Child poverty at devastating levels in US cities and states

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By Patrick Martin 

26 February 2015

Reports issued over the past week suggest that child poverty in America is more widespread than at any time in the last 50 years. For all the claims of economic “recovery” in the United States, the reality for the new generation of the working class is one of ever-deeper social deprivation.

The Annie E. Casey Foundation publishes the annual Kids Count report on child poverty, which was the source of state-by-state reports issued last week. These reports use the new Supplemental Poverty Measure, developed by the Census Bureau, which includes the impact of government benefit programs like food stamps and unemployment compensation, as well as state social programs, and accounts for variations in the cost of living as well.

The result is a picture of the United States with a markedly different regional distribution of child poverty than usually presented. The state with the highest child poverty rate is California, the most populous, at a staggering 27 percent, followed by neighboring Arizona and Nevada, each at 22 percent.

The child poverty rate of California is much higher than figures previously reported, because the cost of living in the state is higher. Moreover, many of the poorest immigrant families are not enrolled in federal social programs because they are undocumented or face language barriers. The same conditions apply in Arizona and Nevada.

The other major centers of child poverty in the United States are the long-impoverished states of the rural Deep South, and the more recently devastated states of the industrial Midwest, where conditions of life for the working class have deteriorated the most rapidly over the past ten years.

It is a remarkable fact, documented in a separate report issued February 23 by the Catholic charity Bread for the World, that African-American child poverty rates are actually worse in the Midwest states of Iowa, Ohio, Michigan, Wisconsin and Indiana than in the traditionally poorest parts of the Deep South, including Mississippi, Louisiana and Alabama.

Several of the Midwest states have replaced Mississippi at the bottom of one or another social index. Iowa has the worst poverty rate for African-American children. Indiana has the highest rate of teens attempting or seriously considering suicide.

The most remarkable transformation is in Michigan, once the center of American industry with the highest working-class standard of living of any state. Michigan is the only major US state whose overall poverty rate is actually worse now than in 1960.

This half-century of decline is a devastating indictment of the failure of the American trade unions, which have collaborated in the systematic impoverishment of the working class in what was once their undisputed stronghold.

The United Auto Workers, in particular, did nothing as dozens of plants were shut down and cities like Detroit, Pontiac, Flint and Saginaw were laid waste by the auto bosses. Meanwhile, the UAW became a billion-dollar business, its executives controlling tens of billions in pension and benefit funds, while the rank-and-file workers lost their jobs, their homes and their livelihoods.

In Detroit, once the industrial capital of the world’s richest country, the child poverty rate was 59 percent in 2012, up from 44.3 percent in 2006.

The social catastrophe facing the population in Detroit also exposes the role of the Democratic Party and the organizations around it that have for decades promoted identity politics—according to which race, and not class, is the fundamental social category in America. The city, like many throughout the region, has been run by a layer of black politicians who have overseen the shocking decay in the social position of African-American workers and youth. (See, “Half a million children in poverty in Michigan”.)

Cleveland, also devastated by steel and auto plant closings, was the only other major US city with a child poverty rate of over 50 percent.

The Detroit figure undoubtedly understates the social catastrophe in the Motor City, since it comes from a study concluded before the state-imposed emergency manager put the city into bankruptcy in the summer of 2013, leading to drastic cuts in wages, benefits and pensions for city workers and retirees.

Wayne County, which includes Detroit, had the highest child poverty rate of any of Michigan’s 82 counties. Southeast Michigan, which includes the entire Detroit metropolitan area, endured an overall rise in child poverty rates from 18.9 percent in 2006 to 27 percent in 2012.

The state-by-state reports issued by Kids Count were accompanied by a press release by the Casey Foundation noting that the child poverty rate in the United States would nearly double, from 18 percent to 33 percent, without social programs like food stamps, school meals, Medicaid and the Earned Income Tax Credit.

This was issued as a warning of the effect of widely expected budget cuts in these critical programs. It coincided with the first hearing before the House Agriculture Committee on plans to attack the federal food stamp program by imposing work requirements and other restrictions to limit eligibility.

