Monday, February 28, 2011

Peak Oil Is Real

From Alternet quoting a British essay on the subject of Peak Oil from inside Saudi Arabia. The much maligned "blogosphere" is once again supported by an insider, essentially whistleblwoing and being ignored by the Mainstream Press who support the people in charge. In order to avoid panic they always tell us. Well panic will doubtless strike as prices inexorably creep up as demand far outsrips supply.
John Vidal's report on US diplomatic cables from Saudi Arabia raises the spectre of premature peak oil: an unexpected deline in global oil production in an oil-dependent world. The US government is among many administrations that routinely reassure the public that supplies of oil can go on growing far into the future. But in private, top diplomats have been telling Washington that they hold deep concerns about supplies from the world's number one supplier. This is an issue that has far-reaching consequences for an oil-importing nation like the UK, and for the global economy.

The latest batch of leaked cables report the views of Sadad al-Husseini, a former board member of the national oil company Saudi Aramco and a geologist who headed exploration and production for the company from 1986 to 2004. He and the US consul-general met in November 2007, when Saudi Aramco were halfway through a $50bn investment programme aiming to lift Saudi maximum daily production capacity from 9.5 million barrels a day to 12.5m by 2009.

Al-Husseini told the Americans he believed that the 12.5m barrel a day target would prove impossible. The kingdom might get to 12m barrels a day given 10 years, but before then – perhaps as early as 2012 – global production would have hit the highest level it ever will, and given that demand won't be abating by then given levels of economic growth in China and India, the oil price will soar. He told the Americans plainly that the Saudis will not be able to ride to the rescue: the Saudi oil industry was overstating its recoverable reserves so as to spur foreign investment, he alleged, at the same time as it was badly underestimating the time needed for bringing new oil on tap.

By 2009, the Saudis were producing 9.7m barrels a day, and claiming more than 4m barrels of spare capacity: capacity beyond the daily production level that can be opened up in an effort to "swing produce" – that is to say, flood the market with oil and bring the price down. Many oil analysts question this figure, and the cables suggest there is good reason to for such scepticism.

Al-Husseini's gloomy view is known from public interviews such as the one he gave to the US Association for the Study of Peak Oil. What is interesting in the cables is the American diplomats' reaction to his view. "Al-Husseini is no doomsday theorist," the cable concludes. "His pedigree, experience and outlook demand that his predictions be thoughtfully considered."

Seven months later, in a June 2008 cable, they went further. "Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period."

No US government official has come close to saying this in public. It is a conclusion of profound significance for the world economy, if correct.

So is it correct? Al-Husseini told the Americans in October 2007 that he didn't think there were enough qualified staff or contracting companies available to Saudis to meet their targets. . In a September 2007 cable the embassy reports hearing "constant complaints of shortages of materials, qualified workers, and infrastructure." Such was the desperation that workers were being hired who had fraudulent documentation. The June 2008 cable reports major project delays and accidents as "evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production."

After this graphic warning about the difficulties the Saudis are having even to replace existing production, much less grow it, the cable goes on to say "while this mission is far from embracing doomsday 'peak oil' theorists, Saudi Aramco's challenges are significant." Al-Husseini himself insisted to embassy staff that he "does not subscribe to the theory of peak oil", before going on to air precisely the concerns that advocates of premature peak oil do: that global demand has essentially met supply, and that a premature drop in global oil production lies a worryingly short way off.

Peak oil is not a "theory." Because oil is a finite resource, it is an inevitability. The debate is all about its timing. Al-Husseini is quoted in the 2007 cable as believing that beyond maximum possible global oil production lies a plateau of production lasting perhaps 15 years. Many others who have "pedigree and experience" think there will be a drop in production within just a few years, and we are in danger of that drop being so steep as to merit description as a collapse. In the YouTube interview al-Husseini recorded in 2009 he talks of a shortage of capacity withing just two to three years – by 2011, conceivably. He then says: "in the long term it's even worse."

The peak oil debate – whether one uses the "P" word or not – involves huge stakes. If US diplomats based in Saudi Arabia harbour fears that the Saudis can't produce enough oil to head off ruinous oil prices, then they are merely telling the US government what a spectrum of UK industry is already telling the UK government. We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, and quite possibly worse.

Jeremy Leggett is the founder and chairman of Solarcentury, the UK's largest solar solutions company.

Saturday, February 26, 2011

The Banana Republic

It is no easy thing to accept that daily simple realities could change at any time. Most Americans have never lived in conflict zones, as the UN calls wars these days. Most Americans have never seen people scrabbling to live, as even those areas of this country that most closely resemble the Third World are closed off to the majority white population. Yet we see social stratification all around us even as the economic reality of this nation grows from bad to worse. That our leaders and the mainstream press denies the increasing stratification is just another way of understanding that stratification is a profoundly Bad Thing. And to speak of stratification as a bad thing puts one in conflict with the Great Myth which is the American Dream. The myth states without fear of contradiction, that anyone can climb the ladder of success in the United States. That the Anti Christ, Billionaire banker and fraud Lloyd Blankfein of Goldman Sachs climbed from obscurity and poverty to financial potentate is proof that the myth is real. The problem isn't that social mobility is possible, it's that it is improbable if not impossible for more and more people in the US today. And even worse than that it will become more and more difficult in the future. Public education (government waste! as it has been relabelled) is under attack and tuition costs prohibit the majority from getting better education. Access to medical care, the best in the world if you are a Saudi Prince with unlimited funds, is becoming more and more remote. These are the practical day to day applications of social inequality. When the poor have nothing left to lose, they revolt. The trend in the US is for greater social inequality is and not only does this make for a harder life for the majority, it also bodes badly for the future of social cohesion and peace as well as prosperity. This map illustrates the Gini Coefficient, a study of social inequality by an Italian economist. The US, in purple is at the top of the lower rank. Russia in dark blue is at the bottom of the top rank. Western Europe and Canada are in light green, Scandinavia in dark green. This map does not measure wealth but it does measure social stability. Notice the countries that match the US :China, Argentina Mexico and Venezuela. Nice huh?From zero hedge this consideration of how we got here and where we are going:

While many watch the revolutions starting virtually on a daily basis in the "developing world", few are concerned that these have any chance of occurring in the United States: "our society is far more cohesive and far less stratified" the rebuttal logic goes. Is it? Over the past two years, the one social class that has received the most voluminous amount of opprobrium is the ubiquitously derogatory "bankster" which represents far more a wealth and income qualification, that a job description. Americans it appears are becoming increasingly sensitive to the stratification within our own society, even if on a subliminal level. And while we have repeatedly shown before in visual terms just how polarized US society is, it worth reminding every few months or so, that the US is rapidly becoming a banana republic not only in its approach to legislative and judicial matters (not to mention regulatory), but toward the distribution of income and wealth. Not that there is anything wrong with a stratified society: after all, that is the purest hallmark of a capitalist society. However when one introduces the basest elements of socialism (and, ostensibly, communism and fascism according to some) in its midst, then things get far more transparent and subjective. Below we once again bring to our readers attention, in easily digestible format, the dramatic schisms that continue to tear through the fabric of US society. And if there is anything that the revolutions in the Maghreb should have taught us by now is that extreme social polarization can only last for so long before a violent snapback restores equilibrium, usually through bloodshed and death.

Graphics courtesy of Mother Jones'

How Rich are the Superrich

A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

Note: The 2007 data (the most current) doesn't reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the superrich.

Winners take it all

The superrich have grabbed the bulk of the past three decades' gains.
Out of Balance

A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it’s more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.

Who's Winning

For a healthy few, it's getting better all the time.

In the end everyone knows that social inequality leads to conflict but we are unwilling to do anything about it. Some few make fortunes and everyone else is destined to be side lined. I don't think the future mapped out there is what most of us want to offer to the next generations. I believe protest will come to this country and i dread the form it will take. To live surrounded by conflict is a very poor quality of life indeed. I wonder at the stupdity of our elites and leaders who encourage this ever widening gap.

Friday, February 25, 2011

Wisconsin: Ground Zero

From Huffington Post a lengthy report on the solidarity on the front lines of the anti union corporate kleptocracy of the new Governor in Wisconsin. I find it surprising that there aren't more widespread calls for the Govenror to rescind the tax breaks for the wealthy already approved. It is that which mnakes this an obvious anti union attack and nothing more. Balancing a budget is just an excuse.

MADISON, Wis. -- On Friday, February 11, at the same hour that the world watched the former Egyptian president Hosni Mubarak resign his post, the newly appointed Republican Governor of Wisconsin quietly launched a ferocious attack on public sector unions -- and the very notion of organized labor in America.

For nearly fifty years unions have sought to safeguard and advance their rights through a process known as collective bargaining, which is the the most powerful tool labor has for peacefully resolving disputes and ensuring workers a voice in negotiations on everything from fair wages to safety conditions and sick leave.

