Saturday, April 14, 2012

Castro Is OK, Or Not

The Miami Marlins coach had the temerity to say he didn't hate Fidel Castro. Oops as Elizabeth di Novella writes for the Progressive magazine. I am a huge Ozzie Guillen fan. When I was a kid, I saw Ozzie play shortstop at Comisky Park, and as an adult I’ve watched him coach the Chicago White Sox. A poster of him holding the World Series Trophy adorns my office wall. I loved how #13 played the game, and I loved his small-ball coaching style. He’s hilarious and outspoken, and when his team played like crap, he’d say so. And he took responsibility when his coaching was bad, too. Ozzie clearly loves the game and my affection for him runs deep. So deep that I almost considered becoming a Marlins fan for the season, just so I could root for him. (As a lifelong White Sox fan, it seemed OK, since the two teams play in different leagues. Plus, it would be fun to watch the Marlins beat the Cubs.) I was wondering why Miami picked him up until I read the Sports Illustrated story “Marlinsanity” with Ozzie and Jose Reyes giggling on the cover. The team was re-branding itself, built a new stadium in Little Havana, and looking for some flash. It drafted a number of hothead players, such as Carlos Zambrano. Suddenly, Ozzie being manager made sense: He has a motor-mouth and is endless entertaining. But saying something nice about Fidel Castro is NOT entertaining, at least not in Little Havana. In an interview with Time, Ozzie is quoted as saying that he loved Fidel Castro and “I respect Fidel Castro. You know why? A lot of people have wanted to kill Fidel Castro for the last sixty years, but that son of a bitch is still there.” Sounds like vintage Ozzie to me. Can the Marlins’ top brass really be surprised? Aren’t they getting the media attention they desired for their team as they try to resurrect baseball in south Florida? They had to have known that Ozzie is a loose canon. Didn’t they do due diligence? Did they forget the time when Ozzie called a sports columnist he was annoyed with a “maricon”? Do they read Ozzie’s Twitter feed? They should—it’s hilarious. And now Ozzie is making mea culpas back in Miami. “It was an error. Everyone hates Fidel Castro, including me. I am surprised he is still in power. That is what I was trying to say to the journalist.” But it wasn’t enough for owner Jeffrey Loria, and he suspended Ozzie for five whole games. (Luckily he’ll be back when the Marlins host the Cubs.) A Cuban-American group Vigilia Mambisa is planning a boycott of the team until Ozzie steps down. Local politicians are calling on Ozzie to resign. The Marlins hired an opinionated coach and now are suspending him for being who he is. Isn’t voicing unpopular opinions something that can get you jailed in Cuba? “This is the biggest mistake I’ve made so far in my life,” Ozzie said. “When you’re a sportsman, you shouldn’t be involved in politics.” But baseball and politics have always been intertwined. From corporate tax breaks to taxpayer-funded stadiums to labor conditions (how much do those Haitians make as they manufacture baseballs?), politics is part of MLB and sports in general. Ozzie also said he’s sad and embarrassed about the whole thing. Me, too—I feel bad for the guy. And I thought Zambrano would be the first to get booted off the team, not Ozzie. But who knows. Maybe Ozzie can come back to Chicago where fans just shrugged when he said stupid things.

Friday, April 13, 2012

President Obama And the One Percent

President Obama wants to tax the rich is a common complaint made against our "quasi socialist" President. This report from naked capitalism should put the lie to any such calumny! Or more likely, the lies will continue even as the President makes his own claims about his concern over wealth inequality.

Yesterday, the President gave a speech in which he demanded that Congress raise taxes on millionaires, as a way to somewhat recalibrate the nation’s wealth distribution. His advisors, like Gene Sperling, are giving speeches talking about the need for manufacturing. A common question in DC is whether this populist pose will help him win the election. Perhaps it will. Perhaps not. Romney is a weak candidate, cartoonishly wealthy and from what I’ve seen, pretty inept. But on policy, there’s a more interesting question. A better puzzle to wrestle with is why President Obama is able to continue to speak as if his administration has not presided over a significant expansion of income redistribution upward.

The data on inequality shows that his policies are not incrementally better than those of his predecessor, or that we’re making progress too slowly, as liberal Democrats like to argue. Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality. The data set is excellent, it’s from the IRS and it’s extremely detailed. This yawing gap of inequality isn’t an accident, and it’s not just because of Republicans. It’s a set of policy choices.

Looking further ahead, based on the US historical record, falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back. Such policy changes took place after the Great Depression during the New Deal and permanently reduced income concentration until the 1970s. Income concentrations are relatively rare, but when they happen, sharp policy moves can retain a strong measure of equality. It’s well-known at this point that President Obama did not want to make such moves. TARP, cramdown, and the foreclosure fraud settlement suggest that his interests lie in preserving the capital structure of the large banks. What about other policy priorities?

Despite his recent speech, President Obama knows that his income tax proposal is going nowhere. So let’s look at three recent policy choices that are going somewhere.
1) President Obama is on the verge of approving a Free Trade deal with Colombia, despite the murder of union organizers in that country. Not content with establishing similar deals with Panama (which has to do with enlarging tax havens) and South Korea, the administration is now embarking on a much vaster Trans-Pacific Partnership deal with countries all over Asia. And it’s being negotiated entirely in secret, with corporate and government officials the only ones allow to be in the room. Trade is a significant driver of lower wages.

2) President Obama just pushed for and signed the JOBS Act, which is a substantial relaxation of regulations and accounting requirements on corporations seeking to go public. Bill Black has many four letter words to describe this bill, but it’s basically a license for Wall Street to commit fraud in the equity markets. The SEC is beginning to promulgate instructions on how this will work.

3) President Obama just refused to issue an executive order forcing campaign spending disclosure by government contractors. President Obama actually criticized the Supreme Court’s decision in Citizens United at a State of the Union address, but as with yesterday’s speech on raising taxes on millionaires, there was actually no there there.

There are many other policy fights, and the President has engaged constructively in some areas and negatively in others. He has been undermined as well as aided by his staff. And he’s just one man, heading up a franchise of thousands of other political actors. It’s been clear, though, since before he took office, that his is a consistent policy architecture on the core questions of power and wealth. In the orbit of this President, power and wealth flow upward. It’s important not to overstate the conclusion.

It’s not obvious that Obama’s policy framework is worse than Bush’s, only that the outcome is. After all, the losses suffered by the wealthy during 2007-2009 recession were less severe than those it suffered in the 2000-2002 recession, and most of the Great Recession happened under Bush (with a Democratic Congress). It’s possible that the Obama policy framework is a bit less bad, but he has been more successful at implementation because unlike Bush, he han’t face any pressure from Democrats.

In other words, perhaps Obama’s policy thrust has just been implemented more fully, because the traditional opposition to plutocratic rule, the left, has been silenced. Perhaps it’s a competence issue. Or maybe you can chalk it all up to structural factors, though I suspect the JOBS Act and trade deals imply otherwise. Maybe he really is as conservative as these policy choices suggest. It’s hard to say. Mitt Romney might be easy to jeer at for his wealth and arrogance, but Saez’s data suggests that Barack Obama is just as much the candidate of inequality.

Thursday, April 12, 2012

Sub Prime National Debt

Chris Martenson believes national debt is going the way of subprime mortgage debt and some sort of melt down is in our collective future. Collateral is the problem allied with the "God-like" status of thwe Federal Reserve, he says.

We all know that central banks and governments have been actively intervening in markets since the 2007 subprime mortgage meltdown destabilized the leveraged-debt-dependent global economy. We also know that unprecedented intervention is now the de facto institutionalized policy of central banks and governments.

In some cases, the financial authorities have explicitly stated their intention to “stabilize markets” (translation: reinflate credit-driven speculative bubbles) by whatever means are necessary, while in others the interventions are performed by proxies so the policy remains implicit. All through the waning months of 2007 and the first two quarters of 2008, the market gyrated as the Federal Reserve and other central banks issued reassurances that the subprime mortgage meltdown was “contained” and posed no threat to the global economy.

The equity market turned to its standard-issue reassurance: “Don’t fight the Fed,” a maxim that elevated the Federal Reserve’s power to goose markets to godlike status. But alas, the global financial meltdown of late 2008 showed that hubris should not be confused with godlike power. Despite the “impossibility” of the market disobeying the Fed’s commands (“Away with thee, oh tides, for we are the Federal Reserve!”) and the “sure-fire” cycle of stocks always rising in an election year, global markets imploded as the usual bag of central bank and Sovereign State tricks failed in spectacular fashion. Keep Doing More of What Has Failed Spectacularly Central banks and states responded by doing more of what had already failed spectacularly.

In the ensuing years 2009-2012, they increased money supply and liquidity and lowered interest rates to zero or near-zero. And sovereign states borrowed vast sums to squander on “stimulus spending.” This “doing more of what has failed spectacularly” earned the apt moniker of “extend and pretend.” Nothing was actually fixed, but we were encouraged to believe it had been fixed with a flurry of absurdly complex “reforms” that only increased the power of the central states and banks without actually addressing the underlying causes of the meltdown: extremes of leveraged debt, extreme concentrations of financial wealth that then bought political power, shadow banking and opaque markets for hundreds of trillions of dollars in notional derivatives, systemic fraud and embezzlement, phony valuations assigned to assets and liabilities, and various schemes to misprice risk, among others.

If we had to distill the entire global crisis into the simplest possible statement, we might say that the collateral that supported this great inverted pyramid of leveraged debt vanished, and as a result the entire pyramid crumbled. Since the global housing bubble was at the heart of the crisis, let’s use housing to explain this simple summarization. If a house that was owned free and clear (no mortgage debt) rose in value from $200,000 to $500,000 during the bubble, the collateral of that asset was valued at $500,000 at the peak. If the house has fallen to $250,000 in the post-bubble decline, the collateral is now $250,000. Since there was no debt leveraged off of that collateral, the owner experienced no leveraged consequence of that decline. His assets fell, and he felt the “reverse wealth effect,” so he feels poorer even though his asset is nominally worth more than it was prior to the bubble. (Adjusted for inflation, that nominal gain might well vanish into a decline in purchasing power, but that’s another story.) Compare that to the home purchased for $500,000 with a highly leveraged subprime mortgage in which 3% of actual cash collateral ($15,000) was leveraged into a mortgage of $500,000. (For simplicity’s sake I am leaving out the transaction costs.) The collateral was leveraged 33-to-1. This is delightfully advantageous if the house continues rising in value to $600,000, as that increase generates a six-fold return on the cash invested ($15,000 in, $90,000 out). But once the house prices slipped 10% to $450,000, then not only did the 3% cash collateral vanish, the collateral supporting the mortgage also declined. The mortgage was no longer “worth” $500,000.

Since Wall Street securitized the mortgage into mortgage-backed securities (MBS) and sold these instruments to investors, then the value of those MBS also fell as the collateral was impaired. And since various derivatives were sold against the collateral of the MBS, then the value of those derivatives was also suspect. If $1 of collateral is supporting an inverted pyramid of $33 of leveraged debt, which is then the collateral supporting an even larger pyramid of derivatives, then when that $1 of collateral vanishes, the entire edifice has lost its base. And that's at the heart of current central bank policy: “Extend and pretend” is all about keeping the market value of various assets high enough that there appears to be some collateral present.

In our example, the mortgage is still valued on the books at $450,000, but the actual collateral — the house — is only worth $250,000. The idea being pursued by central banks around the world is that if they pump enough free money and liquidity into the system, and buy up impaired debt (i.e., debt in which the collateral has vanished), then the illusion that there is still some actual collateral holding up the market can be maintained. Subprime Mortgages Have Given Way to Subprime Sovereign Debt The implosion of overleveraged subprime mortgages triggered the 2008 global meltdown because the market awoke to the fact that the collateral supporting all sorts of debt-based “assets” had vanished into thin air.

Four years later, we have another similar moment of recognition: The collateral supporting mountains of sovereign debt in Europe has vanished. The value of the debt — in this case, sovereign bonds — is now suspect. The European Central Bank (ECB) has played the same hand as the Federal Reserve: Do more of what has failed spectacularly. Expand the money supply, pump in more liquidity and buy up the impaired debt all in the hope that the market will believe that there is still some collateral holding up the leveraged-debt pyramid. The ultimate collateral supporting the stock market is the book value of the assets owned by the company, but the notional collateral is corporate profits: equities are claims on the future free cash flow generated by the corporation.

There are all sorts of inputs into this calculation, and markets are supposed to reflect these various inputs: currency valuations, sales, profit margins, costs of labor and raw materials, inflation and so on. Now that markets are manipulated to maintain the illusion that there is enough collateral out there somewhere to support the inverted pyramid of leveraged debt, it’s difficult to know what’s real and what’s illusion. One of the few ways we have to discern the difference is to compare various markets and look for divergences. If a spectrum of markets and indicators is pointing one way and another market is pointing the other way, we then have a basis for asking which one is reflecting illusion and which one is reflecting reality.