The food stamp program has already suffered through two rounds of budget cuts agreed on in bipartisan deals between the Obama White House and congressional Republicans, which cut $1 billion and $5 billion respectively from the program. Now that Republicans control both houses of Congress, they will press for even more sweeping cuts in a program that helps feed 47 million low-income people, many of them children.

 

http://www.wsws.org/en/articles/2015/02/26/cpov-f26.html

The poor fetish: commodifying working class culture

By Joseph Todd On February 25, 2015

Post image for The poor fetish: commodifying working class cultureBullshit jobs and a pointless existence are increasingly driving London’s spiritually dead middle class towards a fetishization of working class culture.

Photo: Fruit stall in Shoreditch, London (Source: Flickr/Garry Knight).

Literally, he paints her portrait, then he can fuck off  —  he can leave. When Leonardo DiCaprio is freezing in water, she notices that he’s dead, and starts to shout, ‘I will never let you go,’ but while she is shouting this, she is pushing him away. It’s not even a love story. Again, Captains Courageous: upper classes lose their life, passion, vitality and act like a vampire to suck vitality from a lower-class guy. Once they replenish their energy, he can fuck off.

– Slavoj Zizek on Titanic

London’s middle class are in crisis — they feel empty and clamor for vitality. Their work is alienating and meaningless, many of them in “bullshit jobs” that are either socially useless, overly bureaucratic or divorced from any traditional notion of labor.

Financial services exist to grow the fortunes of capitalists, advertising to exploit our insecurities and public relations to manage the reputations of companies that do wrong. Society would not collapse without these industries. We could cope without the nexus of lobbyists, corporate lawyers and big firm accountants whose sole purpose is to protect the interests of capital. How empty if must feel to work a job that could be abolished tomorrow. One that at best makes no tangible difference to society and at worst encourages poverty, hunger and ecological collapse.

At the same time our doctors, teachers, university professors, architects, lawyers, solicitors and probation officers are rendered impotent. Desperate to just do their jobs yet besieged by bureaucracy and box-ticking. Their energies are focused not on helping the sick, teaching the young or building hospitals but on creating and maintaining the trail of paperwork that is a prerequisite of any meaningful action in late capitalist society. Talk to anybody in these professions, from the public or private sector, and the frustration that comes up again and again is that they spend the majority of their time writing reports, filling in forms and navigating bureaucratic labyrinths that serve only to justify themselves.

This inaction hurts the middle-class man. He feels impotent in the blue glare of his computer screen. Unable to do anything useful, alienated from physical labor and plagued by the knowledge that his father could use his hands, and the lower classes still do. Escape, however, is impossible. Ever since the advent of the smartphone the traditional working day has been abolished. Office workers are at the constant mercy of email, a culture of overwork and a digitalization of work. Your job can be done anytime, anywhere and this is exactly what capital demands. Refuge can only be found in sleep, another domain which capital isdetermined to control.

And when the middle classes are awake and working, they cannot even show contempt for their jobs. Affective (or emotional) labor has always been a part of nursing and prostitution, be it fluffing pillows or faking orgasms, but now it has infected both the shop floor of corporate consumer chains and the offices of middle-management above. Staff working at Pret-à-Manger are encouraged to touch each other, “have presence” and “be happy to be themselves.” In the same way the open plan, hyper-extroverted modern office environment enforces positivity. Offering a systemic critique of the very nature of your work does not make you a ‘team player.’ In such an environment, bringing up the pointlessness of your job is akin to taking a shit on the boss’s desk.

This culture is symptomatic of neoliberal contradiction, one which tells us to be true to ourselves and follow our passions in a system that makes it nearly impossible to do so. A system where we work longer hours, for less money and are taught to consume instead of create. Where fulfilling vocations such as teaching, caring or the arts are either vilified, badly paid or not paid at all. Where the only work that will enable you to have a comfortable life is meaningless, bureaucratic or evil. In such a system you are left with only one option: to embrace the myth that your job is your passion while on a deeper level recognizing that it is actually bullshit.