The bill championed by Wisconsin's governor takes dead aim at this process by stripping most state workers of many of their collective bargaining rights. Union leaders have responded uproariously, claiming that the bill effectively guts public unions of their most critical asset in a state that pioneered many of the fundamental fights for worker's rights. Political chaos has ensued on both sides. State Democrats fled the state last week to prevent a vote on the legislation, while many Republican governors -- some who already have similar bills on the table -- watch carefully to see, if the bill succeeds, how they might pass anti-union legislature in their own states.

President Obama called the bill "an assault on unions." On the ground in Wisconsin, the growing crowd of protesters portray their actions as part of a once-in-a generation struggle to shape the dynamic that determines what voice workers will have in the workplace. They feel the eyes of the world upon them. Last Friday as millions swarmed the streets of Egypt in a "Day of Victory" rally, a young man posted a picture on his Facebook page showing a sign reading "EGYPT Supports Wisconsin One World One Pain."

In many statehouses in America, there are heated debates about how to handle mounting deficits and difficult budget cuts. Governor Walker's so-called "Budget Repair Bill" purports to address Wisconsin's $137 million budget shortfall. In addition to removing most collective bargaining rights, Walker's proposal would double the amount state employees pay for health insurance and increase contributions to their pension funds. Republican's say Walker's plan would save the state $30 million over the next three months and $300 million over the next two years. Proponents of the bill say that it is a pragmatic approach to difficult fiscal times.

"I'm just trying to balance my budget," Mr. Walker told the New York Times. "To those who say why didn't I negotiate on this? I don't have anything to negotiate with. We don't have anything to give. Like practically every other state in the country, we're broke. And it's time to pay up."

But labor historians, economists and policy makers say that addressing Wisconsin's deficit is not the full motive of the bill. As they see it, what's really happening is that Walker is seizing on an illusory budget crisis and using it as a battering ram to break public unions.

"It's a symbolically huge stab to see workers rights and mechanisms for conciliation being undone," said labor historian Josh Freeman. "I think [Walker's Bill] is about ideology, generally. There aren't that many worker institutions left in the United States. It's a real effort to take them down. And the budget is an occasion for this."

Indeed, in a conference call with reporters last week, leaders at two of Wisconsin's largest state workers unions -- the Wisconsin Education Association Council and AFSCME -- said that they would concede all of Walker's fiscal demands, if they could keep the right to collective bargaining.

"We want to say loud and clear: it is not about those concessions," said Mary Bell, president of WEAC. "For my members, it's about retaining a voice in their professions."

Walker has rejected this offer. "Doesn't work," he told USA Today. "And the reason, having been a local government official, is we've got 72 counties, 424 school districts, over a thousand municipalities. And like every other state, or nearly every other state across the country, our budget is going to have cuts in aids to local governments."

But union leaders insist that there is always something to bargain over, even if it is only the ability to bargain itself.

"I think what people need to see in this is that it's not just an attack on public service unions. It's really a concerted attack by powerful interests that really want to see working class people be brought down," said Rick Badger, the executive director of AFSCME's Wisconsin 40 council. "Walker claims there's nothing to bargain with. The message we need to get out there is that this could not be further from the truth."

As the crowd builds day by day, the tens of thousands who have showed up to protest Walker's bill claim their actions are much more than a battle over increased health insurance premiums and a cut to their pensions. Those who have gathered for days in increasing numbers in front of the Capitol -- in some cases, through the night, camped out inside the Capitol on sleeping bags and cardboard -- characterize themselves as figures at the heart of the struggle for the future of the American worker.

Other states are closely watching Wisconsin's example.

In Ohio, Republican Senator Shannon Jones proposed a bill which also seeks to eliminate collective bargaining rights for public employees and curtail binding arbitration rules for local governments. Last month, Ohio governor John Kasich said that if employees strike, "they should be fired." In response, last week thousands of protesters gathered in front of the Ohio statehouse.

Indiana is facing protests over a proposed Right to Work bill. Indiana has also proposed a bill which would limit collective bargaining rights for teachers. Union leaders and democrats are preparing for extended fights in both Ohio and Indiana.

"I think other states will be emboldened," says Rebecca Givan, a professor of labor relations at Cornell. "if [Walker's bill] passes there will be a ripple effect and states like Ohio and Indiana will move quickly. And other states will start to think that this is a viable option."


In Wisconsin, the demonstrations have been peaceful. Yet, Walker has attempted to pit law enforcement against protesters since his first announcement of the bill, which was accompanied by the suggestion that he might call in the National Guard to quell protesters. He told reporters at the press conference that the Guard was "prepared" for "whatever the governor, their commander-in-chief, might call for."

Additionally, in a move that might have further divided Wisconsin state workers, Walker exempted police and firefighters from his bill. Many observed that cops and firefighters tend to vote Republican and this might explain their exclusion. But far from turning on the crowd, Wisconsin police have acted as behind-the-scenes advocates for those opposing the bill in negotiations with state administrators.

The protests have been peaceful, with very few arrests. But on Friday night, according to sources inside the Wisconsin Police Department, the state's Department of Administration wanted to clear the Capitol building where people were camped out, singing, praying, and sharing stories late into the night. Those police assigned to the capitol refused to comply, arguing that as there was absolutely nothing going on and there was no need to act. After a "healthy discussion," (as one police officer put it), the discussion was dropped and those inside the Capitol stayed put.

No group has been more loved at the protests in Madison than the cops and firefighters. Everywhere they go, they are trailed by shouts of thanks and cheers. Day after day, police officers, in their civvies, gathered by the Wisconsin Law Enforcement Memorial carrying signs pledging solidarity.

"This is not about the money," said George Silverwood, a silver-haired retiree with a bright white smile straight out of central casting. He was with the police force for 32 years, deeply involved with union negotiations, and said he can't believe what Walker is proposing.

"I sat at that table and arrived at a contract and saw how well that worked, year after year," Silverwood said. "Walker keeps saying, people shouldn't be shocked. Well, we're shocked. And we're angry."

Jamie Leonard, 35, has been a Wisconsin firefighter for 13 years. He lives a 2-hour drive from Wisconsin, but drove down to join the protests last week and plans to go again this week.

"I went to show support," Leonard said simply. "We need to show that, even if we weren't included, we support the public worker unions. We're with them."

"[Collective bargaining] has been in this state for a long time, and not having that, there are a lot of unknowns," Leonard said. "When you lose something, it's like a nice comfortable blanket. You take that away, and you think: are we just going to be left out in the cold? How will we be treated from here on out? Benefits are one thing but rights are something else. And that's what we're fighting about."

Many police are suspicious of Walker's real motives. Scott Favour, a Madison cop for 19 years exclaimed heatedly, "Governor Walker is not telling the whole story on what he's trying to accomplish. It's about breaking unions."

"You can't bribe the cops," Favour said, greeted with grins and high fives from fellow policemen.

There has been extensive debate about why Walker exempted police and firefighters from his bill. In a press conference, Walker simply said that the state has always treated local police and firefighters differently than other public workers.

Rumors swirled with ulterior motives. Was it payback for campaign support? Others felt Walker was too scared to go after cops and firefighters. Some thought, he was trying to bribe them. It's still not entirely clear why he carved them out of the bill.

The largest state police and fire unions in Wisconsin supported Walker's opponent in the elections, although the Milwaukee police and fire fighters unions endorsed Walker.

The Governor did not respond to several requests for comment.

Observers of the state's political climate say the support police and firefighters have shown in the protests over the last week is unprecedented in recent memory.

"Law enforcement officers go into the profession to be helpful to people," said Jim Palmer, executive director of the Wisconsin Professional Police Association. "So they see this as an opportunity to continue doing that. I think they're worried about a whole class of people they work with who will be deprived of their rights, and the second thing is: we could be next."

The uncertainty about why the groups were exempted from the bill leaves a gaping unknown: could their unions be the next on the chopping block?

"The reality is that he's trying to divide those within Wisconsin's various labor groups," Palmer said. "He wants to divide Wisconsin's house of labor so he exempts the two most popular groups and tries to let everyone else fend for themselves. I think that's the political reality."

Veteran groups were outraged by Walker's reference to the National Guard.

In the past, the Guard has stepped in to staff prisons when prison employees went on strike. But, in his comments, the governor did not specify what the Guard might be used for. And the history of the National Guard intervening in union protests in Wisconsin is brutal.

"It's hard to imagine why that had to be raised except to purposely stoke a fire," said Joseph McCartin, a labor historian at Georgetown University. "It's a painful history that Wisconsin has had in that respect and to raise the specter of calling in the National Guard seems totally unwarranted in this case."

The last time Wisconsin called in the National Guard was in 1886. The Guard, then called the State Militia were brought in to break a rally of Milwaukee workers advocating an 8-hour work day. The militia fired into a crowd of unarmed picketers; it's estimated that 5 to 7 workers were killed.


