May 2, 2009, Issue #146
HUDSON VALLEY ACTIVIST NEWSLETTER/CALENDAR
The Activist Newsletter, published in New Paltz, N.Y., appears once a month, supplemented by the Activist Calendar of progressive events, which is sent to Hudson Valley readers only. Editor: Jack A. Smith (who writes the articles that appear without a byline or credit to other publications). He is the former editor of the (U.S.) Guardian Newsweekly. Copy Editor: Donna Goodman. Calendar Editor: Rocco Rizzo. If you know someone who may benefit from this newsletter, ask them to subscribe at firstname.lastname@example.org. If you no longer wish to receive the newsletter, unsubscribe at the same address. Please send event listings to the above email address. The current and back issues of the newsletter/calendar are available at http://activistnewsletter.blogspot.com.
1. THE U.S. AND CUBA — All is not as it seems in terms of the Obama Administration's intentions toward Havana, and there's much more continuity than change, but pressure on Washington from other Latin American countries might force the White House to ease up, a little.
2. Editorial: THE POWER OF LABOR — The labor movement is weak but it may become stronger with passage of the Employee Free Choice Act if conservative Democratic Senators don't doom this progressive measure.
3. CONSERVATIVES TRY TO BLOCK LABOR'S EFCA — Big Business and the right wing have launched an intensive campaign to defeat the Employee Free Choice Act. This article explains what's a stake and refutes Republican allegations that the legislation will "deprive workers of a secret ballot" and that an increase in union membership will lead to greater unemployment.
4. HIGH POVERTY, LOW BENEFITS — The OECD ranks the U.S. 28th out of 30 industrialized countries in terms of its poverty rate. Turkey and Mexico are worse.
5. NEW STATISTICS FOR TROUBLED TIMES — It's amazing how few people it took to catapult the capitalist system into a serious global economic recession that won't end soon.
6. REFLECTION ON PAST WARS — Here's our May 16 Armed Forces Day special: comments from five U.S. generals involved in different American wars during two centuries, who upon retirement seem to have altered their belligerent tone.
7. REFLECTION ON PRESENT WARS — Since Memorial Day May 25 often tends to glorify ongoing wars while grieving for the dead of past wars, here's what poet Bertolt Brecht has to say about war.
8. CHECK IT OUT — Various items of interest with links to original sources.
9. CENTRIST DEMOCRATIC GROUPS VIE FOR POWER — There are so many political centrists in Washington as a result of the Democratic capture of Congress and the White House that some of their number evidently think the town, or at least the spotlight, isn't big enough for all of them.
10. QUOTES IN THE NEWS — Animal rights; Gaza; world water shortage; Red Cross torture report; and the 1919 general strike.
11. THE NEWS IN BRIEF — Canada bars antiwar British parliamentarian; American cops increase Taser use; U.S. finally indicts anti-Cuba terrorist; Supreme Court rejects Mumia's appeal; increase in military domestic violence; sentence reduced for Iraqi show thrower; red and processed meat increase health risk; and jury backs Ward Churchill.
12. VENEZUELA'S MOVES TOWARD SOCIALISM — The U.S. news media usually presents a quite toxic version of political events in Venezuela, so here's an antidote.
13. GAY RIGHTS IN LATIN AMERICA — There have been some important advances.
14. MOSELEY: NATIONALIZE THE BANKS — "If the big banks are 'too big to fail' they should be public," writes leftist Professor Fred Moseley.
15. KRUGMAN: MONEY FOR NOTHING — "There’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks," writes liberal economist Paul Krugman.
16. STIGLITZ: BANK RESCUE MAY FAIL — Another well known liberal economist, and like Krugman a Nobel Prize winner, tells Bloomberg News that the Obama Administration’s bank-rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system,
17. CHINA AT A CROSSROAD? — Shanghai Professor Jian Junbo speculates whether China will move left or right in the near future.
1. THE U.S. AND CUBA
Cuban President Raul Castro made it clear April 29 that while Havana was willing to discuss "everything, everything, everything" with Washington, such talk must be "on an equal footing."
Addressing the ministerial meeting of the Non-Aligned Movement in Havana, the Cuban leader also declared that "we are not willing to negotiate our sovereignty or our political and social system, our right to self-determination or our domestic affairs."
President Barack Obama declared before and after he assumed office that his administration would not end Washington's five decade economic sanctions against Havana and other efforts to bring about regime-change until the Cuban government transformed its political and social system to the liking of the White House and Congress.
U.S. policy in this regard essentially remains as it has been for 50 years since the Cuban Revolution led by Fidel Castro liberated the nation from a domestic dictatorship supported by Washington and six decades of Yankee hegemony and occasional invasions. Despite recent indications of a softer policy toward Cuba by the new U.S. government, Washington still does not intend to tolerate a communist government in the Western Hemisphere.
This does not mean there can be no progress in talks between the United States and Cuba. Each side has simply reiterated its known positions. Cuba, however, has a strong hand this time, and may be able to make a few gains. Virtually every country in Latin America and the Caribbean has demanded an end to the economic blockade and to continual U.S. efforts to isolate and destroy the Cuban government. This is not exactly new, but the circumstances are different.
The U.S. has enjoyed hegemony throughout Latin America for over 100 years, dominating most of the economies and governments. One of the longstanding jokes in the region goes as follows: Q. "Why has the United States never experienced a military coup?" A. "Because it doesn't have an American embassy in its country."
But in the last decade the political situation has changed substantially. Many Latin American governments have moved toward the left, some more than others, and have distanced themselves in various degrees from Washington's policies. The increasing failure of the neoliberal economic model that the U.S. imposed on many countries in the region is a major factor as well.
The Obama Administration has no intention of "losing" Latin America and the Caribbean. Washington recognizes it can no longer rule this roost as it has done before, but it certainly plans to retain its "leadership" and dominant political and economic influence — using honey, where required, instead of a hammer, at least for the time being. But hegemony in the Western Hemisphere remains the name of Washington's foreign policy game, particularly as U.S. power is diminishing in the rest of the world.
In the process the White House may come to realize that it's best to lay off the overt rough stuff with Cuba if it wants the rest of Latin America to believe that the obnoxious George W. Bush has been replaced by President Nice New Guy.
At the same time Washington is well aware there's more than one way to subvert a poor island country much smaller in size and power: make peace and take the fortress from within with money, promises and seeming good will — as though the Cuban government is not prepared for Uncle Sam to do precisely this if it decides upon a "soft" takeover. Cuba has not survived the enmity of 10 U.S. governments, and the collapse of the socialist world, in order to naively walk into a trap. These people will go back to the Sierra Maestra Mountains, if necessary, to save their socialist system.
We shall go into far more detail on U.S. relations with Latin America and Cuba in our next issue of the newsletter, but there's more to say here about Raul Castro's speech two days ago.
Cuba has had excellent relations with the Non-Aligned Movement, now composed of nearly 120 developing countries, for over 40 years, and is presently NAM's chair. Washington always tries to depict Cuba as isolated and shunned, but it has the support of many countries. Over the years Havana has played a leading role in clarifying the NAM's economic and political needs in a world now controlled by the rich capitalist states since the implosion of the USSR.
President Castro told the meeting that "We are currently afflicted by deep economic, social, food, energy and environmental crises that have become global. The international debates are multiplied but they do not engage every country," most particularly, of course, the developing non-aligned nations.
"It is impossible," the Cuban leader continued, "to sustain the unfair and irrational consumption patterns that served as the basis to the current international order imposed by a few that we have been forced to respect. A global order inspired in hegemonic pretenses and the selfishness of privileged minorities is neither legitimate nor ethically acceptable. A system that destroys the environment and promotes unequal access to riches cannot last. Underdevelopment is an unavoidable result of the current world order.
"Neoliberalism has failed as an economic policy. Today, any objective analysis raises serious questions about the myth of the goodness of the market and its deregulation; the alleged benefits of privatizations and the reduction of the states' economic and redistribution capacity; and the credibility of the financial institutions."
At this point Castro noted that in the year 2008 "the number of people starving in the world mounted from 854 million to 963 million." He didn't have to mention what part of the globe these starving human beings live in. The delegates to the conference knew only too well.
He continued: "The UN has estimated that $80 billion a year for a decade would be enough to eradicate poverty, hunger and the lack of health and education services and houses all over the world. That figure is three times lower than what the [poorer, developing] South countries spend every year to pay their foreign debt [to the rich countries].
"The international system of economic relations requires fundamental changes. This was demanded almost 35 years ago by the member countries of our Movement…. The solution to the global economic crisis demands a coordinated action with the universal, democratic and equitable participation of all countries. The response cannot be a solution negotiated by the leaders of the most powerful nations without the participation of the United Nations.
"The G-20 solution calling for the strengthening of the role and functions of the International Monetary Fund, whose nefarious policies had a decisive effect on the emergence, aggravation and magnitude of the current crisis cannot solve inequality, injustice or the unsustainability of the present system….
"The practice of multilateralism requires absolute respect for the sovereignty and territorial integrity of the states and for the self-determination of the peoples. It also demands to dispense with threats and the use of force in international relations, and to do without hegemonic aspirations and imperial behavior. It requires to put an end to foreign occupation and to deny impunity to such criminal aggressions as those of Israel against the Palestinian people."
Raul Castro's comments were a continuation of the enlightened perspective Cuba has been putting forward on these important matters internationally for decades. They are not remarks that resonate in Washington or in many developed, industrialized capitals, but they hit home with the poorer countries that have experienced hunger, humiliation and hostility from the rich countries.
By the year 2050, when today's 6.8 billion people enlarge at minimum to 9 billion, the increase in world poverty — compounded by inadequate attention from the rich countries and the probability that global warming will create much more hardship — will extend to a larger majority of the world population, causing a crisis of historic proportions.
Cuba has been fighting to turn this situation around for a long time. What has the United States done about it except to make the problem worse and demonize Cuba? On May Day, the day after President Castro's speech — undoubtedly by coincidence, but symbolically significant — news agencies reported that the Obama Administration has "retained communist Cuba on a list of countries that support terrorism." The State Department is well aware there's not a bit of truth to the change.
That same afternoon of International Workers Day, Raul Castro and up to a half-million fellow citizens massed in Havana's Revolution Square to honor the working people of the world and to emphasize once again that they have the right to determine their own future, and they will exercise that right rather bravely under Uncle Sam's disapproving nose.
2. Editorial: THE POWER OF LABOR
Eugene V. Debs (1855-1926), was a fiery union leader, a founder of both the American Railway Union (the nation's first industrial union) and the Industrial Workers of the World. He was also the five-time socialist candidate for president who gained 3.42% of the popular vote in 1920, campaigning from the jail cell he occupied since his conviction in 1918 for giving a speech opposing World War I.
As a left wing unionist and politician Debs obviously would have reservations about the lack of militancy and class struggle in today's union movement. Yet he also had great understanding of the crucial importance of unions in good times or bad, strong leadership or weak, and he knew things could change. This one brief paragraph — indeed, one long sentence of 130 words, yet entirely readable — from the book "Debs: His Life, Writings, and Speeches" is worth reflecting upon in relation to labor's weaknesses and potentials:
"Ten thousand times has the labor movement stumbled and fallen and bruised itself, and risen again; been seized by the throat and choked and clubbed into insensibility; enjoined by courts, assaulted by thugs, charged by the militia, shot down by regulars, traduced by the press, frowned upon by public opinion, deceived by politicians, threatened by priests, repudiated by renegades, preyed upon by grafters, infested by spies, deserted by cowards, betrayed by traitors, bled by leeches, and sold out by leaders, but — notwithstanding all this, and all these — it is today the most vital and potential power this planet has ever known, and its historic mission of emancipating the workers of the world from the thralldom of the ages is as certain of ultimate realization as the setting of the sun."