This is London’s middle class crisis.

But thankfully capital has an antidote. Just as in Titanic, when Kate Winslet saps the life from the visceral, working class Leonardo DiCaprio, middle-class Londoners flock to bars and clubs that sell a pre-packaged, commodified experience of working class and immigrant culture. Pitched as a way to re-connect with reality, experience life on the edge and escape the bureaucratic, meaningless, alienated dissonance that pervades their working lives.

The problem, however, is that the symbols, aesthetics and identities that populate these experiences have been ripped from their original contexts and re-positioned in a way that is acceptable to the middle class. In the process, they are stripped of their culture and assigned an economic value. In this way, they are emptied of all possible meaning.

Visit any bar in the hip districts of Brixton, Dalston or Peckham and you will invariably end up in a warehouse, on the top floor of a car park or under a railway arch. Signage will be minimal and white bobbing faces will be crammed close, a Stockholm syndrome recreation of the twice-daily commute, enjoying their two hours of planned hedonism before the work/sleep cycle grinds back into gear.

Expect gritty, urban aesthetics. Railway sleepers grouped around fire pits, scuffed tables and chairs reclaimed from the last generation’s secondary schools and hastily erected toilets with clattering wooden doors and graffitied mixed sex washrooms. Notice the lack of anything meaningful. Anything with politics or soul. Notice the ubiquity of Red Stripe, once an emblem of Jamaican culture, now sold to white ‘creatives’ at £4 a can.

The warehouse, once a site of industry, has trudged down this path of appropriation. At first it was squatters and free parties, the disadvantaged of a different kind, transforming a space of labor into one of hedonistic illegality and sound system counter-culture. Now the warehouse resides in the middle-class consciousness as the go-to space for every art exhibition or party. Any meaning it may once have had is dead. Its industrial identity has been destroyed and the transgressive thrill the warehouse once represented has been neutered by money, legality and middle-class civility.

Nonetheless many still function as clubs across Southeast London, pumping out reggae and soul music appropriated from the long-established Afro-Caribbean communities to white middle-class twenty-somethings who can afford the £15 entrance. Eventually the warehouse aesthetic will make its way to the top of the pay scale and, as the areas in which they reside reach an acceptable level of gentrification, they will become blocks of luxury flats. Because what else does London need but more kitsch, high ceiling hideaways to shield capital from tax?

The ‘street food revolution’ was not a revolution but a middle-class realization that they could abandon their faux bourgeois restaurants and reach down the socioeconomic ladder instead of up. Markets that once sold fruit and vegetables for a pound a bowl to working class and immigrant communities became venues that commodified and sold the culture of their former clientèle. Vendors with new cute names but the same gritty aesthetics serve over-priced ethnic food and craft beer to a bustling metropolitan crowd, paying not for the cuisine or the cold but for the opportunity to bathe in the edgy cool aesthetic of a former working class space.

This is the romantic illusion that these bars, clubs and street food markets construct; that their customers are the ones on the edge of life, running the gauntlet of Zola’s Les Halles, eating local on makeshift benches whilst drinking beer from the can. Yet this zest is vicarious. Only experienced secondhand through objects and spaces appropriated from below. Spaces which are dully sanitized of any edge and rendered un-intimidating enough for the middle classes to inhabit. Appealing enough for them to trek to parts of London in which they’d never dare live in search of something meaningful. In the hope that some semblance of reality will slip back into view.

The illusion is delicate and fleeting. In part it explains the roving zeitgeist of the metropolitan hipster whose anatomy Douglas Haddow so brilliantly managed to pin down. Because as soon as a place becomes inhabited with too many white, middle-class faces it becomes difficult to keep playing penniless. The braying accents crowd in and the illusion shatters. Those who aren’t committed to the working class aesthetic, yuppies dressed in loafers and shirts rather than scruffy plimsoles and vintage wool coats, begin to dominate and it all becomes just a bit too West London. And in no-time at all the zeitgeist rolls on to the next market, pool hall or dive bar ripe for discovery, colonization and commodification.