It's far from an accident that this struggle is being played out in Wisconsin.

Wisconsin workers have a deep and longstanding history with unions. It is the birthplace of the American Federation of State, County and Municipal Employees (AFSCME), one of the largest unions in the United states. Wisconsin fought the first fights to get unemployment insurance, worker's compensation, and public sector collective bargaining.

Jenny Sallmann a 37-year-old Nurse at the UW hospital thought of her father, a Wisconsin teamster, often while she was out protesting last week.

"He taught me never to cross a picket line," she said. "And he's pretty conservative. He believes that--" she paused for a several breaths. "Well, I can't talk for him, but he was in a good union and it helped him have a good paying job. He didn't have a college education, he didn't have a ton of money but he supported us by driving a truck and I saw that growing up."

On Friday and Saturday, the normally pristine interior of the Capitol was practically wallpapered with signs which place the protests in the context of a struggle for fundamental rights. "Worker Rights are Human Rights," "Egypt = 18 days, Wisconsin = ??" and "No! Not In My Wisconsin."

One woman held a sign reading ""My father stood her here in 1956 I stand here in 2011 in his place for his honor." Collective bargaining for public sector workers was first passed in Wisconsin in 1958, after years of protests and negotiations.

There are nearly three hundred thousand public workers in Wisconsin. On the streets, protesters talked of revolution. At night, union leaders gathered at the nearby Concourse hotel to strategize while others swarmed the statehouse, beating drums, and reading statements about how the bill would effect their lives. Last week, protesters read to gathered assembly members late into the night. When the assembly closed, and the members went home Friday night, they read to each other.

Walker's bill does allow collective bargaining on one issue -- workers would be to negotiate over wages up to the Consumer Price Index. Labor historians and economists view this as little more than an empty gesture.

"You're not allowed to negotiate for pension and benefit, you can't negotiate beyond the rate of inflation for wages, " said Laura Dresser, a labor economist at the Center on Wisconsin Strategy, "So workers know: they are stuck, even if economy gets better. Even if the state has money again, they are stuck."

Proponents of the bill say that taking away collective bargaining rights is crucial to maintaining a balanced budget in the future. Walker claims that collective bargaining has "stood in the way of local governments and school districts being able to balance their budget" and maintains that his bill is "modest."

But labor economists point to labor's long history of collaborating with states in times of fiscal trouble.

"The principle of collective bargaining is not that unionized people always get more," says Rebecca Givan. "The principle is that everything gets negotiated. Even if there's only a small amount of money on the table, how it's distributed gets negotiated not imposed."

State workers are quick to point out that they had already faced mandated furlough days and they are fully prepared for more pay and benefit cuts.

"Teacher's all over the state have made concessions on their bargaining," Dresser continued. "We see hard times going forward. But what he's doing, what's duplicitous, is that he's using the budget stress to take on the infrastructure of collective bargaining and worker's voice. And so that's where we have to stand up."

Critics of the bill point to Walker's significant ties with the Koch brothers, two conservative titans of industry who are waging a war against the Obama administration. The brothers were Walker's second-biggest campaign contributor, and have long taken a "very antagonistic view toward public-sector unions," Mother Jones reports.

When Walker took office in January, Wisconsin's budget was not in need of austerity measures, Talking Points Memo reported last week. Rather, the steep state deficit stems from a series of tax cut policies Walker enforced shortly after taking office. Wisconsin's Fiscal Bureau concluded in a recent report (PDF) that the current budget shortfall is a direct result of tax cuts Walker "more than half" of Wisconsin's current shortfall comes from three initiatives Walker enacted shortly after taking office.

"Walker was not forced into a budget repair bill by circumstances beyond his control," said Jack Norman, research director at the Institute for Wisconsin Future -- a public interest think tank. "He wanted a budget repair bill and forced it by pushing through tax cuts... so he could rush through these other changes."

Meanwhile, the share of corporate tax revenue funding the state government has fallen by half since 1981 and, according to Wisconsin Department of Revenue, two-thirds of corporations pay no taxes.

"I'm not saying they don't have real budget issues," Freeman said, "But Wisconsin is not Nevada or California. And there are all kinds of ways to address the deficit, including cutting labor costs. What's interesting here is that after initially resisting it, the unions have actually agreed to all the cuts."

As for what the future holds for Wisconsin workers, if the bill should pass, Freeman points out that there are some indications of what might be ahead. This is the first time that collective bargaining has ever been taken away from a state, but 20 states never negotiated for it.

"This is not a new situation," Freeman said. "Unlike a lot of aspects of the law, labor law is really varied. You could argue that this is the further southernization of northern society, because in much of the south this is already the case. So look there and you'll see what you get."

On Monday, as the protests enter their second week, Wisconsin is frozen in a standoff. Last Wednesday, Democratic lawmakers fled the state to block a quorum and prevent the bill from passing. The Governor has the votes to pass the bill, but while the 14 Senate Democrats remain in undisclosed locations in Illinois, the legislature cannot move forward.

Sen. Spencer Coggs (D-Milwaukee) said Democrats were prepared to stay away "as long as it takes."


One unintended consequence of Walker's proposal is a significant brain drain, as the best and the brightest in Wisconsin's public sector either leave the state or retire.

Elizabeth Zahn, 52, is a Pediatric therapist and union member for 25 years. She has lived in Madison her entire life. She never thought she would contemplate leaving the state, until last week.

As a health care professional and union member, Zahn is concerned for herself, but also for those patients who are supported by state salaries who may no longer be able to afford her services.

After 25 years, she is scared about what the workplace will be like without a union to support her.

"I feel insecure without a union behind me. like there's no one watching my back. I've often been Laissez-faire with my involvement with contract bargaining thinking, oh there's someone watching out for me," Zach says, clenching her hands and looking down. "But now i'll have to figure this all out on my own and I don't know how that's going to work."

Zahn has a graduate degree from the University of Wisconsin in physical therapy and an excellent professional track record. She view's Walker's bill as a slap in the face.

"There's no appreciation for me and what I can do," Zahn says. "And I'm going to move someplace where I can be appreciated."

Workers expressed a variety of reasons for leaving Wisconsin. The budget cuts are a factor, but many would stick it out if they felt that they still had a place at the bargaining table and hope for a more affluent future.

Matthew James Enright, 28, is a school teacher in Lancaster, Wisconsin, about 85 miles west of Madison. His wife, Jo Nelson, is a mathematics graduate student at the University of Wisconsin and member of the Teacher's Assistants Union. They moved to Wisconsin for Nelson's graduate program, but are considering relocating if the protests are unsuccessful.

The couple is rattled by Walker's exclamations that they are the "haves" in the state economy. Enright makes around 35,000 a year, and Nelson makes 13,000. They are burdened with student debt from college, and between the two of them barely scrape by.

"We have put off buying a dresser for a year and a half," Enright said, "And our dresser is falling apart! I'm okay with hand-me-down furniture," he paused. "I have a really good degree from a very respected program and it's every month we end up arguing about something with money."

And yet, when matters turned to collective bargaining, the couple became dramatically more heated, as though the financial burdens of life slipped away in the face of a greater need.

"It's the taking away my seat at the table," Enright said angrily. "That's what really bothers me."

"Even if the economy is to recover we'll never regain what we've lost here," Nelson chimed in.

Enright went on, "I don't see how the school will even really be able to afford to replace me, and other people like me who leave. And i'm pretty good at my job," he laughed. "I'm hard to replace."

Nelson is worried the bill will decimate the University as the best students and professors reach out to other universities. But early retirement is a sharp concern in Wisconsin as well.

"The more immediate problem," Rebecca Givan said, "is the rush to retirement. Because if people are worried about their pension being cut, they're already putting in their retirement requests now. So that's going to be a huge rush of all the most experienced workers putting in their retirement requests now."

But many are not calling it quits just yet.

Dianna James, an Affiliate Processing Technician at ASFCME 40, and member of the private sector union FSSU said that she was planning on retiring, but when Walker made his announcement, reconsidered her plans for the future.

"It's in my blood now," James said. "I'll be out there if it takes all year. My husband says: you're not retiring are you? I said, oh I'm not retiring I'm just starting a new fight."

"I just can't fathom--" James paused for a long moment, considering Walker's proposal to do away with collective bargaining. "I can fathom what they feel: and that's anger. Can I blame them? No. Because I feel the same emotion for them."

Thursday, February 24, 2011

Unions And The Future

By Matt Stoeller of the Roosevelt Institute.
Today, the city of Providence, Rhode Island sent out layoff notices to every single teacher in the city. Every single one of them. If you want to understand why this is happening, why wages in the US keep getting cut, this chart tells the story.That’s the number of strikes since 1947. What you’ll notice is that people in America just don’t strike anymore. Why? Well, their jobs have been shipped off to factory countries, their unions have been broken, and their salaries until recently have been supplemented by credit. It’s part of a giant labor arbitrage game, that the Federal Reserve and elites in both parties are happy to play. Strike, and you’re fired. Don’t strike, and your pay is probably going to be cut. Don’t like it? Sorry, we can open a plant abroad. And we have institutions, like the IMF, to make sure that we get goods from those factory-countries, and get them cheap.