In 2008, the central banks and governments lost control of the illusion that there was sufficient collateral to support a stupendous mountain of leveraged debt. By doing more of what failed spectacularly then, they have laboriously reconstructed the illusion that they control the markets (“Away, tides, for we are the ECB!”) and thus the valuation of collateral. Once again we are sternly warned not to “fight the Fed,” as if the Fed had the financial equivalent of the Death Star (“You don’t know the power of the Dark Side!”). Once again, we are in an election year where the four-year cycle is supposed to “guarantee” an up year in stocks. Or maybe 2012 is shaping up to reprise 2008, and the market will wake up to the fact that intervention doesn’t create collateral, it only creates the temporary illusion of collateral.

Wednesday, April 11, 2012

Corporate Lies

By William Lazonick, professor of economics and director of the UMass Center for Industrial Competitiveness, Ken Jacobson, a journalist covering business, economics and technology, and Lynn Parramore, a contributing editor at Alternet . Cross posted from Alternet and naked capitalism.

The wealth of the American nation depends on the productive power of our major business corporations. In 2008 there were 981 companies in the United States with 10,000 or more employees. Although they were less than two percent of all U.S. firms, they employed 27 percent of the labor force and accounted for 31 percent of all payrolls. Literally millions of smaller businesses depend, directly or indirectly, on the productivity of these big businesses and the disposable incomes of their employees.

When the executives who control big-business investment decisions place a high priority on innovation and job creation, then we all have a chance for a prosperous tomorrow. Unfortunately, over the past few decades, the top executives of our major corporations have turned the productive power of the people into massive and concentrated financial wealth for themselves. Indeed the very emergence of “the 1%” is largely the result of this usurpation of corporate power. And executives’ use of this power to benefit themselves often undermines investment in innovation and job creation.

These corporations do not belong to them. They belong to us. We need to confront some powerful myths of corporate governance as part of a movement to make corporations work for the 99%. To start, we have to recognize these corporations for what they are not.

• They are not “private enterprise.”
• They should not be run to “maximize shareholder value.”
• The mega-millions in remuneration paid to top corporate executives are not determined by the “market forces” of supply and demand.

Let’s take a closer look at each of these myths.

1. Public corporations are not private enterprise.

Here’s something you’ll rarely hear stated by today’s politicians and pundits: Publicly listed and traded corporations are not private enterprise. As documented by the pre-eminent business historian Alfred D. Chandler, Jr., in a book aptly called The Visible Hand, about 100 years ago the managerial revolution in American business placed salaried managers in charge of running the nation’s largest and most productive business corporations.

This was a peaceful revolution in which a generation of owner-entrepreneurs who had founded these companies some decades earlier used initial public offerings on the New York Stock Exchange to sell their ownership stakes to the public, leaving decision-making power in the hands of salaried managers. In effect, these corporate employees, and the boards of directors whom they selected, became trustees of the immense productive power that these corporations had accumulated.

Even when founders of companies that evolve into major public corporations become their CEOs, they generally occupy the top positions as corporate employees, not owners. For example, when the late Steve Jobs returned to Apple Computer in 1997, 11 years after being denied the CEO position of the company he had founded, his ascent to the top position was as a manager, not on owner. When a company founder like Larry Page of Google gives up private ownership by publicly selling shares, he may become CEO of the new corporation, but he is occupying this position as a hired hand, not as a private entrepreneur.

In other words, private owners make choices to transform a private enterprise into a public company that then needs to be regulated as such. There are other choices that could have been made. When the retiring owner of a private company wants to pass on control over a prosperous company to his or her employees, an alternative to the public corporation is to establish an Employee Stock Ownership Plan, or ESOP. There are many successful companies in the U.S. that are not public corporations precisely because they are under the collective ownership of their employees.

It is also possible for some investors to agglomerate sufficient shares to take a public company private (Mitt Romney made his millions doing just that), but that only emphasizes the point: public corporations are not private enterprise. We regulate public corporations far more stringently than private businesses precisely because they are publicly held. And as U.S. citizens, how we regulate public corporations (or even private businesses, for that matter) is up to us.

2. Corporations should be run to benefit everyone who contributes to their success – not just shareholders.

It’s a myth that corporations have a legal duty to maximize profits to shareholders at the expense of everyone else. Historically, the executives and directors of U.S. public corporations understood that they had a responsibility to other constituencies – customers, employees, suppliers, creditors, the communities in which they operate, and the nation.

Today, however, the dominant ideology is that a corporation should “maximize shareholder value.” At the most basic level, the rationale for this ideology is that shareholders own the company’s assets, and therefore have exclusive claim on its profits. A more sophisticated argument is that that among all stakeholders in the business corporation only shareholders bear the risk of getting a positive return from the firm, while all other participants receive guaranteed returns for their productive contributions. If society wants risk-bearing, so the argument goes, firms need to return value to shareholders.

This argument sounds logical – until you question its fundamental assumption. Innovation, defined as the process that generates goods or services that are higher quality and/or lower cost than those previously available, is an inherently uncertain process. Anyone who invests their labor or their capital in the innovation process is taking a risk that the investment may not generate a higher quality, lower cost product. Once you understand the collective and cumulative character of the innovation process, you can easily see that the assumption that shareholders are the only participants in the business enterprise who make investments in productive resources without a guaranteed return is just plain false. In an innovative economy, workers and taxpayers habitually make these risky investments.

How do workers make these risky investments? As is generally recognized by employers who declare that “our most important assets are our human assets”, the key to successful innovation is the extra time and effort, above and beyond the strict requirements of the job, that employees expend interacting with others to confront and solve problems in transforming technologies and accessing markets. Anyone who has spent time in a workplace knows the difference between workers who just punch the clock to collect their pay from day to day and workers who use their paid employment as a platform for the expenditure of creative and collective effort as part of a process of building their careers.

As members of the firm, these forward-looking workers bear the risk that their extra expenditures of time and effort will not yield the gains to innovative enterprise from which they can be rewarded. If, however, the innovation process does generate profits, workers, as risk-bearers, have a claim to a share in the forms of promotions, higher earnings and benefits. Instead, shareholder-value ideology is often used as a rationale for laying off workers whose hard and creative work has contributed to the company’s success. That’s grossly unfair.

Taxpayers also invest in the innovation process without a guaranteed return. Through government agencies, taxpayers fund infrastructural investments that, given their cost and the uncertainty of returns, business enterprises would not have made on their own. It is impossible to explain U.S. leadership in information technology and biotechnology without recognizing the role of government in making investments to develop new knowledge and facilitate its diffusion. As one example, the current annual budget of the National Institutes of Health (http://www.nih.gov/about/budget.htm) is about $31 billion, twice in real terms its level in the early 1990s. Without this government expenditure on research, year in and year out, we would not have a medicinal drug industry. Yet shareholder-value ideology is often used to justify low taxes that deny taxpayers a return on these investments.

So shareholder-value ideology provides a flawed rationale for excluding workers and taxpayers from sharing in the gains of innovative enterprise. To turn this ideology on its head, what risk-bearing role do public shareholders play in the innovation process? Do they confront uncertainty by strategically allocating resources to innovative investments? No. As portfolio investors, they diversify their financial holdings across the outstanding shares of existing firms to minimize risk.
They do so, moreover, with limited liability, which means that they are under no legal obligation to make further investments of “good” money to support previous investments that have gone bad. Even for these previous investments, the existence of a highly liquid stock market enables public shareholders to cut their losses instantaneously by selling their shares – what has long been called the “Wall Street walk”.

3. Executive compensation is a rigged game, not the result of the laws of supply and demand.

You often hear that stratospheric executive pay is the result of some inexorable law of supply and demand. If we don’t give top executives their multimillion dollar compensation, they won’t be willing to come to work and do their jobs. They are supposedly the bearers of “scarce talent” that demands a high price in the market place. Even Robert Reich, Secretary of Labor in the Clinton administration and a critic of U.S. income inequality, has justified the explosion in executive pay, arguing that intense competition makes it much more difficult than it used to be to find the talent who can manage a large corporation (Supercapitalism, 2008, pp 105-114).

That is not what determines executive pay. Here is how it works: Top executives select other top executives to sit on “their” boards of directors. These directors hire compensation consultants to recommend an executive pay package, which consists of salary, bonus, incentive pay, retirement benefits, and all manner of other perks. The consultants look at what top executives at other major corporations are getting, and say that, well, this executive should get more or less the same. Since the directors are mostly these very same “other executives”, they have no interest in objecting – and if any of them were to do so, they would find that they are no longer being invited to sit on corporate boards.

Meanwhile, given the preponderance of stock-based compensation (especially stock options) in executive pay, whenever there is speculative boom in the stock market, top executives of the companies with most rapidly rising stock prices make out like bandits. The higher compensation levels then create a “new normal” for executive pay that, via the compensation consultants and compliant directors, ratchets up the pay of all the top dogs. And, when the stock market is less speculative, these corporate executives do massive stock buybacks to push stock prices up.

What we have here is not “market forces” at work but an exclusive club that promotes the interests of the 0.1%. All too often executives allocate corporate resources to benefit themselves rather than to invest in innovation and job creation. It is time that the 99% see through the ideology, break up the club, and get the U.S. economy back on track.

Corporate power for the people!

Business corporations exist as part of the collective and cumulative development of our economy. The investments in innovation and job creation that these corporations make or decline to make are key to our future prosperity. Public shareholders, the supposed owners of these corporations, are in general only willing to hold shares in a company because of the ease with which they can terminate this relation by selling their shares on the stock market. Yet, almost unanimously, corporate executives proclaim that they run their companies for the sake of shareholders. In fact, their personal coffers pumped up with stock-based compensation, our business “leaders” have increasingly run the corporations for themselves.

The real corporate investors are taxpayers and workers. Through government agencies at federal, state, and local levels, taxpayers supply business corporations with educated labor and physical infrastructure. Through their interaction in business organizations, workers expend the time and effort that can generate innovative products. In the name of shareholder value, however, taxpayers and workers have been losing out. It’s time to confront the myths of “private enterprise”, “shareholder value”, and “market-determined executive compensation” with arguments about how the innovation process actually works with sustainable prosperity as the result.

What will it take to build a movement that can make the business corporation work for the 99%?

We have to elect politicians who will take on corporate power rather than shill for corporate power-brokers. We have to support labor leaders who recognize that gaining a voice in corporate governance is the only way to ensure that corporations will invest in workers and create good jobs. We need teachers at all levels of the education system who understand what business corporations are and what they are not. We need the responsible media to escape from the grip of corporate control. And we have to put in place business executives who represent the interests of civil society rather than those of an elite egotistical club.

Getting Involved

- April 25: National Day of Action Against Student Debt

On April 25th, the total amount of student loan debt in the U.S. is due to top 1 trillion dollars. This staggering economic milestone marks a momentous victory for Wall Street and the 1% against two generations of students and families. A day of action will target big banks and student lenders, as well as increasingly corporatized universities.

-May 1st: May Day

Recognized worldwide as International Workers’ Day, May 1st marks the Haymarket Massacre of 1886 in Chicago, where workers were fighting for the eight hour workday. Look for rallies and gatherings across the country that will draw attention to the needs and concerns of workers.

-Move Your Money

The Move Your Money campaign was launched in 2010 to take on the power of the megabanks that helped cause the financial crisis and continue to wreak havoc on our economy. Numerous ongoing actions around the country are calling attention to the need for fairness and accountability in the banking industry (read about the latest: "Move Your Money" Goes Nationwide As Cities Pull Their Money”)

-Occupy Wall Street

The leaderless resistance movement continues to take on the greed and corruption of the 1%, including a recent day of action for public transit workers. Check the website for gatherings and actions in your community.

Tuesday, April 10, 2012

Welfare Cuts

Peter Goodman of the Huffington Post has an excellent discussion about the impacts of budget cuts, in this case in California. It is not necessarily a direct correlation but I think about the Republican tax cuts proposed in their most recent budget to "balance the deficit" that again awards tax breaks to the one percent. Read it and weep, because this is still the beginning of the downward spiral.



SANTA ROSA, Calif. -- Every time she pulls away from her parent's house, leaving behind her 3-year-old daughter, Angelina, as she heads to work at a local hospital, Jenny Abundis wonders what will happen while she is gone.

She worries things will not go well.

Her father has cancer, which saps his energy and requires a regimen of shots that puts him in ill temper. Her stepmother suffers debilitating liver problems. Often depressed and ceaselessly overwhelmed, they must divide their attentions between Abundis' daughter and her sister's two little children, whose volatile natures reflect early years in a home beset by drugs and violence.

But even as nervousness gnaws at her, and even as she notices disturbing changes in her daughter -- curse words emerging in her limited vocabulary, a clinginess that was not there before -- Abundis says she has no choice but to leave Angelina in this arrangement.