Not all businesses understand this delicacy. Champagne and Fromage waded into the hipster darling food market of Brixton Village, upsetting locals and regulars alike. This explicitly bourgeois restaurant, attracted by the hip kudos and ready spending of the area, inadvertently pointed out that the emperor had no clothes. That the commodified working class experience the other restaurants had been pedaling was nothing more than an illusion.

The same anxiety that fuels this cultural appropriation also drives first wave gentrifiers to ‘discover’ new areas that have been populated by working class or immigrant communities for decades. Cheap rents beckon but so does the chance of emancipation from the bourgeois culture of their previous North London existence. The chance to live in an area that is gritty, genuine and real. But this reality is always kept at arm’s length. Gentrifiers have the income to inoculate themselves from how locals live. They plump for spacious Georgian semi-detached houses on a quiet street away from the tower blocks. They socialize in gastro-pubs and artisan cafés. They can do without sure start centers, food banks and the local comprehensive.

Their experience will always be confined to dancing in a warehouse, drinking cocktails from jam jars or climbing the stairs of a multi-story car park in search of a new pop-up restaurant. Never will they face the grinding monotony of mindless work, the inability to pay bills or feed their children, nor the feeling of guilt and hopelessness that comes from being at the bottom of a system that blames the individual but offers no legitimate means by which they can escape.

This partial experience is deliberate. Because with intimate knowledge of how the other half live comes an ugly truth: that middle-class privilege is in many ways premised on working class exploitation. That the rising house prices and cheap mortgages from which they have benefited create a rental market shot with misery. That the money inherited from their parents goes largely untaxed while benefits for both the unemployed and working poor are slashed. That the unpaid internships they can afford to take sustains a culture that excludes the majority from comfortable, white collar jobs. That their accent, speech patterns and knowledge of institutions, by their very deployment in the job market, perpetuate norms that exclude those who were born outside of the cultural elite.

Effie Trinket of the Hunger Games is the ideal manifestation of this contradiction. She is Kaitness and Peeta’s flamboyant chaperone who goes from being a necessary annoyance in the first film towards nominal acceptance in the second. The relationship climaxes when, just as Kaitness and Peeta are about to re-enter the arena, Effie presents Hamich and Peeta with a gold band and necklace, a consumerist expression of their heightened intimacy. And in that very moment, her practiced façade of enthusiastic positivity finally breaks. Through her sobs she cries “I’m sorry, I’m so sorry” and backs away, absent for the rest of the film.

For Effie, the contradiction surfaced and was too much to bear. She realized that the misery and oppression of those in the districts was in some way caused by her privilege. But her tears were shed for a more fundamental truth — that although she recognizes the horror of the world, she enjoys the material comfort exploitation brings. That if given the choice between the status quo and revolution, she wouldn’t change a thing.

Joseph Todd is a writer and activist who has been published in The Baffler, Salon and CounterFire, among others. For more writings, visit his website.

Celebrating a decade of Zapatismo in East Harlem

By Jessica Davis On February 24, 2015

Post image for Celebrating a decade of Zapatismo in the CitySince ten years the local people of El Barrio have been organizing horizontally to create non-authoritarian spaces of urban resistance and solidarity.

Photo via the Americas Program

We fight so that:
The oceans and mountains will belong to those who live in and take care of them;
The rivers and deserts will belong to those who live in and take care of them;
The valleys and ravines will belong to those who live in and take care of them;
Homes and cities will belong to those who live in and take care of them;
No one will own more land than they can cultivate;
No one will own more homes than they can live in.

Ten years ago, in an area of East Harlem known as El Barrio, women from fifteen Mexican immigrant families came together to see how they could achieve decent housing in their community. They were fighting against gentrification and displacement, as their landlord was trying to force them out of their homes to attract wealthier tenants and transform their neighborhood. Since they had no previous organising experience, they knew there was much to learn. They listened to and supported each other, and in December 2004 they founded theMovement for Justice in El Barrio (The Movement).