But it’s not cheaper, or better, or more efficient. Firing your teachers isn’t exactly “winning the future”. And outsourcing manufacturing, as Boeing found out, is often a good way to increase coordination costs, create more operational risk, and destroy value. However, the system is good at maintaining the power of oligarch-style control of cultural institutions. If no one but the kids of rich people can read, only the kids of rich people will be able to organize society’s resources. Outsourcing work to China means that workers are scared and have no leverage, so they do what management wants. Again, this isn’t efficient; the UAW sought to make small cars in the 1940s, but was rebuffed by management. Workers are closest to production; treating them terribly is a good way to degrade product quality. Silicon Valley companies give their engineers free snacks and frisbees because happy employees that take ownership over their work create good quality products. Treating people terribly scares them, and makes them more pliable. Again, it’s about control.

The problem for the elites is that the system of control is breaking down. I noted a week and a half ago that the Egyptian revolution was a labor uprising against Rubinites. So to the extent that global labor arbitrage relies on sweatshops and environmental degradation in poor countries for cheap goods, successful strikes in poor countries undercuts the whole system. The reason to outsource work in the first place is to prevent workers in rich countries from gaining pricing and political power. Now workers in poor countries are getting pricing and political power? It’s actually a fragile system of control, and can be broken through either crackdowns on tax havens and oligarchs in wealthy countries or protests/strikes where the goods are made.

The Egyptian revolution was really a series of protests and highly politicized strikes, which is why people in Madison are taking inspiration from Cairo. In fact, the actions in Egypt may be creating a wave of labor actions worldwide, rippling to Wisconsin, Indiana, and Ohio. All of these strikes are aimed at a collusive set of tight relationships. Here’s new Republican Florida Governor Rick Scott in a back and forth with public employees explaining how this system works. One worker asked him about proposed benefit cuts in the face of a multi-year freeze in salaries and layoffs.

“Do you fully realize the gross unfairness of that proposal?” one worker asked Scott.

Scott said a change was needed and that, “You never know exactly what’s fair.”

“Right now your plan in underfunded, whether anyone wants to acknowledge it or not,” Scott said. “So whoever the youngest is, everyone else should thank them because there might not be a pension plan, just like we’re worried about Social Security.”

Scott didn’t mention the pension fund is about 88 percent funded – among the best in the country – while Social Security is scheduled to start paying out more than it takes in as soon as 2014.

Instead, Scott said both government and the private sector have less money to spend “and you guys all cause it.”

“As an example, you all shop at WalMart, right?” Scott said. “You don’t say, ‘Golly, I’m going to buy the product because they have a better pension plan or better health care plan or pay more taxes. You say, ‘I’m going to buy based on price.’

“That’s what taxpayers are doing now,” he said. “They’re moving around the country to pick states where they can keep more and more of their dollars. So what we’ve got to do … we’ve got to figure out how to get more efficient every day.”

A female worker was cheered when she asked this follow-up: “How do you expect employees to pay for these increases when we ourselves have not had an increase?”

“I would never defend that any compensation is ever fair for anybody, especially the hardest working people,” Scott said. “It’s never fair and it never will be fair.”

There’s a reason Scott is incoherent. Florida’s pension fund has lots of money in it, and Scott wants to make sure that workers don’t get very much of it. “You never know exactly what’s fair” and “It’s never fair and never will be fair” are cynical Rumsfeld-ian post-modern excuses for wealth transfers upward.

In this 5 minute long answer to another question of why workers are taking cuts while the wealthy do not have to share in the sacrifice, Scott spends time talking about luring companies to Florida, to compete with countries like China.

“There’s a reason [the jobs are overseas]. The labor’s less expensive, the regulation’s less expensive. Everything we do to make it harder on businesspeople means fewer jobs in Florida and less money to do the things we want to do.

This is absurd in one sense, because Florida’s problems have nothing to do with regulation. The whole state is underwater from a housing crash, and there’s just not enough aggregate demand to bring down unemployment. But these economic theories aren’t about efficiency, they are about a value system. Scott is arguing for a low trust low cost world, with no education, no regulatory standards, and low quality output. This is the dominant strain of thinking among American elites. It’s not just Rhode Island, where the teachers are literally all under threat of being fired (and where in 2010 Obama apparently sought to win the future by applauding this firing of teachers). In New York, Democratic Governor and prospective 2016 Presidential candidate Andrew Cuomo is gleefully slashing huge chunks of education and health care rather than retain a mild tax on the wealthy. This is a great way to increase crime, disease rates, and social disorder resulting from inequality.

Cuomo is just acting like a standard neoliberal Democrat. Obama has put forward a proposed pay freeze on non-security state Federal government workers, and Senate Democrats want to extent that for at least five years. That’s their starting position negotiating against the GOP. You can’t have a good regulatory state when you don’t pay regulators good wages. Instead, what you have when government is expansive and poorly run is big government corruption.

The GOP likes to foster corruption through privatization of public services, a shadow large government in the form of security contractors, corporations, and banks that are supported with taxpayer money but consider themselves part of the “private sector”. The elite Democratic model of governance is more subtle; it is embodied in high expertise-driven regulatory programs like the health care bill, cap and trade, GSE reform and Dodd-Frank. Low pay for regulators means corruption in the form of the revolving door. Whether it’s Scott Walker demanding the right to give state power plants and Medicaid money to oligarchs, or revolving door corruption through low pay to regulators, the real agenda of the elites seems to be: cuts for you, corruption for me. Whether the state Senate Democrats in Wisconsin represent an anomaly, or a trend, is an open question. Efficient this is not, but again, it’s not about efficiency, it’s about control.

Egyptians are trying to throw off the IMF-imposed austerity measures that created such a system for their country. The new government there is proposing raising taxes on oligarchs, increasing food subsidies, and reducing inequality. Their new cabinet is letting more people apply for “monthly portions of sugar, cooking oil, and rice.” The previous cabinet, “which was comprised of businessmen and former corporate executives”, had refused this.

And look at how Egypt is treating public employees: “Temporary workers who have spent at least three years working for the government will now be given permanent contracts that carry higher salaries, and benefits such as pension plans, and health and social insurance.”

Pension plans, health, and social insurance, oh my! How are they planning to pay for this? One member of a left-of-center party made it quite clear:

Confiscating wealth looted by cronies of the former regime, more egalitarian distribution of wealth, gradual taxation, better government oversight, and placing “a reasonable ceiling” on profitability of goods and services sold to the public are among the measures that should restore an economic balance to society, he said.

It is too early to pretend like this is a done deal, but it is certainly the case that the mass exercise of people-power in Egypt made this far more possible than it had been before. Even after Mubarak resigned, and even when the army tried to ban labor gatherings, the Egyptian labor movement continued to strike, gather, and make demands.

As Daniel Ellsberg once said, “Courage is contagious.” And what happened in Wisconsin came from the inspiration of see millions of powerless people join together and overthrow a regime in Egypt. It didn’t come from union leaders, who have been perpetually unprepared for the onslaught against them. Just look at the webpage of the AFL-CIO of Wisconsin. It looks like it was designed by Geocities in 1997. Yet, #wiunion has been trending on and off for a week on Twitter, and has inspired actions all over the country (check out the Cheesehead protest in NYC).

This upsurge certainly didn’t come from the Democratic Party leadership. I mean, Rhode Island is a pretty reliable blue state and the last Mayor of Providence was just elected to Congress as a Democrat. Meanwhile, Former Democratic Michigan Governor Jennifer Granholm is saying the Wisconsin state Senators need to get back to work. And what is striking about Obama’s posture on the greatest uprising in American labor history of this century, is how he is really nowhere, meekly tut-tutting about union busting while gravely acknowledging fiscal realities and tough choices. But the Wisconsin protests happen every day, without formal authority structures. This quote from the Huffington Post Hill newsletter shows that there is something new going on.

Tom O’Grady, a union sheet metal worker from Sun Prairie, Wis., said the sight of youngsters protesting against Gov. Scott Walker’s efforts to gut collective bargaining rights is bittersweet. “It’s humbling,” said O’Grady, 60. “We see all these kids, they may never have a union job, and they’re here every night for us? It’s very humbling.”

