David Sirota is the best-selling author of the books “Hostile Takeover,” “The Uprising” and “Back to Our Future.” Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

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6 Ways the 7th Richest Man in America Has Screwed the Poor

Mayor Michael Bloomberg leaves behind one of the biggest wealth gaps in the country.

March 22, 2013  |  

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The following piece is part of AlterNet's series on poverty, Hard Times, USA. 

Earlier this month, Mayor Michael Bloomberg perfectly described a day in the life of your average homeless New Yorker. “You can arrive in your private jet at Kennedy Airport, take a private limousine and go straight to the shelter system and walk in the door and we've got to give you shelter,"  he said on his radio show, addressing the record rate of homelessness in the city. 

50,000 people, including 21,000 children, are currently crowded into the city's emergency shelters, a 61 percent rise from when the Mayor took office,  according to the Coalition for the Homeless. 

Last month, the Mayor had  assured reporters that "Nobody's sleeping on the streets," a claim easily refuted by a look at the city's homelessness statistics and/or going outside in New York. As it turns out, the Department of Homeless Services (DHS) had recently  suspended a program making it easier for homeless families to get into shelters when the temperature dips below freezing. The DHS did not share this information widely; it came to light after a  New York Daily News report highlighted the case of 23 year-old Junior Clarke, who told the News that he, his wife, and 4 year-old daughter were turned away from the city's intake center on a freezing day. When they refused to leave, staff threatened to call the police. 

“They tried to make us leave and we refused,” Clarke  told the Daily News.  “You know some people leave, walk away and go sleep on the train with their families.” 

As the  7th richest man in America finishes his final term in office, he leaves behind one of the biggest wealth gaps in the country:  income inequality in Manhattan is the second worst in the US, according to  the New York Times. New York's poverty rate has risen to the highest level in a decade, the Times also noted. 1 in 3 New York kids live below the  poverty line. In parts of the Bronx, two thirds of residents live  in areas of extreme poverty

At the start of his second term, the Mayor raised the hopes of advocates for the poor by expanding the definition of poverty to account for the high cost of living in the city. But as sociologist Francis Fox Piven  told the Gotham Gazette, "If we thought a new measure would mean more generous policies, we were wrong." 

In fact, many Mayoral actions have significantly worsened the lives of the poor. Here's a look at some of his greatest hits. 

1. Booting Homeless Families from Priority Access to Housing Aid

At the start of his second term, the Mayor promised to reduce the rate of individual and family homelessness in the city by two-thirds in 5 years. Today, there are as many homeless New Yorkers as during the height of the Great Depression, according to the  Coalition for the Homeless. The Mayor blames the recession and, strangely, the  Coalition for the Homeless itself, but homelessness advocates point to a series of ill-advised policy decisions that separated homeless families from the government aid that had kept many of them housed. 

In 2005, the administration cut homeless families'  priority access to Section 8 federal housing aid. In its place, DHS came up with Housing Stability Plus, a program designed to fire up homeless families' magic bootstrap powers by making aid temporary and contingent on work requirements. Families were only eligible if they were on Public Assistance but they also had to work, which counterproductively meant that if one parent got a full-time job they could  lose their housing. A 2007 Coalition report found that families were being funneled into  slumlord properties, where kids could build character by overcoming hardships like rat infestations and lead in the walls. The Advantage program, another impermanent rental subsidy that restricted rental help to 2 years, followed. Despite the administration's efforts, the rate of homelessness continued to climb as families ran out of Advantage subsidies without substantially improving their economic situation and had no choice but to return to shelter.  

Robert Reich on Lessons Learned From Watergate

At the National Press Club, the citizen’s lobby Common Cause held a conference commemorating the 40th anniversary of Watergate. Kicking off the conference was economist Robert Reich, former secretary of labor under President Clinton. In this audio exclusive at the event, Moyers & Company senior writer Michael Winship talks with Reich about the ways in which Washington has changed since Watergate, and how the influence of money continues to corrupt politics and exacerbate income inequality in America.

At the conference, Reich said that despite the crisis, America’s response to Watergate was, in many respects, “a huge success… Watergate should be considered a moment when government showed its resilience.” In the wake of wrongdoing by the president and those closest to him, Reich argued, the rest of the government and the American people rose to the occasion in the way our democracy’s founders would have hoped. There was campaign finance reform, increased transparency and limits placed on presidential power but, he added, in recent years, much of what was accomplished post-Watergate has come undone.

Also listen to Michael Winship’s conversation with Russ Feingold at the same conference.


TRANSCRIPT

Michael Winship: We are talking with Robert Reich. And I first wanted to start by asking you where you were during the Watergate crisis 40 years ago. What were you doing?

Robert Reich: Well, at the beginning of the Watergate crisis I was in law school. One of my law school professors wanted me to come to Washington with him. He had been made solicitor general, and he wanted me to be assistant solicitor general and I accepted the offer. His name was Robert Bork. And then, after I accepted and before I came to Washington, he fired Archibald Cox, which made my life very difficult.

Michael Winship: As part of the Saturday Night Massacre —

Robert Reich: Exactly. And I thought, now, do I really want to come down to Washington and argue Supreme Court cases for the man who fired Archibald Cox? And to make a long story very short, I actually did spend about two years briefing and arguing Supreme Court cases in the Ford administration. That was my first job.

Michael Winship: What were you thinking as all this unrolled, as you saw these events, from break in to cover up to the hearings and —

Robert Reich: I thought at the time that it was the best and worst in America, that Nixon and Haldeman and others around him represented the most venal characteristics of American politics, that John Mitchell and others had no respect for the constitution. But at the same time, I saw John Sirica, the House Judiciary Committee, people who overcame partisanship and rose to the occasion, with honor and courage and integrity. And it seemed to me that the best of America would inevitably trump the worst of America.

Michael Winship: You said in many respects it was a huge success.

Robert Reich: It was. Watergate, contrary to the way history has viewed it, showed the strength of American institutions — not just our political institutions, but our judiciary, and also our media.

Michael Winship: And also, I think you also said that it was a great show of accountability.

Robert Reich: The people who had perpetrated these crimes — and I don’t mean just the burglaries; I mean the cover up, the attempts to essentially undermine the integrity of our entire democratic process — were brought to justice: Ehrlichman, Haldeman, many of those who participated in the cover up, and then ultimately Richard Nixon, who had to resign. Now, it’s still very controversial with regard to President Ford’s pardon, and we can debate that. But the point, and the important point, was that justice was done, accountability was served. People did not get away with it.

Michael Winship: I don’t mean this at all facetiously: Are there aspects of the Nixon presidency that you miss today?

Robert Reich: Well, I don’t miss the personality of Richard Nixon, or the values that I understand were Richard Nixon’s values in terms of what governing is all about. Certainly, you know, the Nixon administration did have some foreign policy successes. I think the opening to China was an extraordinary achievement. I think the Environmental Protection Act and the willingness to really make some headway on the environment was important. But the Nixon administration did leave an undeniable stain on the presidency.

Michael Winship: Were the American people better off? You mentioned some statistics in your opening remarks today.

Robert Reich: Well, the economy was, in many ways, a more equitable economy in those years. The top 1 percent of Americans by income took home about 9 to 10 percent of total income. Today the top 1 percent takes home more than 20 percent. The top 1 percent had about 25 – 30 percent of the nation’s total wealth. Today the top 1 percent has 35 – 40 percent of the nation’s total wealth. So, undeniably, we have gone into — we’ve become a much more — a nation of much more concentrated wealth and income, and also power. Because, don’t forget, income and wealth are correlated with political power. As the great Justice Louis Brandeis once said, we can have a democracy or we can have great wealth concentrated in very few hands, but we can’t have both.

Michael Winship: So what happened? I know in this new documentary that you’re very involved with, Inequality For All, you talk about how in the seventies everything changed, so everything changed just after we went through this crisis in American politics. What changed, what happened?

Robert Reich: Many things changed simultaneously. For one thing, many of the technologies that had been developed in the second world war became commercially viable. Satellite communication technologies, cargo ships, container ships, all of that allowed the production process to be parceled out around the world to where everything could be done most cheaply. But, more to the point, we also had a political system that was less willing or able to respond to these changes, a political system that was willing to allow or encourage the demise of unions, that didn’t pay attention to the stagnation of the median wage, even as productivity continued to surge ahead, a political system that did not want to or wasn’t able to make the investments in education and research and development that needed to be made in order to allow the middle class to continue to prosper. And also, a political system that became obsessed with taxes and taxes on the rich, and thereby, because the rich began to have so much more influence in the political system, began to reduce marginal income taxes and make it impossible for the nation to continue the kind of investments we’d been making in the fifties and sixties, in everything from infrastructure all the way through higher education. So add all of these things up, and we saw a corrosion of our democratic political capacities to respond to structural changes in the economy starting in the late 1970s.

Michael Winship: How do we get that back, what do we do?

Robert Reich: Well, that’s probably the biggest and most important question that I certainly struggle with, and I think many others also struggle with. I think we can’t do it from Washington itself. You know, rarely do you have the capacity in Washington to do anything that the public is not ready to do. In fact, the converse is true. The only time good things happen in Washington is when a majority or a very large number of the public, and people who envision and understand what needs to be done, are mobilized and organized and energized to put pressure on Washington to make sure those things are done. And so we need — I mean I don’t know whether you want to call it a new progressive movement, or a revived Democratic party — I don’t even feel comfortable putting it in such partisan terms, because we used to have liberal Republicans: Nelson Rockefeller, Mark Hatfield, Jacob Javits, many who understood the challenge of widening the circle of prosperity and providing equal opportunity. Well, we need that kind of courage today. We need that kind of political movement today.

Michael Winship: Even during the most rancorous time, during the Watergate crisis, there was still talk between the two parties, there was still a spirit of compromise, a spirit of being able to work together, and that’s totally vanished.

Robert Reich: It’s completely gone. It’s completely gone. I first came to Washington as an intern for Robert Kennedy in 1967. I was back in the 1970s, both in the Ford and in the Carter administration, and then I was again here in the Clinton administration, and I was an advisor in early stages of the Obama administration, and I’ve seen a remarkable steady decline in comity, in collaboration, in civility in this city. Partly, I think it’s because the Republican party has been taken over by a bunch of right wing fanatics. I don’t want to mince words here. I think that’s exactly what’s happened. I think the Democrats and Republicans have forgotten why they’re here and what the public wants them to do. Many Democrats also — I won’t say that they’ve been taken over by left wing fanatics. That’s not the case. But I think many politicians are most interested in their own chances of reelection rather than what is good for the country. And I know that even my students, my best students, who I would want and hope would go into politics, they are eager to go into public service, but they look at politics as essentially corrupt and dirty. Now, to me, that’s dangerous. If we don’t embrace and honor and get involved in politics, we cede democracy to those who are representing the worst or special interests, rather than the public interest.

Michael Winship: That’s another thing, you and I spoke a couple of years ago informally about how Washington, because we both were here in the seventies and here now, today, how money changed this city, I mean physically and philosophically how money has altered Washington.

Robert Reich: It’s a completely different city from what it was in the sixties and early seventies. In fact, Pennsylvania Avenue was kind of seedy. I remember, when I was at the Federal Trade Commission, lobbyists who would want to take me out to lunch — well, I said no to most of them, but if I wanted to be halfway civil I took them across the street to a place called Barney’s, a hamburger joint that was infested by cockroaches, and I never saw them again. Now you can’t find a cockroach on Pennsylvania Avenue, or in any restaurant. They’re all expensive, thick napkins and tableware. You know, this is a city that has gone from, I won’t say rags to riches, but from seediness to great wealth. The counties surrounding Washington are among the wealthiest counties in the nation. Corporations, including Wall Street, have poured a fortune into Washington, in terms of public relations professionals, lobbyists, people who will do the bidding of big corporations, and Wall Street and the rich. And as a result, the process of governing has been subverted in a very profound way.

Michael Winship: And what about campaign finance reform? We seem to — in the years after Watergate, we saw public financing in campaigns, we saw the creation of the Federal Election Commission, and now what’s happened? What happened to that?

Robert Reich: Well, it’s not a dead letter. I think people are still very interested and committed to campaign finance reform. But with Citizens United against the Federal Election Commission, that dreadful 2010 decision by a majority of the Supreme Court, we have opened the floodgates — or they have opened the floodgates — to big money in politics. The reforms that were started just before Watergate, and Watergate then encouraged even more of, in terms of the Federal Election Campaign Act reforms, have been all but eviscerated. We need to reverse Citizens United. We need to revive public financing of presidential and other elections. We need to really create a groundswell of public demands for these and for full disclosure of who is, or what institutions are providing money in our campaigns. This is one area that I have to be completely candid with you, I’m very disappointed with the Obama administration. The president has talked about campaign finance reform, but he did not take public financing in 2008. Again in 2012 he refused it. He set up his own super PAC, and now he’s set up an organization that is taking unlimited amounts of money and providing interviews and access to the administration and to the president as a quid pro quo. Well, some people say to me the administration has to fight fire with fire, and I understand that pragmatic view. But if you don’t take a stand somewhere it is impossible to stand anywhere, with regard to campaign finance reform.

Michael Winship: With media consolidation, and cutbacks in manpower, in money and time dedicated to investigative reporting, could the kind of coverage that Watergate got still take place today? Are we still capable of that kind of reporting?

Robert Reich: We’re capable of that kind of reporting, I believe. There’s still a lot of eager young journalists who would like to do investigative reporting, and who are willing to do it on a shoestring. My bigger concern is that we don’t have neutral arbiters any longer of news and information, such that the public will trust them. We have a very bifurcated system of information now. The right listens to Rush Limbaugh and Fox News. The left has their own tribunes. But people now can very easily tune in to the voices and the people they already agree with, who confirm their every suspicion and their values. So without the neutral arbiters, without the Walter Cronkites or the great newspapers that used to be basically trusted, without what we used to call the establishment “mainstream press,” we run the danger of not being able to get word out to Americans about what’s happening.

Michael Winship: And also, I think attention is so fragmented now, there are so many — when we were living through Watergate you only had the three networks and public television and a couple of other stations, and now there are so many different sources of information, but not enough analysis.

Robert Reich: There’s less analysis. There’s more partisan information, more selective partisan information. There’s less trust, in every institution in our society. Not only Congress and the president, but the media and the judiciary. And without that trust, the public, it seems to me, is put in a very precarious situation in terms of the whole system of governance. What are you left with? You’re left with big corporations and Wall Street and billionaires, and why should anybody trust that they are going to act in the public interest? And this all comes at a time when the challenges that we face, whether they be climate change or nuclear proliferation or poverty, both at home and abroad, or any number of things, the challenges are so large and getting larger that unless we have some set of structures that people believe in and trust to act for all of us — and we used to call that government — then we’re powerless, in a way that I think should disturb all of us.

Michael Winship: A lot of people feel that Watergate was the beginning of the erosion of that trust, but you don’t necessarily feel that way.

Robert Reich: No. I think Watergate, if properly understood, should have been a monument to how powerful, resilient and honorable our system can be under great stress. Unfortunately, the cover up and the plot by President Nixon, and Ehrlichman and Haldeman and Mitchell and others, have overwhelmed the public’s memory of all of the strengths, and the strength of the institutions that counteracted Nixon and really reestablished the primacy of law.

Michael Winship: And finally, can you tell us about the documentary — you have this new documentary that’s coming out in the fall.

Robert Reich: Yes, it’s called Inequality for All. It will be coming out I believe the first week of September. I was very proud to be associated with it. I suppose you could say it’s sort of like An Inconvenient Truth for the economy, and I play the Al Gore character. The ultimate — perhaps this is a bit of a grandiose goal, but the ultimate goal is that it changes and kind of reframes public debate about the economy.

Michael Winship: Well, we all look forward to seeing it.

Robert Reich: Good.

Michael Winship: Thank you very much.

UBS’ George Magnus Asks “Why Are The European Streets Relatively Quiet?”

The wave of social unrest that rumbled across Europe between 2008 and 2011 has become less intense. This has come as a cause for relief in financial markets, as it has helped to underpin the marginalization of ‘tail risk’ already addressed by the ECB and the Greek debt restructuring. And yet the latest crisis over the Cyprus bail-out/bail-in not only shoots an arrow into the heart of the principles of an acceptable banking union arrangement, if it could ever be agreed, but also signifies the deep malaise in the complex and fragile trust relationships between European citizens and their governments and institutions. Some people argue that protest, nationalist and separatist movements are just ‘noise’, that the business of ‘fixing Europe’ is proceeding regardless, and that citizens are resigned to the pain of keeping the Euro system together. UBS' George Magnus is not convinced, even if public anger is less acute now than in the past, it is far from dormant, and its expression is mostly unpredictable. So is the current lull in social unrest a signal that the social fabric of Europe is more robust than we thought, or (as we suggested 14 months ago) is the calm deceptive?

Social unrest is a systemic phenomenon, which, according to an OECD report, meets two principal criteria. It is highly uncertain, complex and ambiguous; and it is highly likely to generate ripple effects into other sectors of the economy and society, possibly leading to the toppling of governments, or even political systems. Although European social unrest since the crisis in Greece began has claimed a small number of fatalities and considerable damage to property, it has been notable more for the public expression of lack of trust in the institutions of government, including in Brussels. If a rising number of people give up on the willingness and ability of their institutions to address grievances, then the lull is most likely deceptive.

We have been here before. The economic and political context of the 1930s was, of course, different. Then there was much historical and unresolved geo-political baggage, and a rupture of the political centre as two radically different ideological veins erupted from the backlash against free trade and the gold standard. One championed radical social reform, the other what may be euphemistically called ‘nation-building’ 5 . And there was no EU. But the problem today, as then, is the same, namely the inadequacy of mainstream, political channels to address rising public concern about the loss of economic security, social stability and, yes, cultural identity6. How else to explain both the rise of Spain’s indignados, and other similar national protest movements in Europe, and the increase in nationalist, populist and separatist sentiment, and representation in national parliaments from Greece, France, and Spain to Finland and the Netherlands, and now Italy?

...

Still an austerity zone

Even though the financial crisis in Europe has faded, for the time being at least, the economic stress nurturing protest movements hasn’t. The best that can be said is that the incidence of austerity may not be as significant as it was in 2010-11

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Backlash link to austerity

Let’s assume nothing changes, and that while European elites debate how – or if – they can build strong European banking, fiscal and economic institutions, with the required transfer mechanisms between creditors and debtors, the economic lot of European citizens, an unhappy one for five years now, shows no improvement. This seems a decent assumption.

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The principal economic lesson is that an austerity regime with recurring reductions in public outlays won’t work a) when the private sector is trying to delever and shrink liabilities at the same time b) when it is a generic phenomenon and c) when its principal impact is to depress the level of money GDP and sustain the economy in a liquidity trap. But thanks to some interesting empirical work, another lesson concerns the corrosive and dangerous effects of large and sustained austerity in creating a social backlash that results in greater uncertainty, and therefore inertia, when it comes to corporate hiring and capital spending. As a result, output and public sector tax revenues suffer, reinforcing the negative dynamic between debt and the economy.

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when expenditure cuts, specifically, rise to more than 2% of GDP, and particularly when they rise towards or over 5% of GDP, the number and the severity of incidents of unrest rise sharply.

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Self-evidently, there have been heightened levels of social unrest and shocks to the political system in Greece, Spain, Portugal and Italy, but not in the UK or Ireland, or in the US, for that matter, though neither the US nor the UK, for example, have been immune to social unrest, sometimes requiring the force of the state to suppress it.12. But the main difference between many incidents of social unrest and the ones that damage the social fabric and the economic environment is the impact (sometimes more perceived than real, perhaps) of highly restrictive budgetary measures. Some governments may be better able to implement and absorb them, and sustain the trust or belief in citizens in perseverance. Mostly, this comes down to the robustness of local institutions, and the performance of leaders, as well as culture and history.

The most fundamental manifestation of this damage is, of course, unemployment. But this is only the most visible sign of the upheaval in Europe’s famed social model, and overlooks other important social and economic fault lines, including stagnant or declining real wages, rising income inequality, levels of youth unemployment of between 25% and 50%, and the rise in the numbers of long-term unemployed.

These phenomena didn’t begin with the financial and Euro crises, of course, but they have certainly been exacerbated by it and by the response of governments, and citizens are certainly making the connection, regardless.

So why are the streets relatively quiet?

The short answer is we don’t know. None of the reasons we can think of add up to much, but judge for yourself. It could have something to do with Europe’s rapid ageing demographic transition. The proportion of young adults, aged 15-24 has already been falling from peak levels seen in the mid 1980s, and is on track to decline further in the next 20 years. The proportion of 15-59 year olds, or what we might imagine as the part of the population most likely to express non-voting anger, is peaking now, but a significant decline is predicted. Perhaps the baby boomers have expended their protest energy!

Rapid growth in, and a rising proportion of, the numbers of young people, say aged 15-29, certainly feed the potential for social protest and upheaval. But they also need a catalyst, which could be the emergence of high inflation.

Empirically, there is an unequivocal association, but this is best applied, in contemporary times at least, to the experience of emerging and developing countries, for example, as in the Arab Spring. Although the European upheavals in the 1960s and 1970s were set against a backdrop of rising inflation, those in the 1930s and today are the product of depression and awkward questions of self-determination, not inflation.

Perhaps the relative calm in Europe has something to do with European family structures. The Bank Credit Analyst recently published a chart, emphasizing the role of the family as a shock absorber. The authors suggest that the countries with the highest youth unemployment rates are also those with the highest proportion of young adults living with their parents, who fulfill the role of effecting transfers and economic and social support.

We are not sure about this one either, although having an extended family structure on which to rely is clearly a mitigating factor against poverty and social exclusion. But the two variables may simply be spuriously correlated since both represent symptoms of a depressed economy. In any event, those countries with the highest youth unemployment and numbers living at home have already claimed the bragging rights for anti-austerity protest, while six of the other eight countries have been characterized by fallen or weakened governments, and the rise of nationalist and anti-immigrant political parties and policies.

A conclusion to this discussion is not possible.

In a benign outcome, the potential for social disorder will be defused by a new approach to economic burden-sharing, a re-sequencing of the pursuit of austerity and growth objectives, and steady progress towards the establishment of credible and trusted European banking, economic and political institutions, including financial transfer mechanisms. Motherhood, to be sure, and this has at least two vital caveats, namely the willingness of Germany and other northern European countries to accept significant sovereignty compromises, and the implications for the EU project, if this level of integration proves a bridge too far for UK voters in the promised 2017 referendum.

Social and political upheavals would doubtless haunt the worst-case outcome, where muddling through leads nevertheless to a fragmentation of the Eurozone, or, in extremis, a collapse, in spite of OMTs and the like. The possible consequences, including for the social fabric of Europe, have been well aired in the last couple of years.

The middle way, so to speak, is a muddling through that never scales the successful outcome hurdles, but carries on regardless. Political bonds, maybe fear, sustain the Euro system, but European leaders are unable to reach an agreed and acceptable framework for durable economic recovery and full integration. This outcome describes the status quo, and is the base case for most people. But it is also about stagnant, low growth, persistent high unemployment, retreating targets for debt sustainability, more bail-outs and bail-ins, latent financial instability, and likely sovereign default. The current Eurozone news could not be more apt, and doesn’t seem like the ideal scenario in which to expect European social unrest and political turbulence to fade away.

Why Democrats Shouldn’t Put Social Security and Medicare on the Table

Why Democrats Shouldn’t Put Social Security and Medicare on the Table

Posted on Mar 21, 2013

By Robert Reich

This post originally ran on Robert Reich’s Web page.

Prominent Democrats — including the President and House Minority Leader Nancy Pelosi — are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation.

This is even before they’ve started budget negotiations with Republicans — who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions.

It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.

For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy. 

In reality, average working people have been stymied because almost all the economic gains of the last three decades have gone to the very top. The middle has lost bargaining power as unions have shriveled. American politics has been flooded with campaign contributions from corporations and the wealthy, which have used their clout to reduce marginal tax rates, widen loopholes, loosen regulations, gain subsidies, and obtain government bailouts when their bets turn sour.

Now five years after the worst downturn since the Great Depression and the biggest bailout in history, the stock market has recouped its losses and corporate profits constitute the largest share of the economy since 1929. Yet the real median wage continues to fall — wages now claim the lowest share of the economy on record — and inequality is still widening. All the economic gains since the trough of the recession have gone to the wealthiest 1 percent of Americans; the bottom 90 percent continue to lose ground.

What looks like the start of a more buoyant recovery is a sham because the vast majority of Americans have neither the pay nor access to credit that allows them to buy enough to boost the economy. Housing prices and starts are being fueled by investors with easy money rather than would-be home buyers with mortgages. The Fed’s low interest rates have pushed other investors into stocks by default, creating an artificial bull market.

If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now — forging an alliance between the frustrated middle and the working poor. This need not be “class warfare” because a healthy economy is in everyone’s interest. The rich would do far better with a smaller share of a rapidly-growing economy than a ballooning share of one that’s growing at a snail’s pace and a stock market that’s turning into a bubble.

But the modern Democratic Party can’t bring itself to do this. It’s too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy. 

It was Bill Clinton, after all, who pushed for repeal of Glass-Steagall, championed the North American Free Trade Act and the World Trade Organization without adequate safeguards for American jobs, and rented out the Lincoln Bedroom to a steady stream of rich executives.

And it was Barack Obama who continued George W. Bush’s Wall Street bailout with no strings attached; pushed a watered-down “Volcker Rule” (still delayed) rather than renew Glass-Steagall; failed to prosecute a single Wall Street executive or bank because, according to his Attorney General, Wall Street is just too big to jail; and permanently enshrined the Bush tax cuts for all but the top 2 percent.

Meanwhile, over the last several decades Democrats have allowed Social Security taxes to grow and its revenue stream to become almost as important a source of overall government funding as income taxes; turned their backs on organized labor and labor-law reforms that would have made it easier to form unions; and then, even as they bailed out Wall Street, neglected the burdens of middle-class homeowners who found themselves underwater and their homes worth less than what they paid for them because of the Street’s excesses.

In fairness, it could have been worse. Clinton did stand up to Gingrich. Obama did get the Affordable Care Act. Congressional Democrats have scored tactical victories against social conservatives and Tea Party radicals. But Democrats haven’t responded in any bold or meaningful way to the increasingly concentrated wealth and power, the steady demise of the middle class, and further impoverishment of the nation’s poor. The Party failed to become a movement to reclaim the economy and our democracy.

And now come their pre-concessions on Social Security and Medicare.

Technically, a “chained CPI” might be justifiable if seniors routinely substitute lower-cost alternatives as prices rise, as most other Americans do. But in reality, seniors pay 20 to 40 percent of their incomes for healthcare, including pharmaceuticals — the prices of which are rising much faster than inflation. So there’s no practical justification for reducing Social Security benefits on the assumption inflation isn’t really eating away at those benefits as much as the current cost-of-living adjustment allows. 

Robert B. Reich, chancellor’s professor of public policy at UC Berkeley, was secretary of labor in the Clinton administration. Time magazine named him one of the 10 most effective Cabinet secretaries of the last century. He has written 13 books, including the best-sellers “Aftershock” and “The Work of Nations.” His latest, “Beyond Outrage,” is now out in paperback. He is also a founding editor of The American Prospect magazine and chairman of Common Cause.


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Solution to Student Debt is to Get the Banks Out of the Education Business

Michael Hudson: Crippling student debt, which is also a drag on the whole ecnonomy, developed as governments pushed the burden of higher education costs onto students and pushed them into the arms of the banks. PAUL JAY, SENIOR EDITOR, TRNN: Welcome b...

Gailbraith and Panitch: Is a New “New Deal’ Possible? Pt.2


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Bio

Leo Panitch is the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto. He is the author of many books, the most recent of which are: The Making of Global Gapitalism: the Political Economy of American Empire (Verso 2012); and, In and Out of Crisis: The Financial Meltdown and Left Alternatives (PM Press 2010). In addition to his university affiliation he is also a co-editor of the Socialist Register, whose 2013 volume is entitled The Question of Strategy.

James K. Galbraith teaches at the LBJ School of Public Affairs, The University of Texas at Austin. He is a Senior Scholar of the Levy Economics Institute and the Chair of the Board of Economists for Peace and Security. The son of a renowned economist, the late John Kenneth Galbraith, he writes occasional commentary for many publications, including Mother Jones, The Texas Observer, The American Prospect, and The Nation. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School, and is President this year of the Association for Evolutionary Economics.

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Rosa Parks Syndrome in Palestine

The same week President Obama honored Rosa Parks Parks’ 100th birthday, Israel announced two newly segregated bus lines for Palestinian workers traveling to Israel from the West Bank. The “Palestinian only” buses were introduced after Israeli settlers complained that fellow Palestinian passengers posed a “security risk.”

The timing of Israel’s announcement set the internet abuzz with moralizing references to the Montgomery Bus Boycott and Jim Crow. If only Palestinians could produce their own Rosa Parks. More sophisticated Palestine analysts observed that for Palestinians, segregation is already routine. Israeli society functions thanks to a complex web of segregated highways, neighborhoods, and educational institutions. Potential Palestinian “Martin Luther King Jr.’s”cycle in and out of Israeli jails.

Of course, President Obama avoids Jim Crow/Israel analogies. His administration continues to oppose international efforts to recognize Palestinian self-determination and the itinerary for Obama’s upcoming Israel trip resembles a POTUS version of Birthright. His first activity is a photo op with missile battery. Obviously, a spell of liberal indignation over bus segregation and a brief flurry of Rosa Park’s references will not translate into US policies shifts on Israel/Palestine. But in this faux-outrage, there is something valuable to be learned about the shortcomings of liberalism and its failure to fully comprehend both the plight of Palestinians and America’s own history of racial oppression.

As Samir Sonti pointed out in Jacobin last week, contemporary liberals sanitize the movement for black liberation as a fundamentally individual struggle for “civil rights,” stripped of its working class roots, revolutionary goals, and strong ties to organized labor.

For liberals, racial oppression is an uncomfortable concept because it lays the blame for inequality at the feet of society at large and implicates the very legitimacy of liberal institutions. For that reason, Martin Luther King Jr. is remembered more for his leadership of the Montgomery Bus Boycott — with its modest goals of bus integration — than for his Poor People’s Campaign and his deeper indictment of American society.

Liberals who generally support Israel, but find themselves cringing when Israeli politicians make racist remarks, seize on incidents like Israeli bus segregation because it packages the conflict in digestible terms. This impulse does signal some empathy for the Palestinian plight. But it also smacks of triumphalism. Realizing African American civil rights, we are told, is the landmark achievement of 20th century liberalism — a hard but necessary journey. When we chastise Israel for segregating buses there is a clear subtext: America has come so far from the days of Jim Crow and our little sibling in the Middle East has some catching up to do.

But Palestinians know that bus segregation is merely a cosmetic feature of their oppression. Commuter discrimination amounts to a red herring. The separate buses are only significant for how they reflect on the general ideological predicament of Israeli society. In fact, many of the Palestinian workers who actually ride the buses welcome the segregation. The new routes are more direct and save the Palestinians from having to endure harassment from settlers.

The perspectives of Palestinian laborers fail to register with liberals, who are desperate to recast Palestinian oppression as an individualistic struggle for civil rights. For them, Palestinian oppression is comfortably framed as “inequality before the law,” a condition easily remedied by extending the largess of the Jewish state. This limited understanding works to reinforce the primacy of Israel — its courts, government, and military — as flawed but ultimately legitimate liberal institutions capable of reform.

If the problem is primarily a problem of civil rights, an issue of inequality rather than oppression, then the solution must be new laws, better courts ,and more sensitive politicians. This is a very comfortable position for liberals because it forecloses far reaching criticism of Israeli society at large and quashes difficult questions about the very foundation of that state.

By sidestepping the question of oppression and dismissing the potential for restructuring Israeli society, liberals do not pause to consider the claims of Palestinians. The age-old Palestinian demand for the “right of return” is considered inconceivable because it would undermine the very nature of the Jewish state. Palestinians are encouraged to set aside their historic grievances and embrace the existing “facts on the ground.” The liberal view holds that by working within the system Palestinians can overcome inequality. It does not leave much room for, in MLK’s words, “radically restructuring society itself.”

The same tendency infects the liberal civil rights mythos. In the push for a color blind society, any system-wide attempts to reach equal racial outcomes are cast outside the mainstream. The ultimate watchdog of American liberalism, the U.S. Supreme Court, is poised to strike down Section 5 of the Voting Rights Act, one of the lone vestiges of a transformative approach to racial equality. For liberals, contemporary racism is the fault of a few bad apples and any push to fundamentally alter the distribution of resources is considered in poor taste.

Rosa Parks is cast as an ordinary woman, fed up with the indignity of her commute, rather than a lifelong activist with revolutionary aspirations and ties to the American Communist Party. Thus, the sanitized perception of Rosa Parks enables people like Mitch McConnell to bask in the achievement of civil rights alongside President Obama.

As liberalism fails to offer compelling solutions to racial inequality, a growing chorus of voices on the Left are shining a light on persistent Jim Crow-like segregation in American society. Under the “New Jim Crow” one in three black men are destined to go to prison and blacks are ten times more likely than whites to be incarcerated for drug crimes.

Critical race theorists like Charles Lawrence III have long anticipated this reconfiguration of racial castes. Lawrence III warned that the dominant individualistic understanding of racial inequality would prove inadequate to reverse centuries of oppression: “Racial equality [should be seen] as a substantive societal condition rather than as an individual right.” Yet radical solutions to persistent racial inequality — more aggressive affirmative action, slavery reparations, dismantling the criminal justice system as we know it, legalizing drugs that are the overwhelming cause of black incarceration — all fall beyond the purview of liberal criticism.

Liberals bring this same limited scope to their understanding of Israel/Palestine and their range of solutions for the conflict exposes grave ideological contradictions. Of course, Palestinians deserve equal rights, liberals proclaim, but fundamental questions about the very nature of Israel and its foundation remain taboo. Those who oppose the right of Israel to exist as a Jewish state are quickly labeled anti-semites.

Liberals balk at racism within Israeli society but the roots of that racism go unexamined. Religion and State should be kept separate, say the liberals, but theocratic and overtly racist Israeli political parties continue to grow. For the foreseeable future Israeli politics will increasingly ruffle liberal sensibilities, but the liberal frame will continue to view Palestinian oppression as an understandable, if regrettable, blip in Israel’s democratic journey.

Budgets Votes in House Cast Long Shadow as ‘Grand Bargain’ Looms

The budget put forth by the Progressive Caucus (CPC) in the House went down in expected defeat on Wednesday with a vote of 84-327.

In this March 18, 2013 file photo, House Budget Committee Chairman Rep. Paul Ryan, R-Wis. is seen on Capitol Hill in Washington. It's not this man, however, that progressives should be most worried about. It's Democrats and what they're willing to do in the name of 'compromise.' (Photo: AP) “The Back-to-Work budget is common sense, and it reflects the values of the American people," said CPC co-chair Rep. Raul Grijalva from the floor ahead of the vote. "It recognizes the realities of our economic and social times. This budget is about investment, and the greatest resource we have in this country is the American people, we need to invest in them."

It was not to be.

The Senate budget, approved by the Democratic-controlled upper-chamber, was also voted down in the House by a margin of 154-261. Among those who voted against it were 35 Democrats.

Also struck down was the the budget proposed by the Congressional Black Caucus (CBC). That vote was 105-305, with Democrats split with 105 in favor and 80 voting against it.

A vote on the Republican House budget, authored by Rep. Paul Ryan, is expected for a vote on Thursday. It will likely pass, of course, but will be dead on arrival in the Senate.

"Before we pass a grand bargain, we have got to take a hard and sober look at what’s happening economically in our country today." - Sen. Bernie Sanders

All votes more or less expected, but the story their failures reveal is one of continued budgetary gridlock in a split Congress and a country stuck in an economic crisis that continues to pit the good of all against the interest of the wealthiest few.

Above all, the failure to pass a budget agreement in Congress pushes President Obama to stay on a trajectory to willingly foster cuts—in the name of "compromise" and "shared sacrifice"—to key social programs like Social Security, Medicare, and Medicaid as he succumbs to the invented mantra that instead of a massive crisis of unemployment and income inequality, the US economy is suffering from annual deficits or a tax code not preferential enough to corporate interests.

In the name of this 'fabricated crisis,' Obama and other Democrats, according to economists and progressive critics, are falling victim (or willingly playing along) to the Republican budget intransigence that has been their hallmark since Obama first took office in 2008.

As recently as last week, House Minority Leader Nancy Pelosi (D-Calif.) said she would be willing to consider the 'chained CPI', which economists widely agree is fundamentally a cut to Social Security. She also said she would consider means-testing Medicare, a shift that could undermine the public support it has long enjoyed.

It's not the first time the Democrats have toyed with cutting program their constituents widely support, as economist and former Labor Secretary Robert Reich points out Thursday, but the Party's current willingness to "lead with compromise" is particularly unwise and harmful.

"If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now," argues Reich. The Democrats should be "forging an alliance between the frustrated middle [class] and the working poor" and arguing that even the rich would be doing better "with a smaller share of a rapidly-growing economy than a ballooning share of one that’s growing at a snail’s pace."

"The modern Democratic Party [is] too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy." - Robert Reich

Unfortunately and frustratingly, however, Reich continues, "the modern Democratic Party can’t bring itself to do this. It’s too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy."

And independent Senator from Vermont Bernie Sanders, who has repeatedly vowed to protect Medicare and Social Security and other earned benefit programs, warned Obama on Wednesday that a 'Grand Bargain' with Republicans should really be seen as a 'Grand Sellout.'

Writing in The Hill newspaper, Sanders said:

At a time when the middle class is disappearing, 46 million Americans are living in poverty and the gap between the very rich and everyone else is growing wider, we need a “grand bargain” that protects struggling working families, not billionaires.

With corporate profits at record-breaking levels while the effective corporate tax is at its lowest level since 1972, and 1 out of 4 profitable corporations pays nothing in federal income taxes, we need a grand bargain that ends corporate loopholes and demands that corporate America starts helping us with deficit reduction. We must not balance the budget on the backs of the elderly, the children, the sick and the poor. We must not cut Social Security, disabled veterans’ benefits, Medicare, Medicaid, education and other programs that provide opportunity and dignity to millions of struggling American families.

Before we pass a grand bargain, we have got to take a hard and sober look at what’s happening economically in our country today. In doing so, we must acknowledge that the United States has the most unequal distribution of wealth and income of any major country on earth and that inequality is worse today than at any time since the late 1920s. Today, the wealthiest 400 individuals in this country own more wealth than the bottom half of America — 150 million Americans. The top 1 percent owns 38 percent of all financial wealth, while the bottom 60 percent owns just 2.3 percent. Incredibly, the Federal Reserve reported last year that median net worth for middle-class families dropped by nearly 40 percent from 2007-2010. That’s the equivalent of wiping out 18 years of savings for the average middle-class family.

And Isaiah Poole, writing about the defeated 'Back to Work Budget'—which his Campaign for America's Future fought hard to support—said:

Though this push has ended, the fight is not over. There will be other battles ahead in the coming weeks in which Congress will be forced to choose priorities, and the Back to Work Budget has made one thing clear: There is a right road to economic recovery and eventual deficit reduction, and progressives have it. Millions of Americans agree, and their representatives have been put on notice.

Stating clearly his priorities going forward, Sen. Sanders said:

We need a budget that puts millions of Americans back to work in decent-paying jobs by rebuilding our crumbling infrastructure and transforming our energy sector away from fossil fuels and into renewable energy and energy efficiency.

We need a budget that keeps the promises we have made to our seniors, veterans and the most vulnerable by protecting Social Security, Medicare and Medicaid benefits.

We need a budget that makes sure that the wealthiest Americans and most profitable corporations pay their fair share of taxes. We must end corporate loopholes that allow Wall Street banks, large corporations and the wealthy to avoid more than $100 billion a year in federal taxes by stashing their profits in the Cayman Islands and other tax havens.

And Reich concludes by arguing that the false narrative that the US is financially "broke" must be upended:

We are the richest nation in the history of the world — richer now than we’ve ever been. But an increasing share of that wealth is held by a smaller and smaller share of the population, who have, in effect, bribed legislators to reduce their taxes and provide loopholes so they pay even less.

The budget deficit “crisis” has been manufactured by them to distract our attention from this overriding fact, and to pit the rest of us against each other for a smaller and smaller share of what remains. Democrats should not conspire.

Needy children should be getting far more help, better pre-school care, better nutrition. Seniors need better healthcare coverage and more Social Security. All Americans need better schools and improved infrastructure.

The richest nation in the history of the world should be able to respond to the legitimate needs of all its citizens.

______________________________________________

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Selling the Store: Why Democrats Shouldn’t Put Social Security and Medicare on the Table

Prominent Democrats — including the President and House Minority Leader Nancy Pelosi — are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation. House Minority Leader Nancy Pelosi (D-Calif.) said last week she's willing to consider cuts to Social Security as part of a sweeping deficit-reduction package, the so-called 'Grand Bargain.'. (Photo: File)

This is even before they’ve started budget negotiations with Republicans — who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions.

It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise.

For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy.

In reality, average working people have been stymied because almost all the economic gains of the last three decades have gone to the very top. The middle has lost bargaining power as unions have shriveled. American politics has been flooded with campaign contributions from corporations and the wealthy, which have used their clout to reduce marginal tax rates, widen loopholes, loosen regulations, gain subsidies, and obtain government bailouts when their bets turn sour.

Now five years after the worst downturn since the Great Depression and the biggest bailout in history, the stock market has recouped its losses and corporate profits constitute the largest share of the economy since 1929. Yet the real median wage continues to fall — wages now claim the lowest share of the economy on record — and inequality is still widening. All the economic gains since the trough of the recession have gone to the wealthiest 1 percent of Americans; the bottom 90 percent continue to lose ground.

If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now — forging an alliance between the frustrated middle and the working poor.

What looks like the start of a more buoyant recovery is a sham because the vast majority of Americans have neither the pay nor access to credit that allows them to buy enough to boost the economy. Housing prices and starts are being fueled by investors with easy money rather than would-be home buyers with mortgages. The Fed’s low interest rates have pushed other investors into stocks by default, creating an artificial bull market.

If there was ever a time for the Democratic Party to champion working Americans and reverse these troubling trends, it is now — forging an alliance between the frustrated middle and the working poor. This need not be “class warfare” because a healthy economy is in everyone’s interest. The rich would do far better with a smaller share of a rapidly-growing economy than a ballooning share of one that’s growing at a snail’s pace and a stock market that’s turning into a bubble.

But the modern Democratic Party can’t bring itself to do this. It’s too dependent on the short-term, insular demands of Wall Street, corporate executives, and the wealthy.

It was Bill Clinton, after all, who pushed for repeal of Glass-Steagall, championed the North American Free Trade Act and the World Trade Organization without adequate safeguards for American jobs, and rented out the Lincoln Bedroom to a steady stream of rich executives.