The Movement is made up of low-income tenants, the majority of whom are immigrants. Many are also indigenous. Forced by poverty to leave their beloved Mexico, they built a strong community in El Barrio, and were determined not to allow themselves to be displaced yet again. They understood that their struggle was against a neoliberal system made up of abusive landlords, property speculators, multinational corporations, corrupt politicians and government institutions seeking to push them away from their much-loved community.

Autonomy and self-determination

We believe that those who suffer injustice first-hand must design and lead their own struggles for justice.

The movement is built around the principles of autonomy, self-determination, and participatory democracy, and it is based on horizontal, leaderless forms of organization. Their goal is to create spaces where people can come together as a community to share their problems. In this way they can collectively come up with solutions, and it is the community itself that has the power. The Movement believes that not being dependent on anyone to tell them what to do creates a strong foundation that can never be destroyed.

Consulting the community is the basis of The Movement’s organizing activity. Its members go door to door, building by building and block by block, getting to know people and forging strong relationships. Committees are formed in each building, and once a whole building is organized, they become members. Each building agrees on its own actions and forms of struggle. The Movement is also deeply committed to fighting all forms of discrimination and respecting differences. Above all, this means listening to one another.

The group operates on many levels. In addition to door-knocking, it holds town hall meetings, community dialogues, street outreach, house meetings, and community-wide votes. It organises protests, marches and direct action. It makes clever use of the media, gives interviews and talks, and organizes gatherings. It uses tactics such as court actions and public condemnation, and once community consultations have been carried out, it campaigns on specific issues.


Movement for Justice in El Barrio: A Decade of Dignified Struggle

We all share a common enemy and it is called neoliberalism. Neoliberalism wishes to divide us and keep us from joining forces. We will defeat this by continuing to unite our entire community, until we achieve true liberation for all.

The organization faces many challenges. Most of its members speak no English and have had few opportunities for education. They have little access to media and information; very few of them have computers. In addition to all of the responsibilities that come with family life, they are forced to work ten- to fourteen-hour days, six or seven days a week. This makes it difficult for them to also attend four- or five-hour meetings to make decisions, and it is difficult for everyone to come together at the same time. Because everyone must be consulted, and all decisions are made collectively, it can take a long time to reach an agreement. Yet in spite of all these difficulties, the commitment and achievements of its members have been remarkable.

In keeping with its principles, The Movement accepts no government funding and has no involvement with politicians or political parties. Its members know that it is essential to build bridges with other ignored, forgotten and marginalized communities including women, migrants, people of color, and the LGBT community, and to build relationships with members of these organizations, who are also fighting against multiple forms of oppression.

Building community

Together, we resist with dignity and fight back against the actions of capitalist landlords and multinational corporations who are displacing poor families from our neighborhood. We fight back locally and across borders. We fight back against local politicians who refuse to obey the will of the people. We fight back against the government institutions that enforce a global economic, social and political system that seeks to destroy humanity.

Human beings were born to live in community — we cannot survive without each other. A society and culture that promotes individualism, everyone for themselves, also promotes loneliness, isolation and despair. Ten years ago, The Movement’s current members did not even know each other, and they had no fellowship with the other inhabitants of their building. Now they resist, organize and celebrate victories together. They have built a community of friendship, love, trust and solidarity, and transformed their lives.

Many of the members of this remarkable organization believe that their greatest achievement over the last ten years has been to build a culture of resistance. This has led to a sense of identity and self-worth, of being a part of something that gives purpose and meaning to their lives. A new generation of children are growing up in an amazing environment of organizing, marching and of collective decision-making, and it makes a lasting impact on their lives, shining through in their vibrant community spirit.

The strength of the community The Movement has created is reflected in the astonishing fact that not one of its members has been displaced over the last ten years. In fact, so far, they have won every battle with which they have been confronted. It is no wonder that Village Voice chose The Movement as the “Best Power to the People Movement in New York City.”

Learning from other struggles

We have found ways to make our voices heard and to let our voices echo with the voices of other marginalized people resisting across the world.