Though Abundis' income qualifies her for subsidized child care, Angelina is among roughly 200,000 eligible California children who are stuck on a waitlist. For many families in the queue, the wait is effectively interminable, a veritable purgatory without end, the result of the aggressive state budget cutting that has defined the aftermath of the Great Recession.

The only families now routinely receiving immediate help are those who enroll in another program, one that was supposed to be rendered obsolete by the availability of subsidized child care: welfare. Abundis is proud to have a job and horrified by the thought of relying entirely on a public assistance.

"When I leave, I just feel like I'm taking chances," Abundis says. "But I don't know what else to do. I have anxiety a lot. Sometimes when I'm at work, I get panic attacks. But I have to work. I want to move up in life and be a role model for my kids. I don't want to go on welfare. I just go day by day."

Long the vanguard of American trends, California is again leading the nation in an area reflective of these times -- carving out prominent gaps in the social safety net. Across the country, states are slashing funding for subsidized child care programs while tightening eligibility requirements, leaving millions of low-income parents scrambling to secure care in order to maintain their jobs.

In 37 states, subsidized child care programs were less generous in February 2011 than in the previous year, according to data compiled by the National Women's Law Center. Twenty-two states were putting eligible families on waiting lists, among them Texas, Florida, New Jersey, North Carolina, Maryland, Minnesota and Virginia.

California, Illinois, Louisiana and Ohio have in recent years tightened eligibility requirements for child care programs, and other states are now pursuing similar courses as they grapple with the red ink left from a sustained slump in housing and elevated unemployment.

The cuts have imposed profound costs, albeit those not easily calculated using traditional ledger books. The toll is reflected in the individual experiences of families encountered here.

There is the stress falling on parents as they leave children in substandard child care facilities to save money -- and the strain on friends and family who pitch in. There are the impacts on the children as they spend developmentally crucial years in far from optimal circumstances. There are the costs imposed on single parents who would work more hours or pursue degrees that would put them on the path toward better-paying careers if only they had reliable child care, but who instead confront a daily struggle just to get to work. Some quit their jobs in frustration or are fired for unplanned absences, sliding into reliance on welfare.

Social services advocates decry the partial dismantling of child care programs as a breach of a crucial promise made to working-poor women in the mid-1990s as part of the landmark welfare reform. When President Bill Clinton famously declared that the nation was "ending welfare as we know it," joining Congressional Republicans to impose time limits on cash assistance programs, he pledged that child care programs would help ease the transition to the working world. That promise came steeped in recognition that child care absorbs as much as one-third of total household income among poor families with small children, according to Census data.

But 16 years later, even proponents of welfare reform are criticizing a failure to follow through.

"We have never spent enough on child care to ensure that every low-income working parent gets a subsidy," says Ron Haskins, a former Republican congressional aide who played an instrumental role in delivering welfare reform and is now a senior fellow at the Brookings Institution in Washington. "This is a flaw in the reform."

State cuts to child care programs are now turning the logic of welfare reform upside down, say social welfare advocates. Child care programs were supposed to allow single mothers to transition off welfare and onto paychecks. But in many states, the only way for a family to secure child care is to go on welfare.

"It reneges on everything that was promised," says Patty Siegel, former executive director of the California Child Care Resource and Referral Network, which advocates for child care programs. "The idea is supposed to be that we want people to work and be self-sufficient, and yet the only way you can get help taking care of your kids is to become more dependent on a system that you've struggled to avoid. That is not the welfare reform that we thought we were getting."

THE LINCHPIN

Santa Rosa, a city of 168,000 people set in the wine country north of San Francisco, typifies the untenable choices framing daily life throughout California and in much of the nation, as working-poor parents unable to secure child care subsidies navigate between satisfying their employers or looking after their children.

California's unemployment rate has averaged about 12 percent over the last two years, meaning that the labor market can be punishing well before considerations of juggling parental responsibilities. The percentage of California's single mothers who are employed sunk below 57 percent last year, down from a peak of nearly 70 percent in 2002, according to an analysis of Census data by the California Budget Project, a nonprofit policy research institution that advocates for the needs of low-income communities.

Nearly 29 percent of Santa Rosa's residents are Hispanic, an ethnic group among whom unemployment tends to run much higher -- typically, about one and a half times the national average.

Locally, the primary hub for lower-income parents seeking help with child care is the Community Child Care Council of Sonoma County -- the 4Cs, as it is commonly known. A nonprofit, the 4Cs has contracts with the state to enroll families in child care programs while also operating child care centers.

The women who walk in or telephone seeking assistance -- and they are nearly always women -- are generally intent on working or attending school in pursuit of a career. The mere mention of welfare ("cash assistance," in the parlance) typically generates discomfort. Yet the staff members at the 4Cs find themselves frequently discussing cash assistance, for the simple reason that this is the only guaranteed path to child care.

"We handle it with delicacy," says Lorie Siebler, assistant director of the resource and referral department. "People are upset that that they are even being told that's an avenue. People work really hard to stay off that program, and they are devastated when they hear that's the only way to get child care."

For Siebler, the subject carries special resonance. In the early 1990s, while a single mother, she worked as a receptionist at a local car dealership. Every night before work, she found herself frantically dialing friends in search of someone able to look after her then 2-year-old daughter.

"Some days, I'd have to use my lunch break to drive over and pick her up at one friend's house and then take her to another," she recalls. "Sometimes, these were people I'd known in high school who my daughter didn't know at all, and I'd be introducing them just as I'm driving off to get back to work."

Siebler eventually went on welfare and put her daughter in a subsidized child care program, a stable situation that allowed her to complete her studies at a local college. Today, she is self-sufficient, having completed her studies and gaining a job at the 4Cs.

"The stable child care was the linchpin," she says. "If I hadn't had that, I wouldn't be able to do anything."

In California these days, the linchpin is on the chopping block, along with many government services. A budget proposal submitted to the state legislature by Gov. Jerry Brown, a Democrat, would cut spending on child care programs by about one-fifth next year, according to a legislative summary. The plan would land atop substantial reductions in recent years, continuing a sharp drop in enrollment in subsidized child care programs -- from nearly 417,000 last year to 344,144 this year, and then below 295,000 next year.

The governor's proposal would cut the reimbursement the state pays to licensed child care providers, heightening concerns about the quality of care. The proposal would also lower the income threshold for eligibility. A family of three with income as much as $3,518 per month now qualifies for help. Under the governor's proposal, that limit would drop to $3,090. By the governor's reckoning, that change alone would eliminate child care for some 8,400 children now enrolled in state programs, plus another 7,300 enrolled in part-day preschool.

Overall, the governor's proposal would eliminate preschool and child care programs for some 60,000 children, according to the California Budget Project Analysis.

Brown declined requests for an interview, but a spokesman described the proposed cuts as unavoidable in light of the $26.6 billion deficit he inherited from the previous administration when he assumed control last year -- particularly in the face of Republican opposition to his proposals to raise revenue via tax increases.

"We see the pathetic fiscal state of Greece and there's no doubt it is possible for a government to dig such a hole that you can't climb out without social turmoil and even breakdown," Brown told reporters in January during a press conference to unveil his budget. "This is not nice stuff, but that's what it takes to balance the budget."

"It's not going to be easy," he added. "It's not going to be easy for the president. It's not going to be easy for America. It's not easy for California."

'I WOULD NOT BE ABLE TO WORK'

It's not going to be easy for Daniella Scally either, not if the governor's proposed budget eliminates child care for her 4-year-old twins, Jayda and Josiah.

This she imagines as the beginning of a downward spiral, one that could take her all the way back to the homelessness she knew as a teenager.

Scally, 31, grew up in Sacramento, in what she describes as a dysfunctional household. Her father died when she was very young, and her mother could not handle the vagaries of tending to six children by herself. As the oldest of those kids, Scally felt an outsized share of responsibility.

"I raised my brothers and sisters," she says.

When Scally became pregnant at 17, her mother kicked her out of the house, she says. She bounced from couch to couch before finding a place of her own -- an apartment just off the freeway, in a neighborhood surrounded by motels that charged by the hour. There, she raised her baby boy, Jevante, relying on a welfare check of $450 a month, plus about $100 worth of food stamps.

"My son had no diapers at times," she says. "Sometimes we had almost no food. I'd go to my neighbor's and she would have rice and I would have a can of tomato sauce. So we would make rice with tomato sauce together. It was day by day."

She worked two jobs -- days at a telemarketing position selling vacation condo properties, and nights as a cashier at Target. Without a car, she rode public buses for two hours a day, getting from job to job and back to her apartment.

While she worked, she left Jevante with neighbors and hoped for the best. Once when he was a toddler, a neighbor left him unattended near a hot iron, and he pulled it down on his arm, leaving him with burns and a permanent scar. Another time, he got caught in the middle of a fight between a neighbor and her boyfriend.

When Jevante was 3, Scally secured a place in the state's subsidized child care program. She took a full-time job in the office of a landscape company. She enrolled in community college classes to get an associate business degree.

She interrupted her studies in 2007 for the birth of her twins. With subsidized child care in place for the younger kids, she resumed her college studies and is on track to graduate this year.

"With honors," she adds.

Child care is the one part of her life that has held everything else together, she says. Now, that part is teetering.

Scally brings home about $42,000 a year, she says, or about $2,600 a month after taxes. The monthly rent on her 900-square-foot townhouse runs $1,100. She pays only $300 a month for child care for her twins, while the subsidy covers the rest, about $1,200 a month. If the governor succeeds in lowering the income level for eligibility and she loses her subsidy, she would have to pay the balance herself -- an impossibility, she says.

"I would not be able to work," she says. "It would be devastating. Everything I have built would be gone. We'd be back in the ghetto. It would be either not pay rent and get evicted, or quit my job, stay home and go on welfare."

The particulars are personal, but the big picture strikes her as a travesty for the taxpayer, a budgetary accounting fraud that would eliminate one line item today only to create a bigger liability down the line.

"I'm paying taxes," she says. "I'm spending my money and supporting the economy, and if you take away my child care, I'm going to have to quit my job and go on welfare again. Then they're going to pay my child care immediately. How does this make financial sense?"

Some see the erosion of child care programs as symptomatic of the nation's culture wars. After three decades in which the vast majority of working people have seen their wages stagnate, with paychecks failing to keep pace with the costs of health care, housing and higher education, the two-income household has been firmly established as an economic necessity. Yet traditionalist conceptions of gender along with a tendency to blame poor people for their plight have combined to limit political support for child care programs.

"People somehow think it's not the government's responsibility," says Helen Blank, director of leadership and public policy at the National Women's Law Center. "'You had these kids. You want to go to work.' It's an old vestige of 'We don't think mothers should go to work.'"

A LEGACY UNDONE

California's subsidized child care programs trace their lineage back to World War II. With women workers needed to produce warships while their husbands waged war overseas, the federal government erected child care centers near shipyards.

After the war, the federal government called on Rosie the Riveter to return to her family, and most of these child care facilities were shuttered. But California continued to operate its centers, crafting programs that provided free or subsidized child care for low-income mothers who were working, looking for work or pursuing education.

Congress passed a child care program in 1990, distributing grants to states for the purpose of offering child care subsidies to low-income households. Six years later, as Clinton signed welfare reform into law, federal child care funding was consolidated into one primary artery of finance -- the Child Care and Development Fund. Here in California, these undertakings merely burnished what had been in place for half a century.

Now, that dynamic is working in reverse, with federal shortfalls exacerbating the pullback in state support. The federal Child Care and Development Fund, which gets distributed to states, has long failed to keep pace with the demand for assistance, according to advocates and federal officials.

From 2004 to 2008, the number of one-parent families receiving Temporary Assistance for Needy Families -- the post-reform version of welfare -- dropped from about 1.1 million to fewer than 800,000, according to data from the Department of Health and Human Services. Yet during that same period, federal funding for subsidized child care programs remained flat, at about $5 billion a year.

The Obama administration added $2 billion through its stimulus spending package, lifting support to $7 billion in 2009. But since then, annual spending has dropped to near $5 billion.

The result: a decline in the number of children enrolled in child care programs nationally -- 1.69 million in 2010, the last year data is available, as compared with 1.75 million five years earlier, according to the Department of Health and Human Services. The Obama administration is now seeking a $1 billion increase in next year's budget.

California's programs are now so beset by shortfall that the state last year stopped maintaining a centralized waitlist in a bid to save on administrative costs.

Local governments still keep their own lists. In Sonoma County, where Santa Rosa sits, the list reached 1,735 families in February. In a good month, perhaps 50 families gain new spots.

The factors determining who gains the spots are both complex and bewildering. Any child subject to a child protective services order or deemed at risk of abuse or neglect gets priority over others. After that, care is prioritized by income.

In Sonoma County, several facilities offer places for 3- to 5-year-old children, but very few accept infants -- another limiting factor. One center that did accept infants was last year shuttered by budget cuts.

"I definitely try to give people a realistic view," says Siebler, the 4Cs' assistant director of the resource and referral department. "I tell them, 'If you don't have a 3- to 5-year-old, your chances are slim.' Some people are on the list for months, but the average family is on for years."