And it was Barack Obama who continued George W. Bush’s Wall Street bailout with no strings attached; pushed a watered-down “Volcker Rule” (still delayed) rather than renew Glass-Steagall; failed to prosecute a single Wall Street executive or bank because, according to his Attorney General, Wall Street is just too big to jail; and permanently enshrined the Bush tax cuts for all but the top 2 percent.

Meanwhile, over the last several decades Democrats have allowed Social Security taxes to grow and its revenue stream to become almost as important a source of overall government funding as income taxes; turned their backs on organized labor and labor-law reforms that would have made it easier to form unions; and then, even as they bailed out Wall Street, neglected the burdens of middle-class homeowners who found themselves underwater and their homes worth less than what they paid for them because of the Street’s excesses.

In fairness, it could have been worse. Clinton did stand up to Gingrich. Obama did get the Affordable Care Act. Congressional Democrats have scored tactical victories against social conservatives and Tea Party radicals. But Democrats haven’t responded in any bold or meaningful way to the increasingly concentrated wealth and power, the steady demise of the middle class, and further impoverishment of the nation’s poor. The Party failed to become a movement to reclaim the economy and our democracy.

And now come their pre-concessions on Social Security and Medicare.

Technically, a “chained CPI” might be justifiable if seniors routinely substitute lower-cost alternatives as prices rise, as most other Americans do. But in reality, seniors pay 20 to 40 percent of their incomes for healthcare, including pharmaceuticals — the prices of which are rising much faster than inflation. So there’s no practical justification for reducing Social Security benefits on the assumption inflation isn’t really eating away at those benefits as much as the current cost-of-living adjustment allows.

Likewise, although a case can be made for reducing the Medicare benefits of higher-income beneficiaries, as a practical matter their savings are almost as vulnerable to rising healthcare costs as are the more modest savings of middle-income retirees. “Means-testing” Medicare also runs the risk of transforming it into a program for the “less fortunate,” which can undermine its political support.

Medicare for all, or even a public option for Medicare, would give the program enough clout to demand health providers move from a fee-for-service system to one that paid instead for healthy outcomes.

In short, Medicare isn’t the problem. The underlying problem is the sky-rocketing costs of health care. Because Medicare’s administrative costs are a fraction of those of private health insurance, Medicare might be part of the solution. Medicare for all, or even a public option for Medicare, would give the program enough clout to demand health providers move from a fee-for-service system to one that paid instead for healthy outcomes.

With healthcare costs under better control, retirees wouldn’t be paying a large and growing portion of their incomes for healthcare — which would alleviate pressure on Social Security. I’m still not convinced a “chained CPI” is necessary, though. A preferable alternative would be to raise the ceiling on the portion of income subject to Social Security taxes (now $113,600).

Besides, Social Security and Medicare are the most popular programs ever devised by the federal government, which is why Republicans hate them so much. If average Americans have trusted the Democratic Party to do one thing it has been to guard these programs from the depredations of the GOP.

Putting these two programs “on the table” is also tantamount to accepting the most insidious and dishonest of all Republican claims: That for too long most Americans have been living beyond their means; that we are rapidly approaching a day of reckoning when we can no longer afford these generous “entitlements;” and that prudence and responsibility dictate that we must now begin to live within our means and cut back these projected expenditures, particularly if we are to have any money left to invest in the young and the disadvantaged.

The truth is the opposite: That for three decades the means of most Americans have been stagnant even though the overall economy has more than doubled in size; that because almost all the gains from growth have gone to the top, most Americans haven’t been able to save enough for retirement or the rising costs of healthcare; and that because of this, Social Security and Medicare are barely adequate as is.

Democrats shouldn’t succumb the lie that the elderly and young are in competition for a portion of a shrinking pie, when in fact the pie is larger than ever. It’s just that those who have the largest and fastest-growing portions refuse to share it.

Paul Ryan’s House Republican budget takes on Medicare, but leaves Social Security alone. Why should Democrats lead the charge on either?

The Republicans are already slashing help for the young and the disadvantaged. Democrats shouldn’t succumb the lie that the elderly and young are in competition for a portion of a shrinking pie, when in fact the pie is larger than ever. It’s just that those who have the largest and fastest-growing portions refuse to share it.

We are the richest nation in the history of the world — richer now than we’ve ever been. But an increasing share of that wealth is held by a smaller and smaller share of the population, who have, in effect, bribed legislators to reduce their taxes and provide loopholes so they pay even less.

The budget deficit “crisis” has been manufactured by them to distract our attention from this overriding fact, and to pit the rest of us against each other for a smaller and smaller share of what remains. Democrats should not conspire.

Needy children should be getting far more help, better pre-school care, better nutrition. Seniors need better healthcare coverage and more Social Security. All Americans need better schools and improved infrastructure.

The richest nation in the history of the world should be able to respond to the legitimate needs of all its citizens.

This work is licensed under a Creative Commons License

Robert Reich

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

The Grand Bargain Could be Grand Sellout

The media appear fixated about when and if a so-called “grand bargain” on our economy will be reached. Wrong question! The question we should be asking is: What should be in a “grand bargain” that works for the average American?

(Photo: mfhiatt via Flickr)At a time when the middle class is disappearing, 46 million Americans are living in poverty and the gap between the very rich and everyone else is growing wider, we need a “grand bargain” that protects struggling working families, not billionaires.

With corporate profits at record-breaking levels while the effective corporate tax is at its lowest level since 1972, and 1 out of 4 profitable corporations pays nothing in federal income taxes, we need a grand bargain that ends corporate loopholes and demands that corporate America starts helping us with deficit reduction. We must not balance the budget on the backs of the elderly, the children, the sick and the poor. We must not cut Social Security, disabled veterans’ benefits, Medicare, Medicaid, education and other programs that provide opportunity and dignity to millions of struggling American families.

Before we pass a grand bargain, we have got to take a hard and sober look at what’s happening economically in our country today. In doing so, we must acknowledge that the United States has the most unequal distribution of wealth and income of any major country on earth and that inequality is worse today than at any time since the late 1920s. Today, the wealthiest 400 individuals in this country own more wealth than the bottom half of America — 150 million Americans. The top 1 percent owns 38 percent of all financial wealth, while the bottom 60 percent owns just 2.3 percent. Incredibly, the Federal Reserve reported last year that median net worth for middle-class families dropped by nearly 40 percent from 2007-2010. That’s the equivalent of wiping out 18 years of savings for the average middle-class family. 

The distribution of income is even worse. If you can believe it, the last study on the subject showed that all of the new income gained from 2009-2011 went to the top 1 percent. ALL of the new income!

In America today, the average middle-class family has seen its income go down by nearly $5,000 since 1999, adjusting for inflation. Real unemployment is not 7.7 percent, it is 14.3 percent, counting those workers who have given up looking for work or who are working part time when they want to be working full time. While youth unemployment is exceptionally high, millions of young people are struggling with student loans they can’t afford to pay back. While we talk about the need to strengthen the middle class, we have to understand that more than half of the new jobs that have been created since 2010 are low-wage jobs paying people between $7.80 and $13.80 an hour. 

That’s the economic reality facing a large majority of our people, and that’s what has to be taken into consideration when we discuss deficit reduction and a “grand bargain.”

As a member of the Senate Budget Committee, here are my priorities:

We need a budget that puts millions of Americans back to work in decent-paying jobs by rebuilding our crumbling infrastructure and transforming our energy sector away from fossil fuels and into renewable energy and energy efficiency.

We need a budget that keeps the promises we have made to our seniors, veterans and the most vulnerable by protecting Social Security, Medicare and Medicaid benefits.

We need a budget that makes sure that the wealthiest Americans and most profitable corporations pay their fair share of taxes. We must end corporate loopholes that allow Wall Street banks, large corporations and the wealthy to avoid more than $100 billion a year in federal taxes by stashing their profits in the Cayman Islands and other tax havens.

A federal budget is not just a set of numbers. It is a value statement of what we, as a nation, stand for. We must fight for a grand bargain that stands for justice, opportunity and the needs of our middle class. We must reject any approach that continues the economic assault on working families.

© 2013 Capitol Hill Publishing Corp.

Bernie Sanders

Bernie Sanders (I-Vt.) was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history. Elected Mayor of Burlington, Vt., by 10 votes in 1981, he served four terms. Before his 1990 election as Vermont's at-large member in Congress, Sanders lectured at the John F. Kennedy School of Government at Harvard and at Hamilton College in upstate New York. Read more at his website.

Greece: The Crisis Behind the Crisis and the Challenges Facing the Left

Neoliberal policies created a disaster in the country now shredded by austerity measures. The Syriza party and the Greek left have much work ahead if they are to build a just and sustainable economic and social order.

When the global financial crisis of 2008 reached Europe's shores sometime in late 2009, the eurozone, with its faulty design and distinct neoliberal policymaking framework, experienced its first major crisis since the introduction of the euro as a single currency; the danger of an imminent collapse was suddenly all too real. From the beginning, there were warnings about the dire consequences of introducing a single currency into a region with sharp economic and cultural differences, but the European political elite turned a deaf ear on the skeptics.(1) European business interests were too big to be compromised over concerns about future financial busts or speculations about the risk of adopting a foreign currency without the backing of a federal treasury and a central bank acting as lender of last resort. Indeed, like the owner of the Titanic who told the captain to go full speed although several warnings had been received about icebergs ahead, European policymakers at the time could not resist the temptation to launch euro as a cash currency in spite of the fact that the Eurosystem was built on a weak institutional foundation. And they compounded the error by allowing highly problematic candidates to join the union, thereby violating the principles of optimal currency areas.(2)

Unfit to Join the Euro

The first crack in the EU wall occurred in Greece, the weakest link of the currency union. Economically, socially and culturally, Greece was ill prepared to join the euro when it did back in 2001, but the country managed nevertheless to do so mainly because of its legacy of contribution to the development of Western culture.(3) The nation's domestic political and economic elite were eager to join Euroland not just because of the perceived benefits, but also because they were very much in need of a psychological boost: if you are weak and marginal, and incapable of change and improvement, joining a group of strong and rich nations gives you the illusion that you are on a par with them.(4) Hence the hilarious statement of then Greek Finance Minister, Yannos Papantoniou, who described the joining of the euro as "'an historic day that would place Greece firmly at the heart of Europe,"' or the equally laughable statement of then prime minister Costas Simitis, who propounded that "we all know that our inclusion in EMU (European Monetary Union) ensures for us greater stability and opens up new horizons."

Apparently, both of these political midgets felt that what shapes a nation's economy is its currency, not its productive base, technological know-how, human skills, etcetera. Be that as it may, the euro produced, for the most part, a rocky ride for Greece (GDP increased, but both public and private debt levels reached new heights while competitiveness declined significantly) that ten years later crashed against the brick wall erected by international credit markets when they refused to extend further lending on account of the country's massive fiscal deficit and humongous public debt burden. And perhaps not without coincidence, both of the aforementioned euro cheerleaders ended up having reigned over the longest unbroken period of political corruption in the modern period of Greece, courtesy of neoliberal "socialist" governance.(5)

When the global financial crisis erupted, the Greek economy had already entered a downturn phase, with GDP expansion having slowed down in 2008. The industrial sector, in fact, had entered a phase of recession as far back as 2005. In 2008, the industrial production indicator had fallen by 4.2 percent and reached a 10 percent decline in 2009.(6) Yet, when the crisis initially reached Greece, everyone was in an apparent and inexplicable state of denial, including leading EU officials. Thus, in October 2008, Kostas Karamanlis, then Greece's prime minister and leader of the conservative New Democracy party, declared in a speech to his cadres that the Greek economy was largely "shielded" from the effects of the economic crisis thanks to the structural adjustments his government had initiated. And his main political opponent, PASOK leader George Papandreou and current prime minister, assured the citizenry that "there was plenty of money around" and that, if elected, his government would exhibit "'the political will"' to find money for the toiling population, just as it had been found for the bailouts of the banks. But the most problematic example of unwillingness on the part of leading public officials to recognize the trouble that lay ahead for Greece came from the EU chiefs themselves: thus, EU Commissioner Joaquín Almunia announced as late as February 2009 that "the Greek economy is in better condition compared with the average condition in the Eurozone, which is currently in recession."(7)

Why were the Greek and EU political elites unable and unwilling to face up to the gravity of the Greek situation before things got out of hand? This question remains vital as the Greek economic crisis is now turning into a humanitarian crisis and EU leaders continue to ignore the pressing reality of the situation, intent on pushing forward with the destructive policies of austerity and fiscal adjustment.

But Greece's sovereign debt crisis did not come out of the blue. It may have been precipitated by the financial global crisis of September-October 2008 (the deficit had climbed to 15.4 percent of GDP, although there are accusations made from a former employee of the Greek Statistical Authority, Zoe Georganta, a professor of economics at the University of Macedonia, that the official figures for the 2009 budget deficit had been inflated by the Papandreou government in 2010 in an apparent attempt to legitimize the harsh austerity measures that came along with the bailout plan orchestrated by the European Union and the International Monetary Fund (IMF); an inquiry is now underway by Greek prosecutors). But it had long been in the making. It was, in effect, a time bomb waiting to explode. The Greek economic model of growth was highly flawed: growth was not based on economic fundamentals; income tax rates were always very low, tax evasion massive, and Greek governments ran a continual deficit - building up an immense stock of national debt consistently well over 100 percent of GDP.

The Triple Nature of the Greek Crisis

Still, the Greek crisis must be seen as something much more than the simple outcome of corrupt government practices, although corruption, including tax evasion, is a major component of the economic ills facing the country today. It is the story of a kleptocratic state and a parasitic capitalist elite who got caught in the web of the eurozone's flawed design when the US financial crisis of 2007–2008 hit Europe's shores.(8) It is also the story of an economy that did not meet the prerequisites for entering an alleged optimum-currency area, nor did it make much attempt to fit in properly. But it is also the story of the general failure of the global neoliberal project, the financialization of the economy and free-market orthodoxy.(9) Indeed, how else could eurozone countries with such dissimilar economies - Greece, a statist and highly corrupt economy; Ireland, a poster-child for neoliberal capitalism; Spain, a faithful follower of EU dictates about deficits and debt - end up suffering the same fate?

The reason is rather simple: because they all orbited the same central entity, the black hole of European neoliberal capitalism. As such, political and ideological differences between social democratic and conservative political parties have long ago vanished. Thus, in Greece, Spain, Portugal and elsewhere, "'social democratic"' governments long ago discarded even the pretext of being agents of progressive reform.(10) Hence the ease with which such governments went along with the EU/IMF dictates in imposing unprecedented cuts and austerity measures that have drastically reduced the standard of living for the working people in their respective countries. In sum, the Greek crisis:

  • stands as a severe fiscal and public debt crisis (during the 1980s and 1990s, annual government expenditures exceeded revenue by an average of more than 8 percent of GDP, while the national debt exceeded 100 percent of GDP) stemming from the deep and long-term structural problems of the Greek economy and the deformities of the domestic political and cultural system
  • represents a European crisis due to the intricate trade and financial ties between Greece and the other eurozone member-states, and
  • reflects the deadly failure of the neoliberal project, which has become institutionalized throughout the EU's operational framework, all while the IMF remains the world's single most powerful enforcer of market fundamentalism. 

At the heart of the neoliberal vision is a societal and world order based on the prioritization of corporate power, "free" markets, and the abandonment of public services. The neoliberal claim is that economies would perform more effectively, producing greater wealth and economic prosperity for all, if markets were allowed to function without government intervention. This claim is predicated on the idea that "free" markets are inherently just and can create effective, low-cost ways to produce consumer goods and services. Subsequently, an interventionist or state-managed economy is wasteful and inefficient, choking off growth and expansion by constraining innovation and the entrepreneurial spirit.

This is the version of neoliberalism developed by Milton Friedman and the Chicago School and usually associated with the Pinochet regime in Chile, and, later, with the free-market policies of Margaret Thatcher and Ronald Reagan - an ideological revolution that was long in the making but that gained ascendancy over Keynesianism with the appearance of stagflation.(11) And it is by far the most dangerous ideology of our time (12), spreading havoc with its "economics of social disaster."(13)

In April 2010, with the bond vigilantes having woken up as a result of Dubai's debt crisis in late 2009, Greece was shut out of the international bond markets and - facing the prospect of a default - sought refuge under an EU/IMF financial rescue scheme. Months prior, the Papandreou government (14) had approached the IMF to extend its "'technical know-how and experience"' to the EU by administering a dose of shock therapy. Greece needed to be "rescued," and the Europeans needed not only the Fund's expertise but also to add an element of legitimacy to the austerity experiment that was about to be performed on a peripheral member-state. In this context, the invitation to the IMF to join in the operation on an ailing European patient served multiple purposes.

The neoliberal quacks were quick to rush to judgment about the roots of the Greek crisis - allegedly, a bloated public sector that wasted too many resources on lazy, unproductive citizens and hindered the potential of the private sector - and lost no time in recommending brutal austerity measures. What if the facts did not fit this narrative? Indeed, all the available data showed that the Greek public sector, while inefficient and corrupt, was actually smaller than the public sector of many other European nations; that Greeks worked on average more than most other Europeans; and that even Greek productivity in the years leading up to the crisis compared favorably with that of Germany.(15) And what if there were huge imbalances in the eurozone, with the core states running huge surpluses and the peripherals running huge deficits?(16) Greece was judged to be solely responsible for the sad state of its fiscal condition in the age of the euro and had to be punished, both as penance for its sins and as a warning to its southern cousins that the same fate awaited them if they didn't put their own fiscal houses in order.

It is this cynical, brutal perspective that led to Greece becoming an unwilling test subject for the EU's neoliberal vision and kept Germany's game going when things got rough in Euroland. Most of the German banks were overexposed to Greek debt and nearly insolvent. The May 2010 bailout of 110 billion euros (with a usurious interest rate of 5 percent) was orchestrated by the EU and the IMF - the twin monsters of neoliberal capitalism - in an apparent attempt to have Greece keep up with its debt payments to foreign banks: hence the rejection of even the slightest consideration of a debt restructuring, even though this would have been the quickest and safest way to allow Greece some breathing room. Helping its economy recover through the coordinated implementation of a large-scale development plan would also have been appropriate in a proper economic and monetary union. Indeed, such moves could have secured the confidence of international bond investors in the euro's sustainability and might even have prevented contagion in the rest of the periphery. They would certainly have prevented the spread of an otherwise avoidable contagion from the periphery to the center, which is clearly underway as of last year. But with the adoption of punishment as policy, contagion in the periphery became inevitable, and with the deficit economies in the periphery wrapped in an austerity straightjacket, the surplus economies of the center were bound to feel the effects of their insane and brutal policies. The economies of both Germany and France contracted in the last quarter of 2012. GDP in the eurozone as a whole fell by 0.5 percent last year, and, more significant, 2012 will go down in history as the first year since 1995 in which no quarter produced growth.(17)

The Catastrophic Effects of Austerity

Indeed, as a policy, the bailout scheme proved to be a dismal failure on every possible front, save for ensuring that debt payments kept flowing to foreign banks. The crude macro-stabilization program and the harsh austerity measures that accompanied the loan to Greece (amounting to 11 percent of the country's GDP) had the opposite of the intended effect on the markets and choked off all prospects of recovery for the Greek economy: demand plummeted due to the deadly combination of massive budget spending cuts, reductions in wages and pensions, and sharp tax increases, causing thousands of small businesses to go bankrupt and forcing several multinationals to move their production facilities to nearby Balkan countries, thereby producing explosive unemployment rates, sharply diminishing state revenues and substantially increasing the debt-to-GDP ratio.(18) The policy pursued by the EU/IMF duo is so fundamentally flawed that Keynes must be rolling over in his grave. Still, economic dogmas ought, apparently, to be respected, no matter what results they produce, so in the mind of the neoliberal zealots, they should be pursued to the bitter end. Thus, less than two years later, a second "bailout" of 130 billion euros was extended to beleaguered Greece, with terms and conditions for allegedly turning the economy around that are much harsher than the first "rescue" attempt. The "pay while you bleed" and "suffer for your sins" policy of the twin monsters should by now be clear to everyone.

In drafting the document for the so-called Second Economic Adjustment Program for Greece, the EU's neoliberal lackeys contended that "Greece made mixed progress towards the ambitious objectives of the first adjustment program."(19) On the positive side, it is noted, the general government deficit was reduced "from 15.75 percent of GDP in 2009 to 9.25 percent in 2011." On the negative side, the recession "was much deeper than previously projected" because, it is claimed, factors such as "social unrest" and "administrative incapacity" (including a lack of effectiveness in combating tax evasion) "hampered implementation." The antigrowth "fiscal and structural adjustment" program was perfectly designed and would have produced all the anticipated results if the government were better able to carry out the policies (perhaps it should have ordered the police and the army to arrest all public administrators and have them shot for disobeying the troika's commands), and if the citizenry did not on occasion make some fuss about the austerity program by staging demonstrations here and there, or by occupying the square outside the Greek parliament building. In essence, this is what the neoliberals' above comments are saying.

The feeble excuses of the EU bureaucrats for the fiscal consolidation program's causing a much sharper economic decline than "previously projected" fly in the face of the recent partial concessions made by the IMF: that the policies carried out in Greece ended up having much more adverse effects on the economy because the IMF miscalculated the impact of the fiscal multiplier. Indeed, the executive summary of the Second Economic Adjustment Program for Greece goes on to state unequivocally that, insofar as the prospects of the success of the second adjustment program are concerned, "the implementation risks ... remain very high" but the success of the program "depends chiefly on Greece."(20)

The neoliberal economics applied to Greece by Germany, the EU and the IMF did not simply cause a greater decline in Greek GDP than "originally projected" or make the debt grow substantially bigger in the course of the last two years (from 126.8 percent in 2010 to 180 percent in 2012). It also produced an economic and social catastrophe of proportions unparalleled in peacetime Europe. In May 2010, when the first bailout was approved and the austerity measures kicked into high gear, the unemployment rate in Greece stood at 12 percent. It has since climbed to 27 percent, and the youth unemployment rate has reached 62 percent. According to the Greek Statistical Authority, the actual number of unemployed reached 1.35 million in November 2012, with the number of employed standing at 3.642 million.(21)

Poverty is also spreading rapidly, affecting all groups in society, including children. In a recent report released by Eurostat, 31 percent of Greeks had a standard of living in 2011 that was close to the poverty line,(22) while the Labor Institute of the Greek General Confederation of Labor (INE-GSEE) states in its monthly publication Enimerosi that by the end of last year, 3.9 million people had fallen below the poverty line.(23) Income levels for workers have also taken a big hit over the last two to three years, and there is more wage suppression to come. According to research data released by the INE-GSEE, incomes dropped by 22.8 percent, or 19 billion euros, during 2010-2011, with a projected decline of 33 billion euros in available income in 2012.(24)

Perhaps most indicative of the catastrophic impact of the EU/IMF austerity measures imposed on Greece is that many schools throughout the country have gone on for a second year without heating oil (the nation was shocked recently by the death of two college students who died in their sleep due to inhalation of carbon monoxide from a makeshift stove as they could not afford heating oil, whose cost has gone through the roof because of the government's ingenious scheme to find extra revenues by raising the taxes on heating oil by 450 percent), the public health care system has collapsed to the point that even medication for cancer patients is not available, and suicides, for a nation that used to have the lowest recorded suicide rates in Europe, are taking place at a record pace.

The aim of the EU/IMF structural adjustment program with regard to the Greek labor market (employment and wages) is crystal clear: total liberalization, minimum wages comparable to those in Bulgaria and Romania (two relatively backward-looking Balkan nations, and with levels of corruption equal to those in Greece), and a potential ban on strikes. The first two elements of the subversive neoliberal labor market policy are well advanced, while the third one is in the works. Again, these measures have an official stamp of approval from the Greek government, including the current administration, a tripartite coalition consisting of the leader of the conservative party as prime minister and the leaders of the Socialist party and the Democratic Left as vice presidents. Moreover, as with every Greek administration since the outbreak of the crisis, the Ministry of Finance serves as a Trojan horse for inflicting the scorched-earth policy of the EU and IMF on Greece's economy and its people.

"The Left's Moment": Problems and Challenges

The scorched-earth policies pursued in Greece over the last three years by Germany and the twin monsters of neoliberalism, i.e., the EU and the IMF, have produced an economic and social catastrophe of unprecedented proportions for a nation in peacetime conditions. For the past three years, Greece has been a guinea pig for the policy prescriptions of a neoliberal EU under the command of Germany and its northern allies. A public debt crisis has been used as an opportunity to dismantle the social state, to sell off profitable public enterprises and state assets at bargain prices, to deprive labor of even its most basic rights after decades of hard-fought struggles against management, and to substantially reduce wages and pensions, creating a de facto banana republic - all with the support of a significant segment of the Greek industrial/financial class and with the assistance of the domestic political elite.

Greece is a nation experiencing a catastrophic crisis of immense proportions inside one of the world's richest regions, yet its government celebrates the fact that the deficit has been reduced as a result of the fiscal adjustment efforts (when virtually all other economic and social variables have gone from bad to worse every year) and expects the citizens to offer more "blood, tears, toil and sweat." At the same time, it is launching a brutal frontal attack on the left, using lies and propaganda and, increasingly, the iron fist of the state, as public opinion polls show consistently for the last few months that the conservative party of New Democracy (which is at the helm of the tripartite government currently ruling the nation) and Syriza, the Coalition of the Radical Left, are in a neck-and-neck race.

The political landscape of Greece has changed radically as a result of the economic crisis. First, the socialists, the true masters of calculated political and ideological duplicity, the real maestros of corruption in Greece, are all but finished as a political force. In the 2012 national elections, the Socialist Party received 12.3 percent of the popular vote, and the latest polls show that its popularity has dropped to about 7 percent. This is the price paid for surrendering Greece to the EU/IMF rescue mechanism in May 2010 and for collaborating since the 2012 elections with the conservatives in finalizing the conversion of Greece into a neoliberal zombie society.

Second, the conservatives, under the leadership of the current prime minister, Antonis Samaras, have shifted from being opponents of the memorandum of agreement with the EU and the IMF when they were the opposition to become its obsequious servants. Their credibility and base support has weakened considerably in the course of the last couple of years, but the conservative constituency in Greece feels trapped and has few options other than perhaps to throw its support behind Golden Dawn, the neo-Nazi party of Greece. To be sure, a good percentage of conservative voters have already done so: the neo-Nazis received 7 percent of the popular vote in the 2012 elections, and their numbers seem to be growing in spite of (in fact, maybe because of) being nothing more than preachers for hate and thugs who carry out organized attacks against immigrants throughout Greece. Ideologically, they embrace Hitler's National Socialism doctrine, strive for racial purity and openly envision the reestablishment of concentration camps for leftists and communists.

Greece's neo-Nazi political party represents a real threat to the social fabric of Greece; however, it remains to be seen how the appeal of the extreme right will be countered when society itself is facing a meltdown because of the harsh austerity measures and the traditional political establishment is morally bankrupt and has lost much of its legitimacy.(25)

The emergence of Syriza as the second-largest party (pulling 26.89 percent of the vote against 29.66 percent for the conservatives) represents the biggest change in the Greek political landscape. In many ways, this is indeed the "left's moment in Greece,"(26) but the reality of the support rate that the left enjoys is more complicated than what the numbers report. Most of its votes in the 2012 elections came from former Pasok voters. This is not to imply that Syriza may eventually rise to power on a protest vote, but it does mean that the left finds itself in the uncomfortable situation of having the backing of a huge percentage of "political orphans." Even more troubling is the fact that many former Socialist Party hacks look to relaunch their political careers by seeking to attach themselves to Syriza's political cause. These are, of course, political opportunists of the highest caliber, and Syriza must turn its back on them if it wishes to keep intact the left's overall mission, vision and core principles.

The general impression among analysts and an increasing number of average citizens is that Syriza is about to become a "new Pasok." This is not far from the truth, especially as some elements close to the leadership of the party appear to be willing to make whatever compromises may be necessary in order to have Syriza rise to power. The party also lacks a clear and coherent agenda for change, and its position on the current crisis has shifted remarkably in the course of the last several months from calling for the abolition of the EU/IMF fiscal adjustment program (but without having an overall strategy for managing the crisis, or even solid support at the grassroots level) to renegotiations of the agreement (when the "troika" - the European Commission, the IMF, and the European Central Bank, or ECB - supervising the fiscal consolidation effort has opposed outright any attempt aiming towards renegotiations of its terms of agreement for the bailout schemes). Conscious, perhaps, of the immaturity of Greek citizenry, but also reflecting its own political and ideological ambiguities, Syriza has also opted not to confront direct exit from the euro as a possible policy option, even though this may, in the final analysis, be the only effective strategy (but with a potentially huge short-term cost) for stopping the permanent decline of the nation's economy. Indeed, as things stand, the current eurozone is doomed to fail, and the peripheral nations will go on experiencing worsening economic and social conditions as the core remains adamantly opposed to any policy options that would mutualize the debt in the eurozone, provide relief for the beleaguered south, or end austerity.

To be sure, Syriza faces daunting challenges ahead, while finding the resolve to deal with them is undermined by the cacophony of views that prevail inside the party and by its lack of apparent influence among working-class organizations and trade unions. The extent to which the organization might be able to find qualified members among its ranks for the tormenting task of turning around a highly inefficient public administrative system and managing an economy which, by the end of the current year, will have seen its GDP shrink by an incredible 25 percent since the onset of the global financial crisis of 2008, is also highly debatable. For a party of the left, Syriza has also shown reluctance, or unwillingness, or inability to embark on an open discussion about the country's future political culture, having chosen, instead, to consume itself scoring political points over the way political corruption was sustained in the past by the conservative and socialist parties.

Yet, if there is anything that the economic crisis in Greece reveals, other than the fact that neoliberal policies wreak havoc on the standard of living and produce massive unemployment and widespread poverty, and that a way must be found to restart the engine of the economy and get the unemployed back to work, it is the need to come to terms with the norms and patterns of the nation's political culture, including revisiting questions of civic virtue, fairness and social provision, expectations and obligations, and articulating visions of a good and decent society.

Having said all that, Syriza remains in Greece today the only political force that can offer hope for the future, put an end to the ongoing catastrophe, and, under certain conditions, work its way toward the realization of a sustainable economic and social order based on those core principles that have long defined progressives worldwide: employment opportunities for all, decent wages, a vigorous and efficient welfare system, free health care services, free education, quality social services, a progressive tax system, democratic accountability, environmental protection, respect for the "other," democratic participation at the workplace, sound business practices, and incentives for new business undertakings.

In politics, there is a huge gap between theory and practice, so Syriza should be neither idealized nor undermined for what it is trying to do, which is to answer history's call and try to rescue the country that gave birth to democracy from becoming ultimately a wretched society and a failed state inside one of the world's richest regions.

C. J. Polychroniou is a policy fellow at the Levy Economics Institute of Bard College. Certain parts of the above article are included in a recent Policy Note (2013/1) published by the Levy Institute and titled "The Tragedy of Greece: A Case Against Neoliberal Economics, the Domestic Political Elite, and the EU/IMF Duo." The views expressed here do not necessarily represent those of the Institute's board nor its advisers.

Endnotes

1.
Some of the most dire warnings against the launching of the euro came from inside Germany itself. Wilhelm Hankel, Karl Albrecht Schachtschneider, Joachim Starbatty, and Wilhelm Nφlling were four renegade professors who opposed the euro from the start and tried to stop it with a legal challenge to Germany's highest court. Obviously, they lost the case. They tried again 12 years later against a German bailout of Greece. They lost again. Their basic claim all along has been was that the euro was an architectural flaw which would lead to the downfall of European economies. Moreover, and in sharp contrast to the original arguments in support of the creation of a single currency zone in Europe, the euro has led to greater economic and social inequality among the various national economies, has exacerbated the problem of unemployment in the peripheral economies, and has produced huge transfers from the periphery to the core.

2.
The original optimal currency area approach was laid out by Robert Mundell in his article "A Theory of Optimum Currency Areas," American Economic Review Vol. 51, No 4 (1961), pp. 657–665. See also R. I. McKinnon, "Optimum Currency Areas," American Economic Review Vol. 53, No. 4 (1963), pp. 717–725.

3.
Greece gained entry into the eurozone by fabricating - with significant help from Goldman Sachs - the true state of the country's fiscal condition. The EU political elite was clearly aware of Greece's actual fiscal condition, but opted to look the other way.

4.
This is the reason that, in spite of the irreparable damage that three years of catastrophic austerity measures - part of the bailout agreements orchestrated by the European Union (EU) and the International Monetary Fund (IMF) - have caused, both to the national interests and to Greece's social fabric, the discussion of exiting the euro remains a taboo virtually across the political spectrum.

5.
The conservative government of Kostas Karamanlis, which came to power in 2004 and governed until 2009, proved to be equally, if not even more, corrupt and immensely incompetent. In fact, from the 1980s onwards, the socialists and the conservatives had ruled the nation in a similar fashion, both of them using the state and its coffers as a means to enrich themselves and their parasitic capitalist partners and to cater to the needs and demands of their political clientele in order to maintain an army of faithful party voters, making it thus virtually impossible to tell which of the two political parties has caused greatest damage to the common good. Both have been implicated in various large-scale scandals that involved exploiting state resources in order to transfer wealth from the public to the private sector and to redistribute wealth from the bottom to the top. Both of them, as well as the private sector, squandered European Union structural funds with reckless abandon, in the process allowing the destruction of vital sectors of the economy to take place (e.g., agriculture). Insofar as the culture of corruption - which the elite saw fit to let spread throughout society, thus creating a system of "corrupt legality" - is concerned, foreign actors also had a major role in it. The German industrial giant Siemens was in the habit of handing out bribes to political figures in order to gain preferential treatment over business deals (i.e., gain state contracts). This was a global practice of Siemens', and it is estimated that the bribes to Greek officials in both main political parties may have been as much as 100 million euros over a ten-year period. Charges were filed in 2008 for money laundering and bribery, but a parliamentary investigative committee that had been formed to examine the Siemens scandal conveniently swept the case under the rug.

6.
Greek Statistical Authority (March 18, 2010). See www.statistics.gr.

7.
Cited on the web site of the Greek Embassy in Washington, DC. See http://www.greekembassy.org/embassy/Content/en/Article.aspx?office=3&folder=1013&article=24631

8.
See Dimitri B. Papadimitriou and L. Randall Wray, "Euroland's Original Sin," Policy Note 2012/8. Annandale-on-Hudson, N.Y.: Levy Economics Institute of Bard College (July 2012). Online: http://www.levyinstitute.org/publications/?docid=1559

9.
C. J. Polychroniou, "The Greek and the European Crisis in Context," New Politics Vol. 13, No. 4 (Winter 2012), pp. 49–56.

10.
See C. J. Polychroniou, "The Mediterranean Conundrum: Crisis in the European Periphery," Economic and Political Weekly, Vol. XLVII, No. 21 (May 26, 2012), pp. 35-41.

11.
A fine new source discussing the history and the policies of neoliberalism is that of Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics ( Princeton, N.J.: Princeton University Press, 2012).

12.
Among the many profound pieces by Henry A. Giroux on the ideology of neoliberalism, see in particular his latest one "The Politics of Disimagination and the Pathologies of Power," Truthout (February 27, 2013). Online: http://www.truth-out.org/news/item/14814-the-politics-of-disimagination-and-the-pathologies-of-power

13.
See C. J. Polychroniou, "Greece's Bailouts and the Economics of Social Disaster," Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online: http://www.levyinstitute.org/publications/?docid=1569

14.
George Papandreou, son of Andreas Papandreou, founder of the Panhellenic Socialist Movement (Pasok) and prime minister of Greece for almost ten years, after having won three national elections, became prime minister in October 2009. With no charisma whatsoever and lacking in intellectual prowess and administrative and leadership skills, his failure as a top political dog was all but ensured. He resigned in November 2011, after having ruled the most excruciatingly amateurish and agonizingly incompetent government in modern Greek history, but will always be remembered as the prime minister who "masterminded" the unconditional surrender of Greece to Germany and the IMF and imposed brutal austerity - the prime minister whose ultimate vision was "one working person per family." He is still the leader of The Socialist International, one of the most shameful contemporary political organizations, allegedly at the service of democratic socialism but whose members included, among other "devotees to the cause of socialism and democracy," Egypt's Hosni Mubarak and Tunisia's Zine al-Abidine Ben Ali; and, the irony of all ironies, he gets paid hefty fees to lecture for a few weeks at prestigious institutions like Harvard and Columbia, probably on how to ruin an economy and destroy a nation's sovereignty.

15.
See Dimitri B. Papadimitriou, Gennaro Zezza, and Vincent Duwicquet, "Current Prospects for the Greek Economy: Interim Report," Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (October 2012). Online: http://www.levyinstitute.org/publications/?docid=1589

16.
See Jörg Bibow, "The Euro Debt Crisis and Germany's Euro Trilemma." Working Paper No. 721. Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (May 2012). Online: http://www.levyinstitute.org/publications/?docid=1535

17.
Philip Blenkinsop and Annika Breidthardt, "Euro Zone Economy Falls Deeper than Expected into Recession," Reuters (February 14, 2013). Online: http://uk.reuters.com/article/2013/02/14/uk-europe-economy-idUKBRE91D0CS20130214

18.
C. J. Polychroniou, "Greece's Bailouts and the Economics of Social Disaster," Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online: http://www.levyinstitute.org/publications/?docid=1569

19.
European Commission, "European Economy: The Second Economic Adjustment Programme for Greece," Occasional Papers 94 (March 2012), p. 1.

20.
European Commission, "European Economy: The Second Economic Adjustment Programme for Greece," Occasional Papers 94 (March 2012), p. 4.

21.
Greek Statistical Authority, "Labour Force Survey: November 2012," Press Release (February 14, 2013).

22.
Cited in ekathimerini.com. "3.4 Million Greeks near Poverty Line in 2011, Eurostat Reports," (December 3, 2012). Online: http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/12/2012_472690.

23.
INE-GSEE (Labour Institute of the Greek General Confederation of Labour), Enimerosi, No. 200 (December 2012), p. 1.

24.
INE-GSEE (Labour Institute of the Greek General Confederation of Labour), The Greek Economy and Employment: Yearly Report (2012), p.21.

25.
Greece's two main political parties, the conservatives (New Democracy, or ND) and the socialists (Pasok), used to draw, until recently, over 75 percent of the combined vote. In the 2012 elections, both parties together managed to attract less than 35 percent of the popular vote - and if elections were held today, it is unlikely that they would get more than 28 percent of the combined vote.

26.
The phrase is borrowed from the title of an article by Costas Lapavitsas, which appeared in The Progressive, Vol. 76, Issue 7 (July 2012).

The Long Hot Summer of 2013

I spent a couple of nights last week on the lookout for a cloud of rising smoke. From the chimney at the Vatican? No, thank you -- there were already thousands of journalists around the globe fixated on the ancient mystical wizardry in St. Peter's Square. I was a lot more concerned that black smoke was going to rise from the damp, raw streets of East Flatbush, in a corner of Brooklyn many blocks removed from the high-tech glitz of that borough's new Barclays Center. Night after night, hundreds of young people -- most from the neighborhood -- marched on their local police station house because they wanted answers to a simple question.

Why was a 16-year-old boy named Kimani Gray shot seven times by the New York cops -- three times in the back?

Of course, I had to follow the waves of Brooklyn protest -- which teetered for a time on the brink of a riot -- by way of Twitter, since the mainstream media gave very slight, and usually belated, coverage to the doings in East Flatbush. I guess issues of law and order, civil rights and civil unrest, and the right to assemble on a major street right here in the United States can't really compete with the nearly 2000-year-old rituals of wrinkled men with their bright robes and their white smoke.

Still, I couldn't help but think that -- stop me if you've heard this one before -- there's something happening here. Maybe it was because East Flatbush wasn't the only place in America where unusual things were taking place -- the scattered shrieks of regular people who've been pushed to the edge. As the protests in Brooklyn dragged on, I heard the annual budget speech from the mayor of Philadelphia drowned out and finally shut down by the voice of angry blue-collar municipal workers, frustrated that City Hall will no longer listen to them. Just a couple of weeks ago and about 10 blocks away, so many Philly teens, parents and teachers were so upset at the knee-jerk closing of 23 neighborhood public schools that they filled the expanse of Broad Street as they tried to flood the room where the vote was taking place.

There were 19 people arrested at the Philly school shutdown; about 45 arrested in various encounters and scuffles with the NYPD in Brooklyn. All of these events were treated by the media as a total out-of-left-field shock -- as if a spaceship had landed from Mars and deposited these mad-as-hell aliens on the hardscrabble streets of the inner city. And if you haven't been paying attention, you'd indeed think these scattered events had nothing to do with each other. But to the contrary, the same river of bruised blood runs through all of them -- people who are at long last tired of the drumbeat of disrespect.

grayriot.jpg

Yes, there's the daily harassment of stop-and-frisk, the yearly push for just one more wage cut or pension givebacks even as CEO pay -- and that of top governmental aides -- never seems to stop going up, or thebillionaire-funded death of the dream of educational opportunity for all. But the real reason we're at the snapping point is even more simple than that.

It keeps coming back to a famous quote that I saw pinging around the Internet a lot last week after it was repeated by the city councilman for East Flatbush, Jumanne Williams, at a hearing. It was uttered by Dr. Martin Luther King in a famous address known as "The Other America" speech. He delivered it a couple of times, including outside of Detroit just months after that city had erupted in flames. The civil rights leader re-affirmed his lifelong commitment to non-violent solutions, but he added this:

I think America must see that riots do not develop out of thin air. Certain conditions continue to exist in our society which must be condemned as vigorously as we condemn riots. But in the final analysis, a riot is the language of the unheard.

Dr. King was murdered exactly three weeks to the day later.

Flash forward 45 years later, and there are many conditions in American society that need to be condemned as vigorously as we condemn riots, arguably more than there were in Dr. King's time -- obscene income inequalitystagnant wages, record levels of long-term unemployment, a diminished watchdog media, failing urban schools, militarized police departments and civil rights abuses from rampant spying to a crackdown on public-serving whistleblowers to targeted assassinations.

It's reached the point where people are straining to be heard over the drone of our all-encompassingkleptocracy. It almost broke loose once, in 2011, with the realization that both political parties were selling out the middle-class in a phony debt crisis, and then the world was stunned by the out-of-nowhere Occupy movement -- thousands of unheard struggling to find their own language. That movement faltered for a variety of reasons, including the risen-again hope that democracy in 2012 could redress the people's grievances.

I think those hopes may have crossed a Rubicon, then crashed and burned for good earlier this month when the Dow Jones hit an all-time record, corporate profits swelled -- and not a dime of it trickled down to the American worker, who has watched nearly every dollar of income growth in recent years accumulate to the 1 Percent.