When The Movement was founded in December 2004, its members had no previous organizing experience. They began to look for other dignified struggles to learn from. When they read the Zapatista’s Sixth Declaration of the Lacandon Jungle, released in June 2005, members saw a mirror of themselves reflected in it. Since then, they have developed their own form of urban Zapatismo, and continue to look to their Zapatista compañeras and compañeros for inspiration in their daily struggle for justice and collective liberation.

With the women, as always, at the forefront, The Movement has applied tools and ways of organizing they learned from the Zapatistas in their own local struggle. The Consultas de Barrio are fundamental to their work. These are neighborhood consultations that enable all local residents to identify the issues which most concern them. These consultations build and strengthen the community at the local level, helping them bring more people into the struggle, and ensure that all of their campaigns are driven by the entire El Barrio community.

Encuentros is a well-known Zapatista tradition that The Movement has made its own in both New York and in Mexico. It serves as a way to link struggles and to build networks of solidarity. They say:

An Encuentro is a space for people to come together; it is a gathering. AnEncuentro is not a meeting, a panel or a conference. It is a way of sharing developed by the Zapatistas as another form of doing politics: from below and to the left. It is a place where we can all speak, listen and learn. It is a place where we can share the many different struggles that make us one.

The next ten years

As they celebrate their tenth anniversary, The Movement now has 900 members, 80% of whom are women, spread out over 85 building committees. Its dignified resistance continues to grow. The Movement and its members have won numerous victories against the brutal landlords and multinational corporations who try to take away their homes and destroy their community. They have held politicians and city institutions to account and constructed a culture of resistance and a community of solidarity. They have formed strong bonds with groups in many countries, and their word has been heard around the world. As the Zapatistas say, the struggle continues.

We are struggling for housing, for education, for health, for freedom, for justice, for love, for a voice, for a space to exist, for peace, for respect, for ourselves, for our community, for dignity…for humanity. We stand in resistance, here, in our corner of the world. Together we will build a world where many worlds fit — un mundo donde quepan muchos mundos.

Jessica Davies is an activist and member of the UK Zapatista Solidarity Network. This article was originally published on Dorset Chiapas Solidarity.

Rightist mayor faces coup charges as Venezuela’s crisis deepens

w460

By Bill Van Auken
25 February 2015

Venezuela’s President Nicolas Maduro has faced widespread international condemnation, but only scattered and minor right-wing protests in the country itself, over the arrest last week of Antonio Ledezma, the mayor of metropolitan Caracas, on charges of conspiracy to overthrow the government.

Joining the usual denunciations from the State Department in Washington or the right-wing governments of President Juan Manuel Santos in neighboring Colombia and President Mariano Rajoy in Spain, was, for example, the leader of the Spanish petty-bourgeois pseudo-left Podemos party, Pablo Iglesias.

The Obama administration has signaled its intentions to ratchet up pressure on the Maduro government. Last Friday, White House spokesman Josh Earnest, asked whether Washington was contemplating new sanctions against Venezuela, responded: “The Treasury Department and the State Department are closely monitoring the situation and are considering tools that may be available that can better steer the Venezuelan government in the direction that they believe they should be headed.”

On Tuesday, the New York Times published an editorial that largely echoed the assertions the day before by the State Department spokesperson that the charges that Ledezma was involved in a US-backed coup conspiracy were “ludicrous.”

The Times called the accusations a “fabricated pretext” and “outlandish,” dismissing talk of a coup as “Mr. Maduro’s conspiracy theories.”

One would hardly guess that the US backed an abortive coup by sections of Venezuela’s capitalist ruling establishment and the military against Maduro’s predecessor, the late Hugo Chavez, as recently as 2002, or that the Timesitself enthusiastically supported the overthrow of the country’s elected president. It noted approvingly at the time that “the military intervened and handed power to a respected business leader.” Within less than 48 hours, massive popular demonstrations sent the business leader, Pedro Carmona, packing and put Chavez back into the presidential palace.