A far stronger and more progressive labor movement is necessary if ever there is to be significant social reform in our society to strengthen democracy, including economic democracy, and greatly empower the multitudes. The first step in this direction is to sweep away the reactionary anti-labor legislation that for decades has been placed in the path of social progress by the right wing and big business.
On the immediate agenda is passage of the Employee Free Choice Act to make it easier for workers to secure collective bargaining and union protection. By its control of the White House and Congress the Democratic Party has the power to pass EFCA and other legislation to strengthen the unions and the working majority in our country. At issue is whether conservative Democrats bloc with the Republicans to weaken or kill the measure.
All of us to the left of Herbert Hoover should be discussing EFCA with our friends, family and fellow workers, and keeping up the pressure on politicians. The article below has a great deal of useful information about the Employee Free Choice Act that may come in handy.
If the Democrats fail to deliver on their promise to enact this legislation when they have the power, it will be one more instance of what Debs would call being "deceived by politicians," or even "deserted by cowards," and perhaps the unions will begin to understand they have other viable progressive political options.
3. CONSERVATIVES TRY TO BLOCK LABOR'S EFCA
Big Business and the right wing have launched an intensive nationwide campaign to defeat the Employee Free Choice Act (EFCA) when it comes before Congress sometime in late spring or summer.
The Obama Administration and most Democratic members of the House and Senate have stated their support for this important bill, but some conservative congressional Democrats may join with the unified Republican minority to block its passage.
Union membership has declined sharply over recent decades, largely because anti-labor laws make it extremely difficult to organize in new workplaces. Opinion polls show that millions more workers would join unions if obstacles were removed, not the least reason being that organized workers enjoy higher wages, benefits and job protections.
Union workers presently constitute 12.4% of the employed work force, just over 16 million workers. In the private sector, only 7.6% of the workers are in unions, but in government employment — federal, state, county and local — it's 36.8%. These figures represent a small but welcome increase in unionization last year. New York State has the highest rate of overall union membership, 24.9%.
Passage of EFCA is backed by both labor federations and all unions, most members of Congress, virtually all moderate, liberal and left organizations and, according to public opinion polls, by 73% of the people. If it becomes law, and it's still an "if," many more workers will seek unions to represent them, and stronger unions will enhance political campaigns for progressive political and social reform in the United States.
Stronger unions, in fact, may embolden labor leaders to take a more forceful political stance on behalf of the working class and lower middle class. This is their principal constituency, although union leaders usually only speak of an amorphous "middle class," archly including everyone earning between $25,000 and $250,000 a year, all presumably sharing the weal and woe of their class.
The possibility of stronger unions is perceived by many big and small businesses, by the very rich and by conservatives as a threat to their interests, and they are engaged in an extensive and expensive propaganda and lobbying campaign to kill the measure, distorting the truth at every opportunity. The U.S. Chamber of Commerce and other anti-union businesses and groups are spending at least $200 million to scuttle the Employment Free Choice effort. Other business groups have so far spent $30 million on anti-labor commercials. The Republican Party is among the most vocal critics, as expected. Sen John McCain referred to EFCA as "a threat to one of the fundamentals of democracy." The Senate Minority Leader, Mitch McConnell said it was "outrageous."
The union movement has collected some choice quotes from big business leaders and GOP politicians to illustrate the shabbiness of the conservative efforts. Here are a few examples:
• Chamber of Commerce Vice President Randel Johnson, who is leading the group's lobby efforts against the bill, said the fight against EFCA will be "a firestorm bordering on Armageddon."
• Former Republican House Speaker Newt Gingrich, who desires his party's presidential nomination in the 2012 election, considers EFCA nothing less than "a mortal threat to American freedom."
• Bernie Marcus, the wealthy entrepreneur, co-founder and former CEO of Home Depot, believes passage of the bill would lead to "the demise of a civilization."
• Gary Shapiro, the president and CEO of the Consumer Electronics Association representing some 2200 companies, opines that if EFCA became law it would "quickly put our American way of life at risk."
• Former Republican Gov. Mitt Romney, who would like to beat out Gingrich for the 2012 nomination, sums it all up in one word: "Calamitous."
Union organizing campaigns are presently governed by the National Labor Relations Act, which became law in 1935 to encourage collective bargaining and to protect the rights of workers and employers. It holds that "Employees shall have the right to self-organization, to form, join, or assist labor organizations."
But according to the AFL-CIO "the current labor law system is broken. Corporations routinely intimidate, harass, coerce and fire people who try to organize unions — and today’s labor law is powerless to stop them. Every day, corporations deny working people the freedom to make their own choice about whether to have a union."
The union movement often cites information from Kate Bronfenbrenner, the director of Labor Education Research at Cornell's School for Industrial and Labor Relations, to back up its charges. Here are some of her findings over the years and recorded in her books and research papers:
• Some 92% of private-sector employers, when faced with workers who want to join together in a union, force them to attend closed-door meetings to hear anti-union propaganda; 80% of bosses require supervisors to attend training sessions on attacking unions; and 78% insist that supervisors deliver anti-union messages to workers they oversee.
• About 75% of companies hire outside consultants to run anti-union campaigns, often based on mass psychology and distorting the law.
• Half of employers threaten to shut down partially or totally if employees join together in a union.
• In 25% of organizing campaigns, private-sector employers illegally fire workers because they want to form a union.
• Even after workers successfully form a union, in one-third of the instances, employers do not negotiate a contract.
The AFL-CIO argues that EFCA will accomplish "three things to level the playing field." (1) The bill strengthens penalties against companies that illegally coerce or intimidate employees to prevent them from forming a union. (2) It brings in a neutral third party to settle a contract when a company and a newly certified union cannot agree on a contract after three months. (3) The measure lets employees decide how to express their choice to organize, either by balloting or by majority sign-up, meaning that if a majority of the employees sign union-authorization cards, validated by the National Labor Relations Board (NLRB), a company must recognize the union.
Business owners, investors and trade organizations make two major points in opposing passage of Employee Free Choice: First, the proposed new law is called "undemocratic" and coercive because it will "deprive workers of a secret ballot." Second, the bosses maintain that unions create unemployment because they demand better pay and benefits for the workers, forcing companies to relocate, shrink or close. Since EFCA would reduce barriers to unionization, it is alleged by the conservatives, many more workers will be unemployed.
Both these allegations are false, as we shall demonstrate. They are constantly evoked in anti-EFCA propaganda in order to create fear among working families and to provide conservative politicians with the semblance of a rational augment to justify a position that in reality is designed to deprive workers of their right to improved wages, benefits and working conditions.
Is EFCA undemocratic and coercive? Actually, it's the current system that is undemocratic. Says the AFL-CIO: "Employers have turned the NLRB election process into management-controlled balloting. The employer has all the power, controls the information workers can receive and routinely poisons the process by intimidating, harassing, coercing and firing people who try to organize unions. On top of that, the law’s penalties are so insignificant that many companies treat them as just another cost of doing business. By the time employees vote in an NLRB election, if they can get to that point, a free and fair choice isn’t an option. Even in the voting location, workers do not have a free choice after being browbeaten by supervisors to oppose the union or being told they may lose their jobs and livelihoods if they vote for the union."
The new legislation would greatly simplify an extremely one-sided and cumbersome process. Under EFCA, if a majority of workers sign authorization cards for union representation that are validated by the federal government, the company must then recognize and bargain with the union. Companies have the right to allow this now, and over the years quite a number of them have bypassed the NLRB procedure in favor of authorization cards — but that choice, currently, is up to management, not labor.
Employee Free Choice gives the same right to the workers. It's called "majority sign-up," or "card-check." And even if a majority have signed up but one-third of the workers still want to have an NLRB election, all they need do is request one from the federal government.
One of management's allegations is that majority sign-up is a form of pressure on workers. The AFL-CIO says this in untrue: "Academic studies show that workers who organize under majority sign-up feel less pressure from co-workers to support the union than workers who organize under the NLRB election process. Workers who vote by majority sign-up also report far less pressure or coercion from management to oppose the union than workers who go through NLRB elections. In addition, it is illegal for anyone to coerce employees to sign a union-authorization card. Any person who breaks the law will be subject to penalties under the Employee Free Choice Act."
Will EFCA create unemployment because unions and union wages hurt businesses and harm U.S. competitiveness abroad, as conservatives allege?
This is an old anti-union canard, going back generations, revived to block EFCA. In order to prove their case, business interests paid for a study given widespread media coverage that was actually based on a small sampling in three Canadian provinces and then unscientifically extrapolated to apply to the U.S.
An important theorist behind the assumption that unions cause joblessness is Lawrence Summers, President Clinton's Treasury Secretary and now President Barack Obama's director of the National Economic Council. If pinned down publicly Summers will probably find a way to wiggle out of it, just as he will if ever queried about being a major force behind the deregulation of the financial markets that brought about the recession. But here's what he wrote a few years ago, published in the second edition (2005) of "The Concise Encyclopedia of Economics," edited by David R. Henderson:
"Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment." In the article Summers also said that "welfare payments and unemployment insurance… contribute to unemployment" because they are incentives not to work.
One way to refute the union-unemployment charge is to check the statistics. North Carolina, with the lowest rate of unionization in the U.S., 3.5%, has the fourth highest rate of unemployment in the U.S. this month, 10.7%. A more scientific refutation was published in a Feb. 12 briefing paper by the Economic Policy Institute titled "Squandering the Blue-Collar Advantage: Why Almost Everything Except Unions and the Blue-Collar Workforce are Hurting U.S. Manufacturing." Keeping in mind that U.S. "productivity has grown 70% since 1980 but overall wages (including the majority of workers who are non-union) have only increased 5%," here are a few edited highlights from this report:
• Of the 20 richest countries tracked by the U.S. Bureau of Labor Statistics, the U.S. ranks 17th in hourly pay for production workers in manufacturing. • Of the 16 nations with higher compensation for production workers in manufacturing, the United States ranks behind only one country (Ireland) in terms of value-added per worker. • The combination of relatively low compensation and high productivity means that U.S. manufacturing leads the world in terms of competitiveness of per unit costs of manufacturing output. • The overvalued U.S. dollar, not unions, hurts U.S. competitiveness.• Health care costs also hurt American manufacturers competing against countries with national health plans. • U.S. managers are overpaid. If the wages claimed by managerial and non-supervisory labor in the United States were the same as the median of comparable countries, U.S. manufacturing would have a 6.4% cost advantage over major trading partners.
America's unions and workers have taken it on the chin from anti-labor laws and stagnant wages these last few decades since big business, the Republican Party and conservative Democrats decided to knock the labor movement and the American working class/lower middle class down a few pegs. It worked, as New York Times columnist Bob Herbert noted March 10: "As hard as it may be to believe, the peak income year for the bottom 90% of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher … than in 2005."
The labor movement and union workers are the most ardent supporters of the Democratic Party. Between the AFL-CIO, Change to Win, and individual unions, this movement probably invested over $300 million to elect Democrats in the 2008 elections, and union members have volunteered innumerable hours on behalf of Democratic candidates.
They have every reason to think that the Democratic Party owes them passage of the Employee Free Choice Act. They also remember that the worst anti-union law of all —Taft-Hartley — has been on the books for over six decades, despite a number of years when the Democrats controlled both the executive and legislative branches of government, as they do now.