Members of the staff at the 4Cs are trained to speak in terms of available assistance, but the vernacular of their working day is full of words of resignation and misfortune.

"There's no amount of time," Jacqueline Buitrago, a resource and referral specialist, tells a woman calling in to ask how long she should expect to remain on the waiting list for child care. "We don't know."

She sits at a cubicle with a wireless telephone headset threaded through her long black hair, patiently having some version of this conversation with a half-dozen women over the course of an hour.

"We don't know," Buitrago says to the mother of a 8-month-old baby, who has been on the waiting list for six months and who complains that she cannot even look for work without child care, let alone secure a job, leaving her family to subsist on her husband's $650-per-month unemployment benefits.

She delivers the same news to a 29-year-old single mother of an infant who is calling to apply for child care so she can work additional hours at a local beauty salon.

Buitrago lays out the grim facts to Jenny Abundis, who longs to go back to school and pursue a nursing degree so she can lift her income, but who is stuck in limbo, waiting for child care, while worrying about the consequences of leaving her daughter with two ailing parents.

Unless Abundis loses her job and goes on welfare, she will languish on the list indefinitely.

"You have to lose everything or there's nothing else that you can do," Buitrago says. "The whole system really is backwards."

THE FUTILE QUEST

Soft-spoken but forthright, Abundis projects an inner calm that betrays the turmoil that has defined much of her life.

When she was 5, her mother committed suicide. She was 32 -- the same age Abundis is now. Her father drank to excess, she says. Among the six children in her family, she is the only one who graduated from high school.

She has held the same job for the last eight years, assembling trays of food and delivering them to patients at a local hospital, bringing home about $900 every two weeks. She works from 1 in the afternoon until 9:30 at night, three days a week. The father of her two children tries to help, she says, but his part-time job in a warehouse gives him little to contribute.

For the first months after Angelina was born, Abundis stayed home, relying on sick leave and a disability payment that she secured from a car accident. Then, she went back to work, putting her daughter in local day care businesses that charged at least $25 for a four-hour day. Angelina's father picked her up in the afternoons and took care of her until Abundis came home from work.

Abundis was uncomfortable with the regimens at day care, which seemed heavy on naps and light on learning. She was also having trouble coming up with the needed cash, prompting her to visit a local payday lender that advanced her $255 at a time. When her next paycheck came, she had to pay the lender $300.

Collection agents were calling about her telephone bill, a credit card, her electric bill. She found herself in arrears at the day care business and eliminated that option.

For a few weeks, she left Angelina with an 18-year-old nephew. He parked her in front of the television while he studied for his GED. This seemed bad for everyone -- a disruption to her nephew's studies and of no benefit to Angelina's development -- so Abundis looked for another arrangement. She reluctantly accepted her parents' offer for help.

Her parents had their own troubles. Her father has prostate cancer and her stepmother's liver problems are a constant source of pain. Her stepmother had not worked since she was laid off from her receptionist job more than four years earlier.

"They are behind two grand on their rent," Abundis says. "I'm surprised their landlord is letting them stay there."

They were already looking after her sister's two children. Her sister is a drug addict who cannot care for her children, Abundis says. She and her partner have tangled violently for years, Abundis says, and her children are high-strung as a result.

"They come from a really bad home," Abundis says. "They scream and they throw things."

Her parents do the best they can, she says, but their home is now dominated by shouting and chaos in cramped quarters. Abundis sees this reflected in the changes in her daughter.

"The other day I was over there and she just picked up a chair and threw it," Abundis says. "She's never done that before."

After particularly bad days, she stays home, either missing a shift or coming in late. Her supervisor has been understanding, but Abundis wonders about the limits of her patience.

"I can't lose this job," she says.

So Abundis keeps going back to the only source of child care that presents itself.

"Every night, I call my stepmom and I ask her, 'Is it okay to bring Angelina?'" Abundis says. "My stepmom cries, but she always tells me yes."

Abundis' home is sparsely furnished but impeccably neat, with framed photos of her children dominating her living room.

On a recent morning, as her working shift approaches, Angelina sits on her lap, embracing her mother with both arms, never allowing even a smidgen of physical separation to creep in.

Abundis recalls an afternoon when Angelina was only 5 months old and they went to a Little League baseball game. She put the baby down in the grass, and a foul ball struck Angelina in the back of the head. Abundis rushed her to the hospital where she works. A helicopter ferried her to a children's hospital in Oakland.

Angelina proved to be okay, yet merely recounting this experience brings tears to Abundis' eyes. Not tears for a moment confined to the past. Tears for now.

"I should have been holding her," Abundis says, a sentiment connected to the feeling that washes over her as she leaves Angelina behind at her parents' place and goes to work.

"I have anxiety every day," she says.

Her current worries center on what to do when June comes and the school year ends. Then, she will need to find child care not just for Angelina, but for her 6-year-old son, Israel. She found a program at the YMCA, but it runs $370 for only two days a week.

"That's definitely out of the question," she says.

If her sister applied for child care for her two children, she would probably jump to the front of the waitlist, given that her kids could easily be deemed "at risk." This strikes Abundis as perverse -- that a working mother who labors to serve fresh vegetables to her children could be treated as a less deserving candidate for help than the children of a drug addict whose mother is not even in the picture.

Such is moral calculus in the age of scarcity.

"If I have to not work and then go on welfare to get child care, how am I ever supposed to move up in life?" she asks.

Like so many of the questions governing her life, this one has no satisfying answer.

Monday, April 9, 2012

Iranian Pipeline

Here could be one reason why oil prices are going up: conflict or the potential for conflict in major oil producing regions. Oil pipelines are one such issue. From Global Research:


Two major pipeline projects are at present vying to secure future energy supplies to Pakistan, India and China. One originates in Iran while the second one draws on reserves in Turkmenistan. The latter is promoted by an Israeli group and is supported by Secretary of State Clinton. According to Manlio Dinucci, an attack against Iran could cripple the Iranian project, which is currently ahead of the game. The question remains whether US leaders are still really in line with this strategy, as hinted in recent statements by Secretary of Defense Leon Panetta.

On the Washington stage, under the world’s media spotlight, Obama stated that: "As president and commander in chief, I prefer peace to war." But, he added, "Israel’s security is sacrosanct," and to prevent Iran from acquiring a nuclear weapon, "I will not hesitate to use force, including all elements of American power."

US nuclear weapons and their preemptive use are part of the options. Words worthy of a Nobel Peace Prize. That’s the scenario. To find out what it is really all about, we need to go behind the scenes.

Leading the anti-Iranian crusade is Israel, the only country in the region which possesses a nuclear arsenal and, unlike Iran, refuses to sign the Nuclear Non-Proliferation Treaty. Then we have the United States, the World's greatest military power, whose underlying political, economic and strategic interests, will under no circumstances allow that a state in the Middle East, namely Iran, escape its influence.

It is no coincidence that the sanctions promulgated by President Obama last November ban the supply of equipment and technologies which would "enhance Iran’s ability to develop its own oil resources." The embargo has been joined by the European Union, buyer of 20% of Iranian oil (of which about 10% is imported by Italy), and Japan, which imports a similar amount and whose need for oil has further increased as a result of the Fukushima nuclear disaster. This embargo constitutes a flying success for Secretary of State Hillary Clinton, who convinced America's allies to freeze energy imports from Iran at the expense of their own interests.

The embargo, however, is not working. Defying Washington’s ban, Islamabad confirmed on March 1st that it will complete the construction of the Iran-Pakistan gas pipeline. More than 2 000 km long, the Iranian section will soon see the light of day whereas the Pakistani side of the pipeline will be finished by 2014. It could, at a later stage, be extended by 600 km to reach India. Meanwhile, Russia has expressed interest in participating in the project, whose estimated cost is $ 1.2 billion. And China, which currently imports 20% of its oil from Iran, signed an agreement with Tehran in February, which contemplates an increase of half a million barrels per day in 2012. Pakistan is also expected to boost its imports of Iranian oil.

Furious, Hillary Clinton has stepped up pressure on Islamabad, using the carrot and the stick: on the one hand the threat of sanctions; on the other the offer of a billion dollars in support of Pakistan’s energy requirements. In exchange, Islmabad should abandon the pipeline with Iran and rely solely on the Turkmenistan-Afghanistan-Pakistan-India pipeline, backed by Washington. Its cost is estimated at 8 billion, twice as much as originally foreseen.

In Washington, however, it is the strategic motivation that ultimately prevails. The Turkmen natural gas deposits are largely controlled by the Israeli Merhav Group, headed by Mossad agent Yosef Maiman, one of the most influential figures in Israel. But the construction of the pipeline, which in Afghanistan passes through the provinces of Herat (where the Italian troops are stationed) and Kandahar) is behind schedule. As things stand, it is the Iran-Pakistan pipeline which has the upper edge.

Unless, of course, the cards are reshuffled by a war against Iran. Even if President Obama "prefers peace."

Sunday, April 8, 2012

No Recovery

We are told repeatedly that our economy is in recovery even as Japan stagnates, Europe sinks and Canada, whence this report originated on Global Research, even starts to show signs of weakness.



The housing recovery seems to have been a temporary affair. Preliminary data frames March as weak as last October. It looks like lower interest rates boasted sales. Those rates are up from 4.72% to 5.02%.

Worse yet, Operation Twist is over. That is where the Fed sold the short end of the bond market and bought notes and bonds of 5, 7, 10 and 30 years. Even though the BIS, The Bank for International Settlements, said the program was a resounding success, it was not. American friends knew the Fed was a buyer, so they proceeded in selling long dated paper destroying what the Fed policy was trying to accomplish. Now we expect QE 3, which we have expected for sometime. Lest we not forget the slight easing of credit and the government’s FHA low down payment programs.


A large negative we did not face several months ago was higher gasoline prices, which the public believes are going to stay at current levels for the next few years.

If a new house is purchased it has to be close to work and that often is not an easy task.

Making plans more difficult is that only half of the homes being sold will be lived in by the owners - the rest are owned by speculators, who for the past 5 years have been eminently unsuccessful in picking a bottom in the housing market.

We wonder if these buyers are aware that the administration, which we reported on a few weeks ago, have proposed to have Fannie Mae and Freddie Mac dump 560,000 under water defaulted properties on the hedge funds and others in blocks of $1 billion or more to be eventually rented and put into REITS. Buyers also have to contend with builders building 513,000 new homes a year when 6.8 million homes are already on sale.

Now that banks have cleaned up most of the defaults at the low end of the market they’ll now concentrate on the smaller middle sector and the top of the market. This lender policy will add many more homes to defaulted inventory and could take that number to 9.8 million defaulted homes for sale. Those looking for a let up will have to wait beyond 2014. That means you should continue to rent over that timeframe. That means depending on type and area, homes over that period should fall another 10% to 20%. What is disconcerting is the perpetual buying by lenders (banks), Wall Street, government statistics, the National Association of homebuilders and the National Association of Realtors - all produce bogus figures to trick the public into buying. There is also a shrinking number of people eligible to be buyers. These facts at our disposal tell us that there is no housing recovery in progress and that the economy needs QE 3 ASAP. The Fed is trapped and has to print more money just to keep the game going sideways. That, of course, pushes inflation higher, which pushes gold and silver higher.


You have to ask yourself how can there possibility be a recovery?

The stock market may be approaching old highs due to the Fed manipulating money, but there is no recovery on Main Street, nor will there be.

We do not know if you noticed, but the Dow has just gotten back to even after its 57% plunge of March 2009. In that correction we recommended sale of 14,200 with a bottom at 6,600. The actual bottom was 6,550.


The Fed also has to continue zero interest rates. As rates rise more money is needed to fund debt and that means the Fed has to print more money to offset the cost of borrowing at higher levels.


As far as building over 600,000 new homes a year we have been asking for more than five years how can builders be building with an enormous for sale inventory hanging over the market. Construction payrolls are at a 16-year low and quite frankly we do not know why there is any construction at all?



Bob Chapman is a frequent contributor to Global Research.

Saturday, April 7, 2012

Debts In Poverty

The well known Indian novelist Arundhati Roy ("The God of Small Things" most notably) has become a tireless and loud activist for the poor. She questions authority and received wisdom and she makes the connections so unpalatable to the people in charge.



Rockefeller to Mandela, Vedanta to Anna Hazare.... How long can the cardinals of corporate gospel buy up our protests?

The corporate or Foundation-endowed NGOs are global finance’s way of buying into resistance movements, literally like shareholders buy shares in companies, and then try to control them from within. They sit like nodes on the central nervous system, the pathways along which global finance flows.


Is it a house or a home? A temple to the new India, or a warehouse for its ghosts? Ever since Antilla arrived on Altamont Road in Mumbai, exuding mystery and quiet menace, things have not been the same. “Here we are,” the friend who took me there said, “Pay your respects to our new Ruler.”