Striking just isn’t in the collective memory of the American public anymore. This kind of highly politicized hybrid political protest/strike walks like an Egyptian these days, which is why Egyptians were sending Wisconsinites pizza and Madison protesters were holding signs lauding teachers, workers, and the new Egyptian flag. In fact, Madison may represent a new kind of American labor model, the melding of old school unions, Howard Dean-style internet-based organizing, Anonymous-style serious pranking, and social media reporting on protests and policy. There’s an anti-bailout class-based fervor here as well, with a simmering anger at Wall Street as subtext. It’s headless and global, though there is leadership. The most powerful moment so far in the Wisconsin conflict didn’t come from the actions of a labor leader, but from a prank call by alt-weekly “Buffalo Beast” editor Ian Murphy, who pretended to be billionaire American oligarch David Koch and had a frank 20 minute conversation with Governor Scott Walker. Murphy originally wanted to pose as Hosni Mubarak, but couldn’t pull off the accent.

Perversely, people may be so beaten down that they only want to side with institutions that are visibly and aggressively advocating for them. This might lead them to recognize that middle class interests are aligned with those of labor, which was the widespread view in the first generation after World War II. However, that also means that the de facto business unionism of the 1970s onward isn’t appealing. People might only like unions when they see strikes, otherwise all they hear about is backroom negotiations. Perhaps effectively striking is actually the way to force people to ask questions about what kind of country they want to live in. I haven’t seen this much labor coverage since, well, ever in my lifetime. There seems to be multiple feedback loops at work: political, global, and economic.

As commodity prices shoot up, and become more volatile, the pressure to liquidate America will only increase. These increases take the form of gifting public assets to oligarchs, taxing the middle class and poor, slashing social service budgets, and cutting wages through inflation and outright demotions (like the NYC sanitation workers that were demoted right before a giant blizzard). But civil unrest is intensifying it its most basic forms: protests and strikes, and in advanced forms, like the blowback at the national security state embodied in the HB Gary and WIkileaks fiasco.

What we are seeing is two political and economic systems, increasingly at odds – high trust and cooperative, or dominance-based and lowest common denominator. This is not, fundamentally, a debate about economics. It is true that neoclassical economics doesn’t work, leads to corruption, and is intellectually dishonest. But that’s why this isn’t a question of economics, because the dishonesty is part of a system of corrupted values.

It is Andrew Mellon morality, the kind that led to the Great Depression (and will lead again to catastrophe):

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.”

Or it is the morality of Martin Luther King:

“True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.”

Sometimes it really is that simple.

Divide And Conquer

What I find interesting about the struggle in Wisconsin is that the facts indicate that the state budget deficit, modest as it is by national standards, has been created by an exacerbated policy of tax cuts. The position on the right is that Wisconsin is New Jersey and about to implode economically speaking and it's all the fault of the unions. It seems obvious enough to me and a few others, apparently, that this is the 21st century moment where unions live or die. Robert Reich agrees.
The Republican strategy is to split the vast middle and working class - pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don't believe these programs will be there for them, and the poor against the working middle class.

By splitting working America along these lines, Republicans want Americans to believe that we can no longer afford to do what we need to do as a nation. They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

Republicans would rather no one notice their campaign to shrink the pie even further with additional tax cuts for the rich - making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.

The strategy has three parts:

1. The Battle over the Federal Budget

The first is being played out in the budget battle in Washington. As they raise the alarm over deficit spending and simultaneously squeeze popular middle-class programs, Republicans want the majority of the American public to view it all as a giant zero-sum game among average Americans that some will have to lose.

The President has already fallen into the trap by calling for budget cuts in programs the poor and working class depend on - assistance with home heating, community services, college loans, and the like.

In the coming showdown over Medicare and Social Security, House budget chair Paul Ryan will push a voucher system for Medicare and a partly-privatized plan for Social Security - both designed to attract younger middle-class voters.

2. The Assault on Public Employees

The second part of the Republican strategy is being played out on the state level where public employees are being blamed for state budget crises. Unions didn't cause these budget crises -- state revenues dropped because of the Great Recession -- but Republicans view them as opportunities to gut public employee unions, starting with teachers.

Wisconsin's Republican governor Scott Walker and his GOP legislature are seeking to end almost all union rights for teachers. Ohio's Republican governor John Kasich is pushing a similar plan in Ohio through a Republican-dominated legislature. New Jersey's Republican governor Chris Christie is attempting the same, telling a conservative conference Wednesday, "I'm attacking the leadership of the union because they're greedy, and they're selfish and they're self-interested."

The demonizing of public employees is not only based on the lie that they've caused these budget crises, but it's also premised on a second lie: that public employees earn more than private-sector workers. They don't, when you take account of their education. In fact over the last fifteen years the pay of public-sector workers, including teachers, has dropped relative to private-sector employees with the same level of education - even including health and retirement benefits. Moreover, most public employees don't have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year.

Bargaining rights for public employees haven't caused state deficits to explode. Some states that deny their employees bargaining rights, such as Nevada, North Carolina, and Arizona, are running big deficits of over 30 percent of spending. Many states that give employees bargaining rights -- Massachusetts, New Mexico, and Montana -- have small deficits of less than 10 percent.

Republicans would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds - many of whom wouldn't have their jobs today were it not for the giant taxpayer-supported bailout, and most of whose lending and investing practices were the proximate cause of the Great Depression to begin with.

Last year, America's top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains - at 15 percent - due to a tax loophole that Republican members of Congress have steadfastly guarded.

If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society - thirteen hedge-fund managers or 300,000 teachers? Let's make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

3. The Distortion of the Constitution

The third part of the Republican strategy is being played out in the Supreme Court. It has politicized the Court more than at any time in recent memory.

Last year a majority of the justices determined that corporations have a right under the First Amendment to provide unlimited amounts of money to political candidates. Citizens United vs. the Federal Election Commission is among the most patently political and legally grotesque decisions of our highest court - ranking right up there with Bush vs. Gore and Dred Scott.

Among those who voted in the affirmative were Clarence Thomas and Antonin Scalia. Both have become active strategists in the Republican party.

A month ago, for example, Antonin Scalia met in a closed-door session with Michele Bachman's Tea Party caucus - something no justice concerned about maintaining the appearance of impartiality would ever have done.

Both Thomas and Scalia have participated in political retreats organized and hosted by multi-billionaire financier Charles Koch, a major contributor to the Tea Party and other conservative organizations, and a crusader for ending all limits on money in politics. (Not incidentally, Thomas's wife is the founder of Liberty Central, a Tea Party organization that has been receiving unlimited corporate contributions due to the Citizens United decision. On his obligatory financial disclosure filings, Thomas has repeatedly failed to list her sources of income over the last twenty years, nor even to include his own four-day retreats courtesy of Charles Koch.)

Some time this year or next, the Supreme Court will be asked to consider whether the nation's new healthcare law is constitutional. Watch your wallets.

The strategy as a whole

These three aspects of the Republican strategy - a federal budget battle to shrink government, focused on programs the vast middle class depends on; state efforts to undermine public employees, whom the middle class depends on; and a Supreme Court dedicated to bending the Constitution to enlarge and entrench the political power of the wealthy - fit perfectly together.

They pit average working Americans against one another, distract attention from the almost unprecedented concentration of wealth and power at the top, and conceal Republican plans to further enlarge and entrench that wealth and power.

What is the Democratic strategy to counter this and reclaim America for the rest of us?

Wednesday, February 23, 2011

Inside Job The Movie

Inside Job is playing at the Tropic Cinema. It's a nice recap of the screw ups that led to the economic meltdown, but it is, I think a good time to remind ourselves how we got to this fiasco of capitalism when banksters profit and socialism on the public coffer when their losses come home to roost.

Everyone in the theater loved the quotation from the advisor to the People Bank of China arguing that it makes more sene to pay engineers more than bankers. "Engineers build bridges, economic engineers build dreams; when they go wrong they become nightmares and everyone pays." And now that Republicans run the house expect nothing new on this subject.

Why The Left Is Lame

From Yves Smith of Naked Capitalism this dissection of the built-in need of leftist politicians to bend down before their opponents and give the store away. It is a permanent source of frustration to me and it seems we can expect at best a slowing action in defense of our former rights. I keep hoping some Messiah will open to help us but so far from the President on down, leftists are lame.

The chattering classes of the left are encouraged by the spectacle of 14 Wisconsin state senators having the intestinal fortitude to deny the governor a quorum for a budget vote that includes provisions to strip most state employees of virtually all of their collective bargaining rights. They were in turn emboldened by large scale demonstrations in the capitol, which seemed to get their momentum from the fact that students, rather than taking the day off when teachers called in sick so they could protest, turned out in large numbers to support them.

Don’t underestimate the ability of the Democrats to trade this opportunity away. All the defecting Senators are asking for is to slow down the process and negotiate the bill. Sounds reasonable, right?

As someone who been party to deal-making, the problem with being reasonable and measured is that that only works with fair-minded and/or experienced opponents. Being non-negotiable is not only terribly effective (you throw a tantrum and then make only token concessions to let the other side save a teeny bit of face), it also takes comparatively little in the way of bargaining skills.