Into this tinderbox walked the 16-year-old Brooklyn kid named Kimani Gray. Those seven police gunshots later, his short life was over. The naysayers were quick to point to Kimani's flirtation with the gangs of East Flatbush and several arrests, and the allegation by police -- fiercely disputed by eyewitnesses -- that he had a gun and pointed it at the plainclothes officers, to dismiss both the value of his life and the cries of the protesters.  But the community deserves answers that it's not getting about what really happened 10 nights ago, as well as the dubious track record of the officers involved.

And New York City officials are doing everyone a huge disservice when they pretend that this is about one kid, and not the daily beatdown of disrespect from programs like stop-and-frisk, which has made it difficult for thousands of young, law-abiding blacks and Latinos to walk down a sidewalk without having to justify their very existence. Today, the courts in the nation's largest city are dealing with a massive class-action lawsuitover the alleged abuses of this policy.

The bottom line is, if it wasn't Kimani Gray, it would have been somebody else.

But no one ever sees it coming. That was the case in Philadelphia, suffering from years of benign and sometimes not-so-benign neglect of public schools and a multi-million-dollar push from the usual suspect of hedge funders, profit-seekers and  to boost charter schools and destroy public education as we know it. The co-conspirators tried (and largely succeeded) to rush through a large-scale scale shutdown of neighborhood schools, but the people formerly known as the unheard did raise of a hell of a ruckus. And they're probably just getting started.

These things don't happen in a vacuum. At the height of the schools crisis, someone emailed me a remarkable document that had been prepared by the Broad Foundation of billionaire Los Angeles "do-gooder" Eli Broad, who wages war on inner-city public education even as his foundation, not so ironically, has trained most of our top urban superintendents.(Now Broad wants to take over the L.A. Times, too -- God help us.) It's an 83-page guide "School Closure Guide" that was published in 2009 to guide presumably Broad-trained superintendents on a step by step method to implement mass closures of public schools in already distressed communities -- exactly what's happening now in Philadelphia, Chicago and elsewhere.

But Broad's minions must act quickly and smartly...before the voices of the unheard become too loud.

But here's the thing: Unheard voices are like water -- they are going to find the path of least resistance. Unless our leaders finally start listening, a trickle in Brooklyn, a leak in Philly, and suddenly there's a full-blown flood. (If you don't understand the oceanography, ask the folks down in New Orleans, another battered American community.)

When we look back on the long hot summer of 2013, and we will, I pray that we'll think of it as a few balmy days on a beach or in the mountains with family and friends after a season of coming together, of finally tackling our root problems from rising inequality to falling civil liberties.

But I worry terribly that it will be the other kind.

Will Bunch is a Pulitzer Prize winning reporter and senior political writer for the Philadelphia Daily News. He blogs at Attytood.com.

NAFTA at 20: The New Spin

Intel engineers test new microprocessors at Intel's research unit in Guadalajara, Mexico's second largest city on July 23, 2008. (Photo: Janet Jarman / The New York Times)Intel engineers test new microprocessors at Intel's research unit in Guadalajara, Mexico's second largest city on July 23, 2008. (Photo: Janet Jarman / The New York Times)Only a few years ago, analysts were warning that Mexico was at risk of becoming a “failed state.” These days, the Mexican government appears to be doing a much better PR job. 

Despite the devastating and ongoing drug war, the story now goes that Mexico is poised to become a “middle-class” society. As establishment apostle Thomas Friedman put it in the New York Times, Mexico is now one of “the more dominant economic powers in the 21st century.”

But this spin is based on superficial assumptions. The small signs of economic recovery in Mexico are grounded largely on the return of maquiladora factories from China, where wages have been increasing as Mexican wages have stagnated. Under-cutting China on labor costs is hardly something to celebrate. This trend is nothing but the return of the same “free-trade” model that has failed the Mexican people for 20 years. 

The North American Free Trade Agreement (NAFTA), which was ratified in 1993 and went into effect in 1994, was touted as the cure for Mexico’s economic “backwardness.” Promoters argued that the trilateral trade agreement would dig Mexico out of its economic rut and modernize it along the lines of its mighty neighbor, the United States.

The story went like this:

NAFTA was going to bring new U.S. technology and capital to complement Mexico’s surplus labor. This in turn would lead Mexico to industrialize and increase productivity, thereby making the country more competitive abroad. The spike in productivity and competiveness would automatically cause wages in Mexico to increase. The higher wages would expand economic opportunities in Mexico, slowing migration to the United States.

In the words of the former President Bill Clinton, NAFTA was going to “promote more growth, more equality and better preservation of the environment and a greater possibility of world peace.” Mexico’s president at the time, Carlos Salinas de Gortari, echoed Clinton’s sentiments during a commencement address at MIT: “NAFTA is a job-creating agreement," he said. "It is an environment improvement agreement.” More importantly, Salinas boasted, “it is a wage-increasing agreement.” 

As the 20th anniversary of NAFTA approaches, however, the verdict is indisputable: NAFTA failed to spur meaningful and inclusive economic growth in Mexico, pull Mexicans out of unemployment and underemployment, or reduce poverty. By all accounts, it has done just the opposite.

The Verdict Is In 

Official statistics show that from 2006 to 2010, more than 12 million people joined the ranks of the impoverished in Mexico, causing the poverty level to jump to 51.3 percent of the population. According to the United Nations, in the past decade Mexico saw the slowest reduction in poverty in all of Latin America. 

Rampant poverty in Mexico is a product of IMF and World Bank-led neoliberal policies—such as anti-inflationary policies that have kept wages stagnant—of which “free-trade” pacts like NAFTA are part and parcel. Another factor is the systematic failure to create good jobs in the formal sectors of the economy. During Felipe Calderon’s presidency, the share of the Mexican labor force relying on informal work—such as selling chewing gum and other low-cost products on the street—grew to nearly 50 percent.

Even the wages in the manufacturing sector, which NAFTA cheerleaders argued would benefit the most from trade liberalization, have remained extremely low. According to the Bureau of Labor Statistics, Mexican manufacturing workers made an average hourly wage of only $4.53 in 2011, compared to $26.87 for their U.S. counterparts. Between 1997 and 2011, the U.S.-Mexico manufacturing wage gap narrowed only slightly, with Mexican wages rising from 13 to 17 percent of the level earned by American workers. In Brazil, by contrast, manufacturing wages are almost double Mexico’s, and in Argentina almost triple. 

Mexico’s stagnant wages are celebrated by free traders as an opportunity for U.S. businesses interested in outsourcing. According to one report by the McKinsey management consulting firm, “for a company motivated primarily by cost, Mexico holds the most attractive position among the Latin American countries we studied. … Mexico’s advantages start with low labor costs.” 

But even as the damning evidence against NAFTA continues to roll in, entrenched advocates of the trade agreement have been busy crafting new arguments. In his recent book, Mexico: A Middle Class Society, NAFTA negotiator Luis De la Calle and his co-author argue that the trade agreement has given rise to a growing Mexican middle class by providing consumers with higher quality, U.S- made goods. The authors proclaim that “NAFTA has dramatically reduced the costs of goods for Mexican families at the same time that the quality and variety of goods and services in the country grew.” 

Most of the economic indicators included in the book conveniently fail to account for the 2008-2009 financial crisis, which hit Mexico worse than almost any other Latin American country. The result has been skyrocketing inequality. As the Guardian reported last December, “ever more Mexican families have acquired the trappings of middle-class life such as cars, fridges, and washing machines, but about half of the population still lives in poverty.”

The indicators of consumption that suggest the rise of Mexico’s middle class also exclude the dramatic increase in food prices in recent years, which has condemned millions of Mexicans to hunger. Twenty-eight million Mexicans are facing “food poverty,” meaning they lack access to sufficient nutritious food. According to official statistics, more than 50,000 people died of malnutrition between 2006 and 2011. That’s almost as many as have died in Mexico's drug war, which dramatically escalated under Calderon and has continued under President Enrique Peña Nieto. 

The food crisis has coincided with the “Walmartization” of the country. In 1994 there were only 14 Walmart retail stores in all of Mexico. Now there are more than 1,724 retail and wholesale stores. This is almost half the number of U.S. Walmarts, and far more than any other country outside the United States. The proliferation of Walmart and other U.S. big-box stores in Mexico since NAFTA came into effect has ushered in a new era of consumerism—in part through an aggressive expansion built on political bribes and the destruction of ancient Aztec ruins.  

The arguments developed prior to the signing of NAFTA focused primarily on the claim that the trade agreement would make Mexico a nation of producers and exporters. These initial promises failed to deliver. Throughout the NAFTA years, the bulk of Mexico’s manufacturing “exports” have come from transnational car and technology companies. Not surprisingly, Mexico’s intra-industry trade with the United Sates is the highest of any Latin American country. Yet the percentage of Mexican companies that are actually exporters is vanishingly small, and imports of food into Mexico have surged.

Same Snake Oil, Different Pitch 

Because their initial promises utterly failed to deliver, the NAFTA pushers are now hyping “consumer benefits” to justify new trade agreements, including the Trans-Pacific Partnership. One of the most extreme examples of this spin is an article in The Washington Post that celebrates a “growing middle class” in Mexico that is “buying more U.S. goods than ever, while turning Mexico into a more democratic, dynamic and prosperous American ally.” Devoid of all logic, it goes on to say that “Mexico's growth as a manufacturing hub is boosted by low wages.” How can low wages make people more prosperous? 

The Post also boasts that in “Mexico’s Costco stores, staples such as tortilla chips and chipotle salsa are trucked in from factories in California and Texas that produce for both sides of the border.” Is this something to celebrate? The influx of traditional Mexican food staples, starting with maize, and goods from the United States has displaced and dislocated millions of Mexican small-scale farmers, producers, and small businesses. And not only that, Mexicans’ increasing consumption of processed foods and beverages from the United States has made the country the second-most obese in the world. 

In essence, NAFTA advocates have been reduced to saying: “so maybe NAFTA didn’t help Mexico reduce poverty or increase wages. But hey! At least it gave it Walmart, Costcos, and sweat shops.”

The bankruptcy of NAFTA’s promises is only compounded by the poverty of this consolation.

What Is Modern Monetary Theory, or “MMT”?

Hundred dollar bill macro(Photo: Tetsumo)Modern Monetary Theory is a way of doing economics that incorporates a clear understanding of the way our present-day monetary system actually works – it emphasizes the frequently misunderstood dynamics of our so-called “fiat-money” economy. Most people are unnerved by the thought that money isn’t “backed” by anything anymore – backed by gold, for example. They’re afraid that this makes money a less reliable store of value. And, of course, it is perfectly true that a poorly managed monetary system, or one which is experiencing something like an oil-price shock, can also experience inflation. But people today simply don’t realize how much bigger a problem the opposite condition can be. Under the gold standard, and largely because of the gold standard, the capitalist world endured eight different deflationary slumps severe enough to be called “depressions.” Since the gold standard was abolished, there have been none – and, as we shall see, this is anything but coincidental.

The great virtue of modern, fiat money is that it can be managed flexibly enough to prevent *both* deflation and also any truly damaging level of inflation – that is, a situation where prices are rising faster than wages, or where both are rising so fast they distort a country’s internal or external markets. Without going into the details prematurely, there are technical reasons why a little bit of inflation is useful and normal. It discourages people from hoarding money and encourages healthy levels of consumption and investment. It promotes growth – provided that a country’s fiscal and monetary authorities manage it properly.

The trick is for the government to spend enough to ensure full employment, but not so much, or in such a way, as to cause shortages or bottlenecks in the real economy. These shortages and bottlenecks are the actual cause of most episodes of excessive inflation. If the mere existence of fiat monetary systems caused runaway inflation, the low, stable rates of consumer-price inflation we have seen over the past thirty-plus years would be pretty difficult to explain.

The essential insight of Modern Monetary Theory (or “MMT”) is that sovereign, currency-issuing countries are only constrained by real limits. They are not constrained, and cannot be constrained, by purely financial limits because, as issuers of their respective fiat-currencies, they can never “run out of money.” This doesn’t mean that governments can spend without limit, or overspend without causing inflation, or that government should spend any sum unwisely. What it emphatically does mean is that no such sovereign government can be forced to tolerate mass unemployment because of the state of its finances – no matter what that state happens to be.

Virtually all economic commentary and punditry today, whether in America, Europe or most other places, is based on ideas about the monetary system which are not merely confused – they are starkly and comprehensively counter-factual. This has led to a public discourse about things like budget deficits and Treasury debt which has become, without exaggeration, utterly detached from reality. Time and time again, these pundits declaim that hyperinflation is imminent, that interest rates are on the verge of an uncontrollable upward spike, and that the jig will be up for sure just as soon as the next T-bond auction fails. But even though, time after time, it is the pundits’ prognostications which fail, no one seems to take any notice. This must change. A reality-based economics is needed to make these things make sense again, and Modern Monetary Theory is here to put everyone on notice that a quite different jig is the one that’s really up.

The gold standard was finally and completely abolished over the course of a two-year period which started in 1971, when Richard Nixon ended the convertibility of the dollar for gold and devalued U.S. currency for the first time since the end of World War II. In 1973, the U.S. stopped trying to peg the dollar to any currency or commodity, instead allowing its value to be set on a freely-floating international currency market. The monetary system we inaugurated then is the one we still have now.

It is not the same as the one which has been adopted by most of Europe – and this very prominent source of confusion about the role of money in the world today will receive close scrutiny at the proper point. But first, we need to carefully unpack the implications of taking both gold and any sort of “peg” out of the monetary equation in the first place. In 1971, gold-linked money became fiat-money – not for the first time, of course, but for the first time in a long time. And it wasn’t just any currency. It was, by far, the world’s most important currency, economically. It was also the world’s reserve currency – the good-as-gold and backed-by-gold currency which the entire non-communist world used to settle transactions between various countries’ central banks. And yet, what everyone, and especially every American was told at the time was that it really wouldn’t make much difference. 

The political emphasis, at the time, was entirely on the importance of making sure that no one panicked. The officials of the Nixon administration acted like cops who had just roped off a fresh crime scene: “Just move right along, folks,” they kept intoning. “Nuthin’ to see here. Nuthin’, to see.” All of the experts and pundits said essentially the same thing – this was just a necessary technical adjustment that was only about complicated international banking rules. It wouldn’t affect domestic-economy transactions at all, or matter to anyone’s individual economic life. And so it didn’t – at least, not right away or in any way that got linked back to the event in later years. The world moved on, and Nixon’s action was mainly just remembered as a typical, high-handed Nixonian move – one which at least carried along with it the virtue of having pissed off Charles De Gaulle.

But what had really happened was epoch-making and paradigm-shattering. It was also, for the rest of the 1970s, polymorphously destabilizing. Because no one had a plan for, or knew, what all of this was going to mean for the reserve currency status of the U.S. dollar. Certainly not Richard Nixon, who was by then embroiled in the early stages of the Watergate scandal. But no one else was in charge of this either. In the moment, other countries and their central banks followed Washington’s line. They wanted to forestall any kind of panic too. But, inevitably, as the real consequences of the new monetary regime kicked in, and as unforeseen and unintended knock-on effects began to be felt, this changed.

The world had a choice to make after the closing of the gold window, but even though it was a very important choice, with very high-stakes outcomes attached to it, there was no international mechanism for making it – it just had to emerge from the chaos. Either the U.S. dollar was going to  continue to be the world’s reserve currency or it wasn’t. If it wasn’t, the related but separate question of what to use instead would come to the fore. But, as things unfolded, no other choice could be imposed on the only economic powerhouse-nation, so all the other little nations eventually just had to work out ways to adjust to the new status quo.

Even after Euro-dollar chaos, oil market chaos, inflationary chaos, a ferocious multi-national property crash and a severe, double-dip American recession, the dollar continued to be the reserve currency. And it still wasn’t going to be either backed by gold or exchangeable at any fixed rate for anything else. But while the implications of this were enormous, almost no one understood them at the time, or ever, subsequently, figured them out. For the 1970s was the period during which Keynesianism was decertified as the reigning economic philosophy of the capitalist world – replaced by something which, at least initially, purported to have internalized and improved upon it. This too was a choice that wasn’t so much made as stumbled into. The chaotic, crisis-wracked world we now live in is the one which subsequent versions of this then-new economic perspective have helped to create.

Conventional, so-called “neo-classical” economics pays little or no attention to monetary dynamics, treating money as just a “veil” over the activity of utility-maximizing individual “agents”. And, as hard as this is for non-economists to believe, the models which these ‘mainstream’ economists make do not even try to account for money, banking or debt. This is one big reason why virtually all members of the economics profession failed to see the housing bubble and were then blind-sided by both the 2008 financial collapse and the grinding, on-going Eurozone crisis which has followed in its wake. And the current group-think among ‘mainstream’ economists is yet another case where failure is no obstacle to continued funding – or continued failure. The absence of any sort of professional, intellectual or academic accountability will be a theme here.

The public policy reversal that began with Margaret Thatcher and Ronald Reagan promised that the deregulation of capitalism would lead to greater shared prosperity for everyone. Today, even though the falsehood of this claim is brutally obvious, the same economic nostrums and stupidities that were used to justify it in the first place continue to be trotted out and paid homage to by a class of financial-media personalities who equate making a lot of money with understanding money. It does not seem to occur to them that financial criminals and practitioners of bank-fraud can get rich through sociopathy alone.

What needs to be said is this: Keynesian economics worked before, and the improved version – now generally called “post-Keynesian” – will work again, to deliver what the market-fundamentalism of the past three decades has patently and persistently failed to deliver *anywhere in the world*. Namely – a prosperity which is shared by everyone. The principal purpose of Modern Monetary Theory is to explain, in detail, why this this worked in the past and how it can be made to work again.

Here’s how: start with a 100% payroll tax cut for both workers and employers – one that will only expire (if it does at all) when we have achieved full employment. This will not de-fund Social Security. And yes, we’ll come back to this point and cover it in great detail in due course. But first, stop and think back on the effect which federal revenue-sharing had on the economy in 2009 and 2010. If you’re thinking there were fewer teachers, nurses, policemen and fire-fighters getting laid off, you are correct. If you’re thinking that more roads, dams, bridges and sewer systems were getting repaired, you’re right again. But if you think that adding 800 million dollars to the deficit over two years is a guaranteed way to generate hyper-inflation, double-digit interest rates and bond-auction failures, leading ultimately to a frenzied worldwide rush to dump dollar-denominated financial assets, well, now would be a good time to ask yourself why you believe this.

One more point – one more plank in this three-point program to restore fiscal and monetary sanity: let’s give everyone who wants to work and is able to work some *work to do*. A currency-issuing government can purchase anything that is for sale in its own currency, including the labor of every last unemployed person who is still looking for a job. So, a key policy recommendation of Modern Monetary Theory is the idea of a “Job Guarantee”. The federal government should take the initiative and organize a transitional-job program for people who just can’t find work in the private sector – as it currently exists in real-world America today. Because the smug one-liner that starts and ends with: “Government can’t create jobs – only the private sector can create jobs!” is about the un-funniest joke on the planet right now.

The government creates millions of jobs already. Isn’t soldiering a job? Isn’t flying the President around in Air Force One a job? What about all the doctors and nurses down at the V.A. hospital, and the day-care workers on military bases? They certainly all appear to be employed. When you go into a convenience store to buy some – uh – local-and-organic Brussels sprouts, say, how closely does the clerk examine the bills and coins you tender? Did any clerk or cashier ever squint or turn your five-dollar bill sideways and back and ask, “Hmm.. are you sure this money came from work that was performed in the private sector?” No. They didn’t. Because the money governments pay to public employees is exactly the same money everyone else gets paid in.

A guaranteed transition-job would need to be different from the familiar examples cited above in certain ways. It would be important to make sure that such a program always hired “from the bottom”, not from the top. That’s an important way of making sure that such programs don’t create real-resource bottlenecks by competing with the private sector for highly skilled or specialized labor. Hence, a transition-program job would more closely resemble an entry-level job at a defense plant. Such a job only exists because of Pentagon orders for fighter planes or helmets or dog food for the K-9 units. There is no sort of ambiguity about where the stuff is going or how it is being paid for. And when the people who mow the lawn or sweep the parking lot get paid, they know, without having to think about it, that their wages will spend exactly the same way down at the grocery store as everyone else’s.

Defence spending is actually quite a good analog to the idea of a transitional-job program – one that would provide work to any and every person who wanted it. The only time the American economy ever achieved an extended, years-long period with zero unemployment, low, well-controlled inflation rates and with no significant financial aftershock at the end was the World War II era – broadly defined to include the Lend-Lease buildup of 1940 and 1941. This solution to the problem of mass unemployment worked in the 1940s and it would work today. In the 1940s, of course,the jobs were almost all war-related. But, economically, this makes no difference.

The connection between war and economic prosperity has been noticed before. It led some 19th Century thinkers (and also Jimmy Carter) to wonder whether there could be a “moral equivalent of war”. Well, there can be – by way of the Job Guarantee. The biggest pre-condition has been met, because one result of most wars has been that they forced the combatant countries off the gold standard. Now, all countries have left it. What matters next is whether there are enough real resources available to produce goods and services that are equal in value to the government’s job-guarantee spending. If these resources are available – if they are not already being used to produce something else – then the increased demand that results from the payment of job-guarantee wages will not be inflationary, regardless of what they go to produce.  

Money is 100% fungible.  Whether the job-guarantee program makes fighter planes or wind turbines makes no economic difference – the workers employed by it will spend their wages on the same things other workers buy. What matters, economically, is whether there are sufficient real resources and labor available to produce these goods and services in line with the increased demand for them. If there are, no additional government intervention is necessary in order to mobilize them. The same private-profit motivation which induces a company to produce one widget can be relied upon to induce the production of another one.

Most popular misconceptions about job-guarantee work as inefficient “make-work” ignore these private-sector dynamics. It is simply assumed that if the publicly-funded workers don’t personally contribute to making shoes or soap, their wages will result in “more money chasing the same goods” – and that this will automatically cause inflation. This is an obvious fallacy which has been empirically falsified many, many times, but most people continue to treat it as an article of economic faith. So, one of MMT’s most pressing tasks today is to make the case that we can, indeed, end mass unemployment without undermining price stability.

There are many other economic problems and challenges in the world today. Modern Monetary Theory is not a panacea for them. Even if its insights and policy recommendations become widely known, and even if they are someday fully implemented, societies will still face challenges such as inequality, regulatory capture and predatory financial behavior, including the kind of predatory mortgage lending that led to the worldwide crash in 2008. In order to understand these additional economic problems and dangers, we need to look at economics in a larger context, and correctly situate Modern Monetary Theory within this wider frame.

Modern Monetary Theory is based on earlier work which also focused on the relationship between the state and its money – ideas which come under the generic designation of “Chartalism”. MMT also remains firmly within the Keynesian tradition of macroeconomnic theorizing, and recognizes an extensive interconnectedness with other economists whose work is categorized as “post-Keynesian”. Some of MMT’s other notable academic progenitors include Hyman Minsky, Abba Lerner and, more recently, the English economist Wynne Godley, whose emphasis on achieving consistency in the analysis of economic stocks and flows presaged the emphasis which MMT-orbit economists put on it today.

The label “Modern Monetary Theory” is not particularly apt. It became attached to its advocates through the informal agency of Internet comment-threading, not because anyone considered it either very useful or very descriptive. In other words, it “just stuck”. In fact, the identity of the first person to use the “MMT” label is lost to online history. So, to be clear, MMT is only modern in the broad sense in which virtually everything that got started in the Western world in the 19th Century is called “modern”. It is not exclusively monetary either – it has quite a bit to say about fiscal policy as well. And it was not, initially, theoretical – it started as a body of quite empirical observations about the dynamics of the monetary system and the many ways they are being misunderstood these days. For MMT has a dual pedigree which is itself quite remarkable.

On the one hand, it represents the patient, decades-long academic work of a cadre of perhaps eight or ten working economists (originally there were three or four, plus their students). But MMT was independently co-discovered by a single person. A person who had no specific training or academic background in economics at all – the American businessman and auto-racing enthusiast Warren Mosler. How he came to initially suspect and, ultimately, clearly understand that the spending of sovereign governments had become operationally independent of their taxing and borrowing is recounted in his 2010 book, “The Seven Deadly Innocent Frauds of Economic Policy.”  The 1996 publication of an earlier book of his, “Soft-Currency Economics,” launched MMT as a social, intellectual and online movement. And while the academic side of MMT was completely unknown to him at first, it was not long before the two camps discovered each other, and this has led to a very extensive collaboration in the years since.

Today, MMT is being discovered by a rapidly-growing worldwide Internet audience. And the public’s growing interest in MMT is evident in other ways as well. One of the movement’s leading spokespersons, Dr. Stephanie Kelton of the University of Missouri at Kansas City, has been a repeat guest on an MSNBC weekend show. She, and other MMT economists, are frequent guests on a number of popular, mostly-progressive radio programs as well – both in the U.S. and in English-speaking countries around the world. And Warren Mosler’s seminal 2010 book was recently published in Italian.

(For obvious reasons, the stressed and austerity-damaged countries of the Eurozone’s southern tier are places where people are becoming more open to fresh economic ideas. At a 3-day conference in Rimini, Italy in 2012, a panel of four MMT/post-Keynesian speakers lectured to a crowd of over 2,000 people in a packed sports arena. Many in the audience crossed multiple international borders to attend.)

MMT has been mentioned, though not yet accurately described, in several of Paul Krugman’s columns for the New York Times. And certain aspects of it have been noticed even more widely in the media – for MMT is the theoretical basis of the “trillion-dollar coin” approach to fiscal cliffs. (The idea was first proposed and debated on Warren Mosler’s website.) In short, MMT is getting harder and harder to ignore. And since it really does have answers to some of the world’s most urgent and otherwise perplexing questions, it seems likely that MMT will soon become quite impossible to ignore. What follows is written to try to hasten that day.

This will be an intentionally simplified, non-technical exposition of the principal tenets of Modern Monetary Theory. The no-algebra version, in other words. It is intended as a guide for non-economists and other lay people who may have heard the phrase or seen a video clip about MMT and who wish to learn more. It is not a substitute for more complete and, necessarily, much more technical treatments that are available elsewhere, including the MMT Primer here at NEP.

Confining myself to examples and cases so widely known that no one will wonder where they came from accounts for the absence of footnotes in this. And since I make no claim to have learned knowledge of anything, I will just say, up front, that everything I know was thought of first by someone else. But rather than interrupt the narrative or complicate the process by trying to establish who said any particular thing first, I hope it is sufficient for me to just thank the MMT community at large for any material that I have borrowed or re-purposed along the way.

I also depart, here, from MMT’s mostly-neutral stance on contested political and ideological questions. For while MMT principles apply equally, irrespective of things like the size of government or the conceptions and misconceptions of people running governments, it has a policy bias no one can really miss.  I choose to emphasize rather than de-emphasize this bias – and I will sometimes even put it front-and-center. I hope no one will mistake this for any sort of rebuke toward those who choose not to do this. We have simply reached a point where practical applications need to be put on an equal footing with their theoretical underpinnings.

For somewhere – maybe somewhere in Italy – and on a day which may not be all that far off now, Modern Monetary Theory is going to start changing the world.

America’s Retirement Crisis

Since the mid-1970s, real wages haven't kept pace with inflation. Benefits steadily eroded. High-paying jobs disappeared. Improved technology forces wage earners to work harder for less.

Paul Ryan’s Regressiveness Redux

Ryan's austerity budget is more of the same from the Ayn Rand enthusiast, but so long as the Democrats keep playing the game, why change course? (Photo: AP Photo)Republicans lost the election but they still shape what’s debated in Washington — the federal budget deficit and so-called “fiscal responsibility.”

The White House’s and the Democrat’s continuing failure to reshape that debate has lead directly and logically to Paul Ryan’s budget plan this week, which is a more regressive version of the same plan American voters resoundingly rejected last November.

Sadly, the President is playing into the GOP’s hands with a new round of negotiations over a “grand bargain.”

Despite February’s encouraging job numbers, the major challenge is still jobs, wages, growth, and widening inequality — not deficit reduction and fiscal responsibility.

We’d need numbers like February’s every month for the next four years to get anywhere close to the level of unemployment we had before the Great Recession. But we won’t get there because of the austerity policies the nation has embarked on, and the continuing erosion of the middle class.

Austerity economics — of which Ryan’s upcoming budget is the most extreme version — is a cruel hoax. Cruel because it hurts most those who are already hurting; a hoax because it doesn’t work.

The entire framework is based on the false analogy that the federal budget is akin to a family’s budget.

Families do have to balance their budgets. But that’s precisely why the federal government has to be the spender of last resort when consumer spending falls short of boosting the economy toward full employment.

And as long as income and wealth continue to concentrate at the very top, the broad middle class and those aspiring to join it won’t have the purchasing power to boost the economy.

So why even try for a “grand bargain” that won’t deal with these fundamentals but only further legitimize the GOP mythology and further mislead the public about what’s really at stake?

This work is licensed under a Creative Commons License

Robert Reich

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

New Study Finds the Wealthy Are Different

On average, high earners have a very different idea of what makes a just society.

Photo Credit: Shutterstock.com

March 11, 2013  |  

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“The very rich,” wrote F. Scott Fitzgerald, “are different from you and me.”

It turns out he was right. According to a new study by the think-tank Demos ( PDF), the affluent tend to hold a different vision of a just society than the public at large, and it is that vision which tops the political agenda in Washington and in state houses across the country.

The report, authored by David Callahan and J. Mijin Cha, found that “wealthy interests are keenly focused on concerns not shared by the rest of the American public, like keeping taxes low on capital gains, and often oppose policies that would foster upward mobility among low-income citizens, such as raising the minimum wage.”

The policy preferences of the wealthy (average income over $1 million annually) vary widely from those of the general public... [A recent] survey found that the general public is more open than the wealthy to a variety of policies designed to reduce inequality and strengthen economic opportunity, including: raising the minimum wage, increasing the Earned Income Tax Credit, providing generous unemployment benefits, and directly creating jobs. For example, only 40 percent of the wealthy think the minimum wage should be high enough to prevent full-time workers from being in poverty while 78 percent of the general public holds this view. Affluent voters are also less supportive of labor unions and less likely to support laws that make it easier for workers to join unions—even as research shows that unions are crucial to enabling people to work their way into the middle class. 

One especially significant difference between the opinions of the wealthy and the population as a whole centers on deficit reduction. According to a study cited by Demos, “87 percent of affluent households believed budget deficits were a 'very important' problem, the highest percentage of all listed perceived problems.” Jobs and education, which rank at or near the top of most Americans' list of priorities, were “a distant second to budget deficits among the concerns of wealthy Americans.”

According to an exit poll conducted after the 2012 election, 59 percent of the public rated the economy as the country's number one problem, while only 15 percent cited the federal budget deficit. But as the Demos report notes, “the affluent [not only] participate more in civic life; they also have greater influence over public policy.”

Peter G. Peterson epitomizes that finding. The Wall Street mogul and Nixon administration cabinet member has reportedly dedicated a billion dollars of his fortune to promoting the idea that “entitlements” are going to impoverish our grandchildren.

Meanwhile, Callahan and Cha note that the affluent, “are significantly less inclined than other groups of Americans to support an active role for government in addressing mass unemployment.”

These are good examples of what the authors describe as “ the interplay between declining upward mobility and growing political inequality.” Perhaps the most troubling finding in the Demos report is that the wealthy are, on average, less likely to support policies that allow people to pull themselves up the economic ladder. “Even when the affluent do support policies for upward mobility,” write Callahan and Cha, “they often do not prioritize these policies over other goals, such as lower taxes.”

A case in point is higher education. While affluent Americans and business leaders broadly support access to higher education, along with the general public, spending in this area has been cut in some states where governors have prioritized cutting taxes—with strong support from wealthy voters and corporate interests.

While most Americans believe that they live in a highly meritocratic society where one's fortunes are limited only by one's innate talents and work ethic, several studies released in recent years suggest that Americans enjoy significantly less upward mobility than do the citizens of a number of other industrialized nations. German workers have 1.5 times the upward movement of Americans, Canada’s economy is nearly 2.5 times as mobile, and Denmark is three times as mobile. Norway, Finland, Sweden, and France are all more upwardly mobile societies than the United States. Of the countries included in the studies, the United States ranked near the bottom; only in the United Kingdom was it tougher to shake off a low social status one had been born with.

Mid-April Venezuelan Presidential Elections Scheduled

Venezuela's National Electoral Council (CNE) President Tibisay Lucena announced Sunday, April 14. Acting President Nicolas Maduro carries Chavez's torch.

One Economy, Two Americas

Cleveland is one of the cities hit hardest by the foreclosure crisis. (AP Photo/Jamie-Andrea Yanak)Before you gulp down your favorite champagne to celebrate Wall Street’s new stock market highs, remember that we are two Americas: The nation’s economic divide is costing us all dearly in terms of lost jobs and growth and is fueling the angry, gridlocked politics in Washington.

As The New York Times reported Monday, corporate profits have been skyrocketing ever since 2008 -– rising an average of 20.1 percent a year for four years in a row. But out on Main Street, average household incomes have risen only 1.4 percent a year. CEOs and big investors have been hogging the profits.

And while the stock market is roaring upward thanks largely to corporate profits earned overseas, 24 million Americans are still out there hunting for full-time jobs, month after month. But our economy is not generating many new jobs. In fact, Congress has just added to unemployment. With the sequester in force, we are going to lose a net of 750,000 jobs this year, according to the Congressional Budget Office.

This disconnect between Wall Street and Main Street, between profits and wages, between the winnings of the 1% and the stagnation of the 99% — what I call “wedge economics” — has been the prevailing pattern in the American economy for the past three decades. And it has been financially killing the American middle class and stealing the American Dream from average people.

Right now, “wedge economics” is mangling America’s economic recovery. Anyone who has taken Economics 101 knows that what drives growth is not high stock gains for the 1% (who capture more than half of the capital gains from the market) but the power of mass consumer demand.

Economists call that the “virtuous circle of growth.” What they mean is that when CEOs share more of corporate profits with their workers and pay higher wages instead of imposing wage freezes, tens of millions of Americans head for Costco or Home Depot or the local car dealer to buy. Their purchases, multiplied by the millions, is what creates the incentives for business to expand, to build new plants, buy new equipment and hire more workers.

Consumer demand is the essential job creator in the American free enterprise system. Without strong demand, built on an ample supply of good jobs and good pay, businesses simply sit on their money, as they have done for most of the past four years, hoarding $2 trillion in accumulated cash.

Old-time CEOs like Charlie Wilson, the former head of General Motors, Reginald Jones, the former chief of General Electric, or Frank Abrams, the former boss of Standard Oil of New Jersey, understood that they could drive economic growth by sharing more of the wealth. They considered it their job to take care of all the stakeholders in the corporation, not just shareholders but all the groups with a stake in the company’s success.

It was the sacred trust of corporate management, as Abrams put it, “to maintain an equitable and working balance among the claims of the various directly affected interest groups…stockholders, employees, customers, and the public at large.” In others words, some profits go to shareholders but another big chunk goes to employees.

But U.S. business leaders moved away from that idea starting in the 1980s and turned to cutting jobs, holding down wages, and focusing on high profits and even higher CEO pay. In 2011, the top 1% got all the gains from U.S. economic growth and the bottom 99% literally went backwards – they saw their collective incomes fall.

More broadly, “wedge economics” have brought us very slow economic growth, much slower than under the old business philosophy. We’ve seen ever-deeper recessions, ever-longer jobless recoveries. With lopsided winnings to the top 1%, dominated by CEOs, the drive has gone out of economic growth.

In fact, economists like Nobel laureate Joseph Stiglitz of Columbia University tell us bluntly that America’s current gaping inequalities of income are bad for economic growth. ”Inequality stifles, restrains and holds back our growth,” Stiglitz asserts. Others agree. The International Monetary Fund has documented that high levels of income equality can be “destructive” to sustained growth and that the best condition for long-term growth is “more equality in the income distribution.”

In short, what Wall Street is celebrating today may cause joy among the 1%, but unless business shares more of its gains, a booming market spells bad news for average Americans.

© 2013 BillMoyers.com

Hedrick Smith

Hedrick Smith is a Pulitzer prize winning journalist and the former Washington bureau chief of The New York Times. Today’s record stock prices and roaring corporate profits reflect the trends of the past three decades captured in his current bestseller, Who Stole the American Dream?

Venezuela and the Middle East After Chavez

Venezuela and the Middle East After Chavez

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Posted on Mar 7, 2013
ABr / José Cruz via WikiMedia Commons (rights reserved)

By Juan Cole

This post first appeared on Juan Cole’s website, Informed Comment.

The foreign policy of late Venezuelan leader Hugo Chavez imagined that socialism and anti-imperialism are the same thing, and that he could lead a new sort of socialist international. (He also seems not to have distinguished between anti-Americanism and anti-imperialism.) These considerations shaped his Middle East policy in ways that were contradictory and hypocritical. Chavez, supposedly a man of the people, stood against Iran’s 2009 Green Movement, against the Libyan Revolution to overthrow the erratic Muammar Qaddafi, against the Syrian Revolution.

Iran, while it is a profound critic of the United States, is not a socialist country. Its gini coefficient or measurement of social inequality now is probably worse than in the days of Mohammad Reza Pahlavi, the monarch overthrown in 1979. As with all oil states, its public sector is large, but it also has a lively private sector, which is dominated by wealthy oligarchs, including some of the ayatollahs and institutions like the Revolutionary Guards. Iran is a right wing theocracy, not a left wing socialist state. If Chavez could embrace a repressive theocracy run for the benefit of wealthy oligarchs, merely because it is anti-American, then of what logical acrobatics was he incapable?

Likewise, Chavez’s support for the Ghaddafis in Libya was based on an extremely superficial reading of Libyan political, economic and social system. The Ghaddafi family looted the country of its wealth, wasting it on ruinous African adventures or squirreling it away in Western banks and real estate. Libya was not a socialist country but a post-Soviet, Russian-style oligarchy. Ordinary Libyans, especially in the east of the country, were increasingly cut out of any share in the country’s oil bonanza. I was shocked last year on my visit there how dowdy and relatively undeveloped Benghazi is; Ghaddafi had clearly punished the country’s second largest city by declining to spend much money on it. Nor was Ghaddafi of 2010 even particularly anti-imperialist. He had welcomed European investment in his oil and gas industries and had much improved relations with the Bush administration. Far from being anti-American, Ghaddafi had a thing for Condi Rice and called Barack Obama his African son. Chavez’s own ally, Iran, largely supported the struggle of the Libyan people against what one ayatollah called “this shell-shocked individual,” though of course Iran condemned the NATO air intervention.

Syria is also no longer a socialist country. The relatives and hangers-on of the ruling al-Assad family transformed themselves into billionaires, using their government contacts to gain lucrative contracts and establishing monopolies. Working Syrians were facing declining real wages in the past decade and very high youth unemployment. Poverty was increasing. Nor was Syria particularly anti-imperialist. In the 1970s and 1980s in Lebanon, Baathist Syria had gladly helped defeat the Palestine Liberation Organization and its Druze and Muslim allies on behalf of the pro-American, right wing Phalangist Party supported by some Christians. After 9/11, the Syrian government tortured al-Qaeda suspects for the Bush administration. It was the US congress that cut Syria off in 2003, not the other way around. And when Obama reopened the US embassy and sought better ties in 2009, al-Assad was perfectly happy to accept.

Whatever one thought of Chavez, he did genuinely improve the lot of the Venezuelan working classes. He won elections and was genuinely popular for this reason. He appears not to have been able to imagine that Khamenei, Ghaddafi and al-Assad are rather less interested in an ideal like the public welfare.

Unable to perform a basic political-economy analysis that would demonstrate that Iran, Libya and Syria had abandoned whatever socialist commitments they once had (Iran of the ayatollahs had never been progressive), Chavez in his own mind appears to have thought that they were analogous to the Bolivia of Eva Morales or the Ecuador of Rafael Correa. Emphatically not so.

He also imagined these countries as anti-American (only Iran really is), and appears to have believed that such a stance covers a multitude of sins on the part of their elites– looting the country, feathering their own nests, and authoritarian dictatorship and police states that deploy arbitrary arrest and torture. In the case of Libya and Syria, the regimes showed a willingness to massacre thousands of their own citizens with bombings from the air and heavy artillery and tank barrages fired into civilian neighborhoods. US imperialism has been guilty of great crimes in Central America and often backed right wing dictators in Latin America generally. You understand how it made a bad impression on Chavez. But the US supported Algeria and many other decolonizing countries in the 1960s and “imperialism” is a thin reed as an all-encompassing analytical tool. There is a sense in which capitalist Russia is seeking a superpower supremacy in parts of the Middle East. Chavez was happy to align with that development.

Venezuela’s stances on the Middle East under Chavez were not usually important in any practical sense. Despite a lot of verbiage, its economic cooperation with Iran has been minor for both countries, and Chavez did no more than make angry speeches about Libya and Syria. Good Iranian-Venezuelan relations provoked a great deal of hysteria in the US, but they don’t actually appear to have been consequential, either in the sphere of economics or in that of security. Despite dark predictions by US hawks, it is probably not very important whether Venezuela keeps its current foreign policy or alters it.

But Chavez did sully his legacy as a progressive with his superficial reading of what ‘anti-imperialism’ entails and his inability to see the neo-liberal police states of the Middle East for what they had become.


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The Legacy of Hugo Chavez: The Revolution Within the Revolution Will Continue

chavez3

 The death of Hugo Chávez is a great loss to the people of Venezuela who have been lifted out of poverty and have created a deep participatory democracy. Chavez was a leader who, in unity with the people, was able to free Venezuela from the grips of US Empire, bring dignity to the poor and working class, and was central to a Latin American revolt against US domination.

Chávez grew up a campesino, a peasant, raised in poverty. His parents were teachers, his grandmother an Indian whom he credits with teaching him solidarity with the people. During his military service, he learned about Simon Bolivar, who freed Latin America from Spanish Empire.  This gradually led to the modern Bolivarian Revolution he led with the people. The Chávez transformation was built on many years of a mass political movement that continued after his election, indeed saved him when a 2002 coup briefly removed him from office. The reality is Venezuela’s 21st Century democracy is bigger than Chávez.  This will become more evident now that he is gone.

The Lies They Tell Us

If Americans knew the truth about the growth of real democracy in Venezuela and other Latin American countries, they would demand economic democracy and participatory government, which together would threaten the power of concentrated wealth. Real democracy creates a huge challenge to the oligarchs and their neoliberal agenda because it is driven by human needs, not corporate greed. That is why major media in the US, which are owned by six corporations, aggressively misinform the public about Chávez and the Bolivarian Revolution.

Mark Weisbrot of the Center for Economic and Policy Research writes:

The Western media reporting has been effective. It has convinced most people outside of Venezuela that the country is run by some kind of dictatorship that has ruined it.