Antilla belongs to India’s richest man, Mukesh Ambani. I had read about this most expensive dwelling ever built, the twenty-seven floors, three helipads, nine lifts, hanging gardens, ballrooms, weather rooms, gymnasiums, six floors of parking, and the six hundred servants. Nothing had prepared me for the vertical lawn—a soaring, 27-storey-high wall of grass attached to a vast metal grid. The grass was dry in patches; bits had fallen off in neat rectangles. Clearly, Trickledown hadn’t worked.

But Gush-Up certainly has. That’s why in a nation of 1.2 billion, India’s 100 richest people own assets equivalent to one-fourth of the GDP.

The word on the street (and in the New York Times) is, or at least was, that after all that effort and gardening, the Ambanis don’t live in Antilla. No one knows for sure. People still whisper about ghosts and bad luck, Vaastu and Feng Shui. Maybe it’s all Karl Marx’s fault. (All that cussing.) Capitalism, he said, “has conjured up such gigantic means of production and of exchange, that it is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells”.

In India, the 300 million of us who belong to the new, post-IMF “reforms” middle class—the market—live side by side with spirits of the nether world, the poltergeists of dead rivers, dry wells, bald mountains and denuded forests; the ghosts of 250,000 debt-ridden farmers who have killed themselves, and of the 800 million who have been impoverished and dispossessed to make way for us. And who survive on less than twenty rupees a day.

Mukesh Ambani is personally worth $20 billion. He holds a majority controlling share in Reliance Industries Limited (RIL), a company with a market capitalisation of $47 billion and global business interests that include petrochemicals, oil, natural gas, polyester fibre, Special Economic Zones, fresh food retail, high schools, life sciences research and stem cell storage services. RIL recently bought 95 per cent shares in Infotel, a TV consortium that controls 27 TV news and entertainment channels, including CNN-IBN, IBN Live, CNBC, IBN Lokmat, and ETV in almost every regional language. Infotel owns the only nationwide licence for 4G Broadband, a high-speed “information pipeline” which, if the technology works, could be the future of information exchange. Mr Ambani also owns a cricket team.



RIL is one of a handful of corporations that run India. Some of the others are the Tatas, Jindals, Vedanta, Mittals, Infosys, Essar and the other Reliance (ADAG), owned by Mukesh’s brother Anil. Their race for growth has spilled across Europe, Central Asia, Africa and Latin America. Their nets are cast wide; they are visible and invisible, over-ground as well as underground. The Tatas, for example, run more than 100 companies in 80 countries. They are one of India’s oldest and largest private sector power companies. They own mines, gas fields, steel plants, telephone, cable TV and broadband networks, and run whole townships. They manufacture cars and trucks, own the Taj Hotel chain, Jaguar, Land Rover, Daewoo, Tetley Tea, a publishing company, a chain of bookstores, a major brand of iodised salt and the cosmetics giant Lakme. Their advertising tagline could easily be: You Can’t Live Without Us.

According to the rules of the Gush-Up Gospel, the more you have, the more you can have.

The era of the Privatisation of Everything has made the Indian economy one of the fastest growing in the world. However, like any good old-fashioned colony, one of its main exports is its minerals. India’s new mega-corporations—Tatas, Jindals, Essar, Reliance, Sterlite—are those who have managed to muscle their way to the head of the spigot that is spewing money extracted from deep inside the earth. It’s a dream come true for businessmen—to be able to sell what they don’t have to buy.

The other major source of corporate wealth comes from their land-banks. All over the world, weak, corrupt local governments have helped Wall Street brokers, agro-business corporations and Chinese billionaires to amass huge tracts of land. (Of course, this entails commandeering water too.) In India, the land of millions of people is being acquired and made over to private corporations for “public interest”—for Special Economic Zones, infrastructure projects, dams, highways, car manufacture, chemical hubs and Formula One racing. (The sanctity of private property never applies to the poor.) As always, local people are promised that their displacement from their land and the expropriation of everything they ever had is actually part of employment generation. But by now we know that the connection between GDP growth and jobs is a myth. After 20 years of “growth”, 60 per cent of India’s workforce is self-employed, 90 per cent of India’s labour force works in the unorganised sector.

Post-Independence, right up to the ’80s, people’s movements, ranging from the Naxalites to Jayaprakash Narayan’s Sampoorna Kranti, were fighting for land reforms, for the redistribution of land from feudal landlords to landless peasants. Today any talk of redistribution of land or wealth would be considered not just undemocratic, but lunatic. Even the most militant movements have been reduced to a fight to hold on to what little land people still have. The millions of landless people, the majority of them Dalits and adivasis, driven from their villages, living in slums and shanty colonies in small towns and mega cities, do not figure even in the radical discourse.

As Gush-Up concentrates wealth on to the tip of a shining pin on which our billionaires pirouette, tidal waves of money crash through the institutions of democracy—the courts, Parliament as well as the media, seriously compromising their ability to function in the ways they are meant to. The noisier the carnival around elections, the less sure we are that democracy really exists.

Each new corruption scandal that surfaces in India makes the last one look tame. In the summer of 2011, the 2G spectrum scandal broke. We learnt that corporations had siphoned away $40 billion of public money by installing a friendly soul as the Union minister of telecommunication who grossly underpriced the licences for 2G telecom spectrum and illegally parcelled it out to his buddies. The taped telephone conversations leaked to the press showed how a network of industrialists and their front companies, ministers, senior journalists and a TV anchor were involved in facilitating this daylight robbery. The tapes were just an MRI that confirmed a diagnosis that people had made long ago.

The privatisation and illegal sale of telecom spectrum does not involve war, displacement and ecological devastation. The privatisation of India’s mountains, rivers and forests does. Perhaps because it does not have the uncomplicated clarity of a straightforward, out-and-out accounting scandal, or perhaps because it is all being done in the name of India’s “progress”, it does not have the same resonance with the middle classes.

In 2005, the state governments of Chhattisgarh, Orissa and Jharkhand signed hundreds of Memorandums of Understanding (MoUs) with a number of private corporations turning over trillions of dollars of bauxite, iron ore and other minerals for a pittance, defying even the warped logic of the free market. (Royalties to the government ranged between 0.5 per cent and 7 per cent.)

Only days after the Chhattisgarh government signed an MoU for the construction of an integrated steel plant in Bastar with Tata Steel, the Salwa Judum, a vigilante militia, was inaugurated. The government said it was a spontaneous uprising of local people who were fed up of the “repression” by Maoist guerrillas in the forest. It turned out to be a ground-clearing operation, funded and armed by the government and subsidised by mining corporations. In the other states, similar militias were created, with other names. The prime minister announced the Maoists were the “single-largest security challenge in India”. It was a declaration of war.

On January 2, 2006, in Kalinganagar, in the neighbouring state of Orissa, perhaps to signal the seriousness of the government’s intention, ten platoons of police arrived at the site of another Tata Steel plant and opened fire on villagers who had gathered there to protest what they felt was inadequate compensation for their land. Thirteen people, including one policeman, were killed, and 37 injured. Six years have gone by and though the villages remain under siege by armed policemen, the protest has not died.

Meanwhile in Chhattisgarh, the Salwa Judum burned, raped and murdered its way through hundreds of forest villages, evacuating 600 villages, forcing 50,000 people to come out into police camps and 3,50,000 people to flee. The chief minister announced that those who did not come out of the forests would be considered to be ‘Maoist terrorists’. In this way, in parts of modern India, ploughing fields and sowing seed came to be defined as terrorist activity. Eventually, the Salwa Judum’s atrocities only succeeded in strengthening the resistance and swelling the ranks of the Maoist guerrilla army. In 2009, the government announced what it called Operation Green Hunt. Two lakh paramilitary troops were deployed across Chhattisgarh, Orissa, Jharkhand and West Bengal.

After three years of “low-intensity conflict” that has not managed to “flush” the rebels out of the forest, the central government has declared that it will deploy the Indian army and air force. In India, we don’t call this war. We call it “creating a good investment climate”. Thousands of soldiers have already moved in. A brigade headquarters and air bases are being readied. One of the biggest armies in the world is now preparing its Terms of Engagement to “defend” itself against the poorest, hungriest, most malnourished people in the world. We only await the declaration of the Armed Forces Special Powers Act (AFSPA), which will give the army legal immunity and the right to kill “on suspicion”. Going by the tens of thousands of unmarked graves and anonymous cremation pyres in Kashmir, Manipur and Nagaland, it has shown itself to be a very suspicious army indeed.

While the preparations for deployment are being made, the jungles of Central India continue to remain under siege, with villagers frightened to come out, or go to the market for food or medicine. Hundreds of people have been jailed, charged for being Maoists under draconian, undemocratic laws. Prisons are crowded with adivasi people, many of whom have no idea what their crime is. Recently, Soni Sori, an adivasi school-teacher from Bastar, was arrested and tortured in police custody. Stones were pushed up her vagina to get her to “confess” that she was a Maoist courier. The stones were removed from her body at a hospital in Calcutta, where, after a public outcry, she was sent for a medical check-up. At a recent Supreme Court hearing, activists presented the judges with the stones in a plastic bag. The only outcome of their efforts has been that Soni Sori remains in jail while Ankit Garg, the Superintendent of Police who conducted the interrogation, was conferred with the President’s Police Medal for Gallantry on Republic Day.

We hear about the ecological and social re-engineering of Central India only because of the mass insurrection and the war. The government gives out no information. The Memorandums of Understanding are all secret. Some sections of the media have done what they could to bring public attention to what is happening in Central India. However, most of the Indian mass media is made vulnerable by the fact that the major share of its revenues come from corporate advertisements. If that is not bad enough, now the line between the media and big business has begun to blur dangerously. As we have seen, RIL virtually owns 27 TV channels. But the reverse is also true. Some media houses now have direct business and corporate interests. For example, one of the major daily newspapers in the region—Dainik Bhaskar (and it is only one example)—has 17.5 million readers in four languages, including English and Hindi, across 13 states. It also owns 69 companies with interests in mining, power generation, real estate and textiles. A recent writ petition filed in the Chhattisgarh High Court accuses DB Power Ltd (one of the group’s companies) of using “deliberate, illegal and manipulative measures” through company-owned newspapers to influence the outcome of a public hearing over an open cast coal mine. Whether or not it has attempted to influence the outcome is not germane. The point is that media houses are in a position to do so. They have the power to do so. The laws of the land allow them to be in a position that lends itself to a serious conflict of interest.

There are other parts of the country from which no news comes. In the sparsely populated but militarised northeastern state of Arunachal Pradesh, 168 big dams are being constructed, most of them privately owned. High dams that will submerge whole districts are being constructed in Manipur and Kashmir, both highly militarised states where people can be killed merely for protesting power cuts. (That happened a few weeks ago in Kashmir.) How can they stop a dam?

The most delusional dam of all is Kalpasar in Gujarat. It is being planned as a 34-km-long dam across the Gulf of Khambhat with a 10-lane highway and a railway line running on top of it. By keeping the sea water out, the idea is to create a sweet water reservoir of Gujarat’s rivers. (Never mind that these rivers have already been dammed to a trickle and poisoned with chemical effluent.) The Kalpasar dam, which would raise the sea level and alter the ecology of hundreds of kilometres of coastline, had been dismissed as a bad idea 10 years ago. It has made a sudden comeback in order to supply water to the Dholera Special Investment Region (SIR) in one of the most water-stressed zones not just in India, but in the world. SIR is another name for an SEZ, a self-governed corporate dystopia of “industrial parks, townships and mega-cities”. The Dholera SIR is going to be connected to Gujarat’s other cities by a network of 10-lane highways. Where will the money for all this come from?

In January 2011, in the Mahatma (Gandhi) Mandir, Gujarat chief minister Narendra Modi presided over a meeting of 10,000 international businessmen from 100 countries. According to media reports, they pledged to invest $450 billion in Gujarat. The meeting was scheduled to take place at the onset of the 10th anniversary year of the massacre of 2,000 Muslims in February-March 2002. Modi stands accused of not just condoning, but actively abetting, the killing. People who watched their loved ones being raped, eviscerated and burned alive, the tens of thousands who were driven from their homes, still wait for a gesture towards justice. But Modi has traded in his saffron scarf and vermilion forehead for a sharp business suit, and hopes that a 450-billion-dollar investment will work as blood money, and square the books. Perhaps it will. Big Business is backing him enthusiastically. The algebra of infinite justice works in mysterious ways.

The Dholera SIR is only one of the smaller Matryoshka dolls, one of the inner ones in the dystopia that is being planned. It will be connected to the Delhi Mumbai Industrial Corridor (DMIC), a 1,500-km-long and 300-km-wide industrial corridor, with nine mega-industrial zones, a high-speed freight line, three seaports and six airports, a six-lane intersection-free expressway and a 4,000 MW power plant. The DMIC is a collaborative venture between the governments of India and Japan, and their respective corporate partners, and has been proposed by the McKinsey Global Institute.