So what are the chances? It seems to be undecided as of now, perhaps even leaning toward defeat, so the next weeks and months are crucial. House and Senate Democrats introduced the bill March 10.
The next day, the Progress Report carried this item: "The all-out assault against unions may turn some Congress members away from supporting the bill. EFCA was introduced with 223 co-sponsors in the House and 40 in the Senate. That is less support than it attracted in the last Congress, even though Democrats now hold more seats in both chambers. In 2007, EFCA had 230 co-sponsors on its day of introduction in the House and 46 in the Senate. In fact, 11 Democratic senators who were co-sponsors in 2007 have refused to sign on to this year's version, including Sens. Mary Landrieu (D-LA), Jim Webb (D-VA), Evan Bayh (D-IN), and Jeff Bingaman (D-NM). At least six Senators who have voted to move forward with the so-called card-check proposal, including one Republican, now say they are opposed or not sure ….
"Yet Harkin [Sen. Tom Harkin (D-IA), the lead sponsor in the Senate] maintains that the bill will pass. 'By the time we bring it up [for a vote], we will have 60 votes,' he said yesterday, adding that he's 'hoping for a vote shortly after the Easter recess However, Senate Majority Leader Harry Reid (D-NV) said yesterday that passage depends on whether 'the Republicans would cooperate with us just a little bit,' adding, 'Otherwise, we'll have to wait until after the August recess.'"
Passage may depend on whether the conservative congressional Democrats follow their leadership in backing EFCA. There are 47 conservative Blue Dog Democrats in the House plus 65 members of the centrist New Democrat Coalition, few of whom are pro-labor. The newly formed Senate Moderate Dems Working Group has 16 members, some of whom are expected to vote in opposition. (See the article below, Centrist Democratic Groups Vie for Power.)
There are 58 Democrats in the Senate out of 100 members. With Pennsylvania's Sen. Arlen Specter, who has just switched to the Democrats, that's 59. And if Minnesota's Al Franken is able to take his seat that amounts to the 60 votes which Sen. Reid said he needs to avoid a Republican filibuster. There will be quite a few Senate Democrats, including Specter, who will oppose EFCA. But if the Democrats get any kind of majority at all they should go for it anyway, have it out with the Republicans at last, and keep coming back with it.
The vote is a toss up for now, and it could of course go labor's way. But if it doesn't this year, it seems to us that the labor movement should get out into the streets with rallies, demonstrations, mass marches and strikes to finally obtain the right to organize workers without being stymied year after year by anti-labor laws crafted on behalf of big business.
4. HIGH POVERTY, LOW BENEFITS
According to the Organization for Economic Cooperation and Development (OECD), which ranks statistics from industrialized capitalist countries, the U.S. — with a poverty rate about 17% of its population — ranks 28 out of 30 countries.
The only two other industrialized states with higher poverty rates are number 29, Turkey at about 17.5% and Mexico, number 30 at 18.5%. Denmark and Sweden have the lowest poverty at just over 5%, The median poverty rate for OECD member nations is around 11%.
The U.S. and OECD measure poverty differently. Washington sets the poverty line quite low. For a family of four it's $22,050 a year. By this calculation the U.S. poverty rate is 12.5%. The OECD level for defining poverty in developed countries begins higher, and it includes government social benefits to the population. The U.S. has a wider rich-poor gap and considerably lower benefits for its people.
A few months ago, before the full impact of the worldwide recession was calculated, the OECD issued a report on growing inequality in the industrialized countries. In the U.S., the report declared, income inequality has increased rapidly, continuing a long-term trend that goes back to the 1970s. Other U.S. findings in the OECD report:
• Increasingly, rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries, but nowhere has this trend been so stark as in the United States.
• The distribution of earnings widened by 20% since the mid-1980s, which is more than in most other OECD countries. This is the main reason for widening inequality in America.
• Government redistribution of income [through social benefits to the people] plays a relatively minor role in the United States. Only in South Korea is the effect smaller. This is partly because the level of spending on social benefits such as unemployment compensation and family stipends is low — equivalent to just 9% of household incomes, while the OECD average is 22%. The effectiveness of taxes and transfers in reducing inequality has fallen still further in the past 10 years.
• Child poverty [in the U.S.] — that is, children in a household with less than half the median income — has fallen since 1985 from 25% to 20%, but poverty rates among the elderly increased from 20% to 23%. Both of these trends are in the opposite direction to those of the other countries in the OECD.
The OECD reports that among all its members, "the gap between rich and poor and the number of people below the poverty line have both grown over the past two decades. The increase is widespread, affecting three-quarters of OECD countries. The scale of the change is moderate but significant."
The recession, of course, is making all this worse in the poorer developing countries — where living conditions for the majorities are far lower to begin with than in the wealthier industrialized sector.
5. NEW STATISTICS FOR TROUBLED TIMES
It's amazing how few people it took — mainly from the United States — to catapult the capitalist system into a global economic recession that is causing grave hardship for billions of people.
Meanwhile, the culprits responsible for the crisis appear to be doing fairly well. Take Wall St., for instance. The New York Times reported April 26 that employees "at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits. Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements."
Recessions are caused by many factors, beginning with overproduction. But the pursuit of extreme free market laissez-faire policies by Democratic and Republican governments over the last dozen years has transformed the most recent of the capitalism's cyclical national recessions into a near international depression.
We're talking about bipartisan congressional action overturning the Glass-Steagall Act and passage of the Commodities Futures Modernization Act during the Clinton Administration that are major causes of today's catastrophe. We're also referring to the deregulation or lax regulation of financial markets, and the actions of greedy banks, brokerage houses, and the Wall St. speculators who were allowed to run riot during the Bush Administration, not to mention the government policies that created and cultivated the real estate bubble until its burst.
All these decisions were made by perhaps a thousand people and carried out by some thousands more inside the financial networks. The latest statistics from the last month provide some idea of who is really paying the price for these government/private-sector outrages in the service of enriching the few at the expense of the many.
• The Federal Reserve reported recently that household wealth in the U.S. fell by 9% in the last three months of 2008. That's $5.1 trillion down the drain — the biggest drop in the nearly 60 years since such records have been kept. The first three months of 2009 have not yet been calculated but it might be just as much if not much more. For all 2008, household wealth fell 18%.
• Americans lost another 663,000 more jobs in March. Unemployment is now 8.5% and may reach 9% by year's end. A year ago it was 5%. White unemployment at the start of April was 7.9%; for blacks it was 13.3%; for Hispanics, 11.4%. This doesn't include nine million part-time workers who need but can't find full-time jobs, nor does it include millions of "discouraged" workers.
• The World Bank (WB) reported a few weeks ago that the expanding recession will shrink the global economy this year for the first time since the devastation of World War 2. Global trade will fall this year for the first time since 1982. Industrial output may drop 15% in 2009 from last year. Poor and developing countries will be hurt the hardest and "women in 34 countries are highly vulnerable to the effect of the financial crisis.
• Further, said the WB, the recession will cause an estimated "200,000 to 400,000 additional infant deaths per year on average from 2009 to 2015, or a total of 1.4 million to 2.8 million more infant deaths." And in a report compiled for the G-20 meeting in March, the WB estimated that the recession will increase world poverty by an additional 46 million people, while global malnutrition will jump by 44 million people.
• The International Monetary Fund reported April 22 that world economic growth in 2009 would probably be minus 1.3%, making this “by far the deepest global recession since the Great Depression.”
In terms of economic hardship, billion is the new million in our world, and in terms of taxpayer bailouts to the financial system, trillion is the new billion. Compared to the trillions in money and guarantees going to the financial system, the amount being spent by the U.S. government to assist the masses of people suffering the consequences of recession is small indeed — one more proof, if needed, that Washington favors investors over taxpayers.
Liberal columnist Bob Herbert picked up on this in the New York Times April 28: "The employment issue is not being addressed with the level of urgency that is warranted. For all the talk of green jobs, there is no large-scale creative effort to turn this employment debacle around. There is no crash program on anything like the scale needed, for example, to rebuild the rotting infrastructure — a big-time potential source of jobs. The financial industry is seen as essential, but millions of American workers are not. They’re expendable."
When the crisis ends, the economic system will get a gentle slap on the wrist from Washington to appease public opinion, but the U.S. model of capitalism, which has brought the world to the brink of economic insolvency, will experience only superficial alterations. Even so, the Republicans will shout "socialism"— would that it were! — and the "post-partisan" Democrats will suggest another round of compromises through bipartisanship and "splitting the difference."
6. REFLECTION ON PAST WARS
Armed Forces Day May 16 and Memorial Day May 25 provide an appropriate occasion to reflect on past wars. Over the years, a number of leading U.S. military commanders have done some reflecting of their own, occasionally with startling results, as these quotes from five American generals make abundantly clear. They show a depth of understanding in retirement that was rarely, if ever, evidenced during active duty. We’ve saved the best for last (the incomparable Maj. Gen. Smedley Butler), but they are all instructive.
Gen. Philip Sheridan (1831-1888): Named commander in chief of the U.S. Army in 1883, he is best remembered during his Indian-fighting days for the vicious phrase, "The only good Indian is a dead Indian." Later in life, he allowed a deeper comprehension of the imperial wars imposed on the Native American people for almost 200 years until their resistance was broken: "We took away their country and their means of support, and it was for this and against this they made war. Could anyone expect less?"
Gen. Douglas MacArthur (1880-1964): A military martinet who led the government’s violent attack against 20,000 poor veterans of World War I encamped in Depression-era Washington in 1932 in an effort to convince the Hoover Administration to pay them their war bonuses ahead of schedule. He subsequently served as commander of U.S. forces in the Far East during World War II, and supreme commander of UN forces in Korea until he was dismissed by President Truman for advocating an invasion and nuclear bombing of China. Testifying a few years later at a congressional hearing on the military budget in 1957, his tune evidently had changed: "Our government has kept us in a perpetual state of fear — kept us in a continuous stampede of patriotic fervor — with the cry of grave national emergency. Always there has been some terrible evil... to gobble us up if we did not blindly rally behind it by furnishing the exorbitant funds demanded. Yet, in retrospect, these disasters seem never to have happened, seem never to have been quite real."
Gen. Dwight D. Eisenhower (1890-1969): Chief of staff of the U.S. Army, supreme commander of NATO, and President of the United States during the early years of the Cold War. He bequeathed to his successor the CIA’s invasion plan for Cuba which he had secretly approved. Upon retiring as president in January 1961, he issued the following warning to the American people in his Farewell Address: "Until the latest of our world conflicts, the United States had no armaments industry.... But now...we have been compelled to create a permanent armaments industry of vast proportions. Added to this, 3.5 million men and women are directly engaged in the Defense Establishment....This conjunction of an immense Military Establishment and a large arms industry is new in the American experience....We must not fail to comprehend its grave implications....In the councils of government we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist....Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals so that security and liberty may prosper together....Disarmament, with mutual honor and confidence, is a continuing imperative. Together we must learn how to compose differences, not with arms but with intellect and decent purpose."
Gen. Wallace Nutting: Washington’s military overlord for the Southern Hemisphere, charged with keeping the lid on social unrest and preventing the rise of communism. He said upon his retirement as U.S. Army Chief of the Southern Command in 1983: "The fundamental causes of dissatisfaction in Central America are the existing social, political and economic inequities."