In fact, just the opposite is true. Venezuela, since the election of Chávez, has become one of the most democratic nations on Earth. Its wealth is increasing and being widely shared. But Venezuela has been made so toxic that even the more liberal media outlets propagate distortions to avoid being criticized as too leftist.

We spoke with Mike Fox, who went to Venezuela in 2006 to see for himself what was happening. Fox spent years documenting the rise of participatory democracy in Venezuela and Brazil. He found a grassroots movement creating the economy and government they wanted, often pushing Chávez further than he wanted to go.

They call it the “revolution within the revolution.” Venezuelan democracy and economic transformation are bigger than Chávez. Chávez opened a door to achieve the people’s goals: literacy programs in the barrios, more people attending college, universal access to health care, as well as worker-owned businesses and community councils where people make decisions for themselves. Change came through decades of struggle leading to the election of Chávez in 1998, a new constitution and ongoing work to make that constitution a reality.

Challenging American Empire

The subject of Venezuela is taboo because it has been the most successful country to repel the neoliberal assault waged by the US on Latin America. This assault included Operation Condor, launched in 1976, in which the US provided resources and assistance to bring friendly dictators who supported neoliberal policies to power throughout Latin America. These policies involved privatizing national resources and selling them to foreign corporations, de-funding and privatizing public programs such as education and health care, deregulating and reducing trade barriers.

In addition to intense political repression under these dictators between the 1960s and 1980s, which resulted in imprisonment, murder and disappearances of tens of thousands throughout Latin America, neoliberal policies led to increased wealth inequality, greater hardship for the poor and working class, as well as a decline in economic growth.

Neoliberalism in Venezuela arrived through a different path, not through a dictator. Although most of its 20th century was spent under authoritarian rule, Venezuela has had a long history of pro-democracy activism. The last dictator, Marcos Jimenez Perez, was ousted from power in 1958. After that, Venezuelans gained the right to elect their government, but they existed in a state of pseudo-democracy, much like the US currently, in which the wealthy ruled through a managed democracy that ensured the wealthy benefited most from the economy.

As it did in other parts of the world, the US pushed its neoliberal agenda on Venezuela through the International Monetary Fund (IMF) and World Bank. These institutions required Structural Adjustment Programs (SAP) as terms for development loans. As John Perkins wrote in Confessions of an Economic Hit Man, great pressure was placed on governments to take out loans for development projects. The money was loaned by the US, but went directly to US corporations who were responsible for the projects, many of which failed, leaving nations in debt and not better off. Then the debt was used as leverage to control the government’s policies so they further favored US interests. Anun Shah explains the role of the IMF and World Bank in more detail in Structural Adjustment – a Major Cause of Poverty.

Neoliberalism Leads to the Rise of Chávez

A turning point in the Venezuelan struggle for real democracy occurred in 1989. President Carlos Andres Perez ran on a platform opposing neoliberalism and promised to reform the market during his second term. But following his re-election in 1988, he reversed himself and continued to implement the “Washington Consensus” of neoliberal policies – privatization and cuts to social services. The last straw came when he ended subsidies for oil. The price of gasoline doubled and public transportation prices rose steeply.

Protests erupted in the towns surrounding the capitol, Caracas, and quickly spread into the city itself. President Perez responded by revoking multiple constitutional rights to protest and sending in security forces who killed an estimated 3,000 people, most of them in the barrios. This became known as the “Caracazo” (“the Caracas smash”) and demonstrated that the president stood with the oligarchs, not with the people.

Under President Perez, conditions continued to deteriorate for all but the wealthy in Venezuela. So people organized in their communities and with Lieutenant Colonel Hugo Chávez attempted a civilian-led coup in 1992. Chávez was jailed, and so the people organized for his release. Perez was impeached for embezzlement of 250 million bolivars and the next president, Rafael Caldera, promised to release Chávez when he was elected. Chávez was freed in 1994. He then traveled throughout the country to meet with people in their communities and organizers turned their attention to building a political movement.

Chávez ran for president in 1998 on a platform that promised to hold a constituent assembly to rewrite the constitution saying:

I swear before my people that upon this moribund constitution I will drive forth the necessary democratic transformations so that the new republic will have a Magna Carta befitting these new times.

Against the odds, Chávez won the election and became president in 1999.

While his first term was cautious and center-left, including a visit by Chávez to the NY Stock Exchange to show support for capitalism and encourage foreign investment, he kept his promise. Many groups participated in the formation of the new constitution, which was gender-neutral and included new rights for women and for the indigenous, and created a government with five branches adding a people’s and electoral branches. The new constitution was voted into place by a 70 percent majority within the year. Chávez also began to increase funding for the poor and expanded and transformed education.

Since then, Chávez has been re-elected twice. He was removed from power briefly in 2002, jailed and replaced by Pedro Carmona, the head of what is equivalent to the Chamber of Commerce. Fox commented that the media was complicit in the coup by blacking it out and putting out false information. Carmona quickly moved to revoke the constitution and disband the legislature. When the people became aware of what was happening, they rapidly mobilized and surrounded the capitol in Caracas. Chávez was reinstated in less than 48 hours.

One reason the Chávez election is called a Bolivarian Revolution is because Simon Bolivar was a military political leader who freed much of Latin America from the Spanish Empire in the early 1800s. The election of Chávez, the new constitution and the people overcoming the coup set Venezuela on the path to free itself from the US empire. These changes emboldened the transformation to sovereignty, economic democracy and participatory government.

In fact, Venezuela paid its debts to the IMF in full five years ahead of schedule and in 2007 separated from the IMF and World Bank, thus severing the tethers of the Washington Consensus. Instead, Venezuela led the way to create the Bank of the South to provide funds for projects throughout Latin America and allow other countries to free themselves from the chains of the IMF and World Bank too.

The Rise of Real Democracy

The struggle for democracy brought an understanding by the people that change only comes if they create it. The pre- Chávez era is seen as a pseudo Democracy, managed for the benefit of the oligarchs. The people viewed Chávez as a door that was opened for them to create transformational change. He was able to pass laws that aided them in their work for real democracy and better conditions. And Chávez knew that if the people did not stand with him, the oligarchs could remove him from power as they did for two days in 2002.

With this new understanding and the constitution as a tool, Chávez and the people have continued to progress in the work to rebuild Venezuela based on participatory democracy and freedom from US interference. Chávez refers to the new system as “21st century socialism.” It is very much an incomplete work in progress, but already there is a measurable difference.

Mark Weisbrot of CEPR points out that real GDP per capita in Venezuela expanded by 24 percent since 2004. In the 20 years prior to Chávez, real GDP per person actually fell. Venezuela has low foreign public debt, about 28 percent of GDP, and the interest on it is only 2 percent of GDP. Weisbrot writes:

From 2004-2011, extreme poverty was reduced by about two-thirds. Poverty was reduced by about one-half, and this measures only cash income. It does not count the access to health care that millions now have, or the doubling of college enrollment – with free tuition for many. Access to public pensions tripled. Unemployment is half of what it was when Chávez took office.

Venezuela has reduced unemployment from 20 percent to 7 percent.

As George Galloway wrote upon Chávez’s death:

Under Chávez’ revolution the oil wealth was distributed in ever rising wages and above all in ambitious social engineering. He built the fifth largest student body in the world, creating scores of new universities. More than 90% of Venezuelans ate three meals a day for the first time in the country’s history. Quality social housing for the masses became the norm with the pledge that by the end of the presidential term, now cut short, all Venezuelans would live in a dignified house.

Venezuela is making rapid progress on other measures too. It has a high human development index and a low and shrinking index of inequality. Wealth inequality in Venezuela is half of what it is in the United States. It is rated “the fifth-happiest nation in the world” by Gallup. And Pepe Escobar writes that:

No less than 22 public universities were built in the past 10 years. The number of teachers went from 65,000 to 350,000. Illiteracy has been eradicated. There is an ongoing agrarian reform.

Venezuela has undertaken significant steps to build food security through land reform and government assistance. New homes are being built, health clinics are opening in under-served areas and cooperatives for agriculture and business are growing.

Venezuelans are very happy with their democracy. On average, they gave their own democracy a score of seven out of ten while the Latin American average was 5.8. Meanwhile, 57 percent of Venezuelans reported being happy with their democracy compared to an average for Latin American countries of 38 percent, according to a poll conducted by Latinobarometro. While 81 percent voted in the last Venezuelan election, only 57.5 percent voted in the recent US election.

Chávez won that election handily as he has all of the elections he has run in since 1999. As Galloway describes him, Chávez was “the most elected leader in the modern era.” He won his last election with 55 percent of the vote but was never inaugurated due to his illness.

Beyond Voting: The Deepening of Democracy in Venezuela

This is not to say that the process has been easy or smooth. The new constitution and laws passed by Chávez have provided tools, but the government and media still contain those who are allied with the oligarchy and who resist change. People have had to struggle to see that what is written on paper is made into a reality. For example, Venezuelans now have the right to reclaim urban land that is fallow and use it for food and living. Many attempts have been made to occupy unused land and some have been met by hostility from the community or actual repression from the police. In other cases, attempts to build new universities have been held back by the bureaucratic process.

It takes time to build a new democratic structure from the bottom up. And it takes time to transition from a capitalist culture to one based on solidarity and participation. In “Venezuela Speaks,” one activist, Iraida Morocoima, says “Capitalism left us with so many vices that I think our greatest struggle is against these bad habits that have oppressed us.” She goes on to describe a necessary culture shift as, “We must understand that we are equal, while at the same time we are different, but with the same rights.”

Chávez passed a law in 2006 that united various committees in poor barrios into community councils that qualify for state funds for local projects. In the city, community councils are composed of 200 to 400 families. The councils elect spokespeople and other positions such as executive, financial and “social control” committees. The council members vote on proposals in a general assembly and work with facilitators in the government to carry through on decisions. In this way, priorities are set by the community and funds go directly to those who can carry out the project such as building a road or school. There are currently more than 20,000 community councils in Venezuela creating a grassroots base for participatory government.

A long-term goal is to form regional councils from the community councils and ultimately create a national council. Some community councils already have joined as communes, a group of several councils, which then have the capacity for greater research and to receive greater funds for large projects.

The movement to place greater decision-making capacity and control of local funds in the hands of communities is happening throughout Latin America and the world. It is called participatory budgeting and it began in Porto Alegre, Brazil in 1989 and has grown so that as many as 50,000 people now participate each year to decide as much as 20 percent of the city budget. There are more than 1,500 participatory budgets around the world in Latin America, North America, Asia, Africa, and Europe. Fox produced a documentary, Beyond Elections: Redefining Democracy in the Americas, which explains participatory budgeting in greater detail.

The Unfinished Work of Hugo Chávez Continues

The movements that brought him to power and kept him in power have been strengthened by Hugo Chávez. Now the “revolution within the revolution” will be tested.  In 30 days there will be an election and former vice president, now interim president, Nicolas Maduro will likely challenge the conservative candidate Chávez defeated.

If the United States and the oligarchs think the death of Chávez means the end of the Bolivarian Revolution he led, they are in for a disappointment.  This revolution, which is not limited to Venezuela, is likely to show to itself and the world that it is deep and strong. The people-powered transformation with which Chávez was in solidarity will continue.

How Deregulation Resurrected American Economic Insecurity

John N. Gray, a distinguished intellect and retired professor of intellectual history at the London School of Economics, disagrees with the view that “the end of history” has placed humanity on a course of ethical and economic progress.

Media Scoundrels Pillory Chavez Before He’s Buried

His passing made no difference. Media scoundrels don't quit. They spent 14 years vilifying him. They did it unfairly. They haven't stopped. They're called scoundrels for good reason. They violate fundamental journalistic ethics. They lie for power. They turn truth on its head.

Swiss Curb Executive Greed; Will Anyone Follow?

Swiss Curb Executive Greed, Will Anyone Follow?

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Posted on Mar 5, 2013

By William Pfaff

Switzerland just had a referendum in which it voted to give company and bank shareholders veto rights over the salaries, bonuses and overall compensation packages of senior executives and board directors.

Bonuses will be prohibited for executives being hired, those leaving, and for those present when a company is taken over. Pension funds holding stock in a company will be required to take part in these compensation votes. Violation of the new rules can be punished by fines worth up to six years of salary and prison sentences of up to three years. These requirements will be written into the Swiss constitution. In short, the Swiss want revolutionary change in the manner by which the modern European (and implicitly, American) corporation is managed, and in how it distributes its funds. This is a demand based on morality.

A majority of 68 percent of those voting in all the Swiss cantons approved this initiative. The Swiss citizenry, in short, is very angry about the current practices of Swiss corporations and financial institutions, even though the country is scarcely noted for past criticism of high finance and the practices prevailing in the international economy.

The Swiss are not the only ones angry at the pay practices of globalized capitalism. The European Union’s Commission, executive agency of the 27-member EU—whose combined economy is the largest and potentially most powerful in the world, dominating world trade—has just delivered a second staggering blow to international finance and the practices of bankers.

The Commission has ruled that all bankers and banking institutions anywhere within the EU, and also—here comes the knockout punch—all those executives working for EU-based banks worldwide, must have the bonuses they pay or receive capped at no more than existing annual salaries. This limit can be waived only if the bank’s shareholders agree, and then only to the level of double the executive’s current salary.

For a normal human being working in a normal enterprise, bonuses are usually connected to meritorious service. They are not a plutocratic competition in ego-display by a limited number of the very rich.

Today’s rich, though, are different from you and me. An executive’s pay sheet may identify bonuses as merited supplements to salaries, and stock option assignments and other monetary and material rewards as essential to keeping an immensely important individual in the company, preventing him or her from taking their invaluable talents elsewhere, but this is part of the game played by the new corporate rich. (The individual may actually be getting fired, and the money greases the exit.)

You can imagine how this draft EU law on banker compensation has been received in the City of London, the British Conservative Party and the community of New York-based executives of London and Scottish banks.

It is difficult to see how Britain can remain a member-state of the EU if this law is approved by finance ministers and the European Parliament—which will happen. Prime Minister David Cameron has already, for purely party-political and electoral reasons, promised the British electorate a referendum before the next national election on the U.K.‘s remaining in the Union (on what he assured them would be revised terms—but scarcely this revision).

The conventional political and journalists’ judgment today is that Britain is on the way out of Europe, for better or for worse. But wait—we have not yet counted in the weight of moral opinion not only in Britain and even, just possibly, in the United States, which now will become the only great business center in the world which practices this kind of mind-blasting greed. Interesting enough, though, the greedy lost the 2012 national election in America.

This greed has caused moral revulsion throughout the Western world—including in the United States, which started it all, and as a result now experiences radical inequality between rich and poor. Just since 2008, American disposable personal income has risen by 1.4 percent per year. Corporate profit has increased by 20 percent per year. The Barclays Bank’s chief American economist says nothing like this has been seen in 50 years.

America’s Puritan forefathers were Calvinist; their “errand into the wilderness” had been conceived as a re-enactment of the exodus of the Hebrews from Egyptian bondage and their Biblical covenant with God was understood as to build a new heaven and new earth. Until the American Revolution, their Presbyterian church, with its millenarian theology, provided the only organized link among the separate colonies.

However, the austere and frightening theology of Calvinist predestination and “irresistible grace” changed in America due to the influence of the Dutch theologian Jacobus Arminius (1560-1609). He argued that for hard-working men and women, predestination could be bestowed, and success and riches be seen as evidence of Heavenly Election. American Protestantism has always respected business success and wealth.

But this? The tea party movement, whatever its ideological aberrations, was seen in 2010 as a people’s revolt against big and intrusive American government, supposed “free riders,” welfare queens, Mitt Romney’s “47 percent” who would vote against him (or wouldn’t vote at all), and against academics, intellectuals and the mainstream media.


It was much more. It was a protest against secular and cosmopolitan forces in America and an affirmation of a traditional American religious culture. But what was not seen then was that it was an upsurge by America’s outsiders or abandoned: the precarious or jobless American poor and lower middle class, protesting globalization, American industry shipped abroad, American deindustrialization, American employment shipped to China, foreign immigrants living on American welfare rolls—and dead American towns, working farmers reduced to living in shabby house-trailers, their children facing perpetual debt in order to get an education.

All this while the rich get greedier.


Visit William Pfaff’s Web site for more on his latest book, “The Irony of Manifest Destiny: The Tragedy of America’s Foreign Policy” (Walker & Co., $25), at www.williampfaff.com.

© 2013 Tribune Media Services, Inc.

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Italians Rejects Austerity

It's high time voters somewhere did. It transfers wealth to bankers, other corporate favorites and rich elites. It wrecks economies. It creates poverty, unemployment and human misery. It turns countries into dystopian backwaters.

Private Jet as Security Write-Off? 10 Most Insane Tax Loopholes

Corp. Tax Loopholes(Photo: suenosdeuomi / Flickr)For corporations and the 1 percent, tax season offers plenty of ways to dodge Uncle Sam.

With the national tax filing deadline fast approaching, Americans are once again plopping down with pen, paper and potentially Turbotax to determine just how much they owe their state and federal governments. But while the popular refrain posits that nothing in life is certain but death and taxes, for many corporations and wealthy individuals, having to pay a tax bill is anything but a certainty.

Due to the proliferation of loopholes, deductions, credits, and the growing use of offshore tax evasion, many rich Americans and corporations are able to dodge the bulk of, if not all, their taxes. Between 2008 and 2011, 26 major American corporations paid nothing in federal corporate income tax, despite making $205 billion in pretax profits. In 2011 (the last year in which data is available), corporations paid just a 12.1 percent effective tax rate, the lowest in four decades. Many wealthy individuals, meanwhile, are able to drive their tax rates down below the rate paid by middle-class families. Some drive it all the way down to zero.

There are certainly large, systemic reasons for these disparities. But part of the problem is that the rich and the biggest companies have access to a slew of tax breaks from which the average household or small business derives very little benefit. Here are 10 of the most ridiculous.

  1. CEO “private security.” A “common corporate tax trick,” according to the New York Times, is corporate boards paying for private jets and other perks for their CEOs under the guise of security. As Steven Davidoff reported, typically CEOs would have to pay taxes on these benefits, but if the benefit is classified as necessary for security purposes, “the chief executive will pay a reduced tax bill or sometimes no tax at all.”
  1. Florida cow scam. In Florida, wealthy developers, lawmakers and even some corporations game the tax code by placing cows on their land for a limited amount of time each year, thereby qualifying for agricultural tax breaks. Sen. Ben Nelson (D-FL) has benefited from this absurd loophole for years, as has Disney World. But Florida isn’t the only offender. From rock stars in New Jersey to movie stars in Colorado, tax breaks meant for farmers get gamed by the most privileged, using everything from sheep to beehives.
  1. Facebook stock options. The social media giant Facebook made more than $1 billion in profits last year, but paid no corporate tax thanks to a huge write-off after its initial public offering. In fact, the company received a refund of $451 million. As Citizens for Tax Justice, explained, “Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options.” This loophole will also allow Facebook to avoid more than $2 billion in taxes in future years. LinkedIn used the same gimmick to pay no federal taxes for the last three years.
  1. Bluegrass boondoggle. This tax break, created by Senate Minority Leader Mitch McConnell (R-Kentucky) in 2008, gives wealthy horse owners a break worth $126 million over 10 years by allowing faster depreciation (quicker tax write-offs) of race horses. McConnell has defended the break by claiming it helps Kentucky’s “farm economy.”
  1. Sheryl Crow loophole. Low tax rates on investment income are one of the main reasons the wealthy are able to pay lower taxes than those in the middle-class (and are also a prime driver of income inequality). Lawmakers from America’s heartland felt it was necessary to let super-wealthy musicians get in on the action, and so “passed a law allowing songwriters to avoid income taxes and sell their publishing catalogs at capital gains rates.” As San Francisco Weekly’s Chris Parker noted, “Three years later, Sheryl Crow sold her publishing rights to one of Australia's largest banks for nearly $10 million. Her estimated savings courtesy of this congressional giveaway: $2 million.”
  1. NASCAR tax break. Thanks to a provision in the 2008 bank bailout, owners of NASCAR tracks are able to write off the costs of their facilities over seven years, rather than “over the 39 years that the government estimates it will take for the tracks to depreciate.” This particular loophole costs the government $40 million per year, but Congress reauthorizes it over and over again.
  1. John Edwards/Newt Gingrich loophole. Both the former presidential candidate and the former Speaker of the House have taken advantage of a provision allowing them to dodge payroll taxes. By forming “S corporations,” Edwards and Gingrich are able to classify the money they receive from various ventures as “business profits,” rather than payments for services rendered, which exempts that money from the payroll tax. This loophole is regularly abused by lawyers, doctors and accountants, who can count the work they do every day as part of operating a “small business” that consists only of themselves. As tax expert Seth Hanlon noted, “Regular wage-earners can’t do this, and neither can the owners of other kinds of small businesses.”
  1. Tax breaks for vacation homes and yachts. The mortgage interest deduction, which is supposed to boost homeownership, can be used on second homes, or even yachts, so long as they are large enough to accommodate a bathroom, along with a cooking and sleeping space. Limiting the deduction to primary residences would raise $1 billion per year in revenue.
  1. “Double Irish” and “Dutch Sandwich.” Many companies, from Google to Amazon to Starbucks, use offshore tax havens to drive down their corporate tax rates, sometimes down into the single digits. Some of the inventive strategies they’ve used include routing profits through Ireland, the Netherlands, Bermuda, or Luxembourg, using tax tricks with cheeky names like the “Double Irish” and the “Dutch sandwich.” European countries have recently attempted to crack down on some of the more flagrant abuses.
  1. Large SUVs. We’ve already discussed the yacht tax break, but going out and purchasing a large SUV will get a member of the 1 percent another write-off. As Bloomberg News noted, the tax code’s restrictions on write-offs for luxury vehicles don’t apply to those “rated at 6,000 pounds unloaded gross vehicle weight or more.” This means that “purchasing a large SUV often provides faster writeoffs than similar but smaller vehicles.”

Closing these loopholes would certainly not fix the tax code’s much larger problems or put a huge dent in the federal deficit. But they would at least get rid of some of the more egregious giveaways that plague the American tax system, while raising some money that can go to providing the critical services upon which many Americans depend.

Private Jet as Security Write-Off? 10 Most Insane Tax Loopholes

For corporations and the 1 percent, tax season offers plenty of ways to dodge Uncle Sam.

Photo Credit: Shutterstock.com

March 1, 2013  |  

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With the national tax filing deadline fast approaching, Americans are once again plopping down with pen, paper and potentially Turbotax to determine just how much they owe their state and federal governments. But while the popular refrain posits that nothing in life is certain but death and taxes, for many corporations and wealthy individuals, having to pay a tax bill is anything but a certainty.

Due to the proliferation of loopholes, deductions, credits, and the growing use of offshore tax evasion, many rich Americans and corporations are able to dodge the bulk of, if not all, their taxes. Between 2008 and 2011, 26 major American corporations paid nothing in federal corporate income tax, despite making $205 billion in pretax profits. In 2011 (the last year in which data is available), corporations paid just a 12.1 percent effective tax rate, the lowest in four decades. Many wealthy individuals, meanwhile, are able to drive their tax rates down below the rate paid by middle-class families. Some drive it all the way down to zero.

There are certainly large, systemic reasons for these disparities. But part of the problem is that the rich and the biggest companies have access to a slew of tax breaks from which the average household or small business derives very little benefit. Here are 10 of the most ridiculous.

  1. CEO “private security.” A “ common corporate tax trick,” according to the New York Times, is corporate boards paying for private jets and other perks for their CEOs under the guise of security. As Steven Davidoff reported, typically CEOs would have to pay taxes on these benefits, but if the benefit is classified as necessary for security purposes, “the chief executive will pay a reduced tax bill or sometimes no tax at all.”
  1. Florida cow scam. In Florida, wealthy developers, lawmakers and even some corporations game the tax code by placing cows on their land for a limited amount of time each year, thereby qualifying for agricultural tax breaks. Sen. Ben Nelson (D-FL) has benefited from this absurd loophole for years, as has Disney World. But Florida isn’t the only offender. From rock stars in New Jersey to movie stars in Colorado, tax breaks meant for farmers get gamed by the most privileged, using everything from sheep to beehives.
  1. Facebook stock options. The social media giant Facebook made more than $1 billion in profits last year, but paid no corporate tax thanks to a huge write-off after its initial public offering. In fact, the company received a refund of $451 million. As Citizens for Tax Justice, explained, “Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options.” This loophole will also allow Facebook to avoid more than $2 billion in taxes in future years. LinkedIn used the same gimmick to pay no federal taxes for the last three years.
  1. Bluegrass boondoggle. This tax break, created by Senate Minority Leader Mitch McConnell (R-Kentucky) in 2008, gives wealthy horse owners a break worth $126 million over 10 years  by allowing faster depreciation (quicker tax write-offs) of race horses. McConnell has defended the break by claiming it helps Kentucky’s “ farm economy.”
  1. Sheryl Crow loophole. Low tax rates on investment income are one of the main reasons the wealthy are able to pay lower taxes than those in the middle-class (and are also a prime driver of income inequality). Lawmakers from America’s heartland felt it was necessary to let super-wealthy musicians get in on the action, and so “passed a law allowing songwriters to avoid income taxes and sell their publishing catalogs at capital gains rates.” As San Francisco Weekly’s Chris Parker noted, “Three years later, Sheryl Crow sold her publishing rights to one of Australia's largest banks for nearly $10 million. Her estimated savings courtesy of this congressional giveaway: $2 million.”
  1. NASCAR tax break. Thanks to a provision in the 2008 bank bailout, owners of NASCAR tracks are able to write off the costs of their facilities over seven years, rather than “ over the 39 years that the government estimates it will take for the tracks to depreciate.” This particular loophole costs the government $40 million per year, but Congress reauthorizes it over and over again.
  1. John Edwards/Newt Gingrich loophole. Both the former presidential candidate and the former Speaker of the House have taken advantage of a provision allowing them to dodge payroll taxes. By forming “S corporations,” Edwards and Gingrich are able to classify the money they receive from various ventures as “business profits,” rather than payments for services rendered, which exempts that money from the payroll tax. This loophole is regularly abused by lawyers, doctors and accountants, who can count the work they do every day as part of operating a “small business” that consists only of themselves. As tax expert Seth Hanlon noted, “ Regular wage-earners can’t do this, and neither can the owners of other kinds of small businesses.”
  1. Tax breaks for vacation homes and yachts. The mortgage interest deduction, which is supposed to boost homeownership, can be used on second homes, or even yachts, so long as they are large enough to accommodate a bathroom, along with a cooking and sleeping space. Limiting the deduction to primary residences would raise $1 billion per year in revenue.
  1. “Double Irish” and “Dutch Sandwich.” Many companies, from Google to Amazon to Starbucks, use offshore tax havens to drive down their corporate tax rates, sometimes down into the single digits. Some of the inventive strategies they’ve used include routing profits through Ireland, the Netherlands, Bermuda, or Luxembourg, using tax tricks with cheeky names like the “Double Irish” and the “Dutch sandwich.” European countries have recently attempted to crack down on some of the more flagrant abuses.
  1. Large SUV’s. We’ve already discussed the yacht tax break, but going out and purchasing a large SUV will get a member of the 1 percent another write-off. As Bloomberg News noted, the tax code’s restrictions on write-offs for luxury vehicles don’t apply to those “rated at 6,000 pounds unloaded gross vehicle weight or more.” This means that “purchasing a large SUV often provides faster writeoffs than similar but smaller vehicles.”

Closing these loopholes would certainly not fix the tax code’s much larger problems or put a huge dent in the federal deficit. But they would at least get rid of some of the more egregious giveaways that plague the American tax system, while raising some money that can go to providing the critical services upon which many Americans depend.

This Year’s Subsidy to Wall Street is Equal to the Amount of This Year’s...

Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

Since we’ve bailed out the 10 largest banks $83 billion this year alone, should they give it back to us by paying into the U.S. Treasury the amount of this year’s sequester? After all, it’s the same amount.

On February 20th, Bloomberg News editors headlined, “Why Should Taxpayers Give Big Banks $83 Billion a Year?” and issued the first-ever thorough and current analysis of the taxpayer-subsidy to the Wall Street mega-banks. They found that this subsidy is $83 billion this year, but they made no note of the fact that this amount is only $2 billion less than this year’s sequester cuts are estimated to be, so that all that would need to be done, in order to avoid those cuts, would be to have those mega-banks that we bail out every year forego their subsidy from taxpayers, for just one year. Unfortunately, this would be easier said than done.

That $83 billion subsidy this year is, according to Bloomberg’s, also approximately the amount of profits that those banks are “earning” this year. So, if the mega-banks wouldn’t refund it out of what we gave them last year, then they could just refund it by paying to us – who, after all, bailed out their stockholders enormously in 2009 – the “profits” that they made this year.

The editors at Bloomberg News (hardly a bunch of populists) calculated this $83 billion figure based upon their analysis of the figures in a sadly ignored but rigorous study that had been done by IMF economists, a study that had been issued months back, in May 2012, and which was titled “Quantifying Structural Subsidy Values for Systemically Important Financial Institutions.” As Bloomberg’s editors summarized the reason for this ongoing federal subsidy: “The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail,” due to the special Government backing for too-big-to-fail (TBTF) institutions.

The taxpayer-funded annual subsidy to these TBTF banks has never before been calculated as to its actual annual dollar-value, but this rigorous IMF study finally provided the means for doing that. Bloomberg’s summarizes: “What if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?”

“The top five banks – JP Morgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits.”

This $83 billion, in other words, is the current value of the annual subsidy received by America’s 10 mega-banks, from our Government’s special treatment of them as “Systemically Important Financial Institutions” (i.e., fully guaranteed by U.S. taxpayers, irrespective of the normal $250,000-per-account limit in savings and checking accounts), or TBTF institutions, which the other 7,053 (out of the total 7,063 FDIC-insured) banks are not – other banks can fail without destroying the U.S. economy. In a certain sense, these are the banks where the super-rich can enjoy FDIC protection without that $250,000-per-account limit, and can even gamble under the protection of that comforting umbrella.

The Dallas Federal Reserve has issued a superb study showing that even at the peak of the crash, when the highest percentage of loans were in arrears, which had occurred around January 2010, only around 3% of loans were in arrears at banks that had “less than $1 billion” in assets, whereas banks that had “over $250 billion” (and only 12 banks are in that august category) were experiencing around 12% of loans in arrears. The following chart on page 7 of the Dallas Fed’s study showed that the 2008 crash was virtually entirely a Wall Street (or mega-bank) phenomenon:

The big-ten banks are the ones that benefited from that $83 billion handout this year, and, as was noted, they did so because they are TBTF. Because these banks (basically the top line there) are TBTF, their top executives can have them engage in, essentially, high-risk gambling (such as “no-doc” or “liars” loans) with the vast sums that are under their command, since the people who buy stock in these banks know in advance that if these high-risk bets fail, then U.S. taxpayers (we) will eat their losses. Consequently, the only incentive for CEOs of these banks is to increase their bank’s size even more, so as to increase their bonuses even bigger, since these executives don’t really need to worry about risk (except as a PR issue, perhaps, but they hire PR people – including politicians – to deal with that).

When Wall Street got bailed out to the tune of trillions of dollars by the U.S. Treasury, and the Federal Reserve (and with Fannie Mae, and Freddie Mac serving as a conduit between them and Wall Street), this left very little remaining for the Government to spend on the rest of the economy, such as infrastructure and education (the kinds of things that we supposedly pay taxes for), which might be why the recovery has been so slow, from the 2008 crash that was caused by Wall Street’s federally-insured gambling with the trillions that they control of everybody else’s money. If so, then this sequester is a result of Wall Street’s failed bets: instead of cutting back on the subsidy to Wall Street, the politicians in Washington have chosen to cut back on government services to the public. Politicians like Barack Obama and his team, and the George W. Bush team before them, and all of the supporters of TBTF in Congress, made the basic choice to subsidize the mega-banks instead of the needy or the deserving, and this is also why the “Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened” under Obama. It really is a plutocracy; that’s precisely the way today’s USA is functioning – no doubt about it.

There were other possible ways of dealing with the 2008 crash than to continue to throw trillions of dollars at Wall Street, but that is what “our” Government did, and continues to do, because, essentially, this is what the super-rich pay them to do.

Bloomberg’s $83 billion/year finding here is so vast that it suggests that the U.S. is a crony-capitalism, hardly an authentic capitalism. The “cronies” are these giant Wall Street firms and their “counterparties” (namely, each other, plus Fannie & Freddie and the government officials and lobbyists, who all serve Wall Street), and also the stockholders and bondholders in these huge financial institutions: the mega-banks that would otherwise be “cleaned out” but for the TBTF backing they receive from U.S. taxpayers. We’re getting reamed by Wall Street and K Street, and this is the first estimate of the actual circumference of that reaming. The Dallas Fed’s study says that this reaming must stop, and that, despite what the Federal Reserve itself says, the mega-banks must be broken up. The easiest way to do that might be for Congress to pass a law that prohibits the largest ten banks from participating in the FDIC. That would transform the entire financial system, but Wall Street would hate it because it would yank their honey-pot.

Because Wall Street’s Mayor Michael Bloomberg made his roughly $20 billion fortune by serving the mega-banks, this editorial from Bloomberg News constituted remarkable news, in and of itself.

One other study of “Valuation in Systemic Risk at U.S. Banks During 1974-2010” found that the taxpayer-subsidy was $300 billion in 2008 but supposedly near zero after 2009. Matt Levine linked to that study on 7 May 2012 under the optimistic headline “Markets Are Telling Us That Too Big To Fail Is All Better.” The editors at Bloomberg ignored that study. The financial expert Yves Smith, when I called to her attention that that study, which she had relied upon, zeroed-out the megabanks’ systemic risk after 2009, wrote in reply, “I didn’t realize they were doing this using bank equity volatility as the proxy. He did not make clear how he was going to do about it in the talk. Methodologically, that’s crap.”  So, Bloomberg’s editors have issued the only reliable study that has ever been done on the size of this important subsidy.

Bloomberg’s editors were courageous to do this, and they are already getting flak for having done it. On February 24th, they issued a follow-up, “Remember That $83 Billion Bank Subsidy? We Weren’t Kidding,” and explained in more detail how they had calculated this $83 billion sum. They explained why the $83 billion estimate was far likelier an underestimate than an overestimate.

Anyway, this subsidy is a major problem, probably at least as big as the sequester, which it might have helped to cause.

On February 28th, Yves Smith posted at her “Naked Capitalism” website, “Occupy the SEC, Frustrated With Regulatory Defiance of Volcker Rule Implementation Requirements, Sues Fed, SEC, CFTC, FDIC and Treasury,” and she linked to a new legal filing in the Eastern District of New York “over the failure of the relevant financial regulators to issue a Final Rulemaking as stipulated in Dodd Frank.” She summarized what the evidence clearly showed: “Not only are the[y] out of compliance [with the Dodd-Frank Act’s Volcker Rule provision for these regulators to draft rules restricting the mega-banks from gambling with investors’ money], they [the regulatory agencies over the mega-banks] appear to have no intent of finalizing the Volcker Rule.” She went on to say: “Much of the public still fails to understand the degree to which the ruling classes no longer represent their interests. Oh, they may resent the banks, and they may also hate Congress, but most people deeply need to believe they live in a system that is fair and where business and political leaders (some if not all) still deserve respect and admiration.”

Meanwhile, click here to find out why Republicans want the sequester, even though economists, the International Monetary Fund, and even the Congress’s own research service (the Congressional Research Service), have amply warned that it will be destructive to the nation.

Comment by Washington’s Blog:  President Obama says that sequestration is the GOP’s fault. But Bob Woodward and YouTube reveal that Obama supported sequestration from day one.

Read potential solutions to the sequestration debate.

The Politics of Disimagination and the Pathologies of Power

The Politics of Disimagination and the Pathologies of Power

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Posted on Feb 27, 2013
DerrickT (CC BY 2.0)

By Henry A. Giroux, Truthout

This piece first appeared at Truthout.

You write in order to change the world knowing perfectly well that you probably can’t, but also knowing that [writing] is indispensable to the world. The world changes according to the way peoples see it, and if you alter even by a millimeter the way people look at reality, then you can change it.” - James Baldwin

The Violence of Neoliberalism

We live in a time of deep foreboding, one that haunts any discourse about justice, democracy and the future. Not only have the points of reference that provided a sense of certainty and collective hope in the past largely evaporated, but the only referents available are increasingly supplied by a hyper-market-driven society, megacorporations and a corrupt financial service industry. The commanding economic and cultural institutions of American society have taken on what David Theo Goldberg calls a “militarizing social logic.”[1] Market discipline now regulates all aspects of social life, and the regressive economic rationality that drives it sacrifices the public good, public values and social responsibility to a tawdry consumerist dream while simultaneously creating a throwaway society of goods, resources and individuals now considered disposable.[2] This militarizing logic is also creeping into public schools and colleges with the former increasingly resembling the culture of prison and the latter opening their classrooms to the national intelligence agencies.[3] In one glaring instance of universities endorsing the basic institutions of the punishing state, Florida Atlantic University in Boca Raton, concluded a deal to rename its football stadium after the GEO Group, a private prison corporation “whose record is marred by human rights abuses, by lawsuits, by unnecessary deaths of people in their custody and a whole series of incidents.” [3A] Armed guards are now joined by armed knowledge.  Corruption, commodification and repressive state apparatuses have become the central features of a predatory society in which it is presumed irrationally “that market should dominate and determine all choices and outcomes to the occlusion of any other considerations.”[4]

The political, economic, and social consequences have done more than destroy any viable vision of a good society. They undermine the modern public’s capacity to think critically, celebrate a narcissistic hyperindividualism that borders on the pathological, destroy social protections and promote a massive shift towards a punitive state that criminalizes the behavior of those bearing the hardships imposed by a survival-of-the-fittest society that takes delight in the suffering of others. How else to account for a criminal justice stacked overwhelmingly against poor minorities, a prison system in which “prisoners can be held in solitary confinement for years in small, windowless cells in which they are kept for twenty-three hours of every day,”[5] or a police state that puts handcuffs on a 5-year old and puts him in jail because he violated a dress code by wearing sneakers that were the wrong color.[6] Why does the American public put up with a society in which “the top 1 percent of households owned 35.6 percent of net wealth (net worth) and a whopping 42.4 percent of net financial assets” in 2009, while many young people today represent the “new face of a national homeless population?”[7] American society is awash in a culture of civic illiteracy, cruelty and corruption. For example, major banks such as Barclays and HSBC swindle billions from clients and increase their profit margins by laundering money for terrorist organizations, and no one goes to jail. At the same time, we have the return of debtor prisons for the poor who cannot pay something as trivial as a parking fine. President Obama arbitrarily decides that he can ignore due process and kill American citizens through drone strikes and the American public barely blinks. Civic life collapses into a war zone and yet the dominant media is upset only because it was not invited to witness the golf match between Obama and Tiger Woods.

The celebration of violence in both virtual culture and real life now feed each other. The spectacle of carnage celebrated in movies such as A Good Day to Die Hard is now matched by the deadly violence now playing out in cities such as Chicago and New Orleans. Young people are particularly vulnerable to such violence, with 561 children age 12 and under killed by firearms between 2006 and 2010.[8] Corporate power, along with its shameless lobbyists and intellectual pundits, unabashedly argue for more guns in order to feed the bottom line, even as the senseless carnage continues tragically in places like Newton, Connecticut, Tustin, California, and other American cities. In the meantime, the mainstream media treats the insane rambling of National Rifle Association’s (NRA) Executive Vice President Wayne LaPierre as a legitimate point of view among many voices. This is the same guy who, after the killing of 20 young children and six adults at Sandy Hook Elementary School, claimed the only way to stop more tragedies was to flood the market with more guns and provide schools with more armed guards. The American public was largely silent on the issue in spite of the fact that an increase of police in schools does nothing to prevent such massacres but does increase the number of children, particularly poor black youth, who are pulled out of class, booked and arrested for trivial behavioral infractions.

At the same time, America’s obsession with violence is reinforced by a market society that is Darwinian in its pursuit of profit and personal gain at almost any cost. Within this scenario, a social and economic order has emerged that combines the attributes and values of films such as the classics Mad Max and American Psycho. Material deprivation, galloping inequality, the weakening of public supports, the elimination of viable jobs, the mindless embrace of rabid competition and consumption, and the willful destruction of the environment speak to a society in which militarized violence finds its counterpart, if not legitimating credo, in a set of atomizing and selfish values that disdain shared social bonds and any notion of the public good. In this case, American society now mimics a market-driven culture that celebrates a narcissistic hyperindividualism that radiates with a new sociopathic lack of interest in others and a strong tendency towards violence and criminal behavior. As John le Carré once stated, “America has entered into one of its periods of historical madness.”[9] While le Carré wrote this acerbic attack on American politics in 2003, I think it is fair to say that things have gotten worse, and that the United States is further plunging into madness because of a deadening form of historical and social amnesia that has taken over the country, further reproducing a mass flight from memory and social responsibility. The politics of disimagination includes, in this instance, what Mumia Abu-Jamal labeled “mentacide,” a form of historical amnesia “inflicted on Black youth by the system’s systematic campaign to eradicate and deny them their people’s revolutionary history.”[10]

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The ABC of Bourgeois Politics


From the Russian Revolution until the demise of Soviet and Eastern European socialism, one dominant, uncompromising and persistent theme has obsessed ruling elites in the capitalist world and their allies: Anything but Communism(ABC). The ABC doctrine has led to the seemingly contradictory consequence of “champions” of democracy and human rights embracing anti-Communist despots and torturers. It has led the same celebrated values to be compromised in capitalist countries by the violent repression of Communists, leftists, and workers. The doctrine has placed arbitrary limits on the rights of self-determination for any emerging nation daring to flirt with a non-capitalist path. And when Communism threatens to breach the barriers constructed by the capitalist class, that class resorts to the most extreme form of Anything but Communism: fascism. 

For the left, ABC has often appeared to be an insurmountable hurdle to the goal of peoples’ power and socialism. Too often the task of overcoming ABC overwhelms the advocates of socialism, leading to compromise, concession and ideological dilution. Certainly, many of the formerly powerful Communist Parties of Western Europe succumbed to this lure. The self-described Euro-Communists, especially, hoped to convince their opponents that they were reliable and docile contestants unworthy of the class hatred embodied in ABC. They thought that by demonstrating their fealty to bourgeois standards of political conduct and by donning the trappings of civil parliamentarians, they would win the respect of their class foes. But the illusion of acceptance through “historical compromise” and electoral coalition proved to be just that—an illusion. Today, these parties have thoroughly demonstrated their “trustworthiness” by totally abandoning Communism for tepid class-neutral reformism.

ABC and Syriza

In the wake of the twenty-first-century crisis of capitalism, the need for a revolutionary movement of peoples’ power and socialism becomes both more apparent and more urgent with every passing day. The material conditions of most poor and working people have sunk to a level demanding far more radical solutions than those offered by the traditional bourgeois parties. Their failure to correct, or even address, the harsh deterioration of mass living standards over the last five years confirms their political irrelevance.