The DMIC website says that approximately 180 million people will be “affected” by the project. Exactly how, it doesn’t say. It envisages the building of several new cities and estimates that the population in the region will grow from the current 231 million to 314 million by 2019. That’s in seven years’ time. When was the last time a state, despot or dictator carried out a population transfer of millions of people? Can it possibly be a peaceful process?

The Indian army might need to go on a recruitment drive so that it’s not taken unawares when it’s ordered to deploy all over India. In preparation for its role in Central India, it publicly released its updated doctrine on Military Psychological Operations, which outlines “a planned process of conveying a message to a select target audience, to promote particular themes that result in desired attitudes and behaviour, which affect the achievement of political and military objectives of the country”. This process of “perception management”, it said, would be conducted by “using media available to the services”.

The army is experienced enough to know that coercive force alone cannot carry out or manage social engineering on the scale that is envisaged by India’s planners. War against the poor is one thing. But for the rest of us—the middle class, white-collar workers, intellectuals, “opinion-makers”—it has to be “perception management”. And for this we must turn our attention to the exquisite art of Corporate Philanthropy.

Of late, the main mining conglomerates have embraced the Arts—film, art installations and the rush of literary festivals that have replaced the ’90s obsession with beauty contests. Vedanta, currently mining the heart out of the homelands of the ancient Dongria Kondh tribe for bauxite, is sponsoring a ‘Creating Happiness’ film competition for young film students whom they have commissioned to make films on sustainable development. Vedanta’s tagline is ‘Mining Happiness’. The Jindal Group brings out a contemporary art magazine and supports some of India’s major artists (who naturally work with stainless steel).

Essar was the principal sponsor of the Tehelka Newsweek Think Fest that promised “high-octane debates” by the foremost thinkers from around the world, which included major writers, activists and even the architect Frank Gehry. (All this in Goa, where activists and journalists were uncovering massive illegal mining scandals, and Essar’s part in the war unfolding in Bastar was emerging.) Tata Steel and Rio Tinto (which has a sordid track record of its own) were among the chief sponsors of the Jaipur Literary Festival (Latin name: Darshan Singh Construction Jaipur Literary Festival) that is advertised by the cognoscenti as ‘The Greatest Literary Show on Earth’. Counselage, the Tatas’ “strategic brand manager”, sponsored the festival’s press tent. Many of the world’s best and brightest writers gathered in Jaipur to discuss love, literature, politics and Sufi poetry. Some tried to defend Salman Rushdie’s right to free speech by reading from his proscribed book, The Satanic Verses. In every TV frame and newspaper photograph, the logo of Tata Steel (and its tagline—Values Stronger than Steel) loomed behind them, a benign, benevolent host. The enemies of Free Speech were the supposedly murderous Muslim mobs, who, the festival organisers told us, could have even harmed the school-children gathered there. (We are witness to how helpless the Indian government and the police can be when it comes to Muslims.)

Yes, the hardline Darul-Uloom Deobandi Islamic seminary did protest Rushdie being invited to the festival. Yes, some Islamists did gather at the festival venue to protest and yes, outrageously, the state government did nothing to protect the venue. That’s because the whole episode had as much to do with democracy, votebanks and the Uttar Pradesh elections as it did with Islamist fundamentalism. But the battle for Free Speech against Islamist Fundamentalism made it to the world’s newspapers. It is important that it did. But there were hardly any reports about the festival sponsors’ role in the war in the forests, the bodies piling up, the prisons filling up. Or about the Unlawful Activities Prevention Act and the Chhattisgarh Special Public Security Act, which make even thinking an anti-government thought a cognisable offence.

Or about the mandatory public hearing for the Tata Steel plant in Lohandiguda which local people complained actually took place hundreds of miles away in Jagdalpur, in the collector’s office compound, with a hired audience of fifty people, under armed guard. Where was Free Speech then? No one mentioned Kalinganagar. No one mentioned that journalists, academics and filmmakers working on subjects unpopular with the Indian government—like the surreptitious part it played in the genocide of Tamils in the war in Sri Lanka or the recently discovered unmarked graves in Kashmir—were being denied visas or deported straight from the airport.

But which of us sinners was going to cast the first stone? Not me, who lives off royalties from corporate publishing houses. We all watch Tata Sky, we surf the net with Tata Photon, we ride in Tata taxis, we stay in Tata Hotels, we sip our Tata tea in Tata bone china and stir it with teaspoons made of Tata Steel. We buy Tata books in Tata bookshops. Hum Tata ka namak khate hain. We’re under siege.

If the sledgehammer of moral purity is to be the criterion for stone-throwing, then the only people who qualify are those who have been silenced already. Those who live outside the system; the outlaws in the forests or those whose protests are never covered by the press, or the well-behaved dispossessed, who go from tribunal to tribunal, bearing witness, giving testimony.

But the Litfest gave us our Aha! Moment. Oprah came. She said she loved India, that she would come again and again. It made us proud.

This is only the burlesque end of the Exquisite Art.

Though the Tatas have been involved with corporate philanthropy for almost a hundred years now, endowing scholarships and running some excellent educational institutes and hospitals, Indian corporations have only recently been invited into the Star Chamber, the Camera stellata, the brightly lit world of global corporate government, deadly for its adversaries, but otherwise so artful that you barely know it’s there.

What follows in this essay might appear to some to be a somewhat harsh critique. On the other hand, in the tradition of honouring one’s adversaries, it could be read as an acknowledgement of the vision, flexibility, the sophistication and unwavering determination of those who have dedicated their lives to keep the world safe for capitalism.

Their enthralling history, which has faded from contemporary memory, began in the US in the early 20th century when, kitted out legally in the form of endowed foundations, corporate philanthropy began to replace missionary activity as Capitalism’s (and Imperialism’s) road opening and systems maintenance patrol. Among the first foundations to be set up in the United States were the Carnegie Corporation, endowed in 1911 by profits from the Carnegie Steel Company; and the Rockefeller Foundation, endowed in 1914 by J.D. Rockefeller, founder of Standard Oil Company. The Tatas and Ambanis of their time.

Some of the institutions financed, given seed money or supported by the Rockefeller Foundation are the UN, the CIA, the Council on Foreign Relations, New York’s most fabulous Museum of Modern Art, and, of course, the Rockefeller Center in New York (where Diego Riviera’s mural had to be blasted off the wall because it mischievously depicted reprobate capitalists and a valiant Lenin. Free Speech had taken the day off.)

J.D. Rockefeller was America’s first billionaire and the world’s richest man. He was an abolitionist, a supporter of Abraham Lincoln and a teetotaller. He believed his money was given to him by God, which must have been nice for him.

Here’s an excerpt from one of Pablo Neruda’s early poems called Standard Oil Company:

Their obese emperors from New York
are suave smiling assassins
who buy silk, nylon, cigars
petty tyrants and dictators.

They buy countries, people, seas, police, county councils,
distant regions where the poor hoard their corn
like misers their gold:
Standard Oil awakens them,
clothes them in uniforms, designates
which brother is the enemy.
the Paraguayan fights its war,
and the Bolivian wastes away
in the jungle with its machine gun.

A President assassinated for a drop of petroleum,
a million-acre mortgage,
a swift execution on a morning mortal with light, petrified,
a new prison camp for subversives,
in Patagonia, a betrayal, scattered shots
beneath a petroliferous moon,
a subtle change of ministers
in the capital, a whisper
like an oil tide,
and zap, you’ll see
how Standard Oil’s letters shine above the clouds,
above the seas, in your home,
illuminating their dominions.

When corporate-endowed foundations first made their appearance in the US, there was a fierce debate about their provenance, legality and lack of accountability. People suggested that if companies had so much surplus money, they should raise the wages of their workers. (People made these outrageous suggestions in those days, even in America.) The idea of these foundations, so ordinary now, was in fact a leap of the business imagination. Non-tax-paying legal entities with massive resources and an almost unlimited brief—wholly unaccountable, wholly non-transparent—what better way to parlay economic wealth into political, social and cultural capital, to turn money into power? What better way for usurers to use a minuscule percentage of their profits to run the world? How else would Bill Gates, who admittedly knows a thing or two about computers, find himself designing education, health and agriculture policies, not just for the US government, but for governments all over the world?

Over the years, as people witnessed some of the genuinely good the foundations did (running public libraries, eradicating diseases)—the direct connection between corporations and the foundations they endowed began to blur. Eventually, it faded altogether. Now even those who consider themselves left-wing are not shy to accept their largesse.

By the 1920s, US capitalism had begun to look outwards, for raw materials and overseas markets. Foundations began to formulate the idea of global corporate governance. In 1924, the Rockefeller and Carnegie foundations jointly created what is today the most powerful foreign policy pressure group in the world—the Council on Foreign Relations (CFR), which later came to be funded by the Ford Foundation as well. By 1947, the newly created CIA was supported by and working closely with the CFR. Over the years, the CFR’s membership has included 22 US secretaries of state. There were five CFR members in the 1943 steering committee that planned the UN, and an $8.5 million grant from J.D. Rockefeller bought the land on which the UN’s New York headquarters stands.

All eleven of the World Bank’s presidents since 1946—men who have presented themselves as missionaries of the poor—have been members of the CFR. (The exception was George Woods. And he was a trustee of the Rockefeller Foundation and vice-president of Chase-Manhattan Bank.)

At Bretton Woods, the World Bank and IMF decided that the US dollar should be the reserve currency of the world, and that in order to enhance the penetration of global capital, it would be necessary to universalise and standardise business practices in an open marketplace. It is towards that end that they spend a large amount of money promoting Good Governance (as long as they control the strings), the concept of the Rule of Law (provided they have a say in making the laws) and hundreds of anti-corruption programmes (to streamline the system they have put in place.) Two of the most opaque, unaccountable organisations in the world go about demanding transparency and accountability from the governments of poorer countries.

Given that the World Bank has more or less directed the economic policies of the Third World, coercing and cracking open the markets of country after country for global finance, you could say that corporate philanthropy has turned out to be the most visionary business of all time.

Corporate-endowed foundations administer, trade and channelise their power and place their chessmen on the chessboard, through a system of elite clubs and think-tanks, whose members overlap and move in and out through the revolving doors. Contrary to the various conspiracy theories in circulation, particularly among left-wing groups, there is nothing secret, satanic, or Freemason-like about this arrangement. It is not very different from the way corporations use shell companies and offshore accounts to transfer and administer their money—except that the currency is power, not money.

The transnational equivalent of the CFR is the Trilateral Commission, set up in 1973 by David Rockefeller, the former US National Security Advisor Zbigniew Brzezinski (founder-member of the Afghan Mujahideen, forefathers of the Taliban), the Chase-Manhattan Bank and some other private eminences. Its purpose was to create an enduring bond of friendship and cooperation between the elites of North America, Europe and Japan. It has now become a penta-lateral commission, because it includes members from China and India. (Tarun Das of the CII; N.R. Narayanamurthy, ex-CEO, Infosys; Jamsheyd N. Godrej, managing director, Godrej; Jamshed J. Irani, director, Tata Sons; and Gautam Thapar, CEO, Avantha Group).

The Aspen Institute is an international club of local elites, businessmen, bureaucrats, politicians, with franchises in several countries. Tarun Das is the president of the Aspen Institute, India. Gautam Thapar is chairman. Several senior officers of the McKinsey Global Institute (proposer of the Delhi Mumbai Industrial Corridor) are members of the CFR, the Trilateral Commission and the Aspen Institute.

The Ford Foundation (liberal foil to the more conservative Rockefeller Foundation, though the two work together constantly) was set up in 1936. Though it is often underplayed, the Ford Foundation has a very clear, well-defined ideology and works extremely closely with the US state department. Its project of deepening democracy and “good governance” are very much part of the Bretton Woods scheme of standardising business practice and promoting efficiency in the free market. After the Second World War, when Communists replaced Fascists as the US government’s enemy number one, new kinds of institutions were needed to deal with the Cold War. Ford funded RAND (Research and Development Corporation), a military think-tank that began with weapons research for the US defense services. In 1952, to thwart “the persistent Communist effort to penetrate and disrupt free nations”, it established the Fund for the Republic, which then morphed into the Center for the Study of Democratic Institutions whose brief was to wage the cold war intelligently without McCarthyite excesses. It is through this lens that we need to view the work Ford Foundation is doing, with the millions of dollars it has invested in India—its funding of artists, filmmakers and activists, its generous endowment of university courses and scholarships.

The Ford Foundation’s declared “goals for the future of mankind” include interventions in grassroots political movements locally and internationally. In the US, it provided millions in grants and loans to support the Credit Union Movement that was pioneered by the department store owner, Edward Filene, in 1919. Filene believed in creating a mass consumption society of consumer goods by giving workers affordable access to credit—a radical idea at the time. Actually, only half of a radical idea, because the other half of what Filene believed in was the more equitable distribution of national income. Capitalists seized on the first half of Filene’s suggestion, and by disbursing “affordable” loans of tens of millions of dollars to working people, turned the US working class into people who are permanently in debt, running to catch up with their lifestyles.