The right wing, for the most part, has made being unreasonable and non-negotiable part of its branding. The left, peculiarly, has not adapted. And the result is that it too often winds up ceding way more ground than it needs to.

Many readers will point out that this ineffectiveness serves as useful protective cover, particularly with the Obama Administration. It has repeatedly sought to have its cake and eat it too, by appealing to as much as possible of the traditional Democratic base (which they figure they can abuse, since it has nowhere to go) while also playing up to corporate backers. The true state of play has reached the point that even purveyors of leading edge conventional wisdom like Jeffrey Sachs are now willing to say that we have two center-right parties in the US.

But this, while true, misses an underlying pathology. Reader Deus-DJ pointed out, “The problem is capitulation. There is always going to be conflict…acting like we should all just get along and that conflict is inherently bad is the problem.”

Let’s give an example I received by e-mail from a group that no doubt sees it self as dedicated progressives, untainted by corporate influences. I’ll take the liberty of reproducing it in full and then parsing it. The cover note read,

Hi xxxx –

Wanted to run by you a campaign by New York Communities for Change against JP Morgan Chase’s mortgage policies. Starting next week, high-profile elected officials, clergy, unions and legislatures across New York state will stop doing business with the bank unless they change their modification system. Particularly interesting as the Madoff angle heats up.

The main text:

“Tell JP Morgan Chase: Foreclosing on Families is Not the Way Forward”

In early February, New York Communities for Change released a report detailing how only a tiny fraction of New Yorkers with JP Morgan Chase mortgages who apply for modifications receive them – just 6 percent of all applications.

Until JP Morgan Chase changes its mortgage policies, a coalition of elected officials, unions, clergy and community leaders will publicly demonstrate that they have stopped doing business with the bank.

The launch of the statewide campaign, including two major unions (United Federation of Teachers and Transport Workers Union), was covered in the NYTimes:

Pulling Money Out of JP Morgan Chase:

Starting next week, the “Not the Way Forward” campaign will be calling for JP Morgan to change its practices and start modifying mortgages. Campaign tactics will include:

· Individuals, unions, community organizations pulling their money out of JP Morgan Chase

· Cities throughout the state debating resolutions to stop doing business with JP Morgan

· Urging the legislature to cancel contracts with JP Morgan Chase

· Weekly actions with affected homeowners and elected officials

These actions build up to the JP Morgan Chase stockholder meeting in May.

Until These Demands Are Met:

In order to protect the residents, communities and governments of New York, JP Morgan Chase should:

· Stop all filed and unfiled foreclosure actions.

· Put in a place a mortgage modification process that produces permanent, affordable, transparent, timely modifications whenever these have a positive net present value.

· Pay for an independent reviewer and pay for borrower representation for an independent appeal process for all mortgage modification requests that are denied by the bank.

· Pay restitution to homeowners who lost their properties unfairly – that is when a modification under the above terms would have been possible.

· Release data about Chase’s proprietary and HAMP mortgage modifications to the City Comptroller and the State Banking Commissioner.

Copy of the Report:

I hate to single a no doubt well meaning group out, but this is just lame. I suspect readers can offer more, um, constructive criticism, but let me go down a short list:

The branding sucks. It’s “Not the Way Forward”. It’s neither specific to mortgages nor evocative. “Stop Servicer Scams” “Shame The Banks” and “Foreclosure Fraud” are more targeted and forceful.

The pressure mechanisms are inadequate. First, this campaign has not started. There is no assurance that meaningful numbers will join in. Second, even if there is a decent level of participation, there appears to be no mechanism for relating the actions of this group to actual account closures. People close accounts all the time. Unless JPM sees a big enough spike to give it pause, it will not relate the account terminations to this campaign (trust me, branch manager will not tabulate it and pass it up the chain even if people tell them “I’m canceling my account due to your foreclosure practices”). The best shot is to do it according to the “Tank a Bank” plan, to pick a target date in the hopes that that the cancellations and withdrawals will be large enough for JPM to notice. But even if they constitute a meaningful blip, so what? You’ve taken you best shot, and the bank knows that was your only bullet.

Similarly, “canceling contracts” with JP Morgan is naive. You can’t just exit them; you might be able to negotiate your way out of them, but that would involve spending hard legal dollars to pay for attorneys, almost certainly paying some sort of settlement for terminating it early, and then having to spend the time to find a replacement vendor and incurring the cost of getting them signed up. And my understanding is that JP Morgan is the dominant provider in some services, such as EBT cards for food stamps. It might be possible to get JP Morgan excluded from consideration for certain contracts and contract renewals, but that is the best you could hope for. And how can an effort like this maintain staffing and momentum long enough (let alone find out about contracts scattered among various New York State government entities) to make this a believable threat?

Third, the most important part of the “ask” is not specific enough and not well thought out:

Put in a place a mortgage modification process that produces permanent, affordable, transparent, timely modifications whenever these have a positive net present value

It should instead say something like, “Provide deep principal mods (minimum 30% reduction in loan balance) on serviced first mortgages to borrowers who can demonstrate sufficient income. The process is to be administered by a credible independent party [such as NACA].” You’d need to add a statement as to what to do about the seconds when Chase owns the second.

Fourth, other “asks” are non-starters. Now there is sometimes value in demanding something that will be painful for the other side to trade away as a bargaining chip, but I doubt that sort of thinking is at work here. There are too many demands that are in the “never gonna happen” category.

Take “Stop all filed and unfiled foreclosure actions.” I hate the servicers and will still tell you that is patently ridiculous. As much as there are a lot of homeowners being treated badly, there are also homeowners who cannot afford their house even with a deep mod. Now there are lots of creative ways to deal with this issue that the banks are refusing to consider (like auctioning homes and letting the borrower remain if he can afford a mortgage at an amount slightly above the highest bid). But a blanket “stop all foreclosures” request just discredits the party asking for it.

“Pay restitution to homeowners who lost their properties unfairly – that is when a modification under the above terms would have been possible” is even more poorly thought out. What criteria do we use to judge this? I can see a demand for penalties of some sort for people who lost their homes during failed HAMP mods, particularly if they received a letter saying they were getting the mod or had been given repeated promises and were also told to ignore foreclosure notices. But how do you set parameters for anything less cut and dried? And even if you did establish criteria, how would you devise a process that does not involve huge documentation requirement on both the borrower and JP Morgan’s end? Who adjudicates? And how pray tell do you set the restitution level for a probably underwater borrower?

Fourth, trying to embarrass executives at shareholder meetings has never been effective and is even less so now. Annual meeting are more controlled by management and less meaningful to investors than they were twenty years ago.

There are far better models for action, such as UK Uncut. If New York Communities for Change wanted to help struggling homeowners, they’d achieve far more in the way of tangible results if they simply raised money for mortgage counselors and legal aid lawyers focused on foreclosure defense.

And if they wanted to pressure JP Morgan, a more direct route would be to set up and publicize a website, say ask customer service and customers reps to leak docs or register complaints, and post them publicly. It would create far more leverage than this campaign.

Wall Street people are overly fond of quoting Sun Tsu, but at two of his saying are nevertheless germane:

Tactics without strategy is the noise before defeat.

Know your enemy and know yourself and you can fight a hundred battles without disaster

As we indicated, this “Not the Way Forward” plan demonstrates perilous little understanding of the opponent.

Tuesday, February 22, 2011

Wisconsin 's Little Secret

For those who know where to look it is a secret no longer. The union busting in Wisconsin is backed by people with a great deal of money who want more- at public expense. To their credit Huffington Post has published that fact front and center. I wonder what union critics think of this? That government deserves to be stripped from the people to line the pockets of corporate kleptocracy? That paying stock holders comes ahead of providing public services?

The Huffington Post's Amanda Terkel reports:

While there has been significant attention devoted to the fact that Walker's 144-page budget repair bill would strip away collective bargaining rights for public employees, the site "Rortybomb" points out a less noticed provision that would allow the state to sell or contract out any state-owned energy asset in no-bid deals with private corporations. From the legislation (emphasis added):

16.896 Sale or contractual operation of state−owned heating, cooling, and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).

It's unclear what "the best interest of the state" is.

But if this deal goes through, one of the companies that could stand to benefit significantly is Koch Industries. Koch already has several companies in the state, including a coal subsidiary, timber plants and a large network of pipelines.

During the 2010 election cycle, Walker received $43,000 from the Koch Industries PAC, his second-largest contribution. The PAC also gave significantly to the Republican Governors Association, which in turn helped out Walker considerably in his race. Koch also contributed $6,500 to support 16 Republican legislative candidates in the state.

The Koch-funded group Americans for Prosperity has also been standing with Walker throughout his budget battles, busing in Tea Party activists and launching the site, Stand With Walker. After the election, Walker and other Republican governors received guidance from the American Legislative Exchange Council, a group that is also funded by Koch dollars and has pushed anti-union measures.

Left And Right

From George washington's Blog.