Nor are the romantic and spontaneous movements of the recent past of any use in the face of the ravages of a capitalist economic, social, and political crisis. Subcommandante Marcos or the leader-eschewing leaders of the Occupy movement are incapable of combating the ravages of a wounded capitalism despite the enthusiasm and encouragement of much of the US and European left.

Indeed, the objective conditions call for an organized movement determined to overthrow capitalism and replace it with peoples’ rule and the construction of socialism.

Yet the US left and much of the European left are still captured by the mentality of Anything but Communism. They subjectively hope to manage capitalism and yearn to return to the pre-crisis world of life-style advocacy, promotion of social harmony and tolerance, and incremental social welfare; they imagine class struggle without class conflict; and they share the make-believe hope of class justice without class domination.

This hope is found in the most recent celebrity of the Greek party, Syriza, and its attractive and agreeable leader, Alexis Tsipras. Syriza embodies the delusions of the US and European soft-left in the post-Soviet era: it advocates a noisy but vacuous anti-capitalist posture attached to a program of “enlightened” management of capitalism. Like its forebears in Social Democracy and Euro-Communism, it offers to appease the bourgeoisie while promising a distant goal with no more clarity than that of William Blake’s poetic Jerusalem.

Tsipras reveals the timidity and conservatism of the Syriza program in two recent documents: an interview with Bret Stephens of The Wall Street Journal published as a glowing opinion piece (The Conscience of a Radical) on January 28, 2013 and an article authored by Tsipras in Le Monde Diplomatique (The Greek Revival Plan, February 16, 2013).

The WSJ interview occurred when Tsipras visited New York to “meet with think-tank scholars, journalists and International Monetary Fund officials, and to be dined at the State Department,” to quote Stephens. It is hard to envision anyone frightening capitalism while maintaining this itinerary. As the friendly Stephens noted: “It definitely amused me to meet him in the breakfast room at his hotel, the Helmsley Park Lane on Central Park South. Not exactly the cafeteria of the proletariat.”  

The trusted spokesperson for monopoly capital, Stephens, found much to like in the spokesperson for Syriza. He concludes that: “If the radical in Syriza means a party capable of thinking for itself and posing the right questions, maybe the right answers won’t be far behind.”

Apart from this ringing endorsement, what answers does Tsipras offer to the growing devastation of Greece and the capitalist crisis?

Tsipras assures Stephens that he advocates neither a default on Greek debt nor an exit from the euro zone.
Instead, Syriza is committed to a “conference” with the European Union to discuss negotiating a restructuring of Greece’s debt (Tsipras writes of the “public debt” though he also calls for the recapitalization of Greek banks, presumably mainly private banks). The model for this maneuver is the 1953 conference called to renegotiate the debt of the Federal Republic of Germany (Tsipras fails to acknowledge that there were two Germanys in 1953!) where 21 countries agreed to reduce the FRG debt and invoke less onerous terms. Unsaid in his proposal is the Cold War context of the 1953 conference. Conferees remembered well the consequences for the world of the heavy reparations and debt imposed on Germany after World War I. They were equally anxious to draw the FRG into the Cold War (the FRG joined NATO IN 1955) and in need of the FRG’s growing industrial might. Nothing remotely like these considerations weighs on the other EU members in deciding Greece’s fate today.

But how would Syriza secure such a conference today? By moral suasion? By calling on historical parallels? Neither would move EU leaders or their Central Bankers to participate in a plan that they would perceive as disordering financial markets. To believe so is to vastly misunderstand the logic of contemporary capitalism. There is something remarkably naïve in believing that the Greek crisis can be solved by merely calling a conference of EU leaders.

Tsipras, in both his interview and article, blames Greece’s sorry state on corruption. He does not place the capitalist system, the capitalist crisis, inequality, or any other systemic element or process in Syriza’s sights; rather, he sees Greece declining because of corruption and cronyism. Surely the leader of a “radical left” party must recognize that capitalism breeds corruption just as surely as it generates crisis. Corruption is an inevitable byproduct of capitalism and will reappear and expand as long as capitalism exists. To attack it, one must attack capitalism.

But there is no attack on capitalism in Tsipras’ or Syriza’s plans. Instead, there is “…breaking with the past… working for social justice, equal rights, political and fiscal transparency—in other words, democracy.”

Fine. But these broad slogans are not socialist. They are not even anti-capitalist. In fact, they could be embraced easily by Social Democrats in Europe or even Democrats in the US.

For those who were quick to condemn the Greek Communists (KKE) for not joining with Syriza in an electoral coalition, Tsipras’ and Syriza’s program should cause pause to reconsider. Like previous appeasers of Anything but Communism, Syriza trades on its differences with Communists. It offers a pledge of fidelity to the bourgeois rules of the game. Like other appeasers, it sacrifices principled advocacy of socialism to political expediency, a sacrifice that gets us no closer to peoples’ power or to socialism. Once Syriza is compelled to come forth with a program, it is impossible to locate a common ground with revolutionary Communists.

Tackling global capitalism—essential to reversing the continuing devastation of this deep and profound crisis—requires more than a conference and a series of slogans. Real solutions are not to be found with those promising to guide capitalism out of an inhuman crisis of its own making.

Zoltan Zigedy
zoltanzigedy@gmail.com 

The Perils of Hoarding Cash

Tim Cook, the head of Apple, visiting the iPhone production line at the Foxconn factory in China. (Photo: Apple)Tim Cook, the head of Apple, visiting the iPhone production line at the Foxconn factory in China. (Photo: Apple)There is lots of talk now about Apple's cash hoard, which is actually kind of amazing: this is supposedly our cutting-edge technology company, and apparently it can't find things it wants to invest in. Or more accurately, given its incredible profits, it can't find enough things to do with all the money it makes.

So, I've had a mild-mannered dispute with the economist Joe Stiglitz over whether individual income inequality is retarding recovery right now; let me say, however, that I think there's a very good case that the redistribution of income away from labor to corporate profits is very likely a big factor.

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Take a look at the chart on corporate profits as a share of gross domestic product. Corporations are taking a much bigger slice of total income — and are showing little inclination either to redistribute that slice back to investors or to invest it in new equipment, software, etc. Instead, they're accumulating piles of cash.

2013 0227kr chStill Say's Law After All These Years When the economist John Maynard Keynes wrote "The General Theory of Employment, Interest and Money" three generations ago, he structured his argument as a refutation of what he called "classical economics," and in particular of Say's Law, the proposition that income must be spent at some point and hence that there can never be an overall deficiency of demand. Ever since, historians of thought have argued about whether this was a fair characterization of what the classical economists, or at any rate Keynes' own intellectual opponents, really believed.

Not being a historian myself, I won't venture an opinion on that subject. What I will say, however, is that Say's Law (Say's False Law? Say's Fallacy?) is something that opponents of Keynesian economics consistently invoke to this day, falling into exactly the same fallacies that Keynes identified back in 1936.

In the past I've caught economists like Brian Riedl and John Cochrane doing this; Peter Dorman, writing in a recent blog post, found Tyler Cowen in their company. Mr. Cowen can't see why corporate hoarding is a problem. Like Mr. Riedl and Mr. Cochrane, he concedes that there might be some problem if corporations literally piled up stacks of green paper, but he argues that it's completely different if they put the money in a bank, which will lend it out, or use it to buy securities, which can be used to finance someone else's spending.

But of course there isn't any difference. If you put money in a bank, the bank might just accumulate excess reserves. If you buy securities from someone else, the seller might put the cash under his mattress, or put it in a bank that just adds it to its reserves, etc. The point is that buying goods and services is one thing, adding directly to aggregate demand; buying assets isn't at all the same thing, especially when we're at the zero lower bound.

What's depressing about all this is that Say's Law is a primitive fallacy — so primitive that Keynes has been accused of attacking a straw man. Yet this primitive fallacy, decisively refuted three-quarters of a century ago, continues to play a central role in distorting economic discussion and crippling our policy response to depression.

Virtually ALL of the Big Banks’ Profits Come from Taxpayer Bailouts and Subsidies

bankers

The government has propped up the big banks for years through massive, never-ending bailouts and subsidies.

Bloomberg noted last year that 77% of JP Morgan’s net income comes from government subsidies.

Bloomberg reported yesterday:

What if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

***

Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers — Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz — put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of$83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – – account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfareIn large part, the profits they report are essentially transfers from taxpayers to their shareholders.

The money hasn’t just gone to the banks shareholders … It has also gone to line the pockets of bank management:

Indeed:

All of the monetary and economic policy of the last 3 years has helped the wealthiest and penalized everyone else. See thisthis and this.

***

Economist Steve Keen says:

“This is the biggest transfer of wealth in history”, as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.

Nobel economist Joseph Stiglitz said in 2009 that Geithner’s toxic asset plan “amounts to robbery of the American people”.

And economist Dean Baker said in 2009 that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”.

We’ve noted for years that the big banks – including CitiWellsBank of America and the rest – areactually insolvent.

Breaking up the big banks would stabilize the economy … and dramatically increase Main Street’s access to credit.

But the government has chosen the banks over the little guy … dooming both:

The big banks were all insolvent during the 1980s.

And they all became insolvent again in 2008. See this and this.

The bailouts were certainly rammed down our throats under false pretenses.

But here’s the more important point. Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not. They were insolvent.

Tim Geithner falsely stated that the banks passed some time of an objective stress test but they did not. They were insolvent.

Both the creditors and the debtors were mortally wounded by the 2008 financial crisis. The big banks wouldn’t have survived without trillions in handouts, guarantees, loans, idiot-proof profits courtesy of the government.

The little guy hasn’t been helped since 2008. He has been left to suffer with his life-threatening wounds. See thisthis and this.

So the government chose sides. The creditors were wiped out, just like a lot of Main Street was wiped out. In one sense, the government chose who would live (the giant banks and other bailed out and favored companies) and who would die (the other 99%).

But in fact, the big banks were no longer creditors after the 2008 crash. Specifically, the big banks which held the mortgages and the loans were wiped out.

The government moved the arms and legs of the big banks to pretend they were still alive … and have been doing so ever since. But they were no longer going concerns after they went bust.

The government pumped blood back in these dead banks and turned them into zombies. They will never come back to life in a real sense … they are still zombies, 3 years later.

Many of the world’s leading economists and financial experts say that by choosing creditors over debtors, the government is dooming the economy. See this and this.

The big zombie banks can never come back to life, and – by trying to save them – the government is bleeding out the little guy.

By choosing the big banks over the little guy, the government is dooming both.

Remember, the Federal Reserve has paid banks high interest rates to stash money (their “excess reserves”) with the Fed for the express purpose of preventing loans to Main Street.

And the Fed plans to throw more money at the banks when the Federal Reserve starts to tighten.  As FTreports:

US Federal Reserve officials fear a backlash from paying billions of dollars tocommercial banks when the time comes to raise interest rates.

The growth of the Fed’s balance sheet means it could pay $50bn-$75bn a year in interest on bank reserves at the same time as it makes losses and has to stop sending money to the Treasury.

***

In an interview with the Financial Times, James Bullard, president of the St Louis Fed, said: “If you think of the profitability of the biggest banks, if you’re going to talk about paying them something of the order of $50bn – well that’s more than the entire profits of the largest banks.”

***

At the moment it only pays 0.25 per cent interest on those reserves. But according to its exit strategy, published in June 2011, the Fed plans to raise interest rates before it sells assets. Interest of 2 per cent on $2.5tn of reserves would run to $50bn a year.

***

The eventual tightening could lead to substantial amounts being transferred to commercial banks from the Fed, given the amounts of cash they have parked there. Wells Fargo has $97.1bn sitting at the Fed, the largest amount of any bank, ahead of JPMorgan Chase at $88.6bn and Goldman Sachs at $58.7bn, according to an FT analysis of SNL data.

Foreign banks also have a striking amount of cash at the Fed, potentially aggravating the Fed’s PR problem. Analysts at Stone & McCarthy noted recently that there had been a steep increase in foreign banks placing reserves at the Fed and suggested that “US banks may have distaste for the opportunistic arbitrage”, between lower market rates and the interest on reserves, whereas overseas institutions “might not feel encumbered in the same fashion”.

Canada’s TD Bank, Germany’s Deutsche Bank and Switzerland’s UBS each have more than $12bn at the Fed.

And while this post focuses on bailouts and subsidies to big American banks,  a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing. More here and here.

Yale Helps DoD Train Soldiers By Interrogating Non-Whites

This is the kind of thing that would have been a reason to shut down the campus, back in the old days. Now? I'd be surprised if the majority of students gave it more than a yawn. But at least the student newpaper reporters are paying attention -- as they should:

The Department of Defense and Yale University have partnered up to train U.S. soldiers in the art of interrogation techniques with the local immigrant community acting as test subjects, reports the Yale Daily News.

As early as this April, Yale plans to welcome a training center for interrogators to its campus.The center’s primary goal would be to coach U.S. Special Forces on interviewing tactics designed to detect lies.

Charles Morgan III, a professor of psychiatry who will head the project, calls these tactics “people skills.” These techniques would be honed using New Haven’s immigrant community as subjects. Morgan hopes that by having soldiers practice their newly acquired techniques on “someone they can’t necessarily identify with” (read: someone who is not white), they’ll be better prepared to do ‘the real thing’ abroad.

The authors of the article, Nathalie Batraville and Alex Law, provide many reasons for why this training center is a terrible idea, one of which includes a lack of transparency. Apparently, students didn’t learn about the new program until now, just two months before the center opens. As Batraville and Law point out:

There was no conversation with the city about how this might impact its immigrant community. There was no conversation with students and faculty about how it might impact campus culture. And there was no conversation at all about the ethics of a project like this. It’s hard to understand where this project came from; the university’s motivations are wholly opaque.

They also argue that Yale could be indirectly involving itself in immoral practices by training soldiers whose skills could be used to, for example, determine whose name is added to President Obama’s kill list.

Most importantly, the authors offer some insight into the racist aspect of this program:

Morgan’s research and, by extension, this proposed center target people of color — brown people exclusively. According to a Yale Herald article, Morgan listed “Moroccans, Columbians, Nepalese, Ecuadorians and others.” Is there an assumption in Morgan’s desire to use more ‘authentic,’ brown interviewees as test subjects, that brown people lie differently from whites — and even more insidiously, that all brown people must belong to the same “category” of liar?

How might training on lie detection be perceived if it targeted blacks, or if it aimed to answer the question, “How do Jews lie?” That Morgan’s test subjects are compensated does not resolve the ethical questions his project raises. In fact, their participation highlights the structural inequality that this research capitalizes on and that the center would ultimately exploit.

As Nathalie was working on this piece, her phone rang. At the other end of the line was her 7-year-old nephew Rocco, who wanted to wish her a happy Valentine’s Day and send her many loud kisses. He now lives in Montreal, where Nathalie is from, but until about a year ago, he lived in Haiti.The U.S.’ involvement in Haiti, from its occupation between 1915 and 1934 to its support — financial, logistical (and “moral”) — of François and later Jean-Claude Duvalier’s brutal dictatorships in the 60s and 70s, informs much of her outrage surrounding the establishment of this center, and her understanding that people often lie to protect their lives, their families, their country and the very freedom that Americans so dearly cherish.

Well said! But even without the the sickening immigrants-as-test-subjects aspect, the training center is still unsettling because it further solidifies the unholy alliance between physicians and the US war machine given that a professor of psychiatry is running the project. This should come as no surprise since we mostly ignored revelations that psychologists and medical doctors helped run the torture program at Guantanamo Bay (look forward, not backward!)

Full-Body Pat-Downs in America’s Schools: How the War on Drugs Is a War on...

A young woman lights a marijuana joint in May 2012.

On a warm spring afternoon at American colleges, the intoxicating aroma of surely medicinal marijuana will be floating like a soft caress in the breeze, and hard-working students will be stocking up on amphetamine cocktails to sharpen their overstressed young minds for the coming exams.

On a warm spring afternoon at the nation’s poorer public schools, children (and I mean children) will endure a daily police presence, including drug-sniffing dogs, full-body pat-downs, searches of backpacks and lockers, stops in the hallways—all in the name of searching for contraband. 

Drugs are ubiquitous in this country, and yet we know that some people have the privilege of doctor-prescribed intoxication, while others are thrown into dungeons for seeking the same relief. We know that the war on drugs is heavily inflected with Jim Crow–ism, economic inequality, gun culture myths and political opportunism. We know that Adam Lanza’s unfortunate mother was not the sole Newtown resident stocking up on military-style weapons; plenty of suburban gun owners keep similar weapons to protect their well-kept homes against darkly imagined, drug-addled marauders from places like Bridgeport. We divert resources from mental health or rehab, and allocate millions to militarize schools.

The result: the war on drugs has metastasized into a war on children.

Best publicized, perhaps, is the plight of young people in Meridian, Mississippi, where a federal investigation is probing into why children as young as 10 are routinely taken to jail for wearing the wrong color socks or flatulence in class. Bob Herbert wrote of a situation in Florida in 2007, where police found themselves faced with the great challenge of placing a 6-year-old girl in handcuffs too big for her wrists. The child was being arrested for throwing a tantrum in her kindergarten class; the solution was to cuff her biceps, after which she was dragged to the precinct house for mug shots and charged with a felony and two misdemeanors. 

In New York City, kids who make trouble are routinely removed from school altogether and placed in suspension centers, holding cells or juvenile detention lockups. In the old days, you got a detention slip for scrawling your initials on a desk. Now a student can be given a summons by a school police officer. If the kid loses it or doesn’t want to tell his parents, it becomes a warrant—and a basis for arrest.

According to the New York Civil Liberties Union, some 
77 percent of New York’s school police interventions are for noncriminal matters like having food outside the cafeteria, having a cellphone or being late. Other minor offenses like shouting, getting into petty scuffles or being on school grounds after hours fall into the category of “disruptive behavior”—an offense that can get a student suspended. Just 4 percent of police interventions are in response to “major crimes against persons.”

But what’s a teacher to do? In New York City, police officers outnumber guidance counselors by more than 2,000.

Yet as Newtown should teach us, we love our guns as much as we love our drugs. We know that even our best efforts at gun control will not undo a simultaneous and enthusiastic installation of armed overseers in our public schools. As such forces grow exponentially across the country, we keep them busy by installing zero-tolerance policies that take disciplinary discretion out of teachers’ hands and put it in the hands of law enforcement officers with little to no training in child psychology, mediation or anger management. Indeed, the NYCLU recently filed a complaint after the NYPD arrested Mark Federman, the principal of East Side Community High School, for intervening as the in-school officers hauled away an honor student. 

The Lamest Excuses Money Can Buy

As we try to grasp the reasoning behind cuts to life-saving programs while billion-dollar incomes and trillion-dollar profits are being made, we must understand that extreme wealth deadens parts of the brain. Empathy and honesty go first. Then rationa...

The Lamest Excuses Money Can Buy

As we try to grasp the reasoning behind cuts to life-saving programs while billion-dollar incomes and trillion-dollar profits are being made, we must understand that extreme wealth deadens parts of the brain. Empathy and honesty go first. Then rationa...

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The American Housing Market is Set to Screw People Far into the Future

Class divisions have become the new norm in housing.

February 17, 2013  |  

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Our political vocabulary is changing all the time. Words that loom large in one generation’s national public discourse can almost totally disappear in the next.

Take the word “segregation.” A half-century ago, newspapers headlined “segregation” on almost a daily basis. This same word today seldom ever appears, either in print or on our computer screens. To our contemporary sensibilities, segregation seems so, well, yesterday.

But segregation still stains America, and not just the lingering legacy of the racial segregation that Americans battled decades ago. America now faces a stark income segregation as well — and this income segregation is getting worse.

Last week, researchers from the U.S. Census Bureau released a new report that details one aspect of this new segregation: the concentration of high-income households by metro area.

How concentrated have these high-income households become? The new Census study, the first ever to examine where America’s most affluent 5 percent live, offers a rather dramatic picture.

In some U.S. metro areas, the  new data show, you can knock randomly on 100 doors and expect to find only one household making at least $191,469, the income threshold for entering America’s top 5 percent between 2006 and 2011.

In other metro areas, that same door knocking would turn up as many as 18 households making near $200,000 and above.

Affluence in America today almost totally bypasses broad swatches of the nation.

In effect, affluence in America today almost totally bypasses broad swatches of the nation, from Cumberland in Maryland to the Kingman area in Arizona. Affluence is settling instead in a relatively few pockets, places like Silicon Valley in California and the hedge-fund-happy suburbs around Stamford, Connecticut.

Our contemporary income segregation becomes even more intense when we drill down from the metro to neighborhood level. Sociologists Sean Reardon and Kendra Bischoff have been doing this drilling, using Census tract data.

Back in 1970,  the pair have found, 65 percent of America’s families lived in “middle-income” situations, neighborhoods where  incomes range from 80 to 125 percent of the median, or most typical, income of the larger metro area. By 2008, only 43 percent of U.S. families lived in middle-income neighborhoods.

Meanwhile, over that same span, the share of families living in either poor or rich neighborhoods essentially doubled.

In 2008,  note Reardon and Bischoff, nearly one in three U.S. families in metro areas “lived in neighborhoods at the extremes of the local income spectrum,” in poor neighborhoods with incomes under 67 percent of the metro median or in affluent neighborhoods with incomes above 150 percent of that median.

Today’s affluent, Reardon and Bischoff observe, actually live more segregated lives than America’s poor. These affluent have become “much less likely” to live in mixed-income neighborhoods than poor families.

Growing income inequality is driving increasing residential segregation.

Growing income inequality, the two sociologists  add, is driving this increasing segregation. With the income gap between the rich and everyone else rising, mixed-income neighborhoods “have grown rarer,” affluent and poor neighborhoods “much more common.”

Average Americans, for their part, are paying a heavy price for this growing segregation. The more isolated the rich become, the more they withdraw into their own private worlds and the less interest they have in supporting public services that can benefit the wider community.

Growing inequality and income segregation impact us on a deeper level as well. The more unequal we become,  notes University of Maryland political scientist Eric Uslaner, the less we feel we have “much in common” with people not like us.

Ecuador Chooses Stimulus over Austerity

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Bio

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And welcome to another edition of The Black Financial and Fraud Report with Bill Black, who now joins us from Kansas City.

Bill is an associate professor of economics and law at the University of Missouri, Kansas City. He's a white-collar criminologist, former financial regulator, and author of The Best Way to Rob a Bank Is to Own One. Thanks for joining us, Bill.BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.JAY: So you've been writing recently about how Ecuador's been dealing with the recession, and you think there are some things to learn. What is that?BLACK: Yeah. I was writing—I was prompted by a article in The Economist which was exceptionally hostile to President Correa and what was being done in Ecuador. So I have actually been there several times recently, so I decided to research. And there wasn't—hardly any data in The Economist's study. What I discovered is that Ecuador should have been in, you would think, terrible trouble with the Great Recession. First, the United States is its leading trading partner. Its leading export is oil, and, of course, our oil consumption was down quite a bit. And the other major source of foreign funds in particular is what is called remittances, which is what Ecuadorians living in other countries send home to Ecuador. And the two leading places that Ecuadorians have emigrated, one is historically the United States, which, again, was in a great recession, but of late it's far more Spain. And Spain isn't simply in a great recession; the austerity programs have thrown it into Great Depression levels of unemployment, where unemployment's over 25 percent, and young people, the unemployment rate is 55 percent—just extraordinary. So remittances were down, oil sales were down, oil prices were down, and you would have thought Ecuador would have been really trashed. But President Correa, who is an economist by training—has a PhD from the United States, a master's from a Belgian university, and an Ecuadorian degree, all in economics—responded in what turned out to be the classic win-win-win that is offered by a severe recession, and that is he increased spending in three major categories—education, health, and public infrastructure. And public infrastructure in Ecuador is not only grossly inadequate; it's really quite dangerous in terms of the roads. And, of course, it's a nation that is incredibly mountainous and is prone to terrible flooding, which destroys dirt roads. So this has been a major effort. And, by the way, he worked on bridge safety as well, something the United States desperately needs to do, and built vital airports.The result of all of this was that within one quarter of going into recession officially, Ecuador was coming out. And indeed, for the entire year it actually had positive growth instead of negative growth, which of course is the absolute norm in a recession. And since then, it's rebounded to have a growth rate that's varied between double and three times the United States' growth rate. Spending on these three areas—education, health, and infrastructures—has more than doubled under President Correa. Poverty is down dramatically. Unemployment is down dramatically. Inequality, which was severe but—in Ecuador is down very substantially as well. And as a result, President Correa was actually, in the kind of polls that they run, the most popular elected leader in all of the Americas—that's North America, Central America, and South America combined. He was the single most popular leader and is widely expected to win an outright majority and avoid a runoff.JAY: Bill, has this made it any more difficult for Ecuador, one, to borrow money internationally? And two, Ecuador does use the U.S. dollar. Does that help or hurt? Maybe it helps in some ways, 'cause one of the reasons countries in theory don't do this kind of spending is they're afraid of, you know, a selloff of their dollars or currency.BLACK: That is an interesting question. Again I think Correa has that one right as an economist. It's actually very bad not to have a sovereign currency. I've explained this several times to the viewers in the context of the euro and giving up the sovereign currency. So this is an extra degree of difficulty that Correa has had to deal with that dramatically reduced the scope of what he could do, and he still succeeded. So his joke, or the joke in Ecuador, is that the only thing more popular than Correa is the dollar. So this is one of those odd things. The dollar is actually a problem for Ecuador, being dollarized, but the Ecuadorian people love it. And so, you know, there—it makes no sense, if you're an elected official, to try to get rid of something that the people absolutely love. So Correa has criticized the dollar but said, you know, look, I'm a pragmatist, and the people love it and such, so, you know, we go forward with the dollar.JAY: But does this play a role in somewhat protecting Ecuador from a run on their currency as a result of all this spending?BLACK: No, because that—it doesn't provide any protection in that regard. What protects Ecuador from those kind of attacks is that because they lack a sovereign currency, they simply can't run large deficits. And they don't. They have a very tiny deficit. So Correa has not done this by goosing the deficit. And as one of your questions implied, they repudiated some debt. Now, actually, they didn't repudiate most of their debt; they had a commission to look into certain debts that had already been negotiated that they declared that had been done in violation of Ecuadorian law and that those bonds were actually unlawful. They repudiated those debts, and then they repurchased those debts, or at least 94 percent of those, at about somewhere around 30 cents on the dollar.JAY: So how's he paying for the new spending?BLACK: Ecuador is an important exporter of oil, and the price of oil has gone up. So that's part of it. But he has also done a whole series of reforms to the deals that Ecuador had with the oil companies, which were, as you would guess, incredibly one-sided, and Ecuador got only a really tiny percentage of the proceeds. Well, now it gets a much higher percentage of proceeds.Correa also made it a priority to improve their equivalent of the IRS. And so it now collects—especially from corporations—far more taxes that used to be evaded and such. These are all, again, good things that the United States could learn. And as I said, the consequences for the lives of everyday Ecuadorians are dramatically improved. The chances that your kid is going to school is way up. The chances that when you're sick you get health care are way up. The chances if you're one of the indigenous people that used to be forgotten that you get services is way up. The vice president of Ecuador is paralyzed from the waist down and in a wheelchair and has led a movement to bring the disabled in Ecuador far more into the mainstream, and this too has been tremendously successful.JAY: Okay. If you want to ask Bill a question or make a comment, Tweet it to me, or you can email it to me at contact (at) therealnews (dot) com, or you can Tweet me @PaulJay_TRNN, and we will ask Bill your question and we'll get him to comment on it next time we talk. Thanks for joining us, Bill.BLACK: Thank you.JAY: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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Mike’s Blog Round Up

Well, that's it for me after another fun week. See you next time.Over at my place: Will Ferrell endorses Eric Garcetti for Los Angeles mayor. Which is all well and good, but I'm not sure I can get behind him until I know what George Clooney thinks.Per...

Guest Post: Currency Wars Are Trade Wars

Submitted by John Aziz of Azizonomics blog,

Paul Krugman is all for currency wars, but not trade wars:

First of all, what people think they know about past currency wars isn’t actually true. Everyone uses some combination phrase like “protectionism and competitive devaluation” to describe the supposed vicious circle of the 1930s, but as Barry Eichengreen has pointed out many times, these really don’t go together. If country A and country B engage in a tit-for-tat of tariffs, the end result is restricted trade; if they each try to push their currency down, the end result is at worst to leave everyone back where they started.

And in reality the stuff that’s now being called “currency wars” is almost surely a net plus for the world economy. In the 1930s this was because countries threw off their golden fetters — they left the gold standard and this freed them to pursue expansionary monetary policies. Today that’s not the issue; but what Japan, the US, and the UK are doing is in fact trying to pursue expansionary monetary policy, with currency depreciation as a byproduct.

There is a serious intellectual error here, typical of much of the recent discussion of this issue. A currency war is by definition a low-level form of a trade war because currencies are internationally traded commodities. The intent (and there is much circumstantial evidence to suggest that Japan at least is acting with mercantilist intent, but that is another story for another day) is not relevant — currency depreciation is currency depreciation and still has the same effects on creditors and trade partners, whatever the claimed intent.

Krugman cites Barry Eichengreen as evidence that competitive devaluation does not necessarily mean a trade war, but Eichengreen does not address the issue of a trade war directly, much less denying the possibility of one.  Indeed, while broadly supportive of competitive devaluation Eichengreen notes that the process was “disorderly and disruptive”.

And the risks of disorder and disruption are still very real today.

As Mark Thoma noted in 2010:

While the positive effects a currency war produced in the 1930s are unlikely to reappear, there is a chance of large negative effects such as a simultaneous trade war or the breakdown of the international monetary system, so let’s hope a currency war can be avoided.

The mechanism here is very simple. Some countries — those with a lower domestic rate of inflation, like Japan — have a natural advantage in a currency war against countries with a higher domestic rate of inflation like Brazil and China. If one side runs out of leverage to debase their currency because of heightened domestic inflation, their next recourse is to resort to direction trade measures like quotas and tariffs.

And actually, the United States and China in particular have been engaging in a low-level trade and currency war for a long time.

As I noted last year:

China and Russia and Brazil have all recently expressed deep unease at America’s can-kicking and money-printing mentality. This is partly because American money printing has exported inflation to the world, as a result of the dollar’s role as the global reserve currency, and partly because these states already own a lot of American debt, and do not want to be paid off in hugely-debased money.

Since I made that statement, there has been a great lot of debasement without any great spiral of damaging trade measures. But with the world locked into ever greater monetary and trade interdependency, and with fiery trade rhetoric continuing to spew forth from the BRIC nations, who by-and-large seem to continue to believe that American money-printing is damaging their interests   — who in the past two years have put together a new global reserve currency framework — it would be deeply complacent to believe that the risks of a severe trade war have gone away.

(Unfortunately, Krugman and Eichengreen both seem to discount the reality that Okun’s law has broken down, and that monetary expansion today is supporting crony industries, and exacerbating income inequality, but those are another story for another day)

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Zapatistas Break Silence to Slam Mexico Elite

After years of silence, secluded in their base communities in Mexico's impoverished south, indigenous Zapatista rebels have re-emerged with a series of public statements in recent weeks, attempting to reignite passions for their demands of "land, liberty, work and peace".

On January 1, 2013, Subcommandante Marcos released a communique slamming the Institutional Revolutionary Party (PRI) and its legacy of "theft". The PRI, a party which ruled Mexico for 71 straight years prior to 2000, regained power in December. (Photo: AFP) In December, 40,000 Zapatista supporters marched through villages in Chiapas, re-asserting their presence. In January and February, Subcomandate Marcos - the Zapatistas' pipe-smoking, non-indigenous spokesman and an international media darling - issued a series of communiques slamming the government of Mexican President Enrique Pena Nieto, a member of the Institutional Revolutionary Party (PRI) which assumed power in December.

"Our pains won't be lessened by opening ourselves up to those that hurt all over the world," Marcos wrote in late January, rallying supporters. "We will resist. We will struggle. Maybe we'll die. But one, ten, one hundred times, we'll always win."

The group first made international headlines on January 1, 1994, when they captured six towns in Chiapas, Mexico's southernmost state and one of the country's poorest regions.

The Rand Corporation, a research group with links to the US military, said Chiapas is "characterised by tremendous age-old gaps between the wealthy and impoverished - kept wide by privileged landowners who ran feudal fiefdoms with private armies".

"The Zapatistas are hoping... that people will create the conditions of autonomy and self-sufficiency in their local areas; they want supporters to bring the ideas of the revolution home."

For nearly two decades, the Zapatistas have attempted to build a system of autonomous governance, emphasising indigenous dignity and collective agriculture. Indigenous members of the group could not be reached by Al Jazeera for comment, due in part to a lack of easy phone access.

'Community building'

The group had been quiet in recent years before the December rally and subsequent communiques. "They have been busy, building up their base as a social movement at the community level, even if they hadn't been in the media," Mark Berger, visiting professor of defence analysis at the US Naval Postgraduate School, told Al Jazeera. There are between 100,000 and 200,000 people living in communities which support the Zapatistas, he said.

In recent communiques, Marcos has described Mexico's government as a "zombie state" controlled by the elite, a statement which likely resonates among some sectors of the population in a country plagued by pervasive inequality and corruption. 

Previous attempts to unify Mexico's social movements, from independent trade unionists, to feminists, students, punks and other indigenous people, have been met with mixed results. The "Other Campaign", the last major outreach drive launched by the Zapatistas in 2006, was largely unsuccessful in building a national movement.

"The Other Campaign was very critical of electoral politics and it marked a fracture among the Mexican left," Alán Arias Marín, a political scientist at the National Autonomous University of Mexico, told Al Jazeera. "Locally [in Chiapas] the movement still has support."

Return of the PRI

Meanwhile, though, Mexico has been consumed with other problems, especially drug-related violence. For the last 12 years, Mexico had been governed by the conservative National Action Party (PAN), led by Vicente Fox and later Felipe Calderon. The PAN had little interest in dealing with the Zapatistas or the broader issues faced by indigenous Mexicans. Today, the PAN is out of office in a development that could change dynamics for the Zapatistas.

The PRI, which ruled Mexico for 71 uninterrupted years before 2000, was in power when the Zapatistas first rebelled. The return of what Peruvian author Mario Vargas Llosa called the "perfect dictatorship" in an election last year marred by allegations of fraud could benefit the Zapatistas as they seek to rebuild alliances with social movements outside of Chiapas and reinvigorate their national presence.

"The same people who poured into the Zocalo [Mexico City's main square] to stop the government from imposing a strict military response to the rebellion [in 1994] are still there," Richard Stahler-Sholk, an author of the book Latin American Social Movements in the Twenty-First Century, told Al Jazeera. "The Mexican government has unleashed militarisation on the country, with the encouragement of the US government, in response to drug violence."

More than 70,000 people have died in drug-related mayhem since 2006 and the US has pledged more than $1.4bn in military aid to Mexico under the auspicies of fighting criminal cartels. 

With carnage raging in parts of Mexico, activists calling for a new approach to the "War on Drugs", and an increasingly powerful student movement confronting the PRI, the Zapatistas have plenty of possible allies.

"I think there is a possibility that the Zapatistas and the student movement could well gain a lot more traction under a PRI-dominated political system," Berger said.

Pena Nieto could become a lightning rod for protests, reacquainting the Zapatistas with their historic foe, the PRI. During his tenure as governor of Mexico State, Nieto oversaw the violent police crackdown against demonstrators in the city of San Salvador Atenco in 2006. Two demonstrators were killed and a group of women say they were sexually terrorised by security forces as they protested the extension of an airport.

The student movement #yosoy132 formed after a group of undergraduates questioned Nieto about the attacks during his presidential campaign in 2012. Angered by reports of electoral fraud and the PRI's history of corruption, many students have been challenging the government.

'Net war'

Mexico's youth are not alone in opposing the status quo. 

"What began as a violent insurgency in an isolated region mutated into a nonviolent though no less disruptive social netwar that engaged the attention of activists from far and wide," the Rand Corporation noted in an analysis of the Zapatistas and the internet. 

In mid-January, Anonymous, the diffuse internet activist movement, apparently launched a cyber-attack crashing the website of Mexico's defence ministry, claiming to be in solidarity with the Zapatistas.

According to some analysts, the Zapatistas - and their early use of the internet to draw support - were the precursor of a new type of diffuse social movement such as Occupy Wall Street, #yosoy132, and anti-globalisation protests.

But the tangible benefits of internet activism and the outside support it garners can be fleeting. "The Zapatistas were trendy, and numerous international initiatives supported them," Marín, the professor in Mexico City, said. But with the onset of the US-led war in Iraq, most NGOs started to have different concerns, he said, describing non-government organisations as "very fussy".

In recent communiques, Marcos said the Zapatistas would reappraise their relationships with various foreign and domestic partners. Aid groups, particularly some charities, have been criticised by the masked revolutionaries.

Revolutionary ideas

If the drug war and the thousands of corpses left in its wake helped push the Zapatistas off the international agenda, the return of the PRI might make it easier for them to reclaim a place in national debates.

In the past, the PRI was widely believed to broker deals between the cartels to ensure stability. "The government will stop trying to go to war with organised crime so much," Berger predicted of the new PRI administration. "That will allow more attention to other forms of politics."

It remains unclear if the Zapatistas will be able to capitalise on these potential changes, but their re-emergence in the public eye is being met with interest across Mexico and beyond.

"Recent communications are specifically directed at re-activating their national and international base," said one long-time supporter, who spoke on the condition of anonymity from Chiapas due to security concerns. "The Zapatistas are hoping, I think, that people will create the conditions of autonomy and self-sufficiency in their local areas; they want supporters to bring the ideas of the revolution home."

© 2013 Al-Jazeera

Winning the Argument

President Barack Obama waits with Sergeants at Arms and Members of Congress before entering the House Chamber to deliver the State of the Union address at the U.S. Capitol in Washington, D.C., February 12, 2013. (Photo: Pete Souza / White House)Washin...

The Great Wealth Robbery

Two important events took place this week. One was President Obama’s call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nation’s wealth continues to be hijacked by the wealthiest among us.

That didn’t get much attention.

There’s a Great Robbery underway, although most of its perpetrators don’t see themselves as robbers. Instead they’re sustained by delusions that protect them from facing the consequences of their own actions.

Heads I Win …

An updated report from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.

If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: You’re not crazy. And since the financial crisis was caused by members of the 1 percent – not all of them, of course, just the ones we spent so much to rescue – it’s understandable if the injustice still rankles you.

You rescued them. Now they’re drinking your milkshake.

Tails You Lose

But this wealth shift is not a new phenomenon. As Saez notes in his paper, “After decades of stability … the top decile share has increased dramatically over the last twenty-five years.” In fact, the top 10 percent’s share of our national income is higher than it’s been since 1917 - and maybe longer. (The figures don’t go back any farther than that.)

Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed – a little over 30 percent, as opposed to 6.5 percent for everyone else – but more than made up the difference again during the Bush years.

The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but they’re rapidly making up the difference now. Government policy’s been designed to help them. (Meanwhile, underwater homeowners still don’t have the help they need.)

The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) There’s even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.

As the old song says: Them that has, gets.

If you can remember the sixties you weren’t there … or can’t afford to remember

The minimum wage has been falling since 1968. As John Schmitt notes in his paper, “The Minimum Wage Is Too Damn Low,” “By all of the most commonly used benchmarks – inflation, average wages, and productivity – the minimum wage is now far below its historical level.”

It’s currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:

Consumer Price Index (CPI-I): $10.52

Current CPI methodology (CPI-U-RS): $9.22

As a percentage of average production worker’s earnings: $10.01

And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.

Magical Thinking

There’s a myth in this country that enormous wealth doesn’t come from anywhere or anyone, that it’s self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions – human actions with human consequences.

Saez: “A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”

Wealth inequity is created whenever an employer lowers his employees’ wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.

It’s created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. It’s created when GE outsources its manufacturing operation and gets into the banking (read, “gambling with taxpayers’ money”) business. Or when AIG stops insuring risk and starts betting on it.

And the process isn’t slowing down. In fact, it seems to be accelerating.

As Saez says, “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”

Up

President Obama’s proposal is modest, and there’s no reason not to enact it immediately. For those who believe that businesses “can’t afford” to pay higher wages, some key facts:

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.

A Data Brief from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.

There’s no evidence minimum wage increases mean fewer jobs.

Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today it’s 7.8 percent – and the unofficial numbers are even worse. At the state level,  the Fiscal Policy Institute recently concluded that “states with minimum wages above the federal level have had faster small business and retail job growth.”

Ninety-two percent of the 50 largest low‐wage employers in the country were profitable last year.

As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.

Bringing It All Back Home

The real “job creators” aren’t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.

They don’t invest their money in hedge funds or stash it in offshore accounts. They spend it: on food, transportation, their kids’ education, maybe a night at the movies … And then other people get jobs making those things possible.

We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, “To the extent that people say the economics is confusing or uncertain, that’s overwhelmingly because people want it to be.” We know how to do this.

Raising the minimum wage is a start. A maximum wage would help, too, by reducing CEOs’ incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.

We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share – at something closer to the top tax rates of the 1950’s or 1960’s. (Elvis Presley’s manager “Colonel” Tom Parker once said “I consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.”)

Most of all, we need to educate those around us so they understand what’s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed.  After all, you can’t stop a robbery until you know it’s happening.

© 2013 Campaign for America's Future

Richard Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

The Great Wealth Robbery

Two important events took place this week. One was President Obama’s call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nation’s wealth continues to be hijacked by the wealthiest among us.

That didn’t get much attention.

There’s a Great Robbery underway, although most of its perpetrators don’t see themselves as robbers. Instead they’re sustained by delusions that protect them from facing the consequences of their own actions.

Heads I Win …

An updated report from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.

If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: You’re not crazy. And since the financial crisis was caused by members of the 1 percent – not all of them, of course, just the ones we spent so much to rescue – it’s understandable if the injustice still rankles you.

You rescued them. Now they’re drinking your milkshake.

Tails You Lose

But this wealth shift is not a new phenomenon. As Saez notes in his paper, “After decades of stability … the top decile share has increased dramatically over the last twenty-five years.” In fact, the top 10 percent’s share of our national income is higher than it’s been since 1917 - and maybe longer. (The figures don’t go back any farther than that.)

Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed – a little over 30 percent, as opposed to 6.5 percent for everyone else – but more than made up the difference again during the Bush years.

The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but they’re rapidly making up the difference now. Government policy’s been designed to help them. (Meanwhile, underwater homeowners still don’t have the help they need.)

The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) There’s even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.

As the old song says: Them that has, gets.

If you can remember the sixties you weren’t there … or can’t afford to remember

The minimum wage has been falling since 1968. As John Schmitt notes in his paper, “The Minimum Wage Is Too Damn Low,” “By all of the most commonly used benchmarks – inflation, average wages, and productivity – the minimum wage is now far below its historical level.”