Ledezma, one of the “dinosaurs” of the Venezuelan right, was an active supporter of the coup 13 years ago. He was also one of the principal figures of the country’s “hard right” who organized the so-called “ salida ” (exit) campaign last year aimed at bringing down Maduro—who won the election as president in April 2013—by means of street violence. These clashes claimed the lives of 43 people.

The corporate media is portraying Ledezma’s arrest on conspiracy charges as merely a response to his decision to sign an open letter calling for a “national agreement for a transition,” which advocates a renewed campaign for the extra-constitutional ouster of Maduro.

In fact, the Venezuelan government claims evidence identifying Ledezma as a key backer of fascist youth leader Lorent Saleh, who was extradited to Venezuela from Colombia to face charges of working with ultra-rightist Colombian mercenaries to organize terrorist attacks and assassinations in Venezuela. Saleh’s group, Operation Liberty, is funded through an NGO that, in turn, receives funding from the US Agency for International Development.

Also linked to plots to overthrow the government are several Venezuelan military officers, including three senior members of the air force arrested last year.

Maduro and his supporters in the ruling PUSV (United Socialist Party of Venezuela) have made defiant statements countering international criticism and vowing to employ an “iron hand” against coup plotters.

This rhetoric, however, is belied by other actions and gestures that make clear the Maduro government is attempting to accommodate itself to the main forces that pose the threat of a coup—the Venezuelan financial elite, US imperialism and the military—while attempting to shift the burden of the country’s deepening economic crisis onto the backs of the working class.

Among the more extraordinary examples of this duplicity came in a speech delivered by Maduro Monday, in which he called upon Barack Obama to “rectify” his administration’s policy toward Venezuela and said the problem was that the US president had been misled “by evil and deceitful advisors.”

Meanwhile, the government has strengthened the powers of the military, which constitutes a central pillar of the so-called Bolivarian Revolution. Fully 11 out of 32 governorships and eight federal ministries are headed by active or retired military officers. Reports of defections and dissension within the top ranks of the armed forces pose the greatest threat of a coup, but these forces already control much of the state apparatus. To the extent that Maduro is seen as no longer effective in defending their interests and containing popular unrest, the military command could move against him.

Then there is the commanding strata of the Venezuelan bourgeoisie. Recently released figures indicate that these layers are continuing to enrich themselves under conditions in which the vast majority of the population confronts declining living standards and mounting layoffs.

Venezuela’s national financial system recorded profits amounting to $1.3 billion in January of this year, a 55.23 percent increase over the same period a year ago, maintaining the country’s status as one of the most profitable for the global banks.

Venezuela’s real economy, however, is in sharp decline, driven by the halving of the price of oil, which accounts for 96 percent of the country’s exports. The country’s reserves for imports have been slashed to $29 billion this year, one third of what they were two years ago.

Financial analysts estimate that the government is confronting a $14 billion budget gap that could nearly double if oil prices remain at their current levels for the rest of this year. There is growing speculation that the government could be forced into a default on its debt obligations if these conditions persist.

With inflation approaching 70 percent, the government has eased currency controls and allowed price increases on basic necessities, including beef and chicken. Shortages and lines of those seeking basic commodities remain ubiquitous. A rise in gasoline prices, which are heavily subsidized, is expected imminently. It was such an increase in fuel costs that triggered the eruption of the Caraczo, the 1989 mass rebellion that led to the deaths of as many as 3,000 people.

The Venezuelan right, representing sections of the ruling capitalists who see their interests better served through a closer semi-colonial relation with US capital and a brutal crackdown on the working class, is seeking to exploit the economic crisis to further its drive to oust the Maduro government. For its part, the Maduro government, which represents a layer of wealthy state officials, the military command and the so-called boliburguesia, which has enriched itself off of oil revenues and financial speculation, is exploiting these reactionary maneuvers to divert attention from its own turn toward austerity policies aimed against the working class and to seek to rally support on the basis of nationalism.

This has gone hand-in-hand with the suppression of independent struggles of the Venezuelan workers, including the jailing of workers who have organized strikes, protests and worker assemblies independent of the unions affiliated to the ruling party.