Many years later, this idea has trickled down to the impoverished countryside of Bangladesh when Mohammed Yunus and the Grameen Bank brought microcredit to starving peasants with disastrous consequences. Microfinance companies in India are responsible for hundreds of suicides—200 people in Andhra Pradesh in 2010 alone. A national daily recently published a suicide note by an 18-year-old girl who was forced to hand over her last Rs 150, her school fees, to bullying employees of the microfinance company. The note said, “Work hard and earn money. Do not take loans.”

There’s a lot of money in poverty, and a few Nobel Prizes too.

By the 1950s, the Rockefeller and Ford foundations, funding several NGOs and international educational institutions, began to work as quasi-extensions of the US government that was at the time toppling democratically elected governments in Latin America, Iran and Indonesia. (That was also around the time they made their entry into India, then non-aligned, but clearly tilting towards the Soviet Union.) The Ford Foundation established a US-style economics course at the Indonesian University. Elite Indonesian students, trained in counter-insurgency by US army officers, played a crucial part in the 1965 CIA-backed coup in Indonesia that brought General Suharto to power. Gen Suharto repaid his mentors by slaughtering hundreds of thousands of Communist rebels.

Eight years later, young Chilean students, who came to be known as the Chicago Boys, were taken to the US to be trained in neo-liberal economics by Milton Friedman at the University of Chicago (endowed by J.D. Rockefeller), in preparation for the 1973 CIA-backed coup that killed Salvador Allende, and brought in General Pinochet and a reign of death squads, disappearances and terror that lasted for seventeen years. (Allende’s crime was being a democratically elected socialist and nationalising Chile’s mines.)

In 1957, the Rockefeller Foundation established the Ramon Magsaysay Prize for community leaders in Asia. It was named after Ramon Magsaysay, president of the Philippines, a crucial ally in the US campaign against Communism in Southeast Asia. In 2000, the Ford Foundation established the Ramon Magsaysay Emergent Leadership Award. The Magsaysay Award is considered a prestigious award among artists, activists and community workers in India. M.S. Subbulakshmi and Satyajit Ray won it, so did Jayaprakash Narayan and one of India’s finest journalists, P. Sainath. But they did more for the Magsaysay award than it did for them. In general, it has become a gentle arbiter of what kind of activism is “acceptable” and what is not.

Interestingly, Anna Hazare’s anti-corruption movement last summer was spearheaded by three Magsaysay Award winners—Anna Hazare, Arvind Kejriwal and Kiran Bedi. One of Arvind Kejriwal’s many NGOs is generously funded by Ford Foundation. Kiran Bedi’s NGO is funded by Coca Cola and Lehman Brothers.

Though Anna Hazare calls himself a Gandhian, the law he called for—the Jan Lokpal Bill—was un-Gandhian, elitist and dangerous. A round-the-clock corporate media campaign proclaimed him to be the voice of “the people”. Unlike the Occupy Wall Street movement in the US, the Hazare movement did not breathe a word against privatisation, corporate power or economic “reforms”. On the contrary, its principal media backers successfully turned the spotlight away from massive corporate corruption scandals (which had exposed high-profile journalists too) and used the public mauling of politicians to call for the further withdrawal of discretionary powers from government, for more reforms, more privatisation. (In 2008, Anna Hazare received a World Bank award for outstanding public service). The World Bank issued a statement from Washington saying the movement “dovetailed” into its policy.

Like all good Imperialists, the Philanthropoids set themselves the task of creating and training an international cadre that believed that Capitalism, and by extension the hegemony of the United States, was in their own self-interest. And who would therefore help to administer the Global Corporate Government in the ways native elites had always served colonialism. So began the foundations’ foray into education and the arts, which would become their third sphere of influence, after foreign and domestic economic policy. They spent (and continue to spend) millions of dollars on academic institutions and pedagogy.

Joan Roelofs in her wonderful book Foundations and Public Policy: The Mask of Pluralism describes how foundations remodelled the old ideas of how to teach political science, and fashioned the disciplines of “international” and “area” studies. This provided the US intelligence and security services a pool of expertise in foreign languages and culture to recruit from. The CIA and US state department continue to work with students and professors in US universities, raising serious questions about the ethics of scholarship.

The gathering of information to control people they rule is fundamental to any ruling power. As resistance to land acquisition and the new economic policies spreads across India, in the shadow of outright war in Central India, as a containment technique, the government has embarked on a massive biometrics programme, perhaps one of the most ambitious and expensive information-gathering projects in the world— the Unique Identification Number (UID).

People don’t have clean drinking water, or toilets, or food, or money, but they will have election cards and UID numbers. Is it a coincidence that the UID project run by Nandan Nilekani, former CEO of Infosys, ostensibly meant to “deliver services to the poor”, will inject massive amounts of money into a slightly beleaguered IT industry? (A conservative estimate of the UID budget exceeds the Indian government’s annual public spending on education.) To “digitise” a country with such a large population of the largely illegitimate and “illegible”—people who are for the most part slum-dwellers, hawkers, adivasis without land records—will criminalise them, turning them from illegitimate to illegal. The idea is to pull off a digital version of the Enclosure of the Commons and put huge powers into the hands of an increasingly hardening police state. Nilekani’s technocratic obsession with gathering data is consistent with Bill Gates’s obsession with digital databases, “numerical targets”, “scorecards of progress”. As though it is a lack of information that is the cause of world hunger, and not colonialism, debt and skewed profit-oriented, corporate policy.

Corporate-endowed foundations are the biggest funders of the social sciences and the arts, endowing courses and student scholarships in “development studies”, “community studies”, “cultural studies”, “behavioural sciences” and “human rights”. As US universities opened their doors to international students, hundreds of thousands of students, children of the Third World elite, poured in. Those who could not afford the fees were given scholarships. Today in countries like India and Pakistan there is scarcely a family among the upper middle classes that does not have a child that has studied in the US. From their ranks have come good scholars and academics, but also the prime ministers, finance ministers, economists, corporate lawyers, bankers and bureaucrats who helped to open up the economies of their countries to global corporations.

Scholars of the Foundation-friendly version of economics and political science were rewarded with fellowships, research funds, grants, endowments and jobs. Those with Foundation-unfriendly views found themselves unfunded, marginalised and ghettoised, their courses discontinued. Gradually, one particular imagination—a brittle, superficial pretence of tolerance and multiculturalism (that morphs into racism, rabid nationalism, ethnic chauvinism or war-mongering Islamophobia at a moment’s notice) under the roof of a single, overarching, very unplural economic ideology—began to dominate the discourse. It did so to such an extent that it ceased to be perceived as an ideology at all. It became the default position, the natural way to be. It infiltrated normality, colonised ordinariness, and challenging it began to seem as absurd or as esoteric as challenging reality itself. From here it was a quick easy step to ‘There is No Alternative’.

It is only now, thanks to the Occupy Movement, that another language has appeared on US streets and campuses. To see students with banners that say ‘Class War’ or ‘We don’t mind you being rich, but we mind you buying our government’ is, given the odds, almost a revolution in itself.

One century after it began, corporate philanthropy is as much part of our lives as Coca Cola. There are now millions of non-profit organisations, many of them connected through a byzantine financial maze to the larger foundations. Between them, this “independent” sector has assets worth nearly 450 billion dollars. The largest of them is the Bill Gates Foundation with ($21 billion), followed by the Lilly Endowment ($16 billion) and the Ford Foundation ($15 billion).

As the IMF enforced Structural Adjustment, and arm-twisted governments into cutting back on public spending on health, education, childcare, development, the NGOs moved in. The Privatisation of Everything has also meant the NGO-isation of Everything. As jobs and livelihoods disappeared, NGOs have become an important source of employment, even for those who see them for what they are. And they are certainly not all bad.

Of the millions of NGOs, some do remarkable, radical work and it would be a travesty to tar all NGOs with the same brush. However, the corporate or Foundation-endowed NGOs are global finance’s way of buying into resistance movements, literally like shareholders buy shares in companies, and then try to control them from within. They sit like nodes on the central nervous system, the pathways along which global finance flows. They work like transmitters, receivers, shock absorbers, alert to every impulse, careful never to annoy the governments of their host countries. (The Ford Foundation requires the organisations it funds to sign a pledge to this effect.) Inadvertently (and sometimes advertently), they serve as listening posts, their reports and workshops and other missionary activity feeding data into an increasingly aggressive system of surveillance of increasingly hardening States. The more troubled an area, the greater the numbers of NGOs in it.

Mischievously, when the government or sections of the Corporate Press want to run a smear campaign against a genuine people’s movement, like the Narmada Bachao Andolan, or the protest against the Koodankulam nuclear reactor, they accuse these movements of being NGOs receiving “foreign funding”. They know very well that the mandate of most NGOs, in particular the well-funded ones, is to further the project of corporate globalisation, not thwart it.

Armed with their billions, these NGOs have waded into the world, turning potential revolutionaries into salaried activists, funding artists, intellectuals and filmmakers, gently luring them away from radical confrontation, ushering them in the direction of multi-culturalism, gender, community development—the discourse couched in the language of identity politics and human rights.

The transformation of the idea of justice into the industry of human rights has been a conceptual coup in which NGOs and foundations have played a crucial part. The narrow focus of human rights enables an atrocity-based analysis in which the larger picture can be blocked out and both parties in a conflict—say, for example, the Maoists and the Indian government, or the Israeli Army and Hamas—can both be admonished as Human Rights Violators. The land-grab by mining corporations or the history of the annexation of Palestinian land by the State of Israel then become footnotes with very little bearing on the discourse. This is not to suggest that human rights don’t matter. They do, but they are not a good enough prism through which to view or remotely understand the great injustices in the world we live in.

Another conceptual coup has to do with foundations’ involvement with the feminist movement. Why do most “official” feminists and women’s organisations in India keep a safe distance between themselves and organisations like say the 90,000-member Krantikari Adivasi Mahila Sangathan (Revolutionary Adivasi Women’s Association) fighting patriarchy in their own communities and displacement by mining corporations in the Dandakaranya forest? Why is it that the dispossession and eviction of millions of women from land which they owned and worked is not seen as a feminist problem?

The hiving off of the liberal feminist movement from grassroots anti-imperialist and anti-capitalist people’s movements did not begin with the evil designs of foundations. It began with those movements’ inability to adapt and accommodate the rapid radicalisation of women that took place in the ’60s and ’70s. The foundations showed genius in recognising and moving in to support and fund women’s growing impatience with the violence and patriarchy in their traditional societies as well as among even the supposedly progressive leaders of Left movements. In a country like India, the schism also ran along the rural-urban divide.

Most radical, anti-capitalist movements were located in the countryside where, for the most part, patriarchy continued to rule the lives of most women. Urban women activists who joined these movements (like the Naxalite movement) had been influenced and inspired by the western feminist movement and their own journeys towards liberation were often at odds with what their male leaders considered to be their duty: to fit in with ‘the masses’. Many women activists were not willing to wait any longer for the “revolution” in order to end the daily oppression and discrimination in their lives, including from their own comrades. They wanted gender equality to be an absolute, urgent and non-negotiable part of the revolutionary process and not just a post-revolution promise. Intelligent, angry and disillusioned women began to move away and look for other means of support and sustenance.

As a result, by the late ’80s, around the time Indian markets were opened up, the liberal feminist movement in a country like India has become inordinately NGO-ised. Many of these NGOs have done seminal work on queer rights, domestic violence, AIDS and the rights of sex workers. But significantly, the liberal feminist movements have not been at the forefront of challenging the new economic policies, even though women have been the greatest sufferers. By manipulating the disbursement of the funds, the foundations have largely succeeded in circumscribing the range of what “political” activity should be. The funding briefs of NGOs now prescribe what counts as women’s “issues” and what doesn’t.

The NGO-isation of the women’s movement has also made western liberal feminism (by virtue of its being the most funded brand) the standard-bearer of what constitutes feminism. The battles, as usual, have been played out on women’s bodies, extruding Botox at one end and burqas at the other. (And then there are those who suffer the double whammy, Botox and the Burqa.) When, as happened recently in France, an attempt is made to coerce women out of the burqa rather than creating a situation in which a woman can choose what she wishes to do, it’s not about liberating her, but about unclothing her. It becomes an act of humiliation and cultural imperialism. It’s not about the burqa. It’s about the coercion. Coercing a woman out of a burqa is as bad as coercing her into one. Viewing gender in this way, shorn of social, political and economic context, makes it an issue of identity, a battle of props and costumes. It is what allowed the US government to use western feminist groups as moral cover when it invaded Afghanistan in 2001. Afghan women were (and are) in terrible trouble under the Taliban. But dropping daisy-cutters on them was not going to solve their problems.