Don't let Wisconsin divide us.

Conservatives and liberals actually agree about the most important things.

In fact, most Americans - conservatives and liberals - are fed up with both of the mainstream republican and democratic parties, because it has become obvious that both parties serve Wall Street and the military-industrial complex at the expense of most Americans.

In reality, all Americans - conservatives and liberals:

Want to break up the unholy alliance between big government and big banks
Want to break up the giant banks (and see this)
Agree that the Wall Street criminals who committed fraud should be thrown in jail
Agree that the Federal Reserve should be audited
Are against corporate socialism
Are against rampant inequality
Want to stand up to the ruling class
And are against unnecessary imperial wars
The powers-that-be try to divide us and demonize the "other side" so that we won't realize how much we all agree on. See this, this, this, this, this, this, this and this.

Don't let them.

Debunking Myths

Before we can honestly look at what's going on in Wisconsin, we need to dispel some commonly-accepted myths.

People who think that debts and deficits don't matter are wrong. As two top American economists - Carmen Reinhart and Kenneth Rogoff - demonstrated in December 2009 :

The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies...
As I wrote in January 2010:

Al Martin - former contributor to the Presidential Council of Economic Advisors and retired naval intelligence officer - observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005. The International Monetary Fund considers a nation-state with a total debt-to-GDP ratio of 200 percent or more to be a "de-constructed Third World nation-state." Martin explained:

What "de-constructed" actually means is that a political regime in that country, or series of political regimes, have, through a long period of fraud, abuse, graft, corruption and mismanagement, effectively collapsed the economy of that country.
Forbes noted in December:

Add the unfunded portion of entitlement programs and we're at 840% of GDP.
Boston University economics professor and former Senior Economist for the President’s Council of Economic Advisers Laurence Kotlikoff says that the real federal debt is $202 trillion dollars, and that the U.S. is bankrupt.

And see this, this, this, this and this.

So we have to reduce our debt.

And yet the government has been spending like a drunken sailor ... while slashing taxes.

Not Liberal or Conservative ... But Redistribution of Wealth Up to the Ultra-Rich

As I noted last December:

Ronald Reagan gave big tax cuts to the wealthy. So it is dramatic that Reagan's director of Office of Management and Budget - David Stockman - calls the Bush tax cuts "the biggest fiscal mistake in history".

Specifically, Stockman told Dylan Ratigan that Bush's advisers forecast a $5 trillion surplus over 10 years. But "two unfunded wars and a Fed engineered housing bubble later", we're in a $ 5 trillion cumulative deficit. So Bush made a $10 trillion mistake.

Stockman said extending the Bush tax cuts won't stimulate the economy, the fact that the tax cut extensions will expire on the eve of the 2012 elections will panic politicians and force them to renew them yet again, and that "we're destroying the economy on Uncle Sam's credit card.

Indeed, Moody's and other rating services are threatening to downgrade America's credit rating due to the extension of the tax cuts for the wealthy:

The rating agency said in a report Monday that last week's agreement between the White House and congressional Republicans should bolster economic growth in the next two years – but at the expense of the nation's already perilous budget position down the road.

The agreement to extend the Bush tax cuts for two years and trim workers' payroll tax contributions for one could raise the U.S. debt-to-GDP ratio at 2012 to 72-73% from around 62% now, Moody's said. It said that without the tax package, that number might have been around 68% in 2012. [These numbers are low, as discussed above.]

"Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government's Aaa rating during the next two years," Moody's said.

The comment comes as the bond market seems to have reached very much the same conclusion. The yield on the 10-year Treasury has soared to 3.32% from around 2.4% two months ago, as investors bet on a stronger recovery and rising inflation.

At the same time, our leaders are spending like they just won the lottery. As I wrote last March:

Why aren't our government "leaders" talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?

And why aren't any of our leaders talking about stopping the permanent bailouts for the financial giants who got us into this mess? And see this.

And why aren't they taking away the power to create credit from the private banking giants - which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) - and give it back to the states?

If we did these things, we wouldn't have to raise taxes or cut core services.
And see this short video from England.

The same thing is playing out on the state level.

For example, if the Wisconsin governor was proposing cutting pensions because everyone needed to share in the sacrifice, that would be understandable. But as the Washington Post's Ezra Klein points out:

The Badger State was actually in pretty good shape. It was supposed to end this budget cycle with about $120 million in the bank. Instead, it's facing a deficit. Why? I'll let the state's official fiscal scorekeeper explain (pdf):
More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees).

In English: The governor called a special session of the legislature and signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it helped turn a surplus into a deficit [see update at end of post]. As Brian Beutler writes, "public workers are being asked to pick up the tab for this agenda."

The $130 million deficit now projected for 2011 isn't the fault of the tax breaks passed during Walker's special session, though his special session created about $120 million in deficit spending between 2011 and 2013 -- and perhaps more than that, if his policies are extended. That is to say, the deficit spending he created in his special session is about equal to the deficit Wisconsin faces this year, but it's not technically correct to say that Walker created 2011's deficit. Rather, he added $120 million to the 2011-2013 deficits, and perhaps more in the years after that.

And according to Madison's Capitol Times:

To the extent that there is an imbalance -- Walker claims there is a $137 million deficit -- it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker’s new spending schemes -- or delay their implementation until they are offset by fresh revenues -- the “crisis” would not exist.

The Fiscal Bureau memo -- which readers can access at -- makes it clear that Walker did not inherit a budget that required a repair bill.

The facts are not debatable.

Because of the painful choices made by the previous Legislature, Wisconsin is in better shape fiscally than most states.

Walker has proposed a $137 million budget “repair” bill that he intends to use as a vehicle to pay for schemes that redirect state tax dollars to wealthy individuals and corporate interests that have been sources of campaign funding for Walker’s fellow Republicans and special-interest campaigns on their behalf. As Madison’s Democratic state Rep. Brett Hulsey notes, the governor and legislators aligned with him have over the past month given away special-interest favors to every lobby group that came asking, creating zero jobs in the process “but increasing the deficit by more than $100 million.”

Actually, Hulsey’s being conservative in his estimate of how much money Walker and his allies have misappropriated for political purposes.

“Since his inauguration in early January, Walker has approved $140 million in new special-interest spending that includes:

“• $25 million for an economic development fund for job creation that still has $73 million due to a lack of job creation. Walker is creating a $25 million hole which will not create or retain jobs.

“• $48 million for private health savings accounts, which primarily benefit the wealthy. A study from the federal Governmental Accountability Office showed the average adjusted gross income of HSA participants was $139,000 and nearly half of HSA participants reported withdrawing nothing from their HSA, evidence that it is serving as a tax shelter for wealthy participants.

“• $67 million for a tax shift plan, so ill-conceived that at best the benefit provided to ‘job creators’ would be less than a dollar a day per new job, and may be as little as 30 cents a day.”

State Rep. Mark Pocan, D-Madison, sums up this scheming accurately when he says: “In one fell swoop, Gov. Walker is trying to institute a sweeping radical and dangerous notion that will return Wisconsin to the days when land barons and railroad tycoons controlled the political elites in Madison.”

Economist Menzie Chen argues that Wisconsin public workers make less than their private counterparts, even when pensions are included. Pulitzer prize winning journalist David Cay Johnston says that Wisconsin's governor is really trying to bust unions as a first step in driving down everyone's wages ... both in the public and the private sector. (Remember, Reuters claims that republicans are trying to bankrupt states in order to weaken unions.) Mother Jones alleges that the billionaire Koch brothers - the ones who Supreme Court justices Scalia and Thomas hung out with before deciding to allow unlimited foreign money to pour into American political races - funded the election of Wisconsin's governor. And Forbes' columnist Rick Ungar claims that the Kochs are behind the crackdown on Wisconsin unions, as they have business interests in Wisconsin. Whether or not these claims are true is beyond the scope of this discussion, and I haven't researched them enough to weigh in one way or the other.

But whether or not you think union workers are whiners and labor unions harmful, the fact is that the governor of Wisconsin is trying to do exactly what the federal government is trying to do: throw money at their ultra-rich friends, and pay for it by shafting the little guy. It almost appears as if the federal and state governments are using "shock doctrine" tactics as an excuse for imposing "austerity measures" which benefit the wealthy at the expense of the little guy just like failed third world countries.

Indeed, Governor Walker is a true conservative to the same extent that President Obama is a true liberal ... not very much.

Again, if everyone - giant banks and corporations as well as workers - were being asked to share in the sacrifice, that would be completely different. I'm all for shared sacrifice (I work for the private sector, but I'll sacrifice a little if we can also claw back the ill-gotten gains from Wall Street CEO's. See this, this and this.)

But that's not what's happening. Instead, federal and state policies are making the rich richer and everyone else poorer.

And if you still think that this is a conservative versus liberal issue, listen to what tried-and-proven conservatives (re-read Stockman's statements above) are saying.