Venezuelan workers cannot advance their interests or defend themselves against the very real threat of a militarized crackdown by lining up behind either of these feuding factions of the ruling establishment. The working class can find a progressive way out of the present crisis only by establishing its political independence from the government and the ruling PSUV and fighting for a workers’ government and a genuine socialist transformation of Venezuelan society as part of a unified struggle of the working class throughout the Americas.

 

http://www.wsws.org/en/articles/2015/02/25/vene-f25.html

The 21st century belongs to China

Why the new Silk Road threatens to end America’s economic dominance

Beijing is building a trans-Siberian railway system that rivals the Marshall Plan in its ambition and global reach

The 21st century belongs to China: Why the new Silk Road threatens to end America's economic dominance
Performers show the dragon dance during a night parade to celebrate Chinese New Year in Hong Kong, Thursday, Feb. 19, 2015. (Credit: AP/Vincent Yu)
This piece originally appeared on TomDispatch.

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.



To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

China as a Mega-City

If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.

Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.

Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.

These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects – part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.

Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.

The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.

The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.

So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”

Markets, Markets, Markets

China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.

Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.

So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.

In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.

Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.

Strengths and Weaknesses

China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.

The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.

As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.

China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control overonline information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.

On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.

When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”

If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.

The Book of Xi

The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.

The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.

Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”

Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.

As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.

No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.

Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth?  Might this, in fact, be the century of the dragon?

Glezos denounces Greek loan agreement as “illusion”

By Manolis Glezos On February 22, 2015

Post image for Glezos denounces Greek loan agreement as “illusion”Syriza’s most senior politician, the 94-year-old war hero and MEP Manolis Glezos, opposes his party’s decision to extend the Eurozone bailout program.

Before it’s too late:

The fact that the Troika has been renamed ‘the Institutions’, the Memorandum has been renamed the ‘Agreement’, and the creditors have been renamed the ‘partners’ — in the same manner as baptizing meat as fish — does not change the previous situation.

You can’t change the vote of the Greek people in the election of January 25.

The Greek people voted for what SYRIZA promised: that we abolish the regime of austerity, which is the strategy not only of the oligarchies of Germany and the other creditor countries but also of the Greek oligarchy; that we abrogate the Memorandum and the Troika and all the austerity legislation; that the next day, with one law, we abolish the Troika and its consequences.

A month has passed and this promise has yet to become action.

It is a pity indeed.

From my part I APOLOGIZE to the Greek people for having assisted in this illusion.

Before we continue in the wrong direction, before it’s too late, let’s react.

Above all, the members, the friends and supporters of SYRIZA, in urgent meetings at all levels of the organization, have to decide if they accept this situation.

Some people say that in an agreement you also have to make some concessions. But as a matter of principle, between the oppressor and the oppressed there can be no compromise, as there can be no compromise between the slave and the tyrant. Freedom is the only solution.

But even if we accept this absurdity, the concessions that have already been made by the previous pro-memoranda government with unemployment, poverty and suicide, are beyond any limit of concession…

Manolis Glezos is a Member of European Parliament for Syriza. Source:News247Translation by Panagiotis Sotiris. Photo courtesy of GUE/NGL.

Federal Reserve Says Your Wages are Too High

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The New American Way: Work Harder for Less Pay

by PETE DOLACK

The Federal Reserve has declared that the reason for ongoing economic weakness is because wages have not fallen enough. Wages have been stagnant for four decades while productivity has soared, but nonetheless orthodox economists believe the collapse of 2008 has been a missed opportunity.

A paper prepared by two senior researchers with the San Francisco branch of the U.S. Federal Reserve Bank attempts to explain the lack of wage growth experienced as unemployment has fallen over the past couple of years this way:

“One explanation for this pattern is the hesitancy of employers to reduce wages and the reluctance of workers to accept wage cuts, even during recessions, a behavior known as downward nominal wage rigidity.”

The two Federal Reserve researchers, Mary Daly and Bart Hobijn, based their argument on the standard ideology of orthodox economists, writing:

“Downward rigidities prevent businesses from reducing wages as much as