It’s currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:

Consumer Price Index (CPI-I): $10.52

Current CPI methodology (CPI-U-RS): $9.22

As a percentage of average production worker’s earnings: $10.01

And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.

Magical Thinking

There’s a myth in this country that enormous wealth doesn’t come from anywhere or anyone, that it’s self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions – human actions with human consequences.

Saez: “A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”

Wealth inequity is created whenever an employer lowers his employees’ wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.

It’s created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. It’s created when GE outsources its manufacturing operation and gets into the banking (read, “gambling with taxpayers’ money”) business. Or when AIG stops insuring risk and starts betting on it.

And the process isn’t slowing down. In fact, it seems to be accelerating.

As Saez says, “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”

Up

President Obama’s proposal is modest, and there’s no reason not to enact it immediately. For those who believe that businesses “can’t afford” to pay higher wages, some key facts:

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.

A Data Brief from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.

There’s no evidence minimum wage increases mean fewer jobs.

Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today it’s 7.8 percent – and the unofficial numbers are even worse. At the state level,  the Fiscal Policy Institute recently concluded that “states with minimum wages above the federal level have had faster small business and retail job growth.”

Ninety-two percent of the 50 largest low‐wage employers in the country were profitable last year.

As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.

Bringing It All Back Home

The real “job creators” aren’t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.

They don’t invest their money in hedge funds or stash it in offshore accounts. They spend it: on food, transportation, their kids’ education, maybe a night at the movies … And then other people get jobs making those things possible.

We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, “To the extent that people say the economics is confusing or uncertain, that’s overwhelmingly because people want it to be.” We know how to do this.

Raising the minimum wage is a start. A maximum wage would help, too, by reducing CEOs’ incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.

We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share – at something closer to the top tax rates of the 1950’s or 1960’s. (Elvis Presley’s manager “Colonel” Tom Parker once said “I consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.”)

Most of all, we need to educate those around us so they understand what’s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed.  After all, you can’t stop a robbery until you know it’s happening.

© 2013 Campaign for America's Future

Richard Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

Winning the Argument

Winning the Argument

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Posted on Feb 15, 2013

By Eugene Robinson

In his bid to be remembered as a transformational leader, President Obama is following the playbook of an ideological opposite, Margaret Thatcher. First you win the argument, she used to say, then you win the vote.

Obama is gradually winning the argument about what government can and should do. His State of the Union address was an announcement of that fact—and a warning to conservatives that to remain relevant, they will have to move beyond the premise that government is always the problem and never the solution.

It’s ridiculous for critics to charge that Tuesday night’s speech was not sufficiently bipartisan. Repairing the nation’s infrastructure is not a partisan issue; bridges rust at the same rate in Republican-held congressional districts as in Democratic ones. The benefits of universal preschool will accrue in red states as well as blue. Climate change is not deterred by the fact that a majority of the Republican caucus in the House doesn’t believe in it.

There is no bipartisan compromise between “do something” and “do nothing.” Obama’s re-election reflected the progress he has made in convincing Americans that “do something” is the only option—and that “do nothing” leads inexorably to decline.

Thatcher’s reshaping of British politics and governance is instructive. The Iron Lady came to power at a time when Britain was sinking. The ideological pendulum had swung too far to the left, and the nominally socialist Labor Party, architect of the modern British welfare state, was out of ideas. Thatcher’s Conservative government roused the nation from its torpor. She was an enormously polarizing figure, and much of what she did—fighting the unions, privatizing state industries and public housing—was met with bitter resistance.

Today, Britain remains one of the wealthiest countries in the world and continues to play a major role in international affairs. London is arguably the world’s pre-eminent financial center. I doubt any of this would be the case if Thatcher had not won the argument about how her nation should move forward.

When Obama took office, the United States was in a similar funk. Ronald Reagan’s conservative ideas had been corrupted by his followers into a kind of anti-government nihilism. Reagan wanted to shrink government; today’s Republican Party wants to destroy it.

Obama assumed leadership of a country in which inequality was growing and economic mobility declining, with the result that the American dream was becoming less attainable. It was a country whose primary and secondary schools lagged far behind international norms; whose airports, roads and bridges were showing their age; and, most important, whose path to continued prosperity, in the age of globalization and information technology, was not entirely clear.

Obama’s State of the Union speech was a detailed reiteration of his position that we can and must act to secure our future—and that government can and must be one of our principal instruments.

To understand why Americans re-elected Obama in November and sent more Democrats to both houses of Congress, consider the Republican response delivered by Sen. Marco Rubio, R-Fla., following the president’s address.

Never mind the unforgettable moment when Rubio stooped almost out of sight and reached for a bottle of water, all the while trying to look straight ahead at the camera like John Cleese in some Monty Python sketch. I felt genuinely sorry for him—and appalled at the Republican Party’s incompetence at basic stagecraft. First they give Clint Eastwood an empty chair to perform with at the convention, and now this?

Even more unfortunate, in the end, was the utter lack of ideas in Rubio’s speech.

“More government isn’t going to help you get ahead, it’s going to hold you back,” Rubio said. Yet he also said that he never would have been able to go to college without government-backed student loans. And he spoke touchingly of how Medicare paid for the care his father received in his final days and the care his mother needs now.

I expected him to try to reconcile this contradiction. Instead, he went back to portraying government as something to be tamed rather than something to be used. To a majority of Republican primary voters, this makes sense. To the electorate as a whole, it might have made sense 30 years ago—but not today.

Margaret Thatcher never won the hearts of her many opponents. But by winning her argument, she shaped a nation’s future. There’s an increasing chance that historians will say the same of Barack Obama.


Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.
   
© 2013, Washington Post Writers Group

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Quinoa: To Buy or Not to Buy… Is This the Right Question?

We’ve been hearing a lot about quinoa lately. While US consumers prize it as a delicious ‘super-food,’ there is growing anxiety about the impact of the quinoa boom in the Andes, and particularly Bolivia, the world’s top producing country. The media has focused primarily on the fact that global demand is driving up the price of quinoa, placing it beyond the reach of poor Bolivians—even of quinoa farmers themselves—leaving them to consume nutritionally vacuous, but cheap, refined wheat products such as bread and pasta. By this logic, some suggest, northern consumers should boycott the ‘golden grain’ to depress its price and make it accessible once again. 

Others point out that the impoverished farmers of Bolivia’s highlands are at long last getting a fair price for their crop—one of the few crops adapted to their arid, high altitude environment. In this view, global markets are finally “working” for peasants, and a consumer boycott would only hurt the hemisphere’s poorest farmers.

In short, the debate has largely been reduced to the invisible hand of the marketplace, in which the only options for shaping our global food system are driven by (affluent) consumers either buying more or buying less. It’s the same logic that makes us feel like we’ve done our civic duty by buying a pound of fair trade coffee. This isn’t to dismiss the many benefits of fair trade or other forms of ethical consumption, but the so-called quinoa quandary demonstrates the limits of consumption-driven politics. Because whichever way you press the lever (buy more/buy less) there are bound to be negative consequences, particularly for poor farmers in the Global South. To address the problem we have to analyze the system itself, and the very structures that constrain consumer and producer choices. Women weighing a bag of quinoa in a local market in Batallas, Bolivia. (Photo: Noah Friedman-Rudovsky for The New York Times)

 The rising demand for quinoa is indeed contributing to higher prices, which have tripled in the last six years. But even more troubling than the price impact on Bolivian quinoa consumption, is the impact on land use. Quinoa production is expanding at a break-neck pace in one of the most vulnerable ecosystems on the planet: the fragile soils and native pastures of the Bolivian high plateau (Altiplano). These lands were once carefully managed with fallow (rest) periods of eight years or more. Now many areas are in near-constant production, threatening to destroy the soil’s fertility. The llama herds that have provided manure to fertilize subsistence quinoa plots for millennia have dwindled to make way for large quinoa monocultures. Government programs are doling out tractors, and this mechanization is allowing for the cultivation of larger and larger fields.

In a public ceremony in early February, President Evo Morales presented 65 John Deere tractors to communities in the highland department of Oruro to promote the expansion of quinoa. The UN Food and Agriculture Organization’s (FAO) announcement that 2013 would be named the International Year of Quinoa goes hand in glove with this big push for mechanization.

Meanwhile, sand storms are increasingly common in the southern Altiplano, an indicator of the progressive desertification of the region. Desertification—characterized by saline soils, loss of nutrients, erosion and decreasing yields—is triggered by the increased mechanization of farming practices, as well as a disruption of the delicate balance between pastoralism and agriculture. Whereas quinoa was once grown primarily on small hillside terraces, it is now moving into large areas formerly dedicated to llama grazing. In so doing, it is wiping out the high biodiversity of native pastures, shrublands (tholares) and wetlands (bofedales)—a diversity necessary for this system’s sustainability and resilience to climate change.

So while no one would argue that Bolivian farmers shouldn’t get a good price for their crop, these trends cannot be ignored—or left up to global market forces. Perhaps most tragic of all is that this boom (and booms are always followed by a bust) is leading the poorest, most vulnerable farmers to degrade their own environment—i.e. the material basis for their very survival and cultural identity—in the name of short-term food security.

Peasants everywhere tend to have an intimate and reciprocal relationship with the natural world—known in the Andes as Pachamama. When this relationship begins to break down, it’s usually because peasants have few or no options. What’s missing from most northern media accounts of quinoa is a discussion of what the range of possible options might look like—that is, beyond the two unsavory extremes of dismal poverty on the one hand, and environmental destruction (invariably leading back to dismal poverty) on the other.

One of the rarely discussed alternative paths is agrarian reform. Bolivia, like most Latin American countries, has a highly unequal distribution of land, with thousands of farmers eking out a living on tiny highland plots, while wealthy elites (including many foreign investors) control enormous lowland plantations, primarily dedicated to export-oriented soy and sugarcane. Over the last few decades, this inequality has generated waves of rural migrants from highland regions to the lowlands, including tropical coca-growing areas, and to the swelling outskirts of cities like La Paz and Santa Cruz. It’s also fed a growing landless movement, now organized as the Bolivian MST (landless worker movement), modeled on the Brazilian example. This movement is actively pushing the Bolivian government to make good on its agrarian reform promises, as a solution to rural poverty and degradation.

Another option—and these are not mutually exclusive—would be to rebuild local food markets that have been decimated by decades of nefarious U.S. aid and trade policies. Might we envision a future in which cheap, highly subsidized U.S. wheat products don’t pour into Bolivia, directly undercutting producers of Andean foods in their own markets? This would require, of course, the political will and capacity to regulate imports (admittedly, import dependence and dietary changes are difficult things to undo). It would also require support for small farmers not only in producing commodities for export but, more importantly, for producing a wide variety of plants and animals for domestic consumption, in a way that is suitable to local ecologies. This is actually something Andean peasants are spectacularly good at—having produced food for thousands of years in one of the most diverse and challenging environments on earth.

Bolivia has a number of laws in place (such as the recently passed Law for Mother Earth, Integrated Development and ‘Living Well’) demonstrating that political will exists on the part of President Evo Morales to promote food sovereignty and peasant production for local markets. But as University of California, Berkeley agroecologist Miguel Altieri notes: 

Discourse must now translate into action. A starting point would be to capitalize on the sustainable peasant production strategies that have stood the test of time—mobilizing indigenous knowledge and ancestral practices (use of animal manure, rotations and fallows, terrace construction, etc.) and spreading these experiences through horizontal, farmer to farmer exchanges.

So while there is no easy solution to the quinoa quandary—much less a solution driven by northern consumers—the issue has generated an important debate about our global food system. At its core, it’s a debate about which strategies are most effective for creating a just and sustainable food system. And consumption-driven strategies, while part of the toolbox for effecting change, are not the only tools. Only by facing the reality that we can’t consume our way to a more just and sustainable world—and examining the full range of political options and strategies—can we start coming up with real solutions.

Tanya Kerssen

Tanya Kerssen is the editor and writer for Food First's fastest growing e-mail list, Bulletin et Blog Souveraineté Alimentaire Africaine (African Food Sovereignty newsletter and blog). Tanya is also participating in growing Food First's tours program, Food Sovereignty Tours.

Denying Minimum-Wage Workers A Raise Is Craven and Grotesque

The president ignited a controversy in his state of the union speech by saying he wants to raise the minimum wage by $1.50, to $9 an hour. He argued that it is shameful that someone working full-time for the current minimum wage of $7.25 would still be below the poverty line.Fast-food relies on minimum-wage workers, which explains why McDonald's stock fell after Obama announced his plan. (Photograph: Alex Segre / Alamy)

Opponents – led by Speaker of the House John Boehner and an endless cadre of mustache-twirling corporate leaders and overpaid Washington think-tankers – have said they oppose the president's plans. They argue that employers forced to pay a higher minimum wage will just hire fewer people to work full-time, that the promise of economic progress from higher pay is illusory, and that a boost in the minimum wage rarely translates to an uptick in economic activity.

These are empty threats, and spurious ones.

The issue about minimum wage, for instance, has almost nothing to do with full-time workers and whether they get hired or not. Only 5.2% of hourly workers are paid minimum wage or below. That's 3.8 million people. It is true that affecting the pay of such a small number of people won't solve America's increasing problems of poverty or income inequality by itself.

But what happens when you look at part-time workers? Then you understand how craven it is to deny workers minimum wage.

There are 8 million workers who are working part-time due to economic reasons, according to the Bureau of Labor Statistics. That means that they want to work full-time, but can't. There are also 18.7 million workers who are part-time out of choice, or for "non-economic reasons".

Those part-time workers are where poverty ends up concentrated, and where the minimum wage will make the most impact.

Part-time workers are much more likely to end up working for minimum wage, according to the BLS's analysis. Fast-food makes up a decent portion of minimum-wage jobs – that's why McDonald's stock fell the most after the president announced his plan – and those workers tend to be older and less likely to be able to find jobs elsewhere. They have no economic leverage.

These part-time, minimum-wage workers also tend to include people who may be working multiple jobs to make ends meet. No matter what they do, they will end up below the poverty line. In December, Bloomberg reported the story of Tyree Johnson, a homeless man who used his two part-time, minimum-wage jobs at McDonalds to pay for a nightly room at a single-occupancy hotel. He's been working for two decades and still can't get the hours necessary to make his work full-time. He scrubs with soap in the sink each day because, he told Bloomberg, "I hate when my boss tells me she won't give me a raise because she can smell me." Johnson is just one story of many, obviously.

So when corporate leaders talk about how the minimum wage won't pull people up from the poverty line, they're right: many companies that rely on minimum-wage workers, from McDonald's to Walmart, have already figured out how to treat their workers as commodities, and poverty is now built into the system because of that. In a longtime period of joblessness like the one we're living through, people will take whatever job they can get.

But there is an intellectual dishonesty here too, as well as a craven contribution to the country's economic woes. Corporate leaders shouldn't have to be told by the government to pay their workers a living wage. They know that consumers will drive the recovery, but consumption by the rich doesn't do it. You need the middle and lower classes.

So when those corporate leaders resort to threats to hold workers hostage – citing numbers about how raising the minimum wage by $1.50 will cause them to fire people – they should take a step back and look at some other numbers.

Try this number, for instance: Over one in five American children is living in poverty. There are others, but are they really necessary? This is the world's leading country and 20% of children are part of families that can barely find money to eat.

Aside from the numbers, there is the issue of image. There is something truly grotesque about corporate leaders who earn millions of dollars – or even hundreds of thousands of dollars – arguing over paying their workers literally pennies more. Those workers often have to rely on food stamps or government welfare programs to make up the difference. Meanwhile, company CEOs have barely received a cut in pay for years, and on average they make 231 times as much as the average worker. That's a lot of money, obviously. So the idea that paying $1.50 an hour more in minimum wage would break their companies and force them to save on costs is patently ridiculous. The first and most obvious cost they would have to think about cutting would be their own pay packages. What if those CEOs made, say, only 200 times the average worker? Or 100 times? One suspects their companies could afford that uptick for poorer workers then.

Most of all, the insistence of business leaders on a lower minimum wage looks, to any other country, completely revolting. It is a Dickensian image of corporate callousness, and it comes just when Corporate America is trying to dig out from its image hole of appearing unconscionable and dastardly.

Business leaders and plump Washington lawmakers would do well to try to step back from their fat bank accounts and their sense of entitlement and put themselves in the shoes of someone who works part-time just to be able to afford food to eat and a bed for the night. Is that the America they want to create? Because keeping poor people down so that they can't even dream of being middle-class seem like a full-time task – although it seems to pay those corporate leaders a lot more than minimum wage.

Why are Unionization Rates at Historic Low?

Context: As yet there are no context links for this item.

Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay.

The Bureau of Labor Statistics last week reported on the numbers of workers in unions. Let's just back up a step first. In 1955, 35 percent of workers were in unions. Most of those were private-sector workers. Well, last week's report says that private-sector workers were down as low as 6.6 percent. Thirty-five percent of public-sector workers are unionized, for an overall rate of 11.3. One more time: 1955, overall rate of unionization 35 percent; last week, 11.3 percent.Now, in that same week, the Dow Jones Industrial Average on the stock market broke 14,000 for the first time in five years—the market's at a historic high.Now joining us to talk about all of this is Stephanie Luce. She's an associate professor of labor studies at the Murphy Institute School for Professional Studies at the City University of New York. She's the author of Fighting for a Living Wage and coauthor, The Living Wage: Building a Fair Economy and The Measure of Fairness. She joins us from New York. In fact, she's in Brooklyn. Thanks for joining us, Stephanie.PROF. STEPHANIE LUCE, LABOR STUDIES, THE MURPHY INSTITUTE, CUNY: Thanks for having me.JAY: So let's focus on the main number here, which is from 35 percent in '55 down to 11 and change now. That's a rather drastic decrease. Why do you think this is happening?LUCE: Well, I think, you know, this steady decrease has been going on for several decades. And for a while, the number of workers in unions was going up as an absolute number, but the density was falling. And now density is falling as well. And I think really you can kind of divide this into different categories of explanations. One of the explanations is that unions themselves are to blame. They were slow to recognize a changing global economy. They were resistant to immigrant workers belonging to unions. They were not innovative in their organizing strategies and not aggressive about corporate globalization. But on the other hand, there's a lot of external forces, too, which is that employers have really been on the offensive against unions in the last 30 years and have in fact changed laws, changed regulations, and even broke—you know, they've—breaking laws as a way to fight unions and keep unions out of the workplace. So we see weak labor law, weakly enforced labor law, but also changing global rules and regulations around workers' rights.JAY: Well, let's start with some of the internal factors first, and then we'll go to external. I mean, it seems to me one of the internal factors is that the leaders of many of the major unions get paid very, very well. I mean, some of them are in the $200,000, $300,000 mark, plus they get all this expense accounts. You can often run into, you know, leaders of major unions eating steaks, you know, $40, $50 steaks and such for lunch. And I've seen it. This isn't just some stereotype. And, frankly, it's, you know, their argument as well: people that run businesses, you know, live this way; why shouldn't the leaders of workers live like this? But that's exactly the point is they started living and thinking like people that run businesses.LUCE: Right. Yeah. There's no doubt that we've had bureaucratization and some corruption and a greater hierarchy within the labor movement. That certainly is a problem. There are a lot of unions that are not really democratically run. They don't really involve their members. You know. And I think that for some people to say, well, that should suggest that we don't need unions or unions are outdated, I often say, well, that's also true in Congress. We see a lot of members of Congress, you know, engaging in corruption and not so democratic. But we're not necessarily calling to abolish Congress, right? We're calling for reform and revitalizing to make it more democratic and more engaging. And I think the same is true of unions, which is that, you know, unions' leaders have had faults, but I'm not ready to give up on them as institutions. I think they still represent one of the only chances that workers have for a democratic voice in the workplace.JAY: Well, one of the numbers in a recent blog you wrote I think is important, which is, the average union member earns 27 percent more than the average nonunion member. So, I mean, I think that shows that, you know, whatever the weaknesses of our unions are, they're still rather—it's a hell of a lot better being in one than not being in one. But in some ways has that not also been part of the problem, which is, for, you know, post World War II there was a kind of a gravy train, especially for the upper tier of workers, like autoworkers and workers in transportation and critical sectors of the economy, where they got very significant wage gains—it wasn't just the union leaders; many of the workers were doing very well. It wasn't unusual to, you know, have a couple of cars and know you could afford university and all the rest. But they didn't give a damn about all the unorganized workers and some of the other sectors of the economy. They kind of were just looking after their own people. And then one day they look around and they find out, oh-oh, we're next.LUCE: Yeah. Well, I mean, I think on the first part is that, yes, unions led to, you know, workers getting a decent income and having some stability, maybe buy a home and send their kids to college. I don't know that we want to—I don't know that I would critique that as too high, because I think workers were getting a share of what they were producing.But on the second point, you're right: they should have been aggressively trying to organize more workers, getting nonunion workers into unions, keeping ahead of what's going on in the economy in terms of changing industries and sectors. And I think not enough of them did that. I wouldn't say no one was doing that, but certainly not enough. And they for the most part, you know, got lazy and behind the trend and didn't keep up with where the economy was going.JAY: Yeah. I mean, I think it's important. There are some unions that are actively organizing and a few unions that are quite militant about their own members and reaching out to others. But I would say the majority have not been—although now that they're being targeted, I mean, maybe you could see a kind of turning point with Reagan and the air traffic controllers. Since that point, sort of the guns have been pointed at some of these stronger American unions. Again, before we get to external factors, let's talk a little bit about the politics of this. I mean, part of the issue is, when there's been Democratic Party governments, either at state levels and nationally, the unions don't seem to have used the clout they used to have to get legislation that might have made it easier to organize unions. And now that they're so weak, they don't have much clout.LUCE: Yeah. And, in fact, even going back to when they were stronger, in the 1970s, we had, you know, Jimmy Carter in office, and we—the Democrats controlled everything, and yet unions were not able to win major labor law reform. So I think that the Democrats have really not been the friend of labor that unions might think that they are. It's not that union leaders are all stupid, but they also realize that they don't have a real exit strategy in this political system, so they've aligned themselves with the Democrats, and for the most part that's been a losing strategy.I think that it didn't work so well even in the '70s when they were strong, and today, as you just said, it certainly is not a way to win any major reform. I think that unions have to seriously rethink their allegiance to the Democratic Party. If it's not realistic to start their own party, they could at least think about withholding their contributions in terms of money and time that they give to electing Democrats over and over again who turn around and sometimes stab them in the back.JAY: This number stands out for me, that unionized workers make 27 percent more than nonunionized workers. Why isn't that fact better known? Like, instead of spending all these millions of dollars of union money promoting the Democratic Party, why don't they spend millions of dollars promoting the fact that unionized workers make more than nonunionized workers? 'Cause I don't think most nonunionized workers know that.LUCE: Well, I think, you know, it's not just wages. They're actually much more likely than nonunion workers to receive health insurance, pension, paid days off, and job security. And a union contract is one of the only ways that workers have to gain any kind of job security in our employment-at-will system. I think there's a little bit of a double-edged sword there, which is, sometimes by promoting that union workers do better, they're afraid that they make themselves more of a target from employers. Like, if they highlight how much, you know, they provide to workers, then does that in fact make unions a greater target? I think that's a mistake, because they already are a target. Employers certainly know this themselves. You know. And another interesting point, though, that I want to highlight is it's not just that—union members make more money than nonunion members, but a lot of research suggests that by having greater union density actually brings up the economy as a whole. So it's good for even nonunion workers when there's greater union density. Some research by Bruce Western at Princeton, he estimates that about 20 to 33 percent of the growth in inequality in this country is because of the falling union density, and he says that what unions did is create a general sense, a norm of equity, a general sense of wage fairness. And what unions do is also reduced inequality between workers. They actually reduced discrimination, for example, between male and female workers or between white and black workers. So there are lots of positive benefits of unions that help not just workers but the economy as a whole.JAY: There's quite a deep-seated feeling, though, amongst unorganized workers that organized, unionized workers, higher-paid unionized workers, is pushing work outside the country, and they blame the unionized workers.It's interesting. We covered a strike in Sudbury, Canada, which—the dynamic here is similar, although unionization rates in Canada are still somewhat higher than in the United States. But this is essentially a one-industry town, a nickel mining town. The nickel miners spend all their money in the town. It's because they've been highly paid that the town does relatively well. They go on strike. And I think—you know, I can't give a scientific take on this, but a majority of ordinary people in the town we talked to were actually blaming the workers for wanting to be highly paid even though they're the spending money in the town, because the company's threatening to go get the nickel somewhere else in the world—which is kind of funny, 'cause obviously, you know, they wanted that nickel. But this division between organized and unorganized workers, I don't see the unions actively fighting it, 'cause even in Sudbury the union wasn't doing that much public relations work to make people understand why that's good for the town.LUCE: Well, I do think some unions are trying. Some unions are active in things like living-wage campaigns and labor-community coalitions to help, you know, low-end workers. But I think, you know, you're right that they need to do a better job of explaining what's going on. I mean, what's interesting is a lot of the drop in unionization in the last year was not because—you know, some of it's jobs moving overseas, but a lot of it is in the public sector. These are not jobs that are moving overseas. This is just, you know, governors attacking workers' rights to form unions. Another huge drop in unionization over the last several decades was in construction. Again, these are not because the employer's moving those jobs to China. These are the same jobs, they're staying here in the United States, but they're being converted to nonunion jobs. So I think you're right. We need a better story and understanding of what's going on in the economy, and that it's not just an inevitable result of globalization that, you know, unions are going to die off.JAY: Yeah. The one words or letters that we have not heard from President Obama during the last presidential election—we haven't heard anything now that he's been inaugurated—was EFCA, the Employee Free Choice Act. This was supposed to be the grand bargain, if you want, with the unions, that President Obama's going to reform labor legislation. And not a whisper of it now.LUCE: Right. Right. And I'm not surprised, because I didn't ever believe that Obama was just going to come in and sign this sweeping labor law reform that, as I said, Jimmy Carter and the Democrats didn't do in the 1970s. I don't think we're going to see any kind of widescale reform like that without massive social protest. I think the unions were grossly mistaken to think they were going to get something in through backdoor channeling, lobbying, or whatever it might be instead of having, you know, massive sit-downs or, you know, people marching in the streets or other forms of social protest. And I feel Obama himself even kind of made that comment when he was first elected. But the unions really didn't pursue that avenue.JAY: Right. Well, thanks for joining us, Stephanie.LUCE: Thank you so much.JAY: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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Worker Owned Businesses Point to New Forms of Ownership

Context: As yet there are no context links for this item. Transcript UNONS IN AMERICA ARE ON A DECLINE. IT'S A FACT --- AND ACCORDING TO THE BUREAU OF LABOR STATISTICS, TODAY ONLY ABOUT 11 PERCENT OF AMERICAN WORKERS ARE A PART OF A UNION. THAT'S A S...

Obama’s State of the Union: The Economic Dimensions

economics

Obama proclaimed in the State of the Union was that the economy was getting stronger even though the last quarter showed a shrinking GDP not an expanding one, the last month showed a rise in unemployment and a report issued last week showed two-thirds of Americans teeter on the edge of an economic abyss. These facts, along with rising poverty and senior citizens who are barely avoiding poverty, were nowhere mentioned in SOTU.  All this adds up to a potential double-dip recession but that sour did not go with the sweet saccharin, so it was left unsaid.

A Couple of Positive Developments

Most of the speech was filled with policies we have heard before, but there were a couple of surprises:

Minimum Wage Hike: The president called for an increase in the minimum wage, saying both he and Romney supported it.  He urged an increase to $9 an hour from the current $7.50. In 2008, candidate Obama called for an increase to $9.50; and Senator Harkin has introduced a bill that calls for an increase to $9.80.  Ralph Nader points out that a rise to $10.25 is needed to get low-wage workers up to the equivalent of inflation-adjusted 1968 pay. No doubt more would be needed to achieve a living wage. There has been tremendous growth in the economy since the 1960s, but the Obama proposal would mean low-wage workers would not benefit from this much larger and more productive economy.

Raising the minimum wage would be good for the economy.  Research makes it clear that increasing the minimum wage is a job creator because low-wage workers will spend the money on necessities and spur the economy; and will rely less on government programs like food stamps.

Pre-School for All: Education is one of those areas where, if you know what the president’s programs actually do, his speech was saccharin, i.e. sweet but poses a risk of cancer.  Whenever Obama talks about education people should be wary and look at the details.  Bruce Dixon of Black Agenda Report makes the point:

“. . . the gap between popular perceptions of the president’s policies and the actual content of those policies is nowhere wider than in public education. While the president pays lip service to the centrality of public education, teachers and parent input, his Race To The Top is paving the road to privatization, closing more public schools and firing more teachers than any president in US history.”

Privatization and Corporatization

The Race to the Top is greater privatization, corporatization and testing of students, all issues teachers, parents and students are revolting against. Dixon goes on to point out that Obama’s policies are George W. Bush’s policies in overdrive, and Rob Delany makes the same point in Salon:

“President Obama should junk the Race to the Top plan immediately. It is a deeply flawed reworking of George W. Bush’s test-based, pro-charter school No Child Left Behind Act. Obama and Secretary of Education Arne Duncan should change course dramatically and publicly admit Race to the Top doesn’t and can’t work and then craft a new plan that doesn’t treat education like an industry and coerce teachers to ‘teach to the test,’ while marching toward education privatization.”

While the idea of pre-school for all and expanded all-day kindergarten sound sweet, this has to be approached with caution due to the president’s privatizing and test-based education policies.Not mentioned by the president in his speech was the sour, an increase in poverty. This is very relevant to education, as poverty undermines efforts to improve educational achievement among low-income and minority students. We must address poverty to improve education.

Jobs, the Hollow Centerpiece of Obama’s Plans

Obama had to fudge statistics to make his jobs numbers look good. Obama has been president for four years, but in reporting on manufacturing jobs he only mentioned the last three; as Politico points out: “When Obama took office in January 2009, the economy had 604,000 more manufacturing jobs than it does now.”

Obama was right to focus on jobs.  If there is one thing that is critical to getting out of economic collapse and reducing the deficit, it is jobs. For 60 years there has been a consistent pattern: when unemployment drops, the deficit as a percentage of GDP drops. When unemployment rises, the deficit rises. The solution to our economic problems is striving toward a full employment economy.

But, the words “full employment” are never mentioned in Washington, DC.  Labor economist Jack Rasmus points out that what we heard in the State of the Union were the same old minimal job programs from Obama – nothing that will come close to providing the jobs we need.  At a time when we need bold action on jobs, we got a non-jobs program.

One of the false solutions Obama put forward, saccharin that risks cancer, were trade agreements. The Trans-Pacific Partnership has been negotiated in secret for three years by Obama, except for the 600 corporate advisors who tell the US what to put in the agreement. The TPP is not a jobs creator, but a jobs destroyer.  NAFTA cost the United States five million jobs. The TPP is known as NAFTA on steroids. The cancer of the TPP is not only going to be to loss of jobs and lowered wages, but increased corporate power. This global corporate coup will make corporations more powerful than governments. Obama also announced a corporate trade agreement with the European Union.  Hopefully, this gets activists in Europe working to oppose it and gets Americans fighting the anti-democratic “fast track” in Congress. Obama needs fast track to pass the TPP because if the issue is debated it will be widely opposed.

Another false solution to jobs is immigration reform.  While immigration reform is much needed, the versions being considered include the gift of indentured servitudeto big business in the United States, in the form of a new warmed-over Bush idea, a “guest-worker program.” Obama did not talk specifics in SOTU, but this provision should be opposed by all Americans and loudly rejected by Obama.

The Big Missed Opportunities

Two big issues that could radically change the debate in Washington, DC were not discussed by the president.

First, with all this talk of sequestration, President Obama should point out that right now the United States is seeing the most rapid decline in government spending since World War II and looking to the future an “unprecedented” decline in government spending is being predicted – not even counting sequestration or any “Grand Bargain.” In fact January actually saw a federal spending surplus for the first time in five years.

We don’t need to speed up this decline in spending.  In fact doing so, especially when there are signs of another recession, risks another economic collapse. Great Britain, the poster child for austerity, seems to be beginning its third recession in four years.  Our own history shows that cutting government spending in a time of collapse causes recession. We should have learned this lesson from the “Roosevelt Recession “of 1937-38 rather than risking an Obama Recession of 2013-2014.

As Nobel Laureate Paul Krugman recently pointed out this is a uniquely bad time for austerity.  In fact a top banker in Britain revived Milton Friedman’s idea of dropping money from helicopters.  Sadly, President Obama did not make this case, so if a recession hits he will appropriately be blamed for it, rather than Congress. Instead Obama put cuts to Social Security and Medicare, his “Grand Bargain,” on the table again. This is the wrong medicine.  More and more people recognize we need to increase Social Security to end poverty retirement and expand an improved Medicare for all to not only provide health care to all but also to control health care spending.

Second, there was no discussion of the wealth divide which plagues the nation and prevents economic recovery.  Even people in favor of the market are making the case for taxing the super-rich, but President Obama seems unable to do so. And, the news on the wealth divide got worse yesterday with a report that showed the richest 1 percent gobbled up 121% of income gains; how? They essentially put everyone else back into recession with shrinking incomes. Obama could have shocked the nation with that fact!

The wealth divide goes hand-in-hand with the concentrated wealth of the big banks but, the idea of breaking up the big banks, banks which have grown even bigger during Obama’s time in office, is not discussed by President Obama. The case for breaking up the big banks is evenbeing made by conservatives like George Will.  But, President Obama insteadappoints an SEC head who was a lawyer for the big banks and a Treasury Secretary who worked for a big bank and kept money in the Cayman Islands.

So, the concentration of wealth, which has grown under Obama, and the wealth divide will continue under the second term agenda announced in SOTU.

War and ‘Democracy’

Of course, we are pleased to hear that President Obama is finally moving toward a possible end of the Afghan War, the longest in US history.  Of course, not mentioned is the troops that he is removing are ones he added in the failed surge.  And, this exit will not be a complete exit, as he said in SOTU. The US will not leave Afghanistan in 2014 but will stay to train Afghan troops and fight terrorists.  As a result, despite a national security budget of over $1 trillion, there is no talk of cutting the bloated national security budget.  The president has not told us how many troops will be staying in Afghanistan after the so-called “end of the war.”

Finally, it was good to hear President Obama mention the need to fix US democracy. As I recently wrote with Margaret Flowers, we live in a mirage democracy.  US democracy is really a “managed democracy” where voters pick from two candidates approved by Wall Street who will not challenge the power of concentrated wealth.  President Obama in SOTU certainly showed he is doing nothing to start the transformation needed.

There is much needed to correct US democracy, here’s the top of my list: (1) universal voter registration so everyone of age can vote, (2) get money out of politics and provide public funding for public elections, (3) remove ballot access obstacles so Americans get more choices, (4) open the debates so candidates on enough ballots to win can be heard, and (5) improve the voting process so vote counts can be easily verified and voters can vote in a half an hour.

I’m sure by now the saccharin is wearing off. The antidote for the sour taste in your mouth is to get active.  Let’s follow the lead of Indians in Canada and the US and be idle no more.  It is evident from the State of the Union that we cannot count on the elected “leaders” in Washington to get the country back on track – we must do it ourselves.

Kevin Zeese co-hosts ClearingtheFOGRadio.org on We Act Radio 1480 AM Washington, DC and on Economic Democracy Media, co-directs It’s Our Economy and was an organizer of the Occupation of Washington, DC. His twitter is @KBZeese.

Obama’s SOTU Was No Game-Changer

In his State of the Union address, President Barack Obama deftly nudged the national debate further away from the dominant austerity framework that brought us the misguided budget deal on New Year’s Day.(Image from WhiteHouse.gov)

He also brought much-needed attention to the critical jobs shortage by eloquently calling the need for more good middle class jobs the “North Star that guides our efforts.”

But, did Obama offer a convincing vision for how to do this? Not quite.

First, he missed a beautiful opportunity to connect the jobs and inequality crises with the climate crisis, all of which can be solved with the same solution: a bold transformative “new jobs” agenda. This approach would move government incentives and resources away from fossil fuels and poorly paid jobs to a vibrant, caring, green economy with quality jobs.

Imagine the stir he’d make if he declared it was time to move from an economy dominated by Wall Street, Lockheed Martin, and Walmart to a Main Street economy. Or if he promised to block the Keystone XL pipeline and crack down on the dangerous practice of natural gas fracking as part of an effort to wean our country off fossil fuels.

Main Street embraces everything from clean energy to high speed rail, from energy-efficient buildings to composting and recycling. And, it means making sure that fast-growing sectors like elder care jobs are upgraded from Walmart poverty jobs to ones that pay a living wage.

Yes, Obama highlighted the challenge of climate change and he mentioned clean energy. He called for a higher minimum wage and stronger education opportunities for all. But he failed to make a powerful call for a transformative economic agenda to replace our Wall Street and Walmart economy with a fundamentally new one rooted in ecology, equity, and democratic forms of ownership.

Obama could also have reminded Americans that there’d be abundant resources to invest in pressing needs if the wealthy, corporations, Wall Street, and polluters paid their fair share of taxes and if we cut fossil fuel subsidies and the wasteful Pentagon budget.

Obama knows full well that he’s working with a gridlocked and largely dysfunctional Congress. But he did make a compelling appeal to lawmakers to take two major actions that could win in 2013: comprehensive immigration reform, and real gun control. Both are long overdue and would make this country a better place. His salute to Desilene Victor, the 102-year-old Florida woman who became famous after a lengthy wait to vote last year, underscored concerns about the outrages of Republican efforts to suppress voting rights.

And I also applaud him for urging the renewal of a strengthened Violence Against Women Act, acknowledging the excesses of CEO pay, and calling for a $15 billion construction jobs program.

But in the face of a Congress too beholden to corporate interests, Obama could have made a better case for vital actions that his administration can take on their own. These include ending drone attacks, shuttering coal plants, using the Environmental Protection Agency to reduce greenhouse gas emissions, ensuring basic labor rights for domestic workers, and pardoning prisoners who were unjustly sentenced. Of these, Obama only indicated that he was ready to order the EPA to take steps to counter climate change.

Obama’s also clinging to a failed free trade policy. And he’s addicted to oil and gas even as he embraces alternatives. His foreign policy vision is overly focused on fighting terrorism as opposed to fostering diplomacy.

Between his more powerful inauguration speech and this address, he’s begun to shift the national conversation toward things that matter to most people. But he’s got a long way to go before he embraces a game-changing agenda.

This work is licensed under a Creative Commons License

John Cavanagh

John Cavanagh is the director of the Institute for Policy Studies, a progressive think tank celebrating its 50th year.

Obama’s SOTU Was No Game-Changer

In his State of the Union address, President Barack Obama deftly nudged the national debate further away from the dominant austerity framework that brought us the misguided budget deal on New Year’s Day.(Image from WhiteHouse.gov)

He also brought much-needed attention to the critical jobs shortage by eloquently calling the need for more good middle class jobs the “North Star that guides our efforts.”

But, did Obama offer a convincing vision for how to do this? Not quite.

First, he missed a beautiful opportunity to connect the jobs and inequality crises with the climate crisis, all of which can be solved with the same solution: a bold transformative “new jobs” agenda. This approach would move government incentives and resources away from fossil fuels and poorly paid jobs to a vibrant, caring, green economy with quality jobs.

Imagine the stir he’d make if he declared it was time to move from an economy dominated by Wall Street, Lockheed Martin, and Walmart to a Main Street economy. Or if he promised to block the Keystone XL pipeline and crack down on the dangerous practice of natural gas fracking as part of an effort to wean our country off fossil fuels.

Main Street embraces everything from clean energy to high speed rail, from energy-efficient buildings to composting and recycling. And, it means making sure that fast-growing sectors like elder care jobs are upgraded from Walmart poverty jobs to ones that pay a living wage.

Yes, Obama highlighted the challenge of climate change and he mentioned clean energy. He called for a higher minimum wage and stronger education opportunities for all. But he failed to make a powerful call for a transformative economic agenda to replace our Wall Street and Walmart economy with a fundamentally new one rooted in ecology, equity, and democratic forms of ownership.

Obama could also have reminded Americans that there’d be abundant resources to invest in pressing needs if the wealthy, corporations, Wall Street, and polluters paid their fair share of taxes and if we cut fossil fuel subsidies and the wasteful Pentagon budget.

Obama knows full well that he’s working with a gridlocked and largely dysfunctional Congress. But he did make a compelling appeal to lawmakers to take two major actions that could win in 2013: comprehensive immigration reform, and real gun control. Both are long overdue and would make this country a better place. His salute to Desilene Victor, the 102-year-old Florida woman who became famous after a lengthy wait to vote last year, underscored concerns about the outrages of Republican efforts to suppress voting rights.

And I also applaud him for urging the renewal of a strengthened Violence Against Women Act, acknowledging the excesses of CEO pay, and calling for a $15 billion construction jobs program.

But in the face of a Congress too beholden to corporate interests, Obama could have made a better case for vital actions that his administration can take on their own. These include ending drone attacks, shuttering coal plants, using the Environmental Protection Agency to reduce greenhouse gas emissions, ensuring basic labor rights for domestic workers, and pardoning prisoners who were unjustly sentenced. Of these, Obama only indicated that he was ready to order the EPA to take steps to counter climate change.

Obama’s also clinging to a failed free trade policy. And he’s addicted to oil and gas even as he embraces alternatives. His foreign policy vision is overly focused on fighting terrorism as opposed to fostering diplomacy.

Between his more powerful inauguration speech and this address, he’s begun to shift the national conversation toward things that matter to most people. But he’s got a long way to go before he embraces a game-changing agenda.

This work is licensed under a Creative Commons License

John Cavanagh

John Cavanagh is the director of the Institute for Policy Studies, a progressive think tank celebrating its 50th year.

SOTU: * Jobs * Equity * Climate

WASHINGTON - February 13 - LORI WALLACH, [email]
Director of Public Citizen’s Global Trade Watch, Wallach said today: “It is the height of cynicism for President Obama to couple the worthy goal of rebuilding American manufacturing with a call for more of the same NAFTA-style trade-deficit boosting, job-killing FTAs [free trade agreements] — especially the 11-nation TPP [Trans-Pacific Partnership]. … Since the implementation of these agreements, 50,000 U.S. manufacturing facilities have been shuttered and we have lost five million manufacturing jobs — fully one quarter of the American industrial jobs that existed before these agreements. U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 44 percent over the last decade. The aggregate U.S. trade deficit with FTA partners increased by more than $151 billion (inflation-adjusted) since the FTAs were implemented.”