Monday, February 21, 2011

Recession Mantras

A cartoon from Tim Eagan a talented cartoonist in Santa Cruz, California.Check out his multi faceted website at

Economic Success

Recent events in Washington, D.C. should provoke fear and outrage in the average American worker. As the jobs recession staggers on, politicians and labor leaders alike seem bizarrely distanced from reality, unable to advance any ideas that remotely correspond to the basic demands of those tens of millions of unemployed, under-employed, or poorly paid workers.

Instead, what we get is President Obama's recent groveling to the corporate-dominated Chamber of Commerce, pleading with them to hire workers. The President's recent speech to the Chamber implied many dangers, which neither labor federation-- AFL-CIO and Change to Win -- bothered to point out. In fact, the AFL-CIO applauded sections of the speech, rather than condemning its sinister motives. If labor unions align themselves with the President's and the Chamber's pro-corporate path out of the recession, a workers’ road to recovery will be bypassed.

What is the corporate route out of recession? Economist Robert Reich explains:

"[The Chamber of Commerce] has a deep, abiding belief in cutting taxes on the wealthy, eroding regulations that constrain Wall Street, cutting back on rules that promote worker health and safety, getting rid of the minimum wage... fighting unions, cutting back Medicare and Social Security, reducing or eliminating corporate taxes, and, in general, taking the nation back to the days before the New Deal." (February 8, 2011).

This is the group that Obama insists that it's possible to "work together" with to create jobs. Under Obama's vision, these pro-corporate policies will make Corporate America the best competitor on the global market, a goal he seems nearly fanatical about.

The President wrongly believes that, by giving in to the above corporate policies, big business will hire workers -- at low wages -- out of the kindness of their own hearts, as if morality has ever played any role in the art of profit-chasing.

Here's what Paul Krugman of The New York Times has to say about focusing U.S. economic policy around making U.S. corporations more competitive:

"...isn’t it at least somewhat useful to think of our nation as if it were America Inc., competing in the global marketplace? No. Consider: A corporate leader who increases profits by slashing his work force is thought to be successful. Well, that’s more or less what has happened in America recently: employment is way down, but profits are hitting new records. Who, exactly, considers this economic success?" (January 23, 2011).

Unfortunately, U.S. labor leaders have not yet drawn the same, correct conclusions as a moderate liberal like Krugman. Worse yet, The AFL-CIO has worked, unforgivably, to bolster the Chamber of Commerce's credibility, forming a "partnership" with these corporate snakes to "rebuild America's infrastructure.” The Chamber's President, Tom Donahue, was quick to take advantage of this positive press, which inevitably aims to fool workers into thinking their enemies are their friends:

“With the U.S. Chamber of Commerce and the AFL-CIO standing together to support job creation, we hope that Democrats and Republicans in Congress will also join together to build America’s infrastructure.”

Unfortunately, both the Democrats and Republicans have made it clear that any increase in public spending will pale in comparison to cuts in social programs that benefit workers. The New York Times reports:

"[Obama's] budget for the 2012 fiscal year, which starts Oct. 1, will call for greater deficit reduction [cuts] over the coming decade... the budget will reflect his midterm shift from a focus on stimulus spending and tax cuts in his first two years to budget-cutting as the economy [corporate profits] picks up steam." (February 12, 2011).

Cuts to social programs are inevitable because the Democrats have already extended the Bush tax cuts for the rich, while also promising to lower the corporate tax rate. This is the essence of the problem.

A workers’ path to economic recovery would be the exact opposite of the above polices that the Chamber of Commerce is successfully implementing. Drastically increasing taxes on the wealthy and corporations is but the first, necessary step to increase public funding for a real jobs program.

This crucial solution is not being proposed by the big labor federations because the union leaderships have a suicidal attachment to the Democratic Party, whose favored constituency is, as always, the rich, who would rather not have their taxes raised.

Sadly, the leaders of both labor federations have done nothing of substance to show their members a worker-centered path out of the recession. They have passively attached themselves to the blatantly pro-corporate agenda pursued in Congress and the White House, while also doing nothing to fight back against the ongoing attack against public sector unions, the backbone of the American labor movement.

What we are witnessing is an attempt by the corporate class to fundamentally shift the power dynamics in American society, completely away from workers towards corporations. The project that began in earnest under Reagan has picked up steam with Obama. Bob Herbert's editorial in The New York Times describes this dynamic well:

"While millions of ordinary Americans are struggling with unemployment and declining standards of living, the levers of real power have been all but completely commandeered by the financial and corporate elite. It doesn’t really matter what ordinary people want. The wealthy call the tune, and the politicians dance." (February 11, 2011).

There are only two ways out of this recession, the path sought by corporations and the one that will benefit working people. The two roads cannot be traveled on simultaneously. Nor can working people expect leaders of national labor unions or national liberal organizations to pick the correct path, let alone make one concrete step in any progressive direction.

The movement must start at the local level, from the bottom up. Local unions and labor councils should pass resolutions demanding that the rich and corporations be taxed for local and national jobs programs. Regional coalitions of community and labor groups can be formed to put on public forums, create educational material, and organize massive demonstrations. The first real step forward will happen after we learn to detach ourselves from the above corporate mindset, relying on ourselves and acting collectively.

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action ( .

Sunday, February 20, 2011

An Alternative Strategy

By Sam Smith

The media tell you about the Tea Party, but not that, according to a recent poll, an equal number of Americans have similar positive feelings about socialism. Part of the reason is the deep conservative bias of the mass media, but it is also because progressives and liberals have not done a good job of promoting specific policies that people will appreciate and the establishment will fear.

Further, progressives and liberals have done a rotten job of reaching out beyond their own natural constituency to find the new supporters that change will require. They have been increasingly content – often quite smugly so – to remain in their nest attacking the right but failing to offer a decent alternative. In other words, they have forgotten the importance and skill of organizing.

Finally, as liberals have become more upscale they have drifted right in their political view, particularly demonstrated by growing indifference to the economic policies and philosophy that once defined them. The right has exploited this shift by distracting a logical constituency away from its own economic and social interests towards such matters as gay marriage and abortion.

But, as Egypt has reminded us, things do change. And since the bipartisan right – i.e., the GOP and Obama – are clearly failing at getting the country back on its economic feet, it's worth considering that how a populist rebellion might turn things around.

Here are a few suggestions:

• Repeal the upscale tax cuts provided in the GOP-Obama tax package. This alone would eliminate the need for Obama's deficit proposal for the next two years. Yes, it would be class warfare, but until the upper classes start behaving themselves, go for it.
• Press for the indictment of those criminally responsible for the foreclosure disaster. Fifty states are doing it and the feds should do it, too.
• Start a drive for a constitutional amendment for an elected Attorney General. 43 states have them and it's a major reason they're going after the banks now.
• Join the drive for a constitutional amendment to deny corporation the status of a human person in political matters.
• Oppose all deficit reduction programs aimed against lower and mid income Americans such as the cut in heating fuel assistance.
• Allow the government to become co-owners of troubled mortgages, just as they became co-owner of GM.
• Replace the high-speed rail program with transportation and other public works programs that help ordinary citizens rather than the business class.
• Support instant runoff voting to increase the influence of the rightfully discontented in our nation.
• Pursue a strongly localist politics aimed at bringing decisions down to the lowest practical level. We need local democracy as well as local lettuce.
• Support public campaign financing.
• Get banks out of financially risky and speculative activities by restoring key provisions of the Glass-Steagall Act.
• Support cooperatives and worker-owned businesses.
• Establish state banks as in North Dakota.
• Start selective boycotts, probably the single most effective and underused organizing tool left in our increasingly oppressive society. The boycotts should be carefully chosen and include easy alternatives (e.g. Coke vs. Pepsi).
• End usury, starting with the prohibition of two digit interest rates on credit cards.
• Strong support for small businesses and strong regulation of large corporations.
• Increase taxes on business outsourcing to foreign countries. For example, over half of Americans support a tax on foreign customer service calls.
• End offshore tax havens.
• Protect Social Security and Medicare.
• Prevent employers from taking a tax deduction, loss, or credit if they downsize or cease operations in the U.S. and subsequently expand or reopen overseas.
• Single payer health care.

There are, of course, other important things we need to do like end the drug war and dismantle our failed empire with its huge military costs. But the list above is centered on one goal: doing the most for the most in ways that an ordinary citizen can understand and which involve the wallet, the shortest path to a voters' heart.

If progressives strongly pursue policies of economic populism, they will discover millions of new allies. If they continue to fail to do so, they can expect little but the continued collapse of their country.

PS: Suggested addition by a reader:

Eliminate the income cap on Social Security contributions.

Sam Smith is a writer, activist and social critic who has been at the forefront of new ideas and new politics for more than three decades. He has been editing alternative publications since 1964, longer than almost anyone in the country.