Maj.-Gen. Smedley D. Butler (1881-1940), joined the U.S. Marine Corps at the age of 17, commanded expeditions in the Philippines, China, Nicaragua, Cuba, Mexico, Dominican Republic, Honduras and Haiti, winning two Medals of Honor before his retirement in 1931. Four years later, he made this extraordinary statement: "I spent 33 years and four months in active service as a member of our country’s most agile military force — the Marine Corps. I served in all commissioned ranks from a second lieutenant to major-general. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street, and for the bankers. In short, I was a racketeer for capitalism....Thus I helped make Mexico and especially Tampico safe for U.S. oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.... I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Honduras ‘right’ for American fruit companies in 1903.... During those years I had, as the boys in the back room would say, a swell racket. I was rewarded with honors, medals, promotion. Looking back on it, I feel I might have given Al Capone a few hints. The best he could do was operate in three city districts. We Marines operated on three continents."
7. REFLECTION ON PRESENT WARS
In recognition of the realities behind Armed Forces Day and Memorial Day — the glorification of the ongoing unjust wars in Iraq and Afghanistan among them — we cannot allow the generals to have the last word (as above), even though their words were wise. Instead we offer these words from poet/playwright Bertolt Brecht:
From a German War Primer (1937)
By Bertolt Brecht
When it comes to marching many do not know
That their enemy is marching at their head.
The voice which gives them their orders
Is their enemy’s voice and
The man who speaks of the enemy
Is the enemy himself.
General, your tank is a powerful vehicle
It smashes down forests and crushes a hundred men.
But it has one defect:
It needs a driver.
General, your bomber is powerful
It flies faster than a storm and carries more than an elephant.
But it has one defect:
It needs a mechanic.
General, man is very useful.
He can fly and he can kill.
But he has one defect:
He can think.
8. CHECK IT OUT
NEWLY-FRUGAL GUY. That's the title of Mark Fiore's latest hilarious video cartoon. It's a spoof depicting a powerful Republican demagogue (shaped like a big bag of money with a cigar in its mouth) denouncing the Obama Administration's stimulus package. Just click on visual when the link is activated. While on the page several more short political cartoons worth watching for laughs. http://www.markfiore.com/
ATTACK IRAN?: An Israeli attack on Iran would blow the Middle East sky high, and Israel itself would certainly be among the major casualties. Everyone knows that. Yet, the new right wing government in Tel Aviv has hastened to inform the Obama Administration that war with Iran is one of its most prominent — virtually inevitable — options. What's really behind all this? Following are links to three key articles published in the mainstream and liberal media that shed light on some of the motivations behind this potential fiasco:
IRAN AND ISRAEL #1: If you haven't been reading Roger Cohen's columns in the New York Times and International Herald Tribune lately you have been missing out on some of the most trenchant commentary available in the mainstream press on the question of Iran and Israel. He's not left enough from our point of view but that's what allows him access to a huge and influential audience. His recent column on Israeli Prime Minister Benjamin Netanyahu and Iran is important, and is located at http://www.nytimes.com/2009/04/09/opinion/09iht-edcohen.html?emc=eta1
IRAN AND ISRAEL #2: "Will Israel Attack? Mixed Messages from Washington Could Lead to Catastrophe in Iran." That's the headline of an article by Roane Carey, the liberal managing editor of The Nation, now on leave at an Israeli university. "Given the Netanyahu government's visible determination to attack," he writes, "an ambiguous signal from Washington — something far less than a green light — could be misread in Tel Aviv. Anything short of a categorical, even vociferous U.S. refusal to countenance an Israeli attack might have horrific consequences." The article is at http://www.alternet.org/story/136295/
IRAN AND ISRAEL #3: Trita Parsi is perhaps the most notable commentator on the modern history of Israeli-Iranian-American relations. His 2007 book "Treacherous Alliance — The Secret Dealings of Israel, Iran, and the U.S.," is of considerable importance to those seeking clarity on Middle Eastern issues. His April 8 article in the Huffington Post suggests that the Netanyahu government's "talk of an Israeli military option is more of a bluff than a threat," but the bluff "serves a purpose" — more in terms of its impact on Washington than Teheran. He then examines Israel's reasons for the "bluff," and what it seeks to accomplish. Find it at http://www.huffingtonpost.com/trita-parsi/netanyahu-and-threat-of-b_b_183822.html
9. CENTRIST DEMOCRATIC GROUPS VIE FOR POWER
There are so many political centrists in Washington as a result of the Democratic capture of Congress and the White House that some of their number evidently think the town, or at least the spotlight, isn't big enough for all of them.
The equivalent of a shootout at the Beltway's Middle-of-the-Road Café has been taking place between two centrist organizations vying for leadership status within the Democratic Party — the experienced Democratic Leadership Council (DLC), seeking to keep its position, and a newer group known as Third Way, seeking to seize it. A few other centrist organizations and think-tanks are also preening for position now that happy days are back again in the nation's capital.
The Democratic centrists in Congress and the White House wield almost all the political power in Washington. The party's center-right — mainly the Blue Dogs with 47 House members plus the semi-conservative Dems — have influence and are pushing to party further to the right. The congressional center-left remains small and without clout despite the fairly large number Democratic voters who consider themselves liberals or progressives and several energetic organizations representing their interests.
The DLC was founded in the mid-1980s on the premise that rightist President Ronald Reagan won a second term because the Democrats were too liberal. The solution was to move to, and sometimes beyond, the middle — a position that contributed to the fairly swift demise of liberalism in the Democratic Party to the point of generating embarrassment when the "L" word was mentioned. By 1992 the Democrats nominated arch-centrist Arkansas Gov. Bill Clinton, a chairman of the DLC. He won two elections — bringing DLC influence directly into the White House, Congress and party leadership.
The eight years of the Clinton Administration were the DLC's biggest success. Clinton compromised repeatedly with the Republicans and consequently did not create one significant social program for the working people and the poor. It was during Clinton's watch that financial regulations were gutted that give rise to the present world recession. Welfare "as we know it" was destroyed, Yugoslavia was unjustly attacked, over a million Iraqis died due to U.S. sanctions and bombings, and laws passed with Clinton's backing paved the way for the Bush Administration's unjust invasion of Iraq.
Two more DLC politicians became the year 2000 Democratic candidates for president and vice president, Al Gore and Joe Lieberman, but they lost to George W. Bush. Many thought they failed because of GOP and Supreme Court shenanigans, but DLC founder-leader Al From blamed Gore because he raised some liberal issues late in the campaign. In 2004, DLC opposition to liberal Howard Dean gave a significant boost to the candidacy of pro-war John F. Kerry, who lost. Dean described the DLC as "the Republican wing of the Democratic Party." (Jesse Jackson referred to the DLC as "Democrats for the Leadership Class.")
The DLC suffered another setback in prestige last year because it supported Sen. Hillary Clinton for the Democratic presidential nomination. Clinton was a long-time front for the DLC and both she and the organization strongly supported Bush's Iraq and Afghanistan wars. DLC leaders From and Bruce Reed wanted to latch on to Obama after he defeated Clinton, but it was too late. Since both Third Way and the DLC serve his purposes, pragmatic Obama is hardly going to take sides. The DLC evidently has retained the support of many of its corporate sponsors, scores of House and Senate members, and it has many key people in Obama's Cabinet.
The Third Way group — named after a centrist tendency long promoted by the DLC and associated with the Clinton Administration and also for a time with some European centrist leaders such as former Prime Minister Tony Blair — was formed soon after Kerry's defeat, the DLC's second loss in row. Third Way calls itself "moderate progressive" but that's just for show; even the mainstream press has defined it as "moderate conservative."
Third Way's politics are extremely close to those of the DLC, which probably means they seek the same funders. Both agree Obama is a centrist and a moderate. Third Way President Jonathan Cowan describes the new occupant of the White House in words that could have been uttered by From and Reed: "Obama has won the White House by explicitly rejecting 'the old ideological debates and divides between the left and right.' In both his announcement speech and his closing argument, he urged Americans to discard the ‘worn-out ideas and politics of the past.'… Obama’s rhetoric is post-partisan, and his policies make it clear that he is who he appears to be — a moderate in moderate’s clothing."
Some liberal groups still view Obama as a progressive in a moderate's clothing, of course. But as a front page article the New York Times April 19 pointed out, Obama's "administration has shown a tendency for compromise and caution, and even a willingness to capitulate on some early initiatives." Obama met behind closed doors in March with the centrist New Democrat Coalition in the House, which has about 65 members, and — according to some moderate House members at the gathering — identified himself as a New Democrat, as did Bill Clinton when he was in the White House.
The political differences between the two centrist organizations are microscopic, suggesting it's more a turf war than anything else, especially on Third Way's part. Asked how they differ, a Third Way official was non-political, saying DLC's "focus is on presidential politics and developing the next generation. Our focus is Congress — both members and candidates."
Third Way's Jim Kessler stresses that "the road to transformational change is going through the moderates," though it is puzzling to discern the transformation of which he speaks, since moderate means not large or great and transformation means complete change.
On March 18, Third Way's Cowan announced the creation of the Senate Moderate Dems Working Group with 16 members (15 Democrats and Lieberman, now an independent), noting that the three leading members — conservative Democratic Senators Evan Bayh of Indiana, Tom Carper of Delaware and Blanche Lincoln of Arkansas — are "Honorary Co-chairs" of his organization. The purpose of the group is to dilute any progressive Democratic initiatives in the Senate to make them acceptable to conservatives. "Moderate Dem" Sen. Lincoln co-sponsored the recent Republican bill to further reduce estate taxes for America's richest families. Nine other Democrats backed the measure, including Bayh. All 41 Republican senators voted in favor. Members of the "Moderate Dems" also oppose the Employee Free Choice Act now before Congress, the passage of which tops the labor movement's legislative agenda. By joining with the Republicans they may kill the bill.
"Moderation" in general is the essence of political centrism and is embraced by most of the Democratic Party leadership these days. When some liberal organizations criticized the formation of the "Moderate Dems" in the Senate, Majority Leader Harry Reid characterized its critics as "very unwise and not helpful." This powerful Democrat, who calibrates his views with those of the White House even more closely than House Speaker Rep. Nancy Pelosi, continued:
"If we are going to deliver the change Americans demanded and move our country forward, it will require the courage to get past our political differences and get to work. Established organizations like Third Way and new ventures like this group offer us a new opportunity to get things done, and I support every effort that puts real solutions above political posturing."
Third Way made its move to become the most influential centrist group within the Democratic Party in early March after From, 66, announced his retirement, leaving Reed in charge of the DLC. "What I set out to do at the DLC has largely been achieved," From stated, clearly taking credit for helping consign the Democratic Party's liberal and progressive wings to the sidelines if not yet to oblivion. In a press release March 5, Cowan praised From effusively, then suggested the DLC founder's departure meant that Third Way was now the top dog in the kennel of political moderation:
“Al From’s retirement from the DLC and the transition of the DLC/PPI [Progressive Policy Institute, the DLC's think-tank] after 20 years of success means the passing of the torch to the next generation in moderate progressive politics. When Al From founded the DLC, the Democratic Party and the progressive movement was in full retreat. His leadership, along with a hungry generation of moderates led by Bill Clinton and Sam Nunn, returned the presidency to Democrats in the 1990s. From’s legacy is not just the Clinton presidency; he fathered and inspired the next generation of the moderate progressive movement, including Third Way…. With the torch now being passed, Third Way is proud to lead the moderate wing of the progressive movement in the area of ideas. And we thank Al From, the DLC, and PPI for their service to America.”