In the NGO universe, which has evolved a strange anodyne language of its own, everything has become a “subject”, a separate, professionalised, special-interest issue. Community development, leadership development, human rights, health, education, reproductive rights, AIDS, orphans with AIDS—have all been hermetically sealed into their own silos with their own elaborate and precise funding brief. Funding has fragmented solidarity in ways that repression never could. Poverty too, like feminism, is often framed as an identity problem. As though the poor have not been created by injustice but are a lost tribe who just happen to exist, and can be rescued in the short term by a system of grievance redressal (administered by NGOs on an individual, person to person basis), and whose long-term resurrection will come from Good Governance. Under the regime of Global Corporate Capitalism, it goes without saying.

Indian poverty, after a brief period in the wilderness while India “shone”, has made a comeback as an exotic identity in the Arts, led from the front by films like Slumdog Millionaire. These stories about the poor, their amazing spirit and resilience, have no villains—except the small ones who provide narrative tension and local colour. The authors of these works are the contemporary world’s equivalent of the early anthropologists, lauded and honoured for working on “the ground”, for their brave journeys into the unknown. You rarely see the rich being examined in these ways.

Having worked out how to manage governments, political parties, elections, courts, the media and liberal opinion, there was one more challenge for the neo-liberal establishment: how to deal with growing unrest, the threat of “people’s power”. How do you domesticate it? How do you turn protesters into pets? How do you vacuum up people’s fury and redirect it into blind alleys?

Here too, foundations and their allied organisations have a long and illustrious history. A revealing example is their role in defusing and deradicalising the Black Civil Rights movement in the US in the 1960s and the successful transformation of Black Power into Black Capitalism.

The Rockefeller Foundation, in keeping with J.D. Rockefeller’s ideals, had worked closely with Martin Luther King Sr (father of Martin Luther King Jr). But his influence waned with the rise of the more militant organisations—the Student Non-violent Coordinating Committee (SNCC) and the Black Panthers. The Ford and Rockefeller Foundations moved in. In 1970, they donated $15 million to “moderate” black organisations, giving people grants, fellowships, scholarships, job training programmes for dropouts and seed money for black-owned businesses. Repression, infighting and the honey trap of funding led to the gradual atrophying of the radical black organisations.

Martin Luther King Jr made the forbidden connections between Capitalism, Imperialism, Racism and the Vietnam War. As a result, after he was assassinated, even his memory became a toxic threat to public order. Foundations and Corporations worked hard to remodel his legacy to fit a market-friendly format. The Martin Luther King Junior Centre for Non-Violent Social Change, with an operational grant of $2 million, was set up by, among others, the Ford Motor Company, General Motors, Mobil, Western Electric, Procter & Gamble, US Steel and Monsanto. The Center maintains the King Library and Archives of the Civil Rights Movement. Among the many programmes the King Center runs have been projects that “work closely with the United States Department of Defense, the Armed Forces Chaplains Board and others”. It co-sponsored the Martin Luther King Jr Lecture Series called ‘The Free Enterprise System: An Agent for Non-violent Social Change’. Amen.

A similar coup was carried out in the anti-apartheid struggle in South Africa. In 1978, the Rockefeller Foundation organised a Study Commission on US Policy toward Southern Africa. The report warned of the growing influence of the Soviet Union on the African National Congress (ANC) and said that US strategic and corporate interests (i.e., access to South Africa’s minerals) would be best served if there were genuine sharing of political power by all races.

The foundations began to support the ANC. The ANC soon turned on the more radical organisations like Steve Biko’s Black Consciousness movement and more or less eliminated them. When Nelson Mandela took over as South Africa’s first Black President, he was canonised as a living saint, not just because he was a freedom fighter who spent 27 years in prison, but also because he deferred completely to the Washington Consensus. Socialism disappeared from the ANC’s agenda. South Africa’s great “peaceful transition”, so praised and lauded, meant no land reforms, no demands for reparation, no nationalisation of South Africa’s mines. Instead, there was Privatisation and Structural Adjustment. Mandela gave South Africa’s highest civilian award—the Order of Good Hope—to his old supporter and friend General Suharto, the killer of Communists in Indonesia. Today, in South Africa, a clutch of Mercedes-driving former radicals and trade unionists rule the country. But that is more than enough to perpetuate the illusion of Black Liberation.

The rise of Black Power in the US was an inspirational moment for the rise of a radical, progressive Dalit movement in India, with organisations like the Dalit Panthers mirroring the militant politics of the Black Panthers. But Dalit Power too, in not exactly the same but similar ways, has been fractured and defused and, with plenty of help from right-wing Hindu organisations and the Ford Foundation, is well on its way to transforming into Dalit Capitalism.

‘Dalit Inc ready to show business can beat caste’, the Indian Express reported in December last year. It went on to quote a mentor of the Dalit Indian Chamber of Commerce & Industry (DICCI). “Getting the prime minister for a Dalit gathering is not difficult in our society. But for Dalit entrepreneurs, taking a photograph with Tata and Godrej over lunch and tea is an aspiration—and proof that they have arrived,” he said. Given the situation in modern India, it would be casteist and reactionary to say that Dalit entrepreneurs oughtn’t to have a place at the high table. But if this is to be the aspiration, the ideological framework of Dalit politics, it would be a great pity. And unlikely to help the one million Dalits who still earn a living off manual scavenging—carrying human shit on their heads.

Young Dalit scholars who accept grants from the Ford Foundation cannot be too harshly judged. Who else is offering them an opportunity to climb out of the cesspit of the Indian caste system? The shame as well as a large part of the blame for this turn of events also goes to India’s Communist movement whose leaders continue to be predominantly upper caste. For years it has tried to force-fit the idea of caste into Marxist class analysis. It has failed miserably, in theory as well as practice. The rift between the Dalit community and the Left began with a falling out between the visionary Dalit leader Dr Bhimrao Ambedkar and S.A. Dange, trade unionist and founding member of the Communist Party of India. Dr Ambedkar’s disillusionment with the Communist Party began with the textile workers’ strike in Mumbai in 1928 when he realised that despite all the rhetoric about working class solidarity, the party did not find it objectionable that the “untouchables” were kept out of the weaving department (and only qualified for the lower paid spinning department) because the work involved the use of saliva on the threads, which other castes considered “polluting”.

Ambedkar realised that in a society where the Hindu scriptures institutionalise untouchability and inequality, the battle for “untouchables”, for social and civic rights, was too urgent to wait for the promised Communist revolution. The rift between the Ambedkarites and the Left has come at a great cost to both. It has meant that a great majority of the Dalit population, the backbone of the Indian working class, has pinned its hopes for deliverance and dignity to constitutionalism, to capitalism and to political parties like the BSP, which practise an important, but in the long run, stagnant brand of identity politics.

In the United States, as we have seen, corporate-endowed foundations spawned the culture of NGOs. In India, targeted corporate philanthropy began in earnest in the 1990s, the era of the New Economic Policies. Membership to the Star Chamber doesn’t come cheap. The Tata Group donated $50 million to that needy institution, the Harvard Business School, and another $50 million to Cornell University. Nandan Nilekani of Infosys and his wife Rohini donated $5 million as a start-up endowment for the India Initiative at Yale. The Harvard Humanities Centre is now the Mahindra Humanities Centre after it received its largest-ever donation of $10 million from Anand Mahindra of the Mahindra Group.

At home, the Jindal Group, with a major stake in mining, metals and power, runs the Jindal Global Law School and will soon open the Jindal School of Government and Public Policy. (The Ford Foundation runs a law school in the Congo.) The New India Foundation funded by Nandan Nilekani, financed by profits from Infosys, gives prizes and fellowships to social scientists. The Sitaram Jindal Foundation endowed by Jindal Aluminium has announced five cash prizes of Rs 1 crore each to be given to those working in rural development, poverty alleviation, environment education and moral upliftment. The Reliance Group’s Observer Research Foundation (ORF), currently endowed by Mukesh Ambani, is cast in the mould of the Rockefeller Foundation. It has retired intelligence agents, strategic analysts, politicians (who pretend to rail against each other in Parliament), journalists and policymakers as its research “fellows” and advisors.

ORF’s objectives seem straightforward enough: “To help develop a consensus in favour of economic reforms.” And to shape and influence public opinion, creating “viable, alternative policy options in areas as divergent as employment generation in backward districts and real-time strategies to counter nuclear, biological and chemical threats”.

I was initially puzzled by the preoccupation with “nuclear, biological and chemical war” in ORF’s stated objectives. But less so when, in the long list of its ‘institutional partners’, I found the names of Raytheon and Lockheed Martin, two of the world’s leading weapons manufacturers. In 2007, Raytheon announced it was turning its attention to India. Could it be that at least part of India’s $32 billion defence budget will be spent on weapons, guided missiles, aircraft, warships and surveillance equipment made by Raytheon and Lockheed Martin?

Do we need weapons to fight wars? Or do we need wars to create a market for weapons? After all, the economies of Europe, US and Israel depend hugely on their weapons industry. It’s the one thing they haven’t outsourced to China.

In the new Cold War between US and China, India is being groomed to play the role Pakistan played as a US ally in the cold war with Russia. (And look what happened to Pakistan.) Many of those columnists and “strategic analysts” who are playing up the hostilities between India and China, you’ll see, can be traced back directly or indirectly to the Indo-American think-tanks and foundations. Being a “strategic partner” of the US does not mean that the Heads of State make friendly phone calls to each other every now and then. It means collaboration (interference) at every level. It means hosting US Special Forces on Indian soil (a Pentagon Commander recently confirmed this to the BBC). It means sharing intelligence, altering agriculture and energy policies, opening up the health and education sectors to global investment. It means opening up retail. It means an unequal partnership in which India is being held close in a bear hug and waltzed around the floor by a partner who will incinerate her the moment she refuses to dance.

+In the list of ORF’s ‘institutional partners’, you will also find the RAND Corporation, Ford Foundation, the World Bank, the Brookings Institution (whose stated mission is to “provide innovative and practical recommendations that advance three broad goals: to strengthen American democracy; to foster the economic and social welfare, security and opportunity of all Americans; and to secure a more open, safe, prosperous and cooperative international system”.) You will also find the Rosa Luxemburg Foundation of Germany. (Poor Rosa, who died for the cause of Communism, to find her name on a list such as this one!)

Though capitalism is meant to be based on competition, those at the top of the food chain have also shown themselves to be capable of inclusiveness and solidarity. The great Western Capitalists have done business with fascists, socialists, despots and military dictators. They can adapt and constantly innovate. They are capable of quick thinking and immense tactical cunning.

But despite having successfully powered through economic reforms, despite having waged wars and militarily occupied countries in order to put in place free market “democracies”, Capitalism is going through a crisis whose gravity has not revealed itself completely yet. Marx said, “What the bourgeoisie therefore produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.”

The proletariat, as Marx saw it, has been under continuous assault. Factories have shut down, jobs have disappeared, trade unions have been disbanded. The proletariat has, over the years, been pitted against each other in every possible way. In India, it has been Hindu against Muslim, Hindu against Christian, Dalit against Adivasi, caste against caste, region against region. And yet, all over the world, it is fighting back. In China, there are countless strikes and uprisings. In India, the poorest people in the world have fought back to stop some of the richest corporations in their tracks.

Capitalism is in crisis. Trickledown failed. Now Gush-Up is in trouble too. The international financial meltdown is closing in. India’s growth rate has plummeted to 6.9 per cent. Foreign investment is pulling out. Major international corporations are sitting on huge piles of money, not sure where to invest it, not sure how the financial crisis will play out. This is a major, structural crack in the juggernaut of global capital.

Capitalism’s real “grave-diggers” may end up being its own delusional Cardinals, who have turned ideology into faith. Despite their strategic brilliance, they seem to have trouble grasping a simple fact: Capitalism is destroying the planet. The two old tricks that dug it out of past crises—War and Shopping—simply will not work.

I stood outside Antilla for a long time watching the sun go down. I imagined that the tower was as deep as it was high. That it had a twenty-seven-storey-long tap root, snaking around below the ground, hungrily sucking sustenance out of the earth, turning it into smoke and gold.

Why did the Ambanis’ choose to call their building Antilla? Antilla is the name of a set of mythical islands whose story dates back to an 8th-century Iberian legend. When the Muslims conquered Hispania, six Christian Visigothic bishops and their parishioners boarded ships and fled. After days, or maybe weeks at sea, they arrived at the isles of Antilla where they decided to settle and raise a new civilisation. They burnt their boats to permanently sever their links to their barbarian-dominated homeland.

By calling their tower Antilla, do the Ambanis hope to sever their links to the poverty and squalor of their homeland and raise a new civilisation? Is this the final act of the most successful secessionist movement in India? The secession of the middle and upper classes into outer space?

As night fell over Mumbai, guards in crisp linen shirts with crackling walkie-talkies appeared outside the forbidding gates of Antilla. The lights blazed on, to scare away the ghosts perhaps. The neighbours complain that Antilla’s bright lights have stolen the night.

Perhaps it’s time for us to take back the night.




Arundhati Roy is a frequent contributor to Global Research.