GWENDOLYN MINK, [email]
Mink is co-editor of the two-volume Poverty in the United States: An Encyclopedia of History, Politics and Policy and author of Welfare’s End. She said today: “The President reiterated his cramped vision of equity and economic well-being in a speech that should set off alarm bells for anyone concerned with improving policies to assure economic security and advance equality. Instead of spelling out ways to strengthen and improve Medicare and Social Security to benefit program participants, the President continued to wave the banner of ‘entitlement reform,’ inviting unspecified policy changes in the name of deficit reduction. Instead of challenging America to end economic vulnerability and poverty by addressing root causes — such as race and gender inequality, the wage structure, and the extra-economic status of caregiving — the President offered an anemic rise in the minimum wage and repackaged old solutions that hang women’s economic security on their linkage to men through marriage and fatherhood. While the President did repeat his support for the Paycheck Fairness Act, he looked no further than this important but narrow measure to advance wage equity for women. The Paycheck Fairness Act would correct and strengthen interpretations of the Equal Pay Act to improve wage equality prospects for women who do ‘substantially equal’ (the same) work as men. But what about the 40 percent of women who work in jobs primarily staffed by women, which are also the jobs that receive less pay? Or the millions of women, especially of color, who are held to the lowest paying jobs? A President who wants to be perceived as an advocate for women needs to present brave and informed ideas to correct structures and practices that perpetuate injustice. One place to begin would be by uttering the word ‘union’ — when government abdicates, unions are still the best guarantee of an improved wage structure for women.”

KEVIN GRAY, [email]
Author of The Decline of Black Politics: From Malcolm X to Barack Obama, Gray said today: “Doubtless, his call to raise the federal minimum wage to $9.00 an hour should be applauded. He’s right that ‘in the wealthiest nation on Earth, no one who works full-time should have to live in poverty…’ A minor miracle was finally hearing Obama say the word ‘poverty’ in a speech. Even so, the President’s speech wasn’t even a glass half full. It was three quarters empty.

“Little was said about helping those in the black community suffering from double-digit unemployment. Or providing job training and economic reintegration to those locked out of the economy because of the drug war and other factors. Or dealing with a continuing housing-mortgage foreclosure crisis in communities of color and, how to force the banks to help those most in need. And while his ‘Fix It First’ jobs and infrastructure program may be – if enacted – a boon to a few select contractors, its impact on creating jobs where they are needed the most is sketchy at best.

“Obama touted the recommendations of the Simpson-Bowles deficit reduction plan as though making people work until they die was the solution to the nation’s debt problem as opposed to ceasing to pay for wars with social security funds. People of color should be outraged at his support of such a backwards plan. He touted his and Arne Duncan’s ‘Race to the Top’ charter school scheme that is nothing more than turning over the schools to Wall Street and the corporations.”

MICHAEL DORSEY, [email]
Visiting fellow and professor at Wesleyan University, College of the Environment, Dorsey said today: , Dorsey said today: “What he could have said: ‘We must choose to end our dependence on fossil fuels in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.’

“The content of the president’s state of the union regarding climate was un-presidential. Trying to resuscitate broken carbon markets that have not worked in a decade since they began in Europe is a recipe for climate catastrophe. The failure to assemble the growing litany of oil and energy executives that are already doing more than the President proposed reveals the lackluster quality of his advisors — that are in desperate need of being replaced. The President could have reclaimed and built upon the admission of his predecessor, that we are addicted to oil. Who could have plotted a path to break our addiction to oil — not by taxing oil, but by giving us a pathway to shifting subsidies away from all fossil fuels and into viable renewables, like wind and solar. …

“It seems the only way forward on climate will be the coming non-violent civil disobedience — backed by both the NAACP and the Sierra Club, amongst others. These marches on the White House shall start this weekend and continue for the next 100 days to Earth Day, and possibly beyond, until we see presidential action for climate justice.”

America’s Deplorable State of the Union

obamadouble
Obama's annual State of the Union addresses reflect beginning-to-end doublespeak duplicity. Empty rhetoric signals business as usual. Policy prioritizes corporate empowerment, rewarding rich elites, letting popular needs go begging, funding America's war machine, and cracking down hard on non-believers.

State Tax Systems Need to Become More Progressive, Not Less

State tax systems, according to a new report from the Institute for Taxation and Economic Policy, take a far larger share of income from their lowest income residents than they do from the wealthy, exacerbating income inequality within and between states, encouraging the wealthy to move to low tax states, and even worse, threatening the effectiveness of federal and state programs designed to ease the tax burden for the poorest families.

The report, called Who Pays: A Distributional Analysis of the Tax Systems in all 50 States, measures the state and local taxes paid by different income groups in 2013 (measured at 2010 income levels, and accounting for the impact of tax changes enacted through January 2, 2013). After combining all of the state and local income, property, sales and excise taxes state residents pay, researchers found that the average overall effective tax rates by income group nationwide are 11.1 percent for the bottom 20 percent, 9.4 percent for the middle 20 percent and 5.6 percent for the top 1 percent. 

Ten states that are particularly egregious offenders. In the "Terrible Ten" as the authors call Washington State, Florida, South Dakota, Illinois, Texas, Tennessee, Arizona, Pennsylvania, Indiana, and Alabama the bottom 20 percent pay up to six times as much of their income in taxes as their wealthy counterparts. 

Five of these "Terrible Ten" derive roughly half to two thirds of their tax revenue from sales and excise taxes, compared to a national average of roughly one third. Five also do not levy a broad-based personal income tax. The other five have a personal income tax rate that is flat or virtually flat, no matter what the income.

Some Republican governors in states that do have an income tax are pushing to get rid of that tax, which would pile an even greater burden on the poor -- not to mention undermine funding for things like education, hospitals, and roads. It's the poorest residents, says Matthew Gardner, the Executive Director of ITEP in a Citizen's For Tax Justice article, who are forced to make up the difference when the low tax promises become law. Often, income taxes are reduced while sales taxes are increased, which of course overwhelming hurts the poor who are forced to pay more for food, gas, and other basic needs. Gardner calls this trend "the surest way to make an already upside down tax system even more so." 

Sometimes credits and deductions like the Earned Income Tax Credit can help. The EITC improves progressivity in 24 states and the District of Columbia, though often the wealthy still have the advantage of low capital gains taxes, and more knowledge of their own eligibility for deductions, or at least access to professionals who can help them. 

In order to counter this increasingly inequal pattern, the report recommends that states adopt a progressive personal income tax, and to reduce their reliance on consumption and sales taxes, whose costs often reduce the impacts of credits like the EITC, since families end up spending much of the money they would have samed from lower taxes on food and gas. Without these changes, inequality between, as well as within states will only get worse. 

So to repeat: Yes, we need state income taxes and such taxes should be even more progressive than they are. The last thing we want for states to go in the opposite direction.

Civil Disobedience Today at White House to Stop Tar Sands, Keystone XL pipeline

WASHINGTON - February 13 - Fifty American leaders–including Michael Brune (Sierra Club), Bill McKibben (350.org), Reverend Lennox Yearwood Jr. (Hip Hop Caucus), civil rights legend Julian Bond, actress Daryl Hannah, Nebraska rancher Randy Thompson and others on the frontlines of climate change–will risk arrest in front of the White House to demonstrate the depth of their support for decisive action against climate change. For the first time in its 120-year history, the Sierra Club will participate in this civil disobedience action to convey the severity and urgency of action on climate.

Where and when:
10:30AM Media availability in Lafayette park for those risking arrest.

11:00AM Activists and supporters will gather in Lafayette park for photos and speeches.

11:30AM The civil disobedience will take place around at the East Gate of the White House on Pennsylvania Avenue, just east of the picture-postcard zone.

Why: 2012 was the hottest year on record, half the country is in severe drought, and Superstorm Sandy just flooded the greatest city in the world–New York. A global crisis unfolds before our eyes and immediate action is required. President Obama has the executive authority to make a significant and immediate impact on carbon pollution, and he can begin by saying no to Big Oil by rejecting the Keystone XL tar sands pipeline.

Civil disobedience is the response of ordinary people to extraordinary injustices. Americans have righted the wrongs of our society – slavery, child labor, suffrage, segregation, and inequality for gays and immigrant workers – with creative nonviolent resistance. Climate change threatens the health and security of all Americans, and action proportional to the problem is required–now.

The full list of participants, along with photos and bios, is available at tarsandsaction.org.

The participants risking arrest have released the following letter to explain their collective action.

“We’re here today to show the depth of our resolve that President Obama take immediate, decisive action against climate change—to show that if the president leads, the vast majority of Americans will rally behind him. We’re not here today to protest the president, we are here to encourage and support him. We lived through horrors of Superstorm Sandy, the Midwest drought, wildfires, and the hottest year on record: we know in our bones that the time has come to do more than we have, and all that we can.

“The president can’t work miracles by himself. An obstructionist Congress stands in the way of progress and innovation. But President Obama has the executive authority and the mandate from the American people to stand up to the fossil fuel industry, and to reject the Keystone XL tar sands pipeline right now.

“And we’re here to show something else—that the movement for a clean energy revolution is a broad and powerful one. In 2011 we were moved by the 1,253 Americans who went jail to protest Keystone in the biggest civil disobedience action in many years in this country. Today we are 50 people at the White House representing millions of Americans in every state, in every community. Today we risk arrest because a global crisis unfolds before our eyes. We have the solutions to this climate crisis. We have a moral obligation to stand stand for immediate, bold action to solve climate disruption. We can do it, and we will.”

Activists Plan White House Civil Disobedience to Pressure Obama on Climate

Opponents of the proposed Keystone XL pipeline demonstrate in front of the White House in August, 2011. On Wednesday, activists vow to continue and escalate their opposition to the pipeline with new direct actions. (Photo by Chip Somodevilla/Getty Images)Saying they're not attacking or protesting against the Obama administration but rather applying the necessary pressure the president himself has asked for, climate activists and environmental groups will descend on the White House today to demand an end to the Keystone XL tar sands pipeline.

For the first time in its 120-year history, the Sierra Club will participate in this civil disobedience action to convey the severity and urgency of action on climate. Joining them will be representatives from other groups including 350.org, Tar Sands Blockade and the Hip Hop Caucus, and individual activists like civil rights activist Julian Bond, actress Daryl Hannah, Nebraska rancher Randy Thompson and others on the frontlines of the climate justice movement.

Those involved released a group statement which said their purpose was "to show the depth of our resolve that President Obama take immediate, decisive action against climate change."

"If the president leads," they continued, "the vast majority of Americans will rally behind him. We’re not here today to protest the president, we are here to encourage and support him. We lived through horrors of Superstorm Sandy, the Midwest drought, wildfires, and the hottest year on record: we know in our bones that the time has come to do more than we have, and all that we can."

350.org, which has staged protest rallies and civil resistance actions outside the White House before, says Wednesday's events are both a continuation of their previous efforts and an escalation they plan to sustain as Obama begins his second term in earnest following his State of the Union address Tuesday night.

As Bill McKibben, co-founder and chief spokesperson for the group, tweeted Wednesday morning:

And:

Those participating will gather in Lafayette in the mid-morning for a small rally and press conference before heading across the street for what they term "civil disobedience" at the East Gate of the White House just before noon.

"Civil disobedience is the response of ordinary people to extraordinary injustices," they said. "Americans have righted the wrongs of our society – slavery, child labor, suffrage, segregation, and inequality for gays and immigrant workers – with creative nonviolent resistance. Climate change threatens the health and security of all Americans, and action proportional to the problem is required--now."

"Today we risk arrest because a global crisis unfolds before our eyes. We have the solutions to this climate crisis. We have a moral obligation to stand stand for immediate, bold action to solve climate disruption. We can do it, and we will.”

Wednesday's action is seen as a small but dramatic preface for a rally scheduled for Sunday that organizers say will bring many thousands of activists from all over the country to the White House gates to ask Obama to move "forward on climate".

_______________________

Will Obama Plan Create a “Rising, Thriving Middle Class”?

Context: As yet there are no context links for this item.

Bio

Leo Panitch is the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto. Panitch is also the author of "Global Capitalism and American Empire" and his most recent release "American Empire and the Political Economy of International Finance."

Jennifer S. Taub is an Associate Professor of Law at the Vermont Law School where she teaches contracts, corporations and securities regulation. Before joining VLS, she taught at the Isenberg School of Management, University of Massachusetts, Amherst. She researches and writes in the area of corporate governance, shareholders’ rights, bankruptcy, and financial market regulation. Previously, Professor Taub was an Associate General Counsel for Fidelity Investments.

Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

In Washington on Tuesday night, President Obama delivered his State of the Union speech. And the fundamental idea of the speech: it's time to restore the basic bargain. Here's what the said.~~~BARACK OBAMA, U.S. PRESIDENT: [T]ogether, we have cleared away the rubble of crisis, and we can say with renewed confidence that the state of our union is stronger.But we gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded. Our economy is adding jobs—but too many people still can't find full-time employment. Corporate profits have skyrocketed to all-time highs—but for more than a decade, wages and incomes have barely budged.It is our generation's task, then, to reignite the true engine of America’s economic growth—a rising, thriving middle class.It is our unfinished task to restore the basic bargain that built this country—the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love.It is our unfinished task to make sure that this government works on behalf of the many, and not just the few; that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation.~~~JAY: Now joining us to give us their take on President Obama's speech is, first of all, Jennifer Taub. She's an associate professor of law at Vermont Law School. She researches and writes in the area of corporate governance and financial market regulation.And joining us from Toronto is Leo Panitch. He's the Canada research chair in comparative political economy and a distinguished research professor of political science at York University. He coauthored the book The Making of Global Capitalism.Thank you, both of you, for joining us.LEO PANITCH, PROF. POLITICAL SCIENCE, YORK UNIVERSITY: Hi, Paul.JAY: So, Leo, why don't you kick us off? What did you make? It's time to restore the basic bargain.PANITCH: Yeah. Well, I found it a typical and, for that reason, very disappointing speech, entirely vague in terms of the basic bargain, and misleading in terms of what that applies, but worse, symbolically touching on all the things that need to be done, above all, massive public expenditure on infrastructure, without really providing any of the financial muscle or the direct government employment that would make these things happen, without taking on—and understandably, given the way he praised free enterprise out of the same side of his mouth that he attacked the wealthy and the people who are able to escape taxation by using high-powered accountants—you know, he didn't take on any of the interests. Sure, he took a shot at the banks for not allowing people to renew their mortgages at lower interest rates, but indicated he would do nothing to actually force them to do it. This has been on the agenda now since the beginning of the crisis.So I found it in every sense a typically symbolic speech and really, really very, very disappointing [inaud.]JAY: Jennifer, what do you think? It seems to have been effective. Some of the people I've been talking to are happy that he just mentioned these things. What did you think?JENNIFER TAUB, ASSOC. PROF., VERMONT LAW SCHOOL: I was also very disappointed, and glad that you zeroed in on that particular phrase he used, which was that we've together "cleared away the rubble" of the crisis. That's simply not true.And I think that if you compare what he said to what Rubio said in terms of the crisis in his response, Rubio said a major cause of our recent downturn was a housing crisis. So that part is true. What was not true in what Rubio said was that the housing crisis was due to reckless government policies. Of course, instead it was due to regulatory failure and due to recklessness and predatory behavior of banks. And by the president failing to remind us and place in the proper historical context where we are today in terms of this very anemic recovery, he won't really get the public's support for what we've already heard needs to be done, which is massive infrastructure spending. We have a problem of lack of aggregate demand. It's not about training people for jobs. It's not about them lacking skills. What we have now are massive unemployment—we're still at 7.9 percent, and when you include the people who are working part-time, who are discouraged, according to vice chairman of the Fed, Janet Yellen, who spoke just yesterday on this topic, we're over 14 percent. And she was bold enough, unlike the president tonight, to talk about the real causes of this. And by the way, it's not just about blaming the banks or blaming regulatory failure, but it actually ties into why the recovery's been so weak, which is this problem that housing has not been able to lead the recovery. And the fact that the president mentioned housing is picking up, we shouldn't look to that as an indicator of growth. Robert Schiller [unintel.] speaking about this recently. So I was discouraged in that, for the reasons we've already talked about, but also particularly discouraged by the failure to really look at who's to blame for this and how we can move forward.JAY: Now, he did—Leo, he did talk about the need for this infrastructure program. He talked about we need to create employment through rebuilding bridges and rebuilding roads. I mean, why isn't that what you're looking for?PANITCH: Well, it is what one should be looking for. He just isn't—having stated the objective, isn't providing the means. And while it's certainly true that he's dealing with a ridiculously recalcitrant Republican Party in Congress, it's also true that American business is fed up with the kind of role they're playing. And he should be leading a massive campaign to get American business behind, Wall Street behind a massive program of borrowing for infrastructure spending, for direct government infrastructure spending. And, you know, one can borrow—governments can borrow now at virtually zero interest rates. The kind of stuff that he's proposing is so minimal, if you compared it to anything that the Work Projects Administration did in the New Deal, it's almost laughable.But more than that, I think it's this triangulation problem that he has—and he shares, by the way, with all of the European social democrats who were enveloped in the middle way, admiring Clinton—he speaks in a way that is at the same time trying to cater to big business and not point, as Jennifer says, to the role that they play in causing the crisis—and even worse, causing the stagnation and the inequality that goes with it—while at the same time throwing out a few symbolic words about things not being fair, but without taking any leadership with regard to getting behind the kind of massive, massive government spending and direct public employment that alone could solve these problems.JAY: Jennifer, there seems to be two contradictory principles here. One is: restore the basic bargain, which—in other words, build the foundation of success or future of the American economy on a restored middle class, and don't add a dime to the deficit. I mean, are these contradictory ideas? And which one does he seem to believe in more?TAUB: I don't know what he actually believes in, but what he was expressing were contradictory ideas. And I think that it's a shame that he didn't use this opportunity to break down these false narratives. You know, if anyone looks at the equation for calculating GDP, they can see right in it is government spending and government and the private sector complimenting each other. And I think by privileging or putting forward this idea that it's—you know, that it's only the private sector that should lead a recovery, he may think he's just using rhetoric to get people to support his agenda here. But I think it's a lost opportunity to make people understand how things really operate. And I agree with Leo: I think government jobs here are important and that he needs to use the word spending. I listened to this speech carefully and then went back and looked at the transcript, and he mentioned jobs over 30 times, and he mentioned spending only on three occasions—twice was about cutting spending, and the third time was about military spending that would be reduced. And nobody is going to be fooled by this idea that we can cut the deficit, cut spending, and somehow end up in a situation we don't—that we can move forward and grow the economy. So it's not going to work if that's what his plans are.JAY: Leo, right from the beginning of his presidency, President Obama has been adamant that the solutions are going to be found through the private sector, when during his stimulus plan, which was—you know, in terms of American history, it was a big stimulus plan—not as big as a lot of people thought it should have been, but it was wedded that it had to be done through the private sector. Now, a lot of that money did in fact go to state and city governments because they were desperate and going bankrupt, but all his rhetoric was private sector, private sector.PANITCH: And he repeated that tonight. He said that in order to have spending on schools and highways and ports, that he would be mobilizing the private sector to invest in these. Now, that's a recipe for privatizing stuff that is not yet privatized or, at best, for private-public partnerships, which turn out to be far more costly, because what governments then do is underwrite corporate borrowing at higher rates of interest than the governments could borrow themselves. But this is all about this triangulation with the enormous power—one has to admit this—of the capitalist class in the United States. And, you know, look, I think to some extent one needs to say it's not just Obama's failures. What we are seeing here is the increasing impossibility of securing anything like equality, let alone justice, in societies that are driven by private property and the power of capitalist classes. The hope that people have that we could get to a social-democratic type of mixed economy, where capitalist crises would be contained by Keyesian spending and whereby you'd get a gradual set of reforms that would equalize class relations, we are now, into the second decade of the 20th century, clearly seeing that those types of goals are no longer realizable in the framework of contemporary capitalism. And the tragedy of people who start out with those kinds of goals, like Obama or like European social democrats, is they end up reinforcing the current structure of power. And I can only hope that eventually people will come to see that one needs much more fundamental change than Obama or indeed others like him are prepared to mobilize people behind.JAY: Alright. Thank you both for joining us.PANITCH: Good to talk to you, Paul.JAY: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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More Austerity Cuts Coming To The States

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The Great Recession has quietly devastated public services on a state-by-state basis, with Republican and Democratic governors taking turns leading the charge. Public education has been decimated, as well as health care, welfare, and the wages and benefits of public sector workers. The public sector itself is being smashed. Since the recession began, states have made combined austerity cuts of at least $337 billion, according to the Center of Budget and Policy Priorities

The 2012-2013 budget deficits for 34 states resulted in $55 billion in cuts, according to the Center of Budget and Policy Priorities. The coming budgets for 2013-2014 that begins on July 1st is becoming clear as well, and the deficits are rolling in by the billions: Connecticut, Minnesota, Maryland, New York, Oregon, Washington, and many others have large deficits projected.

You’d expect after years of austerity cuts to public services, state politicians would think of new ways to raise revenue from those who can afford it — the wealthy and corporations. Not so. The cuts that began as a consequence of the 2008 recession are set to continue; raising revenue from the wealthy is “off the table” for Republicans and Democrats alike.

The pattern of budget cuts has revealed that the age-old distinction between Republican and Democrat has evaporated on the state level. The state budget trends — what’s getting funded and what’s not — are similarly aligned across the country. Both parties have merged their state-level agendas into a singular focus on “economic growth,” a bi-partisan euphemism meaning “corporate profits.”

Below is the bi-partisan funding trends for the states that began with the 2008 recession and continue to this day:

1) The Attack on Public Employees and Pension "Reform"

It wasn’t long ago that everyone understood that the states’ budget crises was caused in part by the recession, itself caused by the big banks and greedy corporations, and in part by the politicians continuing willingness to lower taxes on the rich. Now the corporate media and politicians have re-written history: suddenly it’s “greedy” public workers and their “lavish” pensions that are bankrupting the states. Two years ago it was the health care of public employees that was bankrupting the states, which resulted in large cuts to workers in many states.

The pre-recession pension system was working fine, but it, too, suffered under the bank-caused financial crisis; pension returns sank and right-wing economists projected ruin for the states in the future (they conveniently assumed that recession era rates would continue forever, thus under-funding the system).

Democratic governors are now as eager as their Republican counterparts to destroy the pensions of public employees. Democratic politicians in Oregon, Washington, California, New Jersey, Illinois, Rhode Island, New Hampshire, Maryland, Massachusetts, and several other states are leading the charge to erode the last bastion of retirement security for working people, while continuing to lay off public employees by the thousands. This national shrinkage of state governments is a long-standing right-wing dream: the smaller the state, the greater the “growth opportunities” for corporations that take over privatized public services and the lower their taxes since a smaller state requires less revenue for operating expenses.

2) Education Reform

The National Governors Association (NGA) spoke for both political parties when announcing a renewed focus on education funding for the states during the annual “state of the states” address. The funding is necessary because schools across the country are expecting an influx of students, while school districts everywhere have been starved funds by the ongoing austerity cuts; the system has been literally crumbling. But the new funding is to be used for the undermining and destruction of public education, since it is based on Obama’s pro-corporate Race to the Top education “reform” where charter schools replace public schools.

Democrats and Republicans are in complete agreement over Obama’s education policy, which closes “failing schools,” (those in poor neighborhoods), opens privately run, non-union charter schools, and fires “bad teachers,” (typically those who teach poor students). The whole system is based on standardized testing, which poorer students will spend most of their education preparing for, (those who don’t drop out from sheer boredom). Bi-partisan education reform targets teacher unions while privatizing education — the Democrats have adopted the ideas from the right-wing think tanks of the 1990′s.

3) Raising Revenue - But Not From the Wealthy or Corporations

Many states have implemented — or are planning to implement — a variety of taxes that disproportionally affect working and poor people, including increased sales taxes, alcohol, tobacco and other “sin” taxes, not to mention increases in different fees, from state parks to driver registration.

At the same time that these taxes have been upped, a consistent clamor has been raised by the media and politicians to lower the taxes for corporations, give them new subsidies or “freeze” their already-low taxes so that future tax increases will be impossible. In Oregon the Democratic governor declared a “special session” emergency in order to ensure that NIKE’s super low tax status would be frozen in place for decades, outside the reach of the public, which might want to raise corporate taxes to fund public services.

Democrat and Republican controlled states are equally competing for the adoration of corporations by lavishing a never-ending flow of taxpayer money on them, while “guaranteeing” them “investment security,” i.e., promising low taxes and an open spigot of taxpayer money. This is the basis for several states implementing “right to work” laws that target unions for destruction, while also attempting to “revamp the tax code,” which is a euphemism for lowering corporate taxes.

4) Welfare Reform: Attacking the Safety Net

Waging war against the safety net is like picking a fight with road kill — the states’ safety net is already disfigured beyond recognition, but the bi-partisan assault nevertheless continues. Bill Clinton started welfare “reform” as president, and the 2008 Great Recession accelerated the attack on those in poverty. The year 2011 was a devastating one for welfare, now called Temporary Assistance to Needy Families (TANF).

According to the Center on Budget and Policy Priorities:

In 2011, states implemented some of the harshest cuts in recent history for many of the nation’s most vulnerable families with children who are receiving assistance through [TANF] … The cuts affect 700,000 low-income families that include 1.3 million children; these families represent over one-third of all low-income families receiving TANF nationwide.

But these TANF “reforms” continue, to the detriment of the neediest. Newly released budgets in several states — including California and Oregon — further tighten the program, a relentless boa-like constriction that’s already suffocated millions of the country’s poorest citizens. Typically TANF reform either lowers the monthly payment, shortens the time one can receive benefits, or raises the standards for staying in the program.

Before the giant TANF cuts in 2011, the program was already shrunken such that TANF only assisted 28 families for every 100 in poverty — the ludicrous definition of “poverty” being a family of four that makes only $22,000 or less.

There is a direct link between the assault on TANF and the rising poverty levels in the United States. Cutting TANF in a time of mass unemployment means consciously consigning millions of families to grinding poverty, hunger, homelessness, and the many other barbarisms associated with extreme poverty.

Conclusion:

It wasn’t long ago that the Democrats understood that the government can and should create jobs, especially during a recession. But now the Democratic Party has fully adopted the economics of Reaganism. As a result, the only “job creators” now recognized are the corporations. This bi-partisan agreement not to tax the rich and use the revenue for public spending to create jobs — hiring more teachers, firefighters, roads and parks workers, etc. — is unnecessarily prolonging the job crisis, ensuring more years of deficits and a deeper gouging of the public sector.

These cuts are having a devastating effect on public sector unions, the last bastion of union strength in the country. These unions are being weakened to such an extent that stripping them of their right to collectively bargain — the nail in the coffin — becomes a real possibility. No state is safe from this threat.

If unions don’t unite with community groups to demand that public services be fully funded by taxing the wealthy and corporations, the cuts will continue, communities will feel helpless, inequality will continue to spiral out of control, and working people will be further subjected to the policies of the 1%, now implemented in chorus by Republicans and Democrats alike. But, of course, this means that the unions will have to break with the suicidal strategy of relying on the Democrats for handouts. Time and again the Democrats have demonstrated their willingness to sacrifice the needs of working people in order to curry favor with the rich and corporations, their greatest benefactors when it comes to election campaign contributions.

On BDS, Academic Freedom and Democracy at Brooklyn College

Editors Note: Despite a campaign to silence them, philsophers Judith Butler and Omar Barghouti spoke at Brooklyn College last week. In an exclusive, The Nation presents the text of Butler's remarks.

Usually one starts by saying that one is glad to be here, but I cannot say that it has been a pleasure anticipating this event. What a Megillah! I am, of course, glad that the event was not cancelled, and I understand that it took a great deal of courage and a steadfast embrace of principle for this event to happen at all. I would like personally to thank all those who took this opportunity to reaffirm the fundamental principles of academic freedom, including the following organizations: the Modern Language Association, the National Lawyers Guild, the New York ACLU, the American Association of University Professors, the Professional Staff Congress (the union for faculty and staff in the CUNY system), the New York Times editorial team, the offices of Mayor Michael Bloomberg, Governor Andrew Cuomo and Brooklyn College President Karen Gould whose principled stand on academic freedom has been exemplary.Brooklyn College students protest in support of the upcoming BDS forum at their school. Some elected officials threatened to cut the college’s public funding if the event proceeded. The mayor said he can't think of anything "more destructive to a university and its students" than basing school funding on the political views of professors. (Photo: Reuven Blau/New York Daily News)

The principle of academic freedom is designed to make sure that powers outside the university, including government and corporations, are not able to control the curriculum or intervene in extra-mural speech. It not only bars such interventions, but it also protects those platforms in which we might be able to reflect together on the most difficult problems. You can judge for yourself whether or not my reasons for lending my support to this movement are good ones.   That is, after all, what academic debate is about. It is also what democratic debate is about, which suggests that open debate about difficult topics functions as a meeting point between democracy and the academy. Instead of asking right away whether we are for or against this movement, perhaps we can pause just long enough to find out what exactly this is, the Boycott, Divestment and Sanctions movement, and why it is so difficult to speak about this.

I am not asking anyone to join a movement this evening. I am not even a leader of this movement or part of any of its governing committee, even though the New York Times tried to anoint me the other day—I appreciated their subsequent retraction, and I apologize to my Palestinian colleagues for their error. The movement, in fact, has been organized and led by Palestinians seeking rights of political self-determination, including Omar Barghouti, who was invited first by the Students for Justice in Palestine, after which I was invited to join him. At the time I thought it would be very much like other events I have attended, a conversation with a few dozen student activists in the basement of a student center. So, as you can see, I am surprised and ill-prepared for what has happened.

Omar will speak in a moment about what the BDS movement is, its successes and its aspirations. But I would like briefly to continue with the question, what precisely are we doing here this evening? I presume that you came to hear what there is to be said, and so to test your preconceptions against what some people have to say, to see whether your objections can be met and your questions answered. In other words, you come here to exercise critical judgment, and if the arguments you hear are not convincing, you will be able to cite them, to develop your opposing view and to communicate that as you wish. In this way, your being here this evening confirms your right to form and communicate an autonomous judgment, to demonstrate why you think something is true or not, and you should be free to do this without coercion and fear. These are your rights of free expression, but they are, perhaps even more importantly, your rights to education, which involves the freedom to hear, to read and to consider any number of viewpoints as part of an ongoing public deliberation on this issue. Your presence here, even your support for the event, does not assume agreement among us. There is no unanimity of opinion here; indeed, achieving unanimity is not the goal.

The arguments made against this very meeting took several forms, and they were not always easy for me to parse. One argument was that BDS is a form of hate speech, and it spawned a set of variations: it is hate speech directed against either the State of Israel or Israeli Jews, or all Jewish people. If BDS is hate speech, then it is surely not protected speech, and it would surely not be appropriate for any institution of higher learning to sponsor or make room for such speech. Yet another objection, sometimes uttered by the same people who made the first, is that BDS does qualify as a viewpoint, but as such, ought to be presented only in a context in which the opposing viewpoint can be heard as well. There was yet a qualification to this last position, namely, that no one can have a conversation on this issue in the US that does not include a certain Harvard professor, but that spectacular argument was so self-inflationary and self-indicting, that I could only respond with astonishment.

So in the first case, it is not a viewpoint (and so not protected as extra-mural speech), but in the second instance, it is a viewpoint, presumably singular, but cannot be allowed to be heard without an immediate refutation. The contradiction is clear, but when people engage in a quick succession of contradictory claims such as these, it is usually because they are looking for whatever artillery they have at their disposal to stop something from happening. They don’t much care about consistency or plausibility. They fear that if the speech is sponsored by an institution such as Brooklyn College, it will not only be heard, but become hearable, admitted into the audible world. The fear is that viewpoint will become legitimate, which means only that someone can publicly hold such a view and that it becomes eligible for contestation. A legitimate view is not necessarily right, but it is not ruled out in advance as hate speech or injurious conduct. Those who did not want any of these words to become sayable and audible imagined that the world they know and value will come to an end if such words are uttered, as if the words themselves will rise off the page or fly out of the mouth as weapons that will injure, maim or even kill, leading to irreversibly catastrophic consequences. This is why some people claimed that if this event were held, the two-state solution would be imperiled—they attributed great efficacy to these words. And yet others said it would lead to the coming of a second Holocaust—an unimaginable remark to which I will nevettheless return. One might say that all of these claims were obvious hyperbole and should be dismissed as such. But it is important to understand that they are wielded for the purpose of intimidation, animating the spectre of traumatic identification with the Nazi oppressor: if you let these people speak, you yourself will be responsible for heinous crimes or for the destruction of a state, or the Jewish people. If you listen to the words, you will become complicit in war crimes.

And yet all of us here have to distinguish between the right to listen to a point of view and the right to concur or dissent from that point of view; otherwise, public discourse is destroyed by censorship. I wonder, what is the fantasy of speech nursed by the censor? There must be enormous fear behind the drive to censorship, but also enormous aggression, as if we were all in a war where speech has suddenly become artillery. Is there another way to approach language and speech as we think about this issue? Is it possible that some other use of words might forestall violence, bring about a general ethos of non-violence, and so enact, and open onto, the conditions for a public discourse that welcomes and shelters disagreement, even disarray?

The Boycott Divestment and Sanctions movement is, in fact, a non-violent movement; it seeks to use established legal means to achieve its goals; and it is, interestingly enough, the largest Palestinian civic movement at this time. That means that the largest Palestinian civic movement is a non-violent one that justifies its actions through recourse to international law. Further, I want to underscore that this is also a movement whose stated core principles include the opposition to every form of racism, including both state-sponsored racism and anti-Semitism. Of course, we can debate what anti-Semitism is, in what social and political forms it is found. I myself am sure that the election of self-identified national socialists to the Greek parliament is a clear sign of anti-Semitism; I am sure that the recirculation of Nazi insignia and rhetoric by the National Party of Germany is a clear sign of anti-Semitism. I am also sure that the rhetoric and actions of Iran’s Mahmoud Ahmadinejad are often explicitly anti-Semitic, and that some forms of Palestinian opposition to Israel do rely on anti-Semitic slogans, falsehoods and threats. All of these forms of anti-Semitism are to be unconditionally opposed. And I would add, they have to be opposed in the same way and with the same tenacity that any form of racism has to be opposed, including state racism.

But still, it is left to us to ask, why would a non-violent movement to achieve basic political rights for Palestinians be understood as anti-Semitic? Surely, there is nothing about the basic rights themselves that constitute a problem. They include equal rights of citizenship for current inhabitants; the end to the occupation, and the rights of unlawfully displaced persons to return to their lands and gain restitution for their losses. We will surely speak about each of these three principles this evening. But for now, I want to ask, why would a collective struggle to use economic and cultural forms of power to compel the enforcement of international laws be considered anti-Semitic? It would be odd to say that they are anti-Semitic to honor internationally recognized rights to equality, to be free of occupation and to have unlawfully appropriated land and property restored. I know that this last principle makes many people uneasy, but there are several ways of conceptualizing how the right of return might be exercised lawfully such that it does not entail further dispossession (and we will return to this issue).

For those who say that exercising internationally recognized rights is anti-Semitic, or becomes anti-Semitic in this context, they must mean either that a) its motivation is anti-Semitic or b) its effects are anti-Semitic. I take it that no one is actually saying that the rights themselves are anti-Semitic, since they have been invoked by many populations in the last decades, including Jewish people dispossessed and displaced in the aftermath of the second world war. Is there really any reason we should not assume that Jews, just like any other people, would prefer to live in a world where such internationally recognized rights are honored? It will not do to say that international law is the enemy of the Jewish people, since the Jewish people surely did not as a whole oppose the Nuremburg trials, or the development of human rights law. In fact, there have always been Jews working alongside non-Jews—not only to establish the courts and codes of international law, but in the struggle to dismantle colonial regimes, opposing any and all legal and military powers that seek systematically to undermine the conditions of political self-determination for any population.

Only if we accept the proposition that the state of Israel is the exclusive and legitimate representative of the Jewish people would a movement calling for divestment, sanctions and boycott against that state be understood as directed against the Jewish people as a whole. Israel would then be understood as co-extensive with the Jewish people. There are two major problems with this view. First, the state of Israel does not represent all Jews, and not all Jews understand themselves as represented by the state of Israel. Secondly, the state of Israel should be representing all of its population equally, regardless of whether or not they are Jewish, regardless of race, religion or ethnicity.

So the first critical and normative claim that follows is that the state of Israel should be representing the diversity of its own population. Indeed, nearly 25 percent of Israel’s population is not Jewish, and most of those are Palestinian, although some of them are Bedouins and Druze. If Israel is to be considered a democracy, the non-Jewish population deserves equal rights under the law, as do the Mizrachim (Arab Jews) who represent over 30 percent of the population. Presently, there are at least twenty laws that privilege Jews over Arabs within the Israeli legal system. The 1950 Law of Return grants automatic citizenship rights to Jews from anywhere in the world upon request, while denying that same right to Palestinians who were forcibly dispossessed of their homes in 1948 or subsequently as the result of illegal settlements and redrawn borders. Human Rights Watch has compiled an extensive study of Israel's policy of "separate, not equal" schools for Palestinian children. Moreover, as many as 100 Palestinian villages in Israel are still not recognized by the Israeli government, lacking basic services (water, electricity, sanitation, roads, etc.) from the government. Palestinians are barred from military service, and yet access to housing and education still largely depends on military status. Families are divided by the separation wall between the West Bank and Israel, with few forms of legal recourse to rights of visitation and reunification. The Knesset debates the “transfer” of the Palestinian population to the West Bank, and the new loyalty oath requires that anyone who wishes to become a citizen pledge allegiance to Israel as Jewish and democratic, thus eliding once again the non-Jewish population and binding the full population to a specific and controversial, if not contradictory, version of democracy.

The second point, to repeat, is that the Jewish people extend beyond the state of Israel and the ideology of political Zionism. The two cannot be equated. Honestly, what can really be said about “the Jewish people” as a whole? Is it not a lamentable sterotype to make large generalizations about all Jews, and to presume they all share the same political commitments? They—or, rather, we—occupy a vast spectrum of political views, some of which are unconditionally supportive of the state of Israel, some of which are conditionally supportive, some are skeptical, some are exceedingly critical, and an increasing number, if we are to believe the polls in this country, are indifferent. In my view, we have to remain critical of anyone who posits a single norm that decides rights of entry into the social or cultural category determining as well who will be excluded. Most categories of identity are fraught with conflicts and ambiguities; the effort to suppress the complexity of the category of “Jewish” is thus a political move that seeks to yoke a cultural identity to a specific Zionist position. If the Jew who struggles for justice for Palestine is considered to be anti-Semitic, if any number of internationals who have joined thus struggle from various parts of the world are also considered anti-Semitic and if Palestinians seeking rights of political self-determination are so accused as well, then it would appear that no oppositional move that can take place without risking the accusation of anti-Semitism. That accusation becomes a way of discrediting a bid for self-determination, at which point we have to ask what political purpose the radical mis-use of that accusation has assumed in the stifling of a movement for political self-determination.

When Zionism becomes co-extensive with Jewishness, Jewishness is pitted against the diversity that defines democracy, and if I may say so, betrays one of the most important ethical dimensions of the diasporic Jewish tradition, namely, the obligation of co-habitation with those different from ourselves. Indeed, such a conflation denies the Jewish role in broad alliances in the historical struggle for social and political justice in unions, political demands for free speech, in socialist communities, in the resistance movement in World War II, in peace activism, the Civil Rights movement and the struggle against apartheid in South Africa. It also demeans the important struggles in which Jews and Palestinians work together to stop the wall, to rebuild homes, to document indefinite detention, to oppose military harassment at the borders and to oppose the occupation and to imagine the plausible scenarios for the Palestinian right to return.

The point of the boycott, divestment and sanctions movement is to withdraw funds and support from major financial and cultural institutions that support the operations of the Israeli state and its military. The withdrawal of investments from companies that actively support the military or that build on occupied lands, the refusal to buy products that are made by companies on occupied lands, the withdrawal of funds from investment accounts that support any of these activities, a message that a growing number of people in the international community will not be complicit with the occupation. For this goal to be realized, it matters that there is a difference between those who carry Israeli passports and the state of Israel, since the boycott is directed only toward the latter. BDS focuses on state agencies and corporations that build machinery designed to destroy homes, that build military materiel that targets populations, that profit from the occupation, that are situated illegally on Palestinian lands, to name a few.

BDS does not discriminate against individuals on the basis of their national citizenship. I concede that not all versions of BDS have been consistent on this point in the past, but the present policy confirms this principle. I myself oppose any form of BDS that discriminates against individuals on the basis of their citizenship. Others may interpret the boycott differently, but I have no problem collaborating with Israeli scholars and artists as long as we do not participate in any Israeli institution or have Israeli state monies support our collaborative work. The reason, of course, is that the academic and cultural boycott seeks to put pressure on all those cultural institutions that have failed to oppose the occupation and struggle for equal rights and the rights of the dispossessed, all those cultural institutions that think it is not their place to criticize their government for these practices, all of them that understand themselves to be above or beyond this intractable political condition. In this sense, they do contribute to an unacceptable status quo. And those institutions should know why international artists and scholars refuse to come when they do, just as they also need to know the conditions under which people will come. When those cultural institutions (universities, art centers, festivals) were to take such a stand, that would be the beginning of the end of the boycott (let’s remember that the goal of any boycott, divestment and sanctions movement is to become obsolete and unnecessary; once conditions of equality and justice are achieved, the rationale for BDS falls away, and in this sense achieving the just conditions for the dissolution of the movement is its very aim).

In some ways, the argument between BDS and its opponents centers on the status of international law. Which international laws are to be honored, and how can they be enforced. International law cannot solve every political conflict, but political conflicts that fully disregard international law usually only get worse as a result. We know that the government of the state of Israel has voiced its skepticism about international law, repeatedly criticizing the United Nations as a biased institution, even bombing its offices in Gaza. Israel also became the first country to withhold cooperation from a UN review of its human rights practices scheduled last week in Geneva (New York Times, 1/29/13). I think it is fair to call this a boycott of the UN on the part of the state of Israel. Indeed, one hears criticism of the ineffectiveness of the UN on both sides, but is that a reason to give up on the global human rights process altogether? There are good reasons to criticize the human rights paradigm, to be sure, but for now, I am only seeking to make the case that BDS is not a destructive or hateful movement. It appeals to international law precisely under conditions in which the international community, the United Nations included, neighboring Arab states, human rights courts, the European Union, The United States and the UK, have all failed effectively to rectify the manifest injustices in Palestine. Boycott, divestment and the call for sanctions are popular demands that emerge precisely when the international community has failed to compel a state to abide by its own norms.