From's "torch," of course, was passed to DLC Chief Executive Officer Reed, who was President Bill Clinton's former domestic policy adviser, not to the straining-at-the-leash Cowan, but Third Way is intent upon burying this particular prize in its own back yard. This won't be an easy task. Obama's chief of staff, Rahm Emanuel, is a long time DLC adept and an old friend of Reed. Other exponents of DLC within the Obama Administration, in addition to Secretary of State Clinton, include National Economic Council director Lawrence Summers; Interior Secretary Ken Salazar; Agriculture Secretary Tom Vilsack; Homeland Security Secretary Janet Napolitano; and Health and Human Services Secretary-designate Kathleen Sebelius.
Still, Matthew Bennett, one of Third Way's founders, believes "the DLC as we know it is ending. …. [I]t's not going to be the DLC as it's been for the past couple of decades — we have stepped into that role." This has not yet been decided, but the news that the DLC's Progressive Policy Institute think-tank is "breaking away from its parent organization" is a hopeful sign for the upstart group.
Seeking to retain its primacy, the DLC mission statement is undergoing a change from campaigning for candidates to influencing Obama Administration policies: "For the first time," the DLC announced recently, "our entire efforts in Washington will be devoted not to politics but to making ideas and reforms happen."
Meanwhile, as the centrist groups compete to push the Obama Administration deeper into "post-partisan" compromises with the right wing, and the Republicans are standing pat with reactionary obstructionism, Blue Dogs, Moderate Dems and other Democratic conservatives in Congress are working to permanently lock their centrist party into the political center/center-right.
Well, that's one way of getting rid of the old "left-right divide" and the "worn-out ideas and politics of the past," isn't it? And if you buy that, you may also be interested in a moderately priced bridge that's up for sale in Brooklyn.
— [Editor's Note: "Moderation in all things," says the proverb and the centrist politicians, to which Mark Twain appended, "including moderation." We favor the view of old revolutionary Tom Paine, who would not have felt comfortable in today's politically moderate Washington. He might have responded to Harry Reid as he did to the signers of a proclamation excoriating "seditious writings," when he penned the following: "The words 'temperate and moderate' are words either of political cowardice, or cunning, or seduction. A thing [that is] moderately good in not so good as it ought to be. Moderation in temper is always a virtue, but moderation in principle is a species of vice."]
10. QUOTES IN THE NEWS
• ANIMAL RIGHTS: The issue of the ethical treatment of animals and the suggestions that they have rights — notions which are considered ridiculous by many who still believe that "man was given dominion over all animals" by a deity — are approaching at least minimal acceptance in America and a few other countries. New York Times columnist Nicholas D. Kristof wrote April 9 that "animal rights are now firmly on the mainstream ethical agenda." There's a very long way to go, of course, but:
"In the United States, law schools are offering courses on animal rights, fast-food restaurants including Burger King are working with animal rights groups to ease the plight of hogs and chickens in factory farms and the Humane Society of the United States is preparing to push new legislation to extend the California protections to other states. [In California, a nearly 2-to-1 majority in November approved an animal rights ballot initiative that will ban factory farms from keeping calves, pregnant hogs or egg-laying hens in tiny pens or cages in which they can’t stretch out or turn around.]."
— Full article at: http://www.nytimes.com/2009/04/09/opinion/09kristof.html?_r=1&ref=todayspaper
• AMNESTY REFUTES ISRAELI GAZA PROBE: After a probe of allegations that its attack on Gaza violated international law, the Israeli military concluded April 22 that its armed forces "maintained a high professional and moral level" during its Dec. 27-Jan. 18 invasion and bombardment of Palestinians in Gaza. The attacks resulted in 1,417 Palestinian dead and 5,303 wounded, mostly civilians, compared to 13 Israeli dead and 518 wounded, mostly soldiers, some from friendly fire. On April 23, the human rights organization Amnesty International, after its own investigation, said the Israeli claim lacks credibility:
"There is a strikingly large gap between the 'very small number' of mistakes referred to in the IDF’s briefing paper and the killing by Israeli forces of some 300 Palestinian children and hundreds of other unarmed civilians. The army briefing does not even attempt to explain the overwhelming majority of civilian deaths nor the massive destruction caused to civilian buildings in Gaza….
"The deaths and injury of many civilians and the large-scale destruction in attacks which often violated international humanitarian law demand a full, independent and impartial investigation. The Israeli army must provide specific, detailed information about why targets were chosen and the means and methods of attack used in order to assess their conclusion that the IDF complied fully with international humanitarian law. The information provided in this briefing is insufficient and, in parts, contradicts evidence gathered by Amnesty International and others."
— Full article at: http://www.amnestyusa.org/document.php?id=ENGUSA20090424001&lang=e
• GROWING WORLD WATER SHORTAGE: According to a recent report by the United Nations World Water Assessment Program, "urgent action is needed if we are to avoid a global water crisis." In an article devoted to the growing shortage of fresh water, The Economist of April 11 argued that demography and climate change are the principal culprits. In demography, the magazine pointed out, it's not just the rapid growth of world population but the increase in meat-based diets that is accelerating the depletion of fresh water resources:
"Farmers use about three-quarters of the world’s water; industry uses less than a fifth and domestic or municipal use accounts for a mere tenth. Different foods require radically different amounts of water. To grow a kilogram (2.2 pounds) of wheat requires around 1,000 litres (a litre is 1.056 quarts). But it takes as much as 15,000 litres of water to produce a kilo of beef. The meaty diet of Americans and Europeans requires around 5,000 litres of water a day to produce. The vegetarian diets of Africa and Asia use about 2,000 litres a day (for comparison, Westerners use just 100-250 litres a day in drinking and washing).
"So the shift from vegetarian diets to meaty ones [which usually happens when developing societies industrialize] — which contributed to the food-price rise of 2007-08 — has big implications for water, too. In 1985 Chinese people ate, on average, 20 kilograms of meat; this year, they will eat around 50 kilograms. This difference translates into… [390 trillion] litres of water—almost as much as total water use in Europe."
Full article at: http://www.economist.com/PrinterFriendly.cfm?story_id=13447271
• THE RED CROSS TORTURE REPORT: The use of torture by the U.S. Armed Forces is hardly a new phenomenon, though many Americans think it is. Torture was frequently used against Filipino "suspects" — including waterboarding — during the brutal forced colonization of the Philippines in the early 1900s. Electrical shock torture to sensitive body parts was used against many thousands of Vietnamese during the long Vietnam war. American instructors trained right-wing death squad leaders in Latin America in torture techniques in the 1980s and '90s. And now its been taking place in Iraq, Afghanistan and Guantanamo. The New York Review of Books recently obtained a copy of a secret 43-page report on U.S. torture compiled by the International committee of the Red Cross, and published a 2-part article including some quotes from victims in its April 9 and April 30 issues. Here is testimony on "forced standing" from one abused prisoner.
"On arrival at the place of detention in Afghanistan I was stripped naked. I remained naked for the next two weeks. I was put in a cell measuring approximately [3 ½-by-6 ½ feet]. I was kept in a standing position, feet flat on the floor, but with my arms above my head and fixed with handcuffs and a chain to a metal bar running across the width of the cell. The cell was dark with no light, artificial or natural. During the first two weeks I did not receive any food. I was only given Ensure and water to drink. A guard would come and hold the bottle for me while I drank.... The toilet consisted of a bucket in the cell.... I was not allowed to clean myself after using the bucket. Loud music was playing twenty-four hours each day throughout the three weeks I was there."
— Full article Part 1: http://www.nybooks.com/articles/22530?utm_medium=email&utm_source=Email+marketing+software&utm_content=275190515&utm_campaign=April+9%2c+2009+issue+_+hljtlr&utm_term=US+Torture%3a+Voices+from+the+Black+Sites
— Full article Part 2: http://www.nybooks.com/articles/22614?utm_medium=email&utm_source=Email+marketing+software&utm_content=275190515&utm_campaign=April+30%2c+2009+issue+_+hyihhl&utm_term=The+Red+Cross+Torture+Report%3a+What+It+Means
• THE GENERAL STRIKE: Unions in many countries have conducted protests against job losses and cuts in wages and benefits as a result of the Great Capitalist Recession. But the U.S. labor movement mostly has been quiet, even though the worldwide collapse was largely the product of extreme laissez-faire policies encouraged by the Clinton and Bush Administrations. American labor history, however, has been anything but quiet, save for the most recent decades. A reminder of that history accompanied the recent 90th anniversary of the Seattle General Strike of 1919, an account of which was posted on the Internet April 10.
"A general strike was seen, almost at once, to differ profoundly from any of the particular strikes with which the workers of Seattle were familiar. Consequently, the problems of what should be done about the water supply, the lighting system, the hospitals, the babies’ milk supply, rested on a committee of working people whose stake in all these things was as great as that of any persons in the city. As a result, the General Strike Committee and its executive committee (known as the Committee of Fifteen) began to grant exemptions to various groups of workers, for the safety of city. For instance, the firefighters’ union was allowed to remain on duty; and electricity was maintained for street and traffic lights."
— Full article at: http://www.pslweb.org/site/News2?page=NewsArticle&id=11807&news_iv_ctrl=1261
11. THE NEWS IN BRIEF
By Nathan Rosenblum
ANTIWAR BRITISH MP REFUSED ENTRY TO CANADA: George Galloway, a prominent supporter of progressive causes and Member of Parliament in London, was refused entrance into Canada in late March where he had planned to attend a peace conference in Toronto and conduct a speaking tour. Galloway has served five terms as a socialist in the House of Commons, first in the Labour Party (from which he was expelled for his opposition to invading Iraq) and now in the Respect Party that he founded. He also serves as a vice president of the Stop the War Coalition, Britain's main peace organization. He was barred from Canada because of his opposition to the war in Afghanistan, as well as his support of the Palestinian people. He was specifically excluded for "providing support for terrorism" because he organized and accompanied an aid shipment to devastated Gaza. Conservative Prime Minister Stephen Harper, despite opposition from many Canadians, is keeping Canadian soldiers in Afghanistan, and he has signed a cooperation pact with Israel. Galloway, who said "this idiotic ban shames Canada," continued his speaking tour in the United States. Canadian Jewish organizations lauded the government decision. The Toronto Coalition to Stop the War declared: "This is a full frontal attack on free speech in Canada, and one that all supporters of civil liberties must challenge."
AMERICAN COPS INCREASE TASER USE: Painful Taser weapons continue to grow in popularity in U.S. law enforcement. A new model, the "Shockwave," was marketed in March. It can inflict a shock of up to 50,000 volts, The allegedly "non-lethal" weapon has been blamed for at least 351 deaths in the U.S. alone, says Amnesty International. Among the known cases of Taser abuse are instances of people being shocked for refusing to sign a parking ticket, for moving too slowly when producing driver’s license, for refusing to leave a library, and while handcuffed. A substantial number of victims were reported to have had physical or psychological difficulties. The weapon is catching on in other countries. Britain’s police now having permission to use it on children. It is frequently claimed that those killed by Tasers are victims of "excited delirium," a condition which the American Medical Association does not recognize. Tasers are also sold openly to the public.
ANTI-CUBAN TERRORIST FINALLY INDICTED: Luis Posada Carriles, a former CIA asset involved in numerous bombings of tourist areas in Cuba, the killing of 73 people in the 1978 terror bombing of a Cuban jet, and an assassination attempt on Fidel Castro, was recently indicted by a federal grand jury. He is charged not with the bombings, but with perjury during an immigration interview when he denied involvement with terrorism. The exact charge is lying about "soliciting other individuals to carry out… bombings in Cuba." Posada, 81, is wanted in both Venezuela and Cuba, both of which have requested his extradition. He entered the U.S. in 2005 and has been living in Miami (as does his co-conspirator in the bombings, Orlando Bosch).