Let us consider, then, go back to the right of return, which constitutes the controversial third prong of the BDS platform. The law of return is extended to all of us who are Jewish who live in the diaspora, which means that were it not for my politics, I too would be eligible to become a citizen of that state. At the same time, Palestinians in need of the right of return are denied the same rights? If someone answers that “Jewish demographic advantage” must be maintained, one can query whether Jewish demographic advantage is policy that can ever be reconciled with democratic principles. If one responds to that with “the Jews will only be safe if they retain their majority status,” the response has to be that any state will surely engender an opposition movement when it seeks to maintain a permanent and disenfranchised minority within its borders, fails to offer reparation or return to a population driven from their lands and homes, keeps over four million people under occupation without rights of mobility, due process and political self-determination, and another 1.6 million under siege in Gaza, rationing of food, administering unemployment, blocking building materials to restore bombed homes and institutions, intensifying vulnerability to military bombardment resulting in widespread injury and death.

If we conclude that those who participate in such an opposition movement do so because they hate the Jews, we have surely failed to recognize that this is an opposition to oppression, to the multi-faceted dimensions of a militarized form of settler colonialism that has entailed subordination, occupation and dispossession. Any group would oppose that condition, and the state that maintains it, regardless of whether that state is identified as a Jewish state or any other kind. Resistance movements do not discriminate against oppressors, though sometimes the language of the movement can use discriminatory language, and that has to be opposed. However, it is surely cynical to claim that the only reason a group organizes to oppose its own oppression is that it bears an inexplicable prejudice or racist hatred against those who oppress them. We can see the torque of this argument and the absurd conclusions to which it leads: if the Palestinians did not hate the Jews, they would accept their oppression by the state of Israel! If they resist, it is a sign of anti-Semitism!

This kind of logic takes us to one of the traumatic and affective regions of this conflict. There are reasons why much of the global media and prevailing political discourses cannot accept that a legitimate opposition to inequality, occupation, and dispossession is very different from anti-Semitism. After all, we cannot rightly argue that if a state claiming to represent the Jewish people engages in these manifestly illegal activities, it is therefore justified on the grounds that the Jews have suffered atrociously and therefore have special needs to be exempt from international norms. Such illegal acts are never justified, no matter who is practicing them.

At the same time, one must object to some of the language used by Hamas to refer to the state of Israel, where very often the state of Israel is itself conflated with the Jews, and where the actions of the state reflect on the nature of the Jews. This is clearly anti-Semitism and must be opposed. But BDS is not the same as Hamas, and it is simply ignorant to argue that all Palestinian organizations are the same. In the same vein, those who wrote to me recently to say that BDS is the same as Hamas is the same as the Nazis are involved in fearful and aggressive forms of association that assume that any effort to make distinctions is naïve and foolish. And so we see how the conflations such as these lead to bitter and destructive consequences. What if we slowed down enough to think and to distinguish—what political possibilities might then open?

And it brings us to yet another outcry that we heard in advance of our discussion here this evening. That was BDS is the coming of a second holocaust. I believe we have to be very careful when anyone makes use of the Holocaust in this way and for this purpose, since if the term becomes a weapon by which we seek to stigmatize those with opposing political viewpoints, then we have first of all dishonored the slaughter of over 6 million Jewish people, and another 4 million gypsies, gay people, disabled, the communists and the physically and mentally ill. All of us, Jewish or not Jewish, must keep that historical memory intact and alive, and refuse forms of revisionism and political exploitation of that history. We may not exploit and re-ignite the traumatic dimension of Hitler’s atrocities for the purposes of accusing and silencing those with opposing political viewpoints, including legitimate criticisms of the state of Israel. Such a tactic not only demeans and instrumentalizes the memory of the Nazi genocide, but produces a general cynicism about both accusations of anti-Semitism and predictions of new genocidal possibilities. After all, if those terms are bandied about as so much artillery in a war, then they are used as blunt instruments for the purposes of censorship and self-legitimation, and they no longer name and describe the very hideous political realities to which they belong. The more such accusations and invocations are tactically deployed, the more skeptical and cynical the public becomes about their actual meaning and use. This is a violation of that history, an insult to the surviving generation, and a cynical and excited recirculation of traumatic material—a kind of sadistic spree, to put it bluntly—that seeks to defend and legitimate a very highly militarized and repressive state regime. Of the use of the Holocaust to legitimate Israeli military destructiveness, Primo Levi wrote in 1982, “I deny any validity to [the use of the Holocaust for] this defence.”

We have heard in recent days as well that BDS threatens the attempt to establish a two-state solution. Although many people who support BDS are in favor of a one-state solution, the BDS movement has not taken a stand on this explicitly, and includes signatories who differ from one another on this issue. In fact, the BDS committee, formed in 2005 with the support of over 170 organizations in Palestine, does not take any stand on the one state or two state solution. It describes itself as an “anti-normalization” politics that seeks to force a wide range of political institutions and states to stop compliance with the occupation, unequal treatment and dispossession. For the BDS National Committee, it is not the fundamental structure of the state of Israel that is called into question, but the occupation, its denial of basic human rights, its abrogation of international law (including its failure to honor the rights of refugees), and the brutality of its continuing conditions—harassment, humiliation, destruction and confiscation of property, bombardment, and killing. Indeed, one finds an array of opinions on one-state and two-state, especially now that one-state can turn into Greater Israel with separated Bantustans of Palestinian life. The two-state solution brings its own problems, given that the recent proposals tend to suspend the rights of refugees, accept curtailed borders and fail to show whether the establishment of an independent state will bring to an end the ongoing practices and institutions of occupation, or simply incorporate them into its structure. How can a state be built with so many settlements, all illegal, which are expected to bring the Israeli population in Palestine to nearly one million of its four million inhabitants. Many have argued that it is the rapidly increasing settler population in the West Bank, not BDS, that is forcing the one-state solution.

Some people accept divestment without sanctions, or divestment and sanctions without the boycott. There are an array of views. In my view, the reason to hold together all three terms is simply that it is not possible to restrict the problem of Palestinian subjugation to the occupation alone. It is significant in itself, since four million people are living without rights of mobility, sovereignty, control over their borders, trade and political self-determination, subjected to military raids, indefinite detention, extended imprisonment and harassment. However, if we fail to make the link between occupation, inequality and dispossession, we agree to forget the claims of 1948, bury the right to return. We overlook the structural link between the Israeli demand for demographic advantage and the multivalent forms of dispossession that affect Palestinians who have been forced to become diasporic, those who live with partial rights within the borders, and those who live under occupation in the West Bank or in the open air prison of Gaza (with high unemployment and rationed foods) or other refugee camps in the region.

Some people have said that they value co-existence over boycott, and wish to engage in smaller forms of binational cultural communities in which Israeli Jews and Palestinians live and work together. This is a view that holds to the promise that small organic communities have a way of expanding into ever widening circles of solidarity, modeling the conditions for peaceable co-existence. The only question is whether those small communities continue to accept the oppressive structure of the state, or whether in their small and effective way oppose the various dimensions of continuing subjugation and disenfranchisement. If they do the latter, they become solidarity struggles. So co-existence becomes solidarity when it joins the movement that seeks to undo the structural conditions of inequality, containment and dispossession. So perhaps the conditions of BDS solidarity are precisely what prefigure that form of living and working together that might one day become a just and peaceable form of co-existence.

One could be for the BDS movement as the only credible non-violent mode of resisting the injustices committed by the state of Israel without falling into the football lingo of being “pro” Palestine and “anti” Israel. This language is reductive, if not embarrassing. One might reasonably and passionately be concerned for all the inhabitants of that land, and simply maintain that the future for any peaceful, democratic solution for that region will become thinkable through the dismantling of the occupation, through enacting the equal rights of Palestinian minorities and finding just and plausible ways for the rights of refugees to be honored. If one holds out for these three aims in political life, then one is not simply living within the logic of the “pro” and the “anti”, but trying to fathom the conditions for a “we”, a plural existence grounded in equality. What does one do with one’s words but reach for a place beyond war, ask for a new constellation of political life in which the relations of colonial subjugation are brought to a halt. My wager, my hope, is that everyone’s chance to live with greater freedom from fear and aggression will be increased as those conditions of justice, freedom, and equality are realized. We can or, rather, must start with how we speak, and how we listen, with the right to education, and to dwell critically, fractiously, and freely in political discourse together. Perhaps the word “justice” will assume new meanings as we speak it, such that we can venture that what will be just for the Jews will also be just for the Palestinians, and for all the other people living there, since justice, when just, fails to discriminate, and we savor that failure.

© 2012 The Nation

Judith Butler

Judith Butler is a professor in the Rhetoric and Comparative Literature department at UC Berkeley. She is the author of several books on feminist theory, continental philosophy and contemporary politics.

On BDS, Academic Freedom and Democracy at Brooklyn College

Editors Note: Despite a campaign to silence them, philsophers Judith Butler and Omar Barghouti spoke at Brooklyn College last week. In an exclusive, The Nation presents the text of Butler's remarks.

Usually one starts by saying that one is glad to be here, but I cannot say that it has been a pleasure anticipating this event. What a Megillah! I am, of course, glad that the event was not cancelled, and I understand that it took a great deal of courage and a steadfast embrace of principle for this event to happen at all. I would like personally to thank all those who took this opportunity to reaffirm the fundamental principles of academic freedom, including the following organizations: the Modern Language Association, the National Lawyers Guild, the New York ACLU, the American Association of University Professors, the Professional Staff Congress (the union for faculty and staff in the CUNY system), the New York Times editorial team, the offices of Mayor Michael Bloomberg, Governor Andrew Cuomo and Brooklyn College President Karen Gould whose principled stand on academic freedom has been exemplary.Brooklyn College students protest in support of the upcoming BDS forum at their school. Some elected officials threatened to cut the college’s public funding if the event proceeded. The mayor said he can't think of anything "more destructive to a university and its students" than basing school funding on the political views of professors. (Photo: Reuven Blau/New York Daily News)

The principle of academic freedom is designed to make sure that powers outside the university, including government and corporations, are not able to control the curriculum or intervene in extra-mural speech. It not only bars such interventions, but it also protects those platforms in which we might be able to reflect together on the most difficult problems. You can judge for yourself whether or not my reasons for lending my support to this movement are good ones.   That is, after all, what academic debate is about. It is also what democratic debate is about, which suggests that open debate about difficult topics functions as a meeting point between democracy and the academy. Instead of asking right away whether we are for or against this movement, perhaps we can pause just long enough to find out what exactly this is, the Boycott, Divestment and Sanctions movement, and why it is so difficult to speak about this.

I am not asking anyone to join a movement this evening. I am not even a leader of this movement or part of any of its governing committee, even though the New York Times tried to anoint me the other day—I appreciated their subsequent retraction, and I apologize to my Palestinian colleagues for their error. The movement, in fact, has been organized and led by Palestinians seeking rights of political self-determination, including Omar Barghouti, who was invited first by the Students for Justice in Palestine, after which I was invited to join him. At the time I thought it would be very much like other events I have attended, a conversation with a few dozen student activists in the basement of a student center. So, as you can see, I am surprised and ill-prepared for what has happened.

Omar will speak in a moment about what the BDS movement is, its successes and its aspirations. But I would like briefly to continue with the question, what precisely are we doing here this evening? I presume that you came to hear what there is to be said, and so to test your preconceptions against what some people have to say, to see whether your objections can be met and your questions answered. In other words, you come here to exercise critical judgment, and if the arguments you hear are not convincing, you will be able to cite them, to develop your opposing view and to communicate that as you wish. In this way, your being here this evening confirms your right to form and communicate an autonomous judgment, to demonstrate why you think something is true or not, and you should be free to do this without coercion and fear. These are your rights of free expression, but they are, perhaps even more importantly, your rights to education, which involves the freedom to hear, to read and to consider any number of viewpoints as part of an ongoing public deliberation on this issue. Your presence here, even your support for the event, does not assume agreement among us. There is no unanimity of opinion here; indeed, achieving unanimity is not the goal.

The arguments made against this very meeting took several forms, and they were not always easy for me to parse. One argument was that BDS is a form of hate speech, and it spawned a set of variations: it is hate speech directed against either the State of Israel or Israeli Jews, or all Jewish people. If BDS is hate speech, then it is surely not protected speech, and it would surely not be appropriate for any institution of higher learning to sponsor or make room for such speech. Yet another objection, sometimes uttered by the same people who made the first, is that BDS does qualify as a viewpoint, but as such, ought to be presented only in a context in which the opposing viewpoint can be heard as well. There was yet a qualification to this last position, namely, that no one can have a conversation on this issue in the US that does not include a certain Harvard professor, but that spectacular argument was so self-inflationary and self-indicting, that I could only respond with astonishment.

So in the first case, it is not a viewpoint (and so not protected as extra-mural speech), but in the second instance, it is a viewpoint, presumably singular, but cannot be allowed to be heard without an immediate refutation. The contradiction is clear, but when people engage in a quick succession of contradictory claims such as these, it is usually because they are looking for whatever artillery they have at their disposal to stop something from happening. They don’t much care about consistency or plausibility. They fear that if the speech is sponsored by an institution such as Brooklyn College, it will not only be heard, but become hearable, admitted into the audible world. The fear is that viewpoint will become legitimate, which means only that someone can publicly hold such a view and that it becomes eligible for contestation. A legitimate view is not necessarily right, but it is not ruled out in advance as hate speech or injurious conduct. Those who did not want any of these words to become sayable and audible imagined that the world they know and value will come to an end if such words are uttered, as if the words themselves will rise off the page or fly out of the mouth as weapons that will injure, maim or even kill, leading to irreversibly catastrophic consequences. This is why some people claimed that if this event were held, the two-state solution would be imperiled—they attributed great efficacy to these words. And yet others said it would lead to the coming of a second Holocaust—an unimaginable remark to which I will nevettheless return. One might say that all of these claims were obvious hyperbole and should be dismissed as such. But it is important to understand that they are wielded for the purpose of intimidation, animating the spectre of traumatic identification with the Nazi oppressor: if you let these people speak, you yourself will be responsible for heinous crimes or for the destruction of a state, or the Jewish people. If you listen to the words, you will become complicit in war crimes.

And yet all of us here have to distinguish between the right to listen to a point of view and the right to concur or dissent from that point of view; otherwise, public discourse is destroyed by censorship. I wonder, what is the fantasy of speech nursed by the censor? There must be enormous fear behind the drive to censorship, but also enormous aggression, as if we were all in a war where speech has suddenly become artillery. Is there another way to approach language and speech as we think about this issue? Is it possible that some other use of words might forestall violence, bring about a general ethos of non-violence, and so enact, and open onto, the conditions for a public discourse that welcomes and shelters disagreement, even disarray?

The Boycott Divestment and Sanctions movement is, in fact, a non-violent movement; it seeks to use established legal means to achieve its goals; and it is, interestingly enough, the largest Palestinian civic movement at this time. That means that the largest Palestinian civic movement is a non-violent one that justifies its actions through recourse to international law. Further, I want to underscore that this is also a movement whose stated core principles include the opposition to every form of racism, including both state-sponsored racism and anti-Semitism. Of course, we can debate what anti-Semitism is, in what social and political forms it is found. I myself am sure that the election of self-identified national socialists to the Greek parliament is a clear sign of anti-Semitism; I am sure that the recirculation of Nazi insignia and rhetoric by the National Party of Germany is a clear sign of anti-Semitism. I am also sure that the rhetoric and actions of Iran’s Mahmoud Ahmadinejad are often explicitly anti-Semitic, and that some forms of Palestinian opposition to Israel do rely on anti-Semitic slogans, falsehoods and threats. All of these forms of anti-Semitism are to be unconditionally opposed. And I would add, they have to be opposed in the same way and with the same tenacity that any form of racism has to be opposed, including state racism.

But still, it is left to us to ask, why would a non-violent movement to achieve basic political rights for Palestinians be understood as anti-Semitic? Surely, there is nothing about the basic rights themselves that constitute a problem. They include equal rights of citizenship for current inhabitants; the end to the occupation, and the rights of unlawfully displaced persons to return to their lands and gain restitution for their losses. We will surely speak about each of these three principles this evening. But for now, I want to ask, why would a collective struggle to use economic and cultural forms of power to compel the enforcement of international laws be considered anti-Semitic? It would be odd to say that they are anti-Semitic to honor internationally recognized rights to equality, to be free of occupation and to have unlawfully appropriated land and property restored. I know that this last principle makes many people uneasy, but there are several ways of conceptualizing how the right of return might be exercised lawfully such that it does not entail further dispossession (and we will return to this issue).

For those who say that exercising internationally recognized rights is anti-Semitic, or becomes anti-Semitic in this context, they must mean either that a) its motivation is anti-Semitic or b) its effects are anti-Semitic. I take it that no one is actually saying that the rights themselves are anti-Semitic, since they have been invoked by many populations in the last decades, including Jewish people dispossessed and displaced in the aftermath of the second world war. Is there really any reason we should not assume that Jews, just like any other people, would prefer to live in a world where such internationally recognized rights are honored? It will not do to say that international law is the enemy of the Jewish people, since the Jewish people surely did not as a whole oppose the Nuremburg trials, or the development of human rights law. In fact, there have always been Jews working alongside non-Jews—not only to establish the courts and codes of international law, but in the struggle to dismantle colonial regimes, opposing any and all legal and military powers that seek systematically to undermine the conditions of political self-determination for any population.

Only if we accept the proposition that the state of Israel is the exclusive and legitimate representative of the Jewish people would a movement calling for divestment, sanctions and boycott against that state be understood as directed against the Jewish people as a whole. Israel would then be understood as co-extensive with the Jewish people. There are two major problems with this view. First, the state of Israel does not represent all Jews, and not all Jews understand themselves as represented by the state of Israel. Secondly, the state of Israel should be representing all of its population equally, regardless of whether or not they are Jewish, regardless of race, religion or ethnicity.

So the first critical and normative claim that follows is that the state of Israel should be representing the diversity of its own population. Indeed, nearly 25 percent of Israel’s population is not Jewish, and most of those are Palestinian, although some of them are Bedouins and Druze. If Israel is to be considered a democracy, the non-Jewish population deserves equal rights under the law, as do the Mizrachim (Arab Jews) who represent over 30 percent of the population. Presently, there are at least twenty laws that privilege Jews over Arabs within the Israeli legal system. The 1950 Law of Return grants automatic citizenship rights to Jews from anywhere in the world upon request, while denying that same right to Palestinians who were forcibly dispossessed of their homes in 1948 or subsequently as the result of illegal settlements and redrawn borders. Human Rights Watch has compiled an extensive study of Israel's policy of "separate, not equal" schools for Palestinian children. Moreover, as many as 100 Palestinian villages in Israel are still not recognized by the Israeli government, lacking basic services (water, electricity, sanitation, roads, etc.) from the government. Palestinians are barred from military service, and yet access to housing and education still largely depends on military status. Families are divided by the separation wall between the West Bank and Israel, with few forms of legal recourse to rights of visitation and reunification. The Knesset debates the “transfer” of the Palestinian population to the West Bank, and the new loyalty oath requires that anyone who wishes to become a citizen pledge allegiance to Israel as Jewish and democratic, thus eliding once again the non-Jewish population and binding the full population to a specific and controversial, if not contradictory, version of democracy.

The second point, to repeat, is that the Jewish people extend beyond the state of Israel and the ideology of political Zionism. The two cannot be equated. Honestly, what can really be said about “the Jewish people” as a whole? Is it not a lamentable sterotype to make large generalizations about all Jews, and to presume they all share the same political commitments? They—or, rather, we—occupy a vast spectrum of political views, some of which are unconditionally supportive of the state of Israel, some of which are conditionally supportive, some are skeptical, some are exceedingly critical, and an increasing number, if we are to believe the polls in this country, are indifferent. In my view, we have to remain critical of anyone who posits a single norm that decides rights of entry into the social or cultural category determining as well who will be excluded. Most categories of identity are fraught with conflicts and ambiguities; the effort to suppress the complexity of the category of “Jewish” is thus a political move that seeks to yoke a cultural identity to a specific Zionist position. If the Jew who struggles for justice for Palestine is considered to be anti-Semitic, if any number of internationals who have joined thus struggle from various parts of the world are also considered anti-Semitic and if Palestinians seeking rights of political self-determination are so accused as well, then it would appear that no oppositional move that can take place without risking the accusation of anti-Semitism. That accusation becomes a way of discrediting a bid for self-determination, at which point we have to ask what political purpose the radical mis-use of that accusation has assumed in the stifling of a movement for political self-determination.

When Zionism becomes co-extensive with Jewishness, Jewishness is pitted against the diversity that defines democracy, and if I may say so, betrays one of the most important ethical dimensions of the diasporic Jewish tradition, namely, the obligation of co-habitation with those different from ourselves. Indeed, such a conflation denies the Jewish role in broad alliances in the historical struggle for social and political justice in unions, political demands for free speech, in socialist communities, in the resistance movement in World War II, in peace activism, the Civil Rights movement and the struggle against apartheid in South Africa. It also demeans the important struggles in which Jews and Palestinians work together to stop the wall, to rebuild homes, to document indefinite detention, to oppose military harassment at the borders and to oppose the occupation and to imagine the plausible scenarios for the Palestinian right to return.

The point of the boycott, divestment and sanctions movement is to withdraw funds and support from major financial and cultural institutions that support the operations of the Israeli state and its military. The withdrawal of investments from companies that actively support the military or that build on occupied lands, the refusal to buy products that are made by companies on occupied lands, the withdrawal of funds from investment accounts that support any of these activities, a message that a growing number of people in the international community will not be complicit with the occupation. For this goal to be realized, it matters that there is a difference between those who carry Israeli passports and the state of Israel, since the boycott is directed only toward the latter. BDS focuses on state agencies and corporations that build machinery designed to destroy homes, that build military materiel that targets populations, that profit from the occupation, that are situated illegally on Palestinian lands, to name a few.

BDS does not discriminate against individuals on the basis of their national citizenship. I concede that not all versions of BDS have been consistent on this point in the past, but the present policy confirms this principle. I myself oppose any form of BDS that discriminates against individuals on the basis of their citizenship. Others may interpret the boycott differently, but I have no problem collaborating with Israeli scholars and artists as long as we do not participate in any Israeli institution or have Israeli state monies support our collaborative work. The reason, of course, is that the academic and cultural boycott seeks to put pressure on all those cultural institutions that have failed to oppose the occupation and struggle for equal rights and the rights of the dispossessed, all those cultural institutions that think it is not their place to criticize their government for these practices, all of them that understand themselves to be above or beyond this intractable political condition. In this sense, they do contribute to an unacceptable status quo. And those institutions should know why international artists and scholars refuse to come when they do, just as they also need to know the conditions under which people will come. When those cultural institutions (universities, art centers, festivals) were to take such a stand, that would be the beginning of the end of the boycott (let’s remember that the goal of any boycott, divestment and sanctions movement is to become obsolete and unnecessary; once conditions of equality and justice are achieved, the rationale for BDS falls away, and in this sense achieving the just conditions for the dissolution of the movement is its very aim).

In some ways, the argument between BDS and its opponents centers on the status of international law. Which international laws are to be honored, and how can they be enforced. International law cannot solve every political conflict, but political conflicts that fully disregard international law usually only get worse as a result. We know that the government of the state of Israel has voiced its skepticism about international law, repeatedly criticizing the United Nations as a biased institution, even bombing its offices in Gaza. Israel also became the first country to withhold cooperation from a UN review of its human rights practices scheduled last week in Geneva (New York Times, 1/29/13). I think it is fair to call this a boycott of the UN on the part of the state of Israel. Indeed, one hears criticism of the ineffectiveness of the UN on both sides, but is that a reason to give up on the global human rights process altogether? There are good reasons to criticize the human rights paradigm, to be sure, but for now, I am only seeking to make the case that BDS is not a destructive or hateful movement. It appeals to international law precisely under conditions in which the international community, the United Nations included, neighboring Arab states, human rights courts, the European Union, The United States and the UK, have all failed effectively to rectify the manifest injustices in Palestine. Boycott, divestment and the call for sanctions are popular demands that emerge precisely when the international community has failed to compel a state to abide by its own norms.

Let us consider, then, go back to the right of return, which constitutes the controversial third prong of the BDS platform. The law of return is extended to all of us who are Jewish who live in the diaspora, which means that were it not for my politics, I too would be eligible to become a citizen of that state. At the same time, Palestinians in need of the right of return are denied the same rights? If someone answers that “Jewish demographic advantage” must be maintained, one can query whether Jewish demographic advantage is policy that can ever be reconciled with democratic principles. If one responds to that with “the Jews will only be safe if they retain their majority status,” the response has to be that any state will surely engender an opposition movement when it seeks to maintain a permanent and disenfranchised minority within its borders, fails to offer reparation or return to a population driven from their lands and homes, keeps over four million people under occupation without rights of mobility, due process and political self-determination, and another 1.6 million under siege in Gaza, rationing of food, administering unemployment, blocking building materials to restore bombed homes and institutions, intensifying vulnerability to military bombardment resulting in widespread injury and death.

If we conclude that those who participate in such an opposition movement do so because they hate the Jews, we have surely failed to recognize that this is an opposition to oppression, to the multi-faceted dimensions of a militarized form of settler colonialism that has entailed subordination, occupation and dispossession. Any group would oppose that condition, and the state that maintains it, regardless of whether that state is identified as a Jewish state or any other kind. Resistance movements do not discriminate against oppressors, though sometimes the language of the movement can use discriminatory language, and that has to be opposed. However, it is surely cynical to claim that the only reason a group organizes to oppose its own oppression is that it bears an inexplicable prejudice or racist hatred against those who oppress them. We can see the torque of this argument and the absurd conclusions to which it leads: if the Palestinians did not hate the Jews, they would accept their oppression by the state of Israel! If they resist, it is a sign of anti-Semitism!

This kind of logic takes us to one of the traumatic and affective regions of this conflict. There are reasons why much of the global media and prevailing political discourses cannot accept that a legitimate opposition to inequality, occupation, and dispossession is very different from anti-Semitism. After all, we cannot rightly argue that if a state claiming to represent the Jewish people engages in these manifestly illegal activities, it is therefore justified on the grounds that the Jews have suffered atrociously and therefore have special needs to be exempt from international norms. Such illegal acts are never justified, no matter who is practicing them.

At the same time, one must object to some of the language used by Hamas to refer to the state of Israel, where very often the state of Israel is itself conflated with the Jews, and where the actions of the state reflect on the nature of the Jews. This is clearly anti-Semitism and must be opposed. But BDS is not the same as Hamas, and it is simply ignorant to argue that all Palestinian organizations are the same. In the same vein, those who wrote to me recently to say that BDS is the same as Hamas is the same as the Nazis are involved in fearful and aggressive forms of association that assume that any effort to make distinctions is naïve and foolish. And so we see how the conflations such as these lead to bitter and destructive consequences. What if we slowed down enough to think and to distinguish—what political possibilities might then open?

And it brings us to yet another outcry that we heard in advance of our discussion here this evening. That was BDS is the coming of a second holocaust. I believe we have to be very careful when anyone makes use of the Holocaust in this way and for this purpose, since if the term becomes a weapon by which we seek to stigmatize those with opposing political viewpoints, then we have first of all dishonored the slaughter of over 6 million Jewish people, and another 4 million gypsies, gay people, disabled, the communists and the physically and mentally ill. All of us, Jewish or not Jewish, must keep that historical memory intact and alive, and refuse forms of revisionism and political exploitation of that history. We may not exploit and re-ignite the traumatic dimension of Hitler’s atrocities for the purposes of accusing and silencing those with opposing political viewpoints, including legitimate criticisms of the state of Israel. Such a tactic not only demeans and instrumentalizes the memory of the Nazi genocide, but produces a general cynicism about both accusations of anti-Semitism and predictions of new genocidal possibilities. After all, if those terms are bandied about as so much artillery in a war, then they are used as blunt instruments for the purposes of censorship and self-legitimation, and they no longer name and describe the very hideous political realities to which they belong. The more such accusations and invocations are tactically deployed, the more skeptical and cynical the public becomes about their actual meaning and use. This is a violation of that history, an insult to the surviving generation, and a cynical and excited recirculation of traumatic material—a kind of sadistic spree, to put it bluntly—that seeks to defend and legitimate a very highly militarized and repressive state regime. Of the use of the Holocaust to legitimate Israeli military destructiveness, Primo Levi wrote in 1982, “I deny any validity to [the use of the Holocaust for] this defence.”

We have heard in recent days as well that BDS threatens the attempt to establish a two-state solution. Although many people who support BDS are in favor of a one-state solution, the BDS movement has not taken a stand on this explicitly, and includes signatories who differ from one another on this issue. In fact, the BDS committee, formed in 2005 with the support of over 170 organizations in Palestine, does not take any stand on the one state or two state solution. It describes itself as an “anti-normalization” politics that seeks to force a wide range of political institutions and states to stop compliance with the occupation, unequal treatment and dispossession. For the BDS National Committee, it is not the fundamental structure of the state of Israel that is called into question, but the occupation, its denial of basic human rights, its abrogation of international law (including its failure to honor the rights of refugees), and the brutality of its continuing conditions—harassment, humiliation, destruction and confiscation of property, bombardment, and killing. Indeed, one finds an array of opinions on one-state and two-state, especially now that one-state can turn into Greater Israel with separated Bantustans of Palestinian life. The two-state solution brings its own problems, given that the recent proposals tend to suspend the rights of refugees, accept curtailed borders and fail to show whether the establishment of an independent state will bring to an end the ongoing practices and institutions of occupation, or simply incorporate them into its structure. How can a state be built with so many settlements, all illegal, which are expected to bring the Israeli population in Palestine to nearly one million of its four million inhabitants. Many have argued that it is the rapidly increasing settler population in the West Bank, not BDS, that is forcing the one-state solution.

Some people accept divestment without sanctions, or divestment and sanctions without the boycott. There are an array of views. In my view, the reason to hold together all three terms is simply that it is not possible to restrict the problem of Palestinian subjugation to the occupation alone. It is significant in itself, since four million people are living without rights of mobility, sovereignty, control over their borders, trade and political self-determination, subjected to military raids, indefinite detention, extended imprisonment and harassment. However, if we fail to make the link between occupation, inequality and dispossession, we agree to forget the claims of 1948, bury the right to return. We overlook the structural link between the Israeli demand for demographic advantage and the multivalent forms of dispossession that affect Palestinians who have been forced to become diasporic, those who live with partial rights within the borders, and those who live under occupation in the West Bank or in the open air prison of Gaza (with high unemployment and rationed foods) or other refugee camps in the region.

Some people have said that they value co-existence over boycott, and wish to engage in smaller forms of binational cultural communities in which Israeli Jews and Palestinians live and work together. This is a view that holds to the promise that small organic communities have a way of expanding into ever widening circles of solidarity, modeling the conditions for peaceable co-existence. The only question is whether those small communities continue to accept the oppressive structure of the state, or whether in their small and effective way oppose the various dimensions of continuing subjugation and disenfranchisement. If they do the latter, they become solidarity struggles. So co-existence becomes solidarity when it joins the movement that seeks to undo the structural conditions of inequality, containment and dispossession. So perhaps the conditions of BDS solidarity are precisely what prefigure that form of living and working together that might one day become a just and peaceable form of co-existence.

One could be for the BDS movement as the only credible non-violent mode of resisting the injustices committed by the state of Israel without falling into the football lingo of being “pro” Palestine and “anti” Israel. This language is reductive, if not embarrassing. One might reasonably and passionately be concerned for all the inhabitants of that land, and simply maintain that the future for any peaceful, democratic solution for that region will become thinkable through the dismantling of the occupation, through enacting the equal rights of Palestinian minorities and finding just and plausible ways for the rights of refugees to be honored. If one holds out for these three aims in political life, then one is not simply living within the logic of the “pro” and the “anti”, but trying to fathom the conditions for a “we”, a plural existence grounded in equality. What does one do with one’s words but reach for a place beyond war, ask for a new constellation of political life in which the relations of colonial subjugation are brought to a halt. My wager, my hope, is that everyone’s chance to live with greater freedom from fear and aggression will be increased as those conditions of justice, freedom, and equality are realized. We can or, rather, must start with how we speak, and how we listen, with the right to education, and to dwell critically, fractiously, and freely in political discourse together. Perhaps the word “justice” will assume new meanings as we speak it, such that we can venture that what will be just for the Jews will also be just for the Palestinians, and for all the other people living there, since justice, when just, fails to discriminate, and we savor that failure.

© 2012 The Nation

Judith Butler

Judith Butler is a professor in the Rhetoric and Comparative Literature department at UC Berkeley. She is the author of several books on feminist theory, continental philosophy and contemporary politics.

The Real Debt Issue: It’s Not How Much We Will Owe, It’s Who Will...

There’s a dirty little secret lurking behind the Republican’s debt and deficit hysteria.

No, it’s not the fact that austerity during an economic downturn is a proven way to shrink the economy and create debt.  Although true, that’s hardly a secret. Economists are just about screaming it out to anyone who will listen. 

And no, it’s not the fact that every country that’s tried austerity in an economic downturn is either experiencing a double dip recession or approaching one.  That’s a matter of record that folks like Krugman, and Reich and Stiglitz have been pointing out on a near daily basis.

And no, it’s not the fact that countries like Iceland and China that ignored the austerity mongers have prospered.

It’s not even the fact that Republicans don’t really give a damn about deficits.

Nope.  The dirty little secret is that if we follow their advice, we the people will end up with more debt than if we don’t, and fat cats and corporations will be holding the note.

Here’s why.

First, the main drivers of debt – medical and retirement costs – are much cheaper when administered by government. Impossible you say?  Why, doesn’t everyone know that big ol’ gubmint’ is clumsy and inefficient, while the private sector is agile and efficient.

Well, let’s step outside the bubble for a moment and check some facts.  You know, the things that make up reality.

First, overhead on Medicare, Medicaid, Veteran’s health care and Social Security are far lower than private sector equivalents.  Overhead for Medicare comes in at around 2% while private health insurance averages close to 17% of revenue.  And Medicare gets higher satisfaction rates and better health outcomes than private insurance. 

We will need medical care and retirement, regardless of whether it is provided by government or the private sector.  And we will have to pay for them – either by taxes or out of pocket.

Countries like Chile that experimented with private sector versions of social security experienced overheads of 14% or more, while social security has an administrative overhead of about 4%. 

Or take student loans.  Until public pressure forced Congress to kill it, a heavily subsidized private sector loan program ran in parallel to the federal direct loan program.  Even with the subsidies, the banks couldn't compete with the more efficient government program.

The second reason you’ll owe more if we cut government is that government is far better at containing cost increases. 

The single biggest factor driving debt is health care. The share of the economy devoted to health care grew from about 7.2 percent in 1970 to 17.9 in 2010, and it is expected to reach 25% of the economy by 2025.  

If we cut the budget and privatize health care this dizzying increase will continue – in fact it will accelerate, because Medicare is far more effective at containing costs than private health insurance.

The third reason you’ll end up with more debt is that corporations have a fiduciary responsibility to put profits over people.

Overturning the Glass-Steagal Act was a critical part of the conservative playbook. Until Clinton’s adminstration, banks were prohibited from taking your money and playing beach blanket bingo with it.  Now they routinely take big risks with your money.  Why? Because we the people are underwriting those risks with our taxes. 

And once we gut the budget, the already lame enforcement of the financial sector will get even worse, as the SEC is targeted for deep cuts.

Because Republicans  -- and some Democrats – fought “too big to fail” we now have even fewer banks controlling more of our collective national wealth.  This not only concentrates economic power, it concentrates political power. 

Already income disparity in the US is worse than in Iran or Cambodia, and the US ranks lower on intergenerational income mobility than just about any developed country.  In short, you’re getting a smaller share of the economic pie, and your kids will get even less.   

The reason all this is occurring is because for 30 years we’ve been pushing policies that favor speculators and the uber rich over wage earners and the middle class, and because we’ve let the private market run amuck.  Not surprisingly, the market does what it does best – it concentrates wealth. Today, the top fifth of the population has 87% of the nation's wealth, while the bottom fifth now has no net wealth (PDF).  If we keep the same policies we’ll continue to concentrate wealth, and spread debt.

We will need medical care and retirement, regardless of whether it is provided by government or the private sector.  And we will have to pay for them – either by taxes or out of pocket. 

The only difference is, who will hold be holding the note.  A government that can contain costs and deliver services efficiently – a government that can borrow at low or no cost and print money. Most importantly, one that must answer to us.  Or a private sector that is unconstrained, motivated by maximizing profits, and uninterested in controlling costs. 

Our personal debt will be larger if we choose the conservative playbook.  And the disparity in wealth and income that has marked the last 30 years will accelerate.  Yeah, eventually the deficit might go down, but you are unlikely to care much as you drive your decrepit car past an opulent gated community on your way to a low paying job you can’t afford to leave because you’re mired in private debt.

John Atcheson

John Atcheson is author of the novel, A Being Darkly Wise, an eco-thriller and Book One of a Trilogy centered on global warming. His writing has appeared in The New York Times, the Washington Post, the Baltimore Sun, the San Jose Mercury News and other major newspapers. Atcheson’s book reviews are featured on Climateprogess.org.

23 Policies That Would Make It Easier To Save The World

It's been said that the wealthy win because they can always hire half the poor to shoot the other half. Rarely is there a sadder case of this than when it comes to trying to protect the planet that feeds us, clothes us, and generates the only pocket of breathable atmosphere in our solar system.

Baby Weddell seal, by Samuel BlancBecause look, say you're a committed environmentalist, your beloved spouse has treatable cancer, and the only way to save his or her life is to take a job clubbing the last baby seal on the beach. That seal is toast. And so is anything or anyone else that stands between your partner and their chemo.

Don't think the greedy jerks who own everything don't know it; they downright count on it to get their way.

Driving down wages, increasing animosity among the lower classes by scapegoating various segments of also-poor people, decreasing the health and safety of working conditions -- these aren't unfortunate side effects of our current economic incentive structures. They are the point, fueling a vicious cycle where more profits flow to the top while workers are too desperate to do anything about it. The effect, as it was recently said, is this:

The great problem we have today in improving our society, in fixing our economy, is that so many people don't want to give up what they have. . . . [W]hat the past 40 years have proven is this: if you lose your job, you're on your own. If you're in your 40s and 50s and you lose a good job, you'll probably never, ever, have a good job ever again. . . .

People know, they know and they are right, that economic change, in our society, could cost them everything. Their job and any prospect of a good job. Their house. Their marriage. Their health care and even their life.

So they grasp tightly to what they have, and everyone fights to make sure that nothing really changes. Each person, with their little or big piece of the pie, fights viciously to keep it whether it's good for society or not. They are right to do so.

The biggest enemy of our environment, therefore, is mass desperation wielded like a billy club in the hands of the extremely wealthy. The following are some ideas on how to both disarm them and take the next steps towards creating a more awesome society to live in.

-----

1. Increase the minimum wage. Adjusted for inflation, the minimum wage is lower than it was in the 1970s. It's not a family wage, even though it's all some families can get. Yet the whole time it's been declining, productivity and profits have gone up, but a fair share of the increase hasn't been passed on to workers. Raising the minimum wage would put upward pressure on the share of business profits that go to workers, making life less precarious for millions of people.

2. Shorten the work week and increase paid time off. It's hard to have an engaged citizenry when work demands so much of people's time that they can barely unwind, let alone follow the news. A full-time work week barely leaves time to be a good parent, a good friend, or even a good housekeeper; forget hitting the mark on all three. The idea that a 40 hour work week, plus the 10-20 hours of preparation and commute time involved, is a reasonable base amount of time to demand of someone is premised on the social expectations of a bygone era where a full-time worker had a full-time caregiver at home. Lowering the full-time work week to even 35 hours would not only create more job openings, it would likely boost per hour productivity, as it has done in some European nations.

3. Cut higher education and worker retraining costs to students. In the era of the GI Bill, not only was it free for returning veterans to go to college, it was affordable for almost anyone who could spring a part-time summer job. But federal funding cuts have piled on top of state funding cuts, and tuition is now ridiculous at most public colleges. It's patently ridiculous to saddle new college graduates with a mortgage-worth of debt when they graduate and set out on their own. Particularly when the value of a college education has decreased for so many, but is nonetheless necessary because it's barely possible anymore to find family-wage blue collar employment. And when people lose their jobs, they should be able to retrain, if possible, if they can't find work in their original field.

4. Restore federal funding for university research programs. Research departments have had to increasingly rely on industry funding, a type of ballyhooed public-private partnership, which has reduced the independence and objectivity of the nation's research institutions to everyone's detriment. There are many cases, but you have to look no further than the way the fossil fuel industry has corrupted university research on fracking, such that very little information at all is available about the risks of hydraulic fracturing recovery of natural gas, and the public must mainly rely on anecdotes and independent filmmakers to hear anything negative about its consequences.

5. Expand unemployment insurance. Want workers not to fear the loss of outdated, polluting industries? Make sure they know they won't be out on the street if they have to look for work for a while, and that they don't have to take the first crappy job that comes their way. It would go a long way towards preventing rank-and-file workers from fighting to the death to defend industries that are long past their sell-by date.

6. Break up the big banks. The financial sector has grown significantly in terms of their share of GDP and has been the biggest accelerant of income inequality in the country. Add to that the longstanding investment policies of these very large banks to either refuse loan capital to, or downgrade the ratings of, businesses who refuse to move production overseas, bust unions, liquidate pensions or drive down wages, and they have overweening power to make life miserable for the average worker. They can no longer be trusted in any respect to be good stewards of the capital they've extracted from the rest of us and their power must be dismantled.

7. Financial transaction tax. Rapid-fire speculation, computerized trading, reckless short-term investing, all add to financial insecurity and promote a casino atmosphere in stock exchanges. It doesn't create a good economy for the average person, though, and these tax-free transactions privilege investors over every other sector of society that has to pay taxes when money changes hands. And there's no one it's more fair to ask to pony up for the public good than the people who've been busily dismantling democracy all these years.

8. Tax capital gains as income. Since capital gains are taxed at very low rates, the wealthy have been incentivized to collect more and more of their household income as some form of investment payout, and disincentivized to reinvest in the productive economy. It's just another way to encourage the wealthy to uselessly hoard cash and is grossly unjust. Tax it fairly and spend it on building a better world.

9. Crack down on overseas tax evasion. With feeling, the wealthy must stop unproductively hoarding cash and starving the public of the funds to run a civil society. This must become unacceptable in every country.

10. Move your money. While large, unaccountable international financial institutions have an incentive to starve their native economies and follow the global race to the bottom wherever it may lead, they're not the only banks. The prosperity of independent credit unions and community banks is much more directly tied to the prosperity of their local economies and the well-being of their customers. These institutions can't afford to recklessly gamble with their financial reserves and are among the most responsible actors in the financial sector. If you can take your business to one of them, please do.

11. Uncap Social Security taxes. If FICA taxes were collected on all income, not just that below the inflation-adjusted, currently ~$110,000 threshold, it would make the program solvent for the foreseeable future. Taking Social Security's solvency off the table for the next few decades would remove a significant wedge issue used by the financial elite to distract the public by leaving us terrified that we're going to wind up homeless when we're too old to work anymore.

12. Lower the retirement age. Increases in the