SUPREME COURT REJECTS MUMIA'S APPEAL: Mumia Abu Jamal, the longtime activist, author, and political prisoner, was denied a new trial by the U.S. Supreme Court. Mumia has been on death row in Pennsylvania for 28 years for allegedly killing a police officer — a charge he vigorously denies. It is well known that his original judge was a racist and that African Americans were excluded from the jury. Numerous witnesses have recanted their testimony. The former Black Panther's chief defense attorney, Robert Bryan, had asked the court for a new trial based upon the racism charges. The high court offered no explanation for its decision.
INCREASE IN MILITARY DOMESTIC VIOLENCE: The National Organization for Women (NOW) has begun a campaign to raise awareness about domestic violence and sexual assault in the U.S. Military and to press for the passage of a new law that would help alleviate the problem. The Military Domestic Violence and Sexual Assault Response Act (H.R.840) would create a Victims Advocate Office in the Defense Department for assessing services provided to victims and ensuring that all branches have violence prevention programs in place. It also prohibits retaliation against those reporting abuse, requires a sexual assault examiner, a psychiatrist, and clinical staff at all DOD facilities, and provides for a court marshal for those who violate protection orders. There has been a substantial increase in violence against women by military personal in recent years and it is widely believed that vast numbers are unreported for fear of retaliation. The bill currently has 30 sponsors in the House. For more information, http://www.womensrights.change.org/actions/view/pass_the_military_domestic_violence_and_sexual_assault_response_act.
GAZA AFFECTED BY WATER SHORTAGES: The UN Office for the Co-ordination of Humanitarian Affairs reported April 5 that 150,000 people in Gaza — over 10% of the population — still lack access to tap water in the aftermath of the Israeli assault. Of these, 50,000 lack water due to destruction of their homes. The remaining shortage is due to the severe damage to water facilities. This includes the complete destruction of six major wells, with eleven more not functioning, and major damage to several water treatment plants, causing sewage to seep into groundwater. A number of relief agencies have been distributing bottled water to the victims.
SENTENCE REDUCED FOR IRAQI SHOE-THROWER: The prison sentence of Muntadhar al-Zaidi, the Iraqi journalist who threw his shoes in disgust at George W. Bush at a Baghdad press conference last year, was reduced April 7 from three years to one year. Throughout Iraq, the Middle East, and many other parts of the world al-Zaidi is lauded as a hero, evidently a factor in the decision to reduced his penalty.
RED AND PROCESSED MEAT INCREASE HEALTH RISK: According to the new findings of a study conducted over a 10-year period by the National Cancer Institute, consumption of red and processed meat leads to an increased risk of premature death. The study looked at five groups of people separated by the amount of red meat each consumes. Those who ate the most (over two ounces per 1000 Calories daily) were about 30% more likely to die over a given decade. Death rates declined proportionately as each group consumed less. The recommended daily allowance of red meat is no more than 0.7 ounce for women and almost an ounce for men. The main reasons for earlier death were heart disease (connected to saturated fat in the meat leading to high cholesterol) and cancer (from chemicals formed during the cooking process of well-done meat, excess iron, and saturated fat). Among the types of cancers associated with the consumption are those of the breast, colon, stomach, and esophagus (the last being the most quickly increasing in occurrence in the United States).
JURY BACKS WARD CHURCHILL: A jury recently agreed with well-known scholar Ward Churchill who challenged his July 2007 firing from a tenured position in the University of Colorado in Boulder. He was awarded a symbolic $1 in damages, as he had requested. Churchill, a member of the Keetoowah Cherokee Nation and a long time leader of the state branch of the American Indian Movement (AIM), has written numerous works on the genocide committed against the indigenous people of North America. The college claims it fired Churchill due to a lack of proper citation for some of his claims regarding the intentional spread of disease to Native Americans. In his suit, however, Churchill contended that the real reason for the firing was that he had publicly suggested that the 9/11 terror attacks on the Pentagon and World Trade Center were a response to aggressive U.S. foreign policy actions in the Middle East and elsewhere. Churchill has been subjected to years of vilification from rightwing groups because of his criticism of Washington's policies. However, there has been considerable support for reinstating Churchill by many organizations. For more information, go to http://www.wardchurchill.net/index.html
12. VENEZUELA'S MOVES TOWARD SOCIALISM
[Editor's Note: The U.S. news media usually presents a quite distorted version of political events in Venezuela, the most left-leaning of the of South American nations heading in various progressive directions. The following article about current developments in Venezuela supports the changes taking place in that country of 25 million people. It appeared March 25 in Australia's Green Left Weekly under the headline "Mass Organization and Unity Increase as Revolution Deepens," and was written by Federico Fuentes.]
“This government is here to protect the people, not the bourgeoisie or the rich," proclaimed Venezuelan President Hugo Chavez on Feb. 28, as he ordered soldiers to take over two rice-processing plants owned by Venezuelan food and drink giant Empresas Polar.
The move was made in order to ensure that the company was producing products subjected to the government-imposed price controls that aim to protect the poor from the affects of global price rises and inflation.
Under Venezuelan law, companies that can produce basic goods regulated by price controls must guarantee that 70-95% of their products are of the regulated type.
“They’ve refused 100 times to process the typical rice that Venezuelans eat," said Chavez. “If they don’t take me seriously, I’ll expropriate the plants and turn them into social property.”
Four days later, Chavez announced the expropriation of a rice-processing plant owned by U.S. food giant Cargill after it was revealed the company was attempting to subvert the price controls.
In the following period, “Venezuela’s National Institute of Lands (INTI) [took] public ownership of more than 5,000 hectares [1 hectare = 2.47 acres] of land claimed by wealthy families and multi-national corporations and is reviewing tens of thousands more hectares across the nation," Venezuelanalysis.com reported on March 11.
This includes the March 5 expropriation of 1,500 hectares of a tree farm owned by Ireland’s Smurfit Kappa. The government has pledged to move away from eucalyptus trees, which were drying up the land, and turn the land over to cooperatives for sustainable agriculture.
On March 14, Chavez decreed a new fishing law, banning industrial trawl-fishing within Venezuela’s territorial waters.
“Trawling fishing destroys the sea, destroys marine species and benefits a minority. This is destructive capitalism," explained Chavez on his weekly TV show, Alo Presidente the following day.
Venezuelanalysis.com reported on March 17 that the government will invest $32 million to convert or decommission trawling boats, as well as to development of fish-processing plants. “Thirty trawling ships will be expropriated, Chavez said, due to the refusal of their owners to cooperate with the plans to adapt the boats to uses compliant with the new fishing regulations.” Small-scale fisherpeople will have access to the converted boats.
This latest wave of radical measures by the Chavez government should be seen in the context of the ongoing process of nationalizations since early 2006, the onset of the global economic and food crises, and the Feb. 15 referendum victory.
The government has re-nationalized privatized industries such as electricity, telecommunications and steel. Cement companies, milk producing factories and one of Venezuela’s major banks have either been, or are in negotiations to be, nationalized.
Unlike the state interventions currently being undertaken in the imperialist centers, the aim of these moves is not to bail out bankrupt capitalists, but to help shift production towards meeting people’s needs — in service provisions (phone lines, electricity, banking) and production of essential goods (concrete, steel for housing and factories, and food).
Last July, the government made strong signals that its next targets would be two strategic sectors previously barely touched — food and finance.
The day after announcing the planned government buyout of Banco de Venezuela (which, once completed, will give the government control over close to 20% of the banking sector), Chavez issued 26 decrees, a number of which increase government and community control over food storage and distribution — and allow the state to jail company owners for hoarding.
Moves aimed at increasing government control over food production come amid soaring world food prices and 30% inflation within Venezuela — which is still dependent on imports for 70% of its food supply.
The government also faces an ongoing campaign of food speculation and hoarding carried out by the capitalist food producers and distributors in order to destabilize the anti-capitalist government.
With oil prices plummeting by almost $100 per barrel from a high of more than $140 last year, the government is tightening the screws. Oil accounts for 93% of the government’s export revenue and around half of its national budget.
The government has already announced the restructuring of its ministries, merging a number of them in order to cut down on bureaucracy.
The Chavez government is making it very clear that it will be the capitalists, not the people, who will pay for the mess that the capitalist system has created.
“I have entrusted myself with putting the foot down on the accelerator of the revolution, of the social and economic transformation of Venezuela," Chavez explained on March 8.
These latest moves follow the government’s victory in the Feb. 15 referendum. Officially, the referendum concerned whether to amend the constitution and remove limits on the number of times elected officials could stand for re-election. At stake was the possibility of Chavez standing for re-election in 2012. In the context of the intense class struggle, it became a referendum on the socialist project pushed by Chavez.
Addressing tens of thousands of supporters from the balcony of the presidential palace after the victory, Chavez noted that those that had voted “yes” had “voted for socialism, voted for the revolution.”
The referendum was proposed by Chavez as a “counter-offensive” against the opposition following the Nov. 23 regional elections.
Candidates from Chavez’s United Socialist Party of Venezuela (PSUV) won the overwhelming majority of governorships and mayoralties. However, opposition victories in key states on the Colombian border (where there is growing right-wing paramilitary activity) and the Greater Caracas mayoralty were viewed as important gains for the counter-revolution.
Opposition governors and mayors began to use their new positions to attack community organizations and the pro-poor social missions.
The rapid mobilization by the poor and working people to defeat these attacks was converted into the formation of 100,000 “Yes Committees” to campaign in the referendum, in poor communities, workplaces and universities across the country.
These committees were the backbone of the successful referendum campaign.
The latest measures will undoubtedly intensify the class conflict in Venezuela. An example of this conflict has resulted from the government’s program of land reform, aimed at ending the domination over agriculture by a small minority of large landowners. Previous attempts by the government to redistribute land have resulted in a violent counter-offensive by large landowners that has resulted in the murder of more than 200 peasants since the land reform law of 2001.
On March 9, land reform activist Mauricio Sanchez was murdered in Zulia, two weeks after campesino [farmworker] activist Nelson Lopez was shot dead in Yaracuy.
Increasingly, trade unionists have also been the target of violent repression when struggling for their rights. On Jan. 29, two workers at Mitsubishi plant were killed by police during an industrial dispute — sparking protests and the arrest of a number of police.
Several peasant organizations are seeking to unite their forces in support of government measures and against repression. The PSUV leadership has also called for a restructuring of the party to better organize the masses for the coming battles.
Launched after Chavez’s 2006 re-election to help accelerate the revolutionary process, the PSUV brought together a range of revolutionary forces as well as opportunist and corrupt layers.
On March 6, the national leadership of the PSUV made public a series of decisions aimed at deepening participation and democracy in the party.
This includes a recruitment drive to sign up new militants, a clean out of the current membership lists, the reactivation of the grassroots socialist battalions and the organization of an extraordinary congress for August to deepen discussion over the party’s program and principles.
Building on the success of the “yes” campaign, the PSUV will move to consolidate national mass fronts of workers, peasants, women and students — along with converting the “yes committees” into ongoing “socialist committees”.
13. GAY RIGHTS IN LATIN AMERICA
By Donna Goodman
Gay rights have been hard won in Latin America. While no country in the region has complete rights for Lesbian, Gay, Bisexual, and Transgender (LGBT) individuals, there have been some important advances.
At the same time, huge populations still consider homosexuality a sin, in part a product of Roman Catholic influence. And the macho culture that has kept women subordinate has also undermined LGTB life.
Homosexuality is no longer illegal in the region. But discrimination in employment and the public sphere is still widespread, and the negative attitudes of law enforcement contribute to a practice of impunity when it comes to violence against LGBT people.
The first significant step in promoting region-wide sexual and gender rights in Latin America was taken when the human rights committee of the Southern Common Market (MERCOSUR) issued a declaration in 2007 to recognize and promote an end to discrimination against sexual and gender minorities by member countries. In 2008 the OAS approved a positive resolution on "Human Rights, Sexual Orientation, and Gender Identity.”
Latin America is now the site of some of the most important gay rights legislation in the developing world of Asia, Africa and Latin America, including civil unions in Argentina, same-sex marital rights (equivalent to common law relationships) in Mexico, health benefits, inheritance, and pension and parenting rights in Uruguay
In Cuba, sexual relations between same-sex consenting adults 16 and over have been legal in since 1979, although same-sex relationships are not yet recognized by the state. Havana now has an open and vibrant gay scene. At the same time, elements of homophobic culture remain. Lesbians suffer from these attitudes more than gay men, but this has eased since the 1990s. In addition, Cuba now provides citizens with sex reassignment surgery for free.
Cuba's National Center for Sex Education sponsors educational campaigns on LGBT issues. This government organization is headed by Mariela Castro, who is energetically pushing passage of further legislation to advance gay rights. She is the daughter of President Raul Castro and Vilma Espin, the first chair of the Federation of Cuban Women.
In an interview last year she told the BBC that "in the early years of the revolution much of the world was homophobic. It was the same here in Cuba and led to acts which I consider unjust. What I see now is that both Cuban society and the government have realized that these were mistakes. There is also the desire to take initiatives which would prevent such things happening again."
In another interview with the Montreal Gazette, Castro said: "There is no official repression of lesbians and gays in Cuba. What remains are social and cultural reactions that must be transformed, the same as in many other countries."
14. MOSELEY: NATIONALIZE THE BANKS
[Editor's Note: Professor Fred Moseley teaches economics at Mt. Holyoke College in South Hadley, MA. He is a well known Marxist and has written or edited seven books on economics. In an article appearing in the March/April 2009 issue of Dollars and Sense, he argues that "If the big banks are 'too big to fail' they should be public." The article follows.]
The Treasury Department’s recent bailouts of major U.S. banks will result in a massive transfer of income from taxpayers to those banks’ bondholders.
Under the government’s current bailout plan, the total sum of money transferred from taxpayers to bondholders will probably be at least several hundred billion dollars and could be as much as $1 trillion, which is about $3,300 for each man, woman, and child in the United States. These bondholders took risks and made lots of money during the recent boom, but now taxpayers are being forced to bail them out and pay for their losses.
This trillion-dollar transfer of income from taxpayers to bondholders is an economic injustice that should be stopped immediately, and it can be stopped—if the government fully and permanently nationalizes the banks that are "too big to fail."
The TARP program (Troubled Assets Recovery Program) has gone through several incarnations. It was originally intended to purchase high-risk mortgage-backed securities from banks. But this plan floundered because it is very difficult in the current circumstances to determine the value of these risky assets, and thus the price the government should pay for them. The main policy for the first $350 billion spent so far has been to invest government capital into banks by buying preferred stock (which is the equivalent of a loan), which receives a 5% rate of return (Warren Buffet gets a 10% rate of return when he buys preferred stocks these days) and has no voting rights. Managers of the banks are not being replaced, and there are usually cosmetic limits on executive pay, unlikely to be enforced. So these bank managers, who are largely responsible for the banking crisis, will continue to be rewarded with salaries of millions of dollars per year, paid for in part with taxpayer money. Existing bank stock loses value as the bank issues stock secured by TARP funds.
But the main beneficiaries of the government bailout money are the bondholders of the banks. In the event of future losses, which are likely to be enormous, the government bailout money will be used directly or indirectly to pay off the bondholders. This could eventually take all of the available TARP money, and perhaps even more. So the government bailout of the banks is ultimately a bailout of the banks’ bondholders, paid for by taxpayers.
The Bush administration’s rationale for this approach to the bailout was that if the government did not bail out the banks and their bondholders, then the whole financial system in the United States would collapse. Nobody would lend money to anybody, and the economy would seize up (in the memorable words of George W. Bush: "this sucker would go down"). Bush Treasury secretary Paulson presented us with an unavoidable dilemma—either bail out the bondholders with taxpayers’ money or suffer a severe recession or depression.
If Paulson’s assertion were correct, it would be a stinging indictment of our current financial system. It would imply that the capitalist financial system, left on its own, is inherently unstable, and can only avoid sparking major economic crises by being bailed out by the government, at the taxpayers’ expense. There is a double indictment here: the capitalist financial system is inherently unstable and the necessary bailouts are economically unjust.
But there is a better alternative, a more equitable, "taxpayer friendly" option: Permanently nationalize banks that are "too big to fail" and run these banks according to public policy objectives (affordable housing, green energy, etc.), rather than with the objective of private profit maximization. The nationalization of banks, if it’s done right, would clearly be superior to current bailout policies because it would not involve a massive transfer of wealth from taxpayers to bondholders.
Besides providing a more equitable response to the current banking crisis, nationalizing the biggest banks will help ensure that a crisis like this never happens again, and we never again have to bail out the banks and their bondholders to "save the economy." Once some banks have become "too big to fail" and everyone understands that the government will always bail out these large banks to avoid a systematic collapse, it follows that these banks should be nationalized. Otherwise, the implicit promise of a bailout gives megabanks a license to take lots of risks and make lots of money in good times, and then let the taxpayers pay for their losses in the bad times. Economists call this dilemma the "moral hazard" problem. In this case, we might instead call it the "economic injustice" problem.
Bank bonds are loans to banks by the bondholders, in contrast to common stocks, which are capital invested in banks by its owners. Bank bonds are a relatively new phenomenon in the U.S. economy (and the rest of the world). Until the 1980s, almost all loans by banks were financed from money deposited in the banks by depositors. Then in the 1980s, banks began to borrow more and more money by selling bonds to bondholders; this became a primary way that banks financed their loans. This debt strategy of banks enabled them to invest ever-larger sums and make more profits. However, this debt strategy left the banking system more unstable and vulnerable to collapse because banks would have to repay their bondholders. And when major banks were unable to do so, the banking system fell into crisis.
The best way to avoid this legal robbery of taxpayers is to nationalize the banks. If taxpayers are going to pay for banks’ losses, then they should also receive their profits. The main justification for private profit is to encourage capitalists to invest and to invest wisely because they would suffer the losses if their investment fails. But if the losses fall not on capitalists, but instead on the taxpayers, then this justification for private profit disappears.
Freed from the need to maximize short-term profit, nationalized banks would also make the economy more stable in the future. They would take fewer risks during an expansion, to avoid debt-induced bubbles, which inevitably burst and cause so much hardship. For example, there would be fewer housing bubbles; instead, the deposits of these megabanks would be invested in decent affordable housing available to all. With housing more affordable, mortgages would be more affordable and less risky.
The newly nationalized banks could also increase their lending to credit-worthy businesses and households, and thereby help stabilize the economy and lessen the severity of the current recession. As things stand, banks do not want to increase their lending, since the crediworthiness of any borrower is difficult to determine, especially that of other banks that may also hold toxic assets. They have suffered enormous losses over the last year, and they fear that more enormous losses are still to come. Banks prefer instead to hoard capital as a cushion against these expected future losses.
What the government is doing now is giving money to banks in one way or another, and then begging them to please lend this money to businesses and households. Nationalization is clearly the better solution. Instead of giving money to the banks and begging them to lend, the government should nationalize the banks in trouble and lend directly to credit-worthy businesses and households.
How would the nationalization of banks work? I suggest the following general principles and guidelines:
• The federal government would become the owner of any "systemically significant" bank that asks for a government rescue or goes into bankruptcy proceedings. The value of existing stock would be wiped out, as it would be in a normal bankruptcy.
• The government would itself operate the banks. Top management would be replaced by government banking officials, and the managers would not receive "golden parachutes" of any kind.
• Most importantly, the banks’ long-term bonds would be converted into common stock in the banks. This would restore the banks to solvency, so they could start lending again. The private common stock would be subordinate to the government preferred stock in the capital structure, which would mean that any future losses would be taken out of the private stock before the government stock. Bondholders could also be given the option of converting their stocks back to bonds at a later date, with a significant write-down or discount, determined by bankruptcy judges.
These "bonds-to-stocks" swaps (often called "debt-to-equity" swaps), or partial write-downs if the bondholders so choose, are a crucial aspect of an equitable nationalization of banks. The bondholders lent their money and signed contracts that stipulated that if the banks went bankrupt, they might suffer losses. Now the banks are bankrupt and the bondholders should take the losses.
This process of accelerated bankruptcy and nationalization should be applied in the future to any banks that are in danger of bankruptcy and are deemed to be "systemically significant." This would include the next crises at Citigroup and Bank of America. Other banks in danger of bankruptcy that are not "systemically significant" should be allowed to fail. There should be no more bailouts of the bondholders at the expense of taxpayers. In addition, the banks who received some of the first $350 billion should be subject to stricter conditions along the lines that Congress attached to the second $350 billion—that banks should be required to increase their lending to businesses and consumers, to fully account for how they have spent the government capital, and to follow strict limitations on executive compensation. The government should withdraw its capital from any banks that fail to meet these standards.
here is one other acceptable option: the government could create entirely new banks that would purchase good assets from banks and increase lending to credit-worth borrowers. These government banks are sometimes called "good banks," in contrast to the "bad bank" proposals that have been floated recently, according to which the government would set up a bank to purchase bad ("toxic") assets from banks. The term "good bank" is no doubt more politically acceptable than "government bank," but the meaning is the same. The only difference between the "good bank" proposal and the nationalization proposal I’ve outlined here is that my proposal would start with existing banks and turn them into government banks.
In recent weeks, there has been more and more talk about and even acceptance of the "nationalization" of banks. The Washington Post recently ran an op-ed by NYU economists Nouriel Roubini and Matthew Richardson entitled "Nationalize the Banks! We Are All Swedes Now," and New York Times business columnist Joe Nocera has written about how more and more economists and analysts are beginning to call for nationalization: "Nationalization. I just said it. The roof didn’t cave in."
Even former Fed chair Alan Greenspan, whom many regard as one of the main architects of the current crisis, recently told the Financial Times that (temporary) nationalization may be the "least bad option": He added, "I understand that once in a hundred years this is what you do."
But there are three crucial differences between such pseudo-nationalizations and full-fledged, genuine nationalization:
• The pseudo-nationalizations are intended to be temporary. In this, they follow the model of the Swedish government, which temporarily nationalized some major banks in the early 1990s, and has subsequently almost entirely re-privatized them. Real nationalization would be permanent; if banks are "too big to fail", then they have to be public, to avoid more crises and unjust bailouts in the future.
• In pseudo-nationalizations, the government has little or no decision-making power in running the banks. In real nationalization, the government would have complete control over the banks, and would run the banks according to public policy objectives democratically decided.
• In pseudo-nationalizations, bondholders don’t lose anything, and the loans owed by the banks to the bondholders are paid in full, in large part by taxpayers’ money. In real nationalization, the bondholders would suffer their own losses, just as they reaped the profits by themselves in the good times, and the taxpayers would not pay for the losses.
In mid-February, Treasury Secretary Timothy Geithner announced the Obama administration’s plans for the bank bailout—renamed the "Financial Stability Plan." This plan is very similar to Paulson’s two versions of TARP: it includes both purchases of high-risk mortgage-backed securities from banks and also investing capital in banks. The main new feature is that government capital is supposed to be invested together with private capital. But in order to attract private capital, the government will have to provide sufficient guarantees, so most of the risks will still fall on taxpayers. So Geithner’s Financial Stability Plan has the same fundamental flaw as Paulson’s TARP: it bails out the banks and their bondholders at the expense of taxpayers.
The public should demand that the Obama administration should cancel these plans for further bank bailouts and consider other options, including genuine, permanent nationalization. Permanent nationalization with bonds-to-stocks swaps for bondholders is the most equitable solution to the current banking crisis, and would provide a better basis for a more stable and public-oriented banking system in the future.
— The magazine Dollars & Sense, where this article first appeared, deals with "real world economics," and it doesn't use esoteric language to explain complex economic developments. We find it quite useful. You may subscribe and/or read many of its articles that are posted free at http://www.dollarsandsense.org.
15. KRUGMAN: MONEY FOR NOTHING
[Editor's Note: Paul Krugman, the Princeton professor, New York Times columnist, and 2008 recipient of the Nobel Prize in economics, has been a sharp critic of the banking and financial establishment. Although he supports President Obama, he has also been extremely dubious about the Obama Administration's bailout scheme (largely for its lack of oversight and accountability), and he thinks the stimulus package has been underfunded. Krugman took aim at the "wizards of Wall Street" in his April 27 column printed here.]
On July 15, 2007, The New York Times published an article with the headline “The Richest of the Rich, Proud of a New Gilded Age.” The most prominently featured of the “new titans” was Sanford Weill, the former chairman of Citigroup, who insisted that he and his peers in the financial sector had earned their immense wealth through their contributions to society.
Soon after that article was printed, the financial edifice Mr. Weill took credit for helping to build collapsed, inflicting immense collateral damage in the process. Even if we manage to avoid a repeat of the Great Depression, the world economy will take years to recover from this crisis.
All of which explains why we should be disturbed by an article in Sunday’s Times reporting that pay at investment banks, after dipping last year, is soaring again — right back up to 2007 levels.
Why is this disturbing? Let me count the ways.
First, there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks.
Remember that the gilded Wall Street of 2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other industries, yet kept the economy’s wheels turning.
So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.
Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks?
Still, you might argue that we have a free-market economy, and it’s up to the private sector to decide how much its employees are worth. But this brings me to my second point: Wall Street is no longer, in any real sense, part of the private sector. It’s a ward of the state, every bit as dependent on government aid as recipients of Temporary Assistance for Needy Families, a k a “welfare.”
I’m not just talking about the $600 billion or so already committed under the TARP. There are also the huge credit lines extended by the Federal Reserve; large-scale lending by Federal Home Loan Banks; the taxpayer-financed payoffs of A.I.G. contracts; the vast expansion of F.D.I.C. guarantees; and, more broadly, the implicit backing provided to every financial firm considered too big, or too strategic, to fail.
One can argue that it’s necessary to rescue Wall Street to protect the economy as a whole — and in fact I agree. But given all that taxpayer money on the line, financial firms should be acting like public utilities, not returning to the practices and paychecks of 2007.
Furthermore, paying vast sums to wheeler-dealers isn’t just outrageous; it’s dangerous. Why, after all, did bankers take such huge risks? Because success — or even the temporary appearance of success — offered such gigantic rewards: even executives who blew up their companies could and did walk away with hundreds of millions. Now we’re seeing similar rewards offered to people who can play their risky games with federal backing.
So what’s going on here? Why are paychecks heading for the stratosphere again? Claims that firms have to pay these salaries to retain their best people aren’t plausible: with employment in the financial sector plunging, where are those people going to go?
No, the real reason financial firms are paying big again is simply because they can. They’re making money again (although not as much as they claim), and why not? After all, they can borrow cheaply, thanks to all those federal guarantees, and lend at much higher rates. So it’s eat, drink and be merry, for tomorrow you may be regulated.
Or maybe not. There’s a palpable sense in the financial press that the storm has passed: stocks are up, the economy’s nose-dive may be leveling off, and the Obama administration will probably let the bankers off with nothing more than a few stern speeches. Rightly or wrongly, the bankers seem to believe that a return to business as usual is just around the corner.
We can only hope that our leaders prove them wrong, and carry through with real reform. In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again.
16. STIGLITZ: BANK RESCUE MAY FAIL
[Editor's Note: Columbia University Professor Joseph Stiglitz appears to have been moving in a rather progressive direction since being awarded the Nobel Prize in Economics in 2001. His research on the enormous costs of the Iraq war have become the benchmark for the left. (His latest book, with Linda Bilmes, is "The Three Trillion Dollar War: The True Cost of the Iraq Conflict.") In recent months he has become one of the two most prominent liberal critics of the Obama Administration's bank bailout plan (the other is Paul Krugman, above). Stiglitz was interviewed by reporters for Bloomberg.com April 17. Excerpts follow.]
The Obama administration’s bank-rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.
"All the ingredients they have so far are weak, and there are several missing ingredients," Stiglitz said in an interview yesterday. The people who designed the plans are "either in the pocket of the banks or they’re incompetent."
The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.
"We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control" of the banks, a set of constraints that will guarantee failure, Stiglitz said.
The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. "The bank restructuring has been an absolute mess."
Rather than continually buying small stakes in banks, the government should put weaker banks through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said….
The Public-Private Investment Program, PPIP, designed to buy bad assets from banks, "is a really bad program," Stiglitz said. It won’t accomplish the administration’s goal of establishing a price for illiquid assets clogging banks’ balance sheets, and instead will enrich investors while sticking taxpayers with huge losses, he said.
"You’re really bailing out the shareholders and the bondholders," he said. "Some of the people likely to be involved in this, like Pimco, are big bondholders," he said, referring to Pacific Investment Management Co., a bond investment firm in Newport Beach, California.
Stiglitz said taxpayer losses are likely to be much larger than bank profits from the PPIP program even though Federal Deposit Insurance Corp. Chairman Sheila Bair has said the agency expects no losses. "The statement from Sheila Bair that there’s no risk is absurd," he said, because losses from the PPIP will be borne by the FDIC, which is funded by member banks….
Stiglitz was also concerned about the links between White House advisers and Wall Street. Hedge fund D.E. Shaw & Co. paid National Economic Council Director Lawrence Summers, a managing director of the firm, more than $5 million in salary and other compensation in the 16 months before he joined the administration. Treasury Secretary Timothy Geithner was president of the New York Federal Reserve Bank. "America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street," he said. "Even if there is no quid pro quo, that is not the issue. The issue is the mindset"….
Stiglitz was also critical of Obama’s other economic rescue programs. He called the $787 billion stimulus program necessary but "flawed" because too much spending comes after 2009, and because it devotes too much of the money to tax cuts "which aren’t likely to work very effectively."
The $75 billion mortgage relief program, meanwhile, doesn’t do enough to help Americans who can’t afford to make their monthly payments, he said. It doesn’t reduce principal, doesn’t make changes in bankruptcy law that would help people work out debts, and doesn’t change the incentive to simply stop making payments once a mortgage is greater than the value of a house….
16. CHINA AT A CROSSROAD?
[Editor's Note: China has been experiencing an historic transition for about 100 years since the fall of the Qing Dynasty, including the establishment of a republic, the beginnings of capitalism, the socialist revolution and socialist society, and then back on the capitalist road under the guidance of the Chinese Communist Party, which refers to its efforts as "Socialism with Chinese characteristics." Some on the left believe the conversion to capitalism is completed. In our view, the transition is not yet over in this society of 1.33 billion people, and the question of socialism or capitalism or a mixed economy for China during this century remains to be determined. It is within this context, not whether we agree or disagree, that we offer this informational article on "China at a Crossroad: Right or Left?" by Jian Junbo, an assistant professor at the Institute of International Studies at Fudan University in Shanghai. It is excerpted from a somewhat longer version appearing in the April 24 Asia Times.]
SHANGHAI: As China feels the pinch of the economic downturn, its government is under increased pressure from the "neo-leftist" and "rightist" camps. The rightists want Beijing to speed up democratization, while neo-leftists demand the restoration of some sort of socialism. The two camps have recently intensified their criticism of each other to compete for public influence.
The conflict shows the crossroads China is at after 30 years of economic reform and opening up. If it has learned from the past, then the Chinese Communist Party will reject both extremes and seek a middle path.
The neo-leftists first became active a few years ago, but their influence remained limited until recently. Amid the economic downturn, social injustice issues such as official corruption and the widening wealth gap have risen in importance, and this offered them a golden political opportunity. Recent surveys have showed that social injustice is the public's top source of discontent.
The neo-leftists are made up of young or middle-aged intellectuals such as Zuo Dapei from the Chinese Academy of Social Sciences, Wang Hui and Cui Zhiyuan from Tsinghua University, Wang Shaoguang from the Chinese University of Hong Kong, Gan Yang at the Hong Kong University, and Wen Tiejun from Renmin University of China.
They are called neo-leftists to separate them from the old leftists from the 1980s, who staunchly opposed late paramount leader Deng Xiaoping's economic reforms of the time. The neo-leftists do not oppose a market economy but do advocate a stronger role for the government in the economy and wealth distribution.
The rightists are a much larger group, mostly made up of liberal intellectuals, party veterans and economists. This group supports capitalist-style economic reforms and China's "opening up". It is often regarded as pro-West.
The global financial crisis has been seen in China as the failure of a laissez-faire economy, and neo-leftists have seized on this opportunity to intensify their attacks on the somewhat crestfallen rightists. Through such attacks they can press the government for fundamental changes in economic policy, and by highlighting social issue the group has attracted public attention.
Several days ago, at Wu You Hometown Bookshop, a well-know neo-leftist center in Beijing, a lecture session on social problems was so full that latecomers had to stand in its passageways. This was not a one-off, as the bookshop regularly attracts neo-leftist crowds to lectures and seminars. The name of the bookshop, Wu You Hometown, is symbolic of neo-leftist idealism, as in Chinese literature it refers to a visionary world similar to utopia.
Generally speaking, neo-leftists believe they represent the interests of the grassroots, especially in rural areas. Pointing to the widening gaps between the rich and the poor, and between cities and the countryside, neo-leftists have questioned the Chinese road toward modernization. They claim this road has been based on the Western values that rightists advocate, such as a free market economy and "small government."
The rightists have pinned the blame for the downturn on political reform lagging behind economic reform, and not on the free market economy. They advocate political reforms that would implement what they call "universal values," such as democracy, human rights and liberty.
For a long time, the rightists were in favor as their views were in line with the government's policy of reform and opening up, which many say has led to China's economic rise. This has led many rightists to think they are on the "right" side of history, and that China's rise occurred due to its integration into the "civilized" world dominated by Western countries, especially the United States.
Because of this, the rightists sneer at the neo-leftists claiming they know nothing about economic realities. They criticize them for their lack of "moral sense," as they do not believe in the rightists' "universal values" of liberty and democracy.
Both camps have made false accusations against each other. The rightists have said neo-leftists want to restore Maoist-style authoritarianism, but neo-leftists are different from the traditional leftists that advocated this. Neo-leftists on the other hand have said that rightist's proposals for integration with the West will damage China's sovereignty. Yet not all rightists think Western values should be adopted by China.
Common ground has been found in the groups' criticism of the government. The neo-leftists are not satisfied with the fast development of the capitalist economy, as they claim it has caused social injustice. While the rightists have criticized the government for the slow place of political reform leading to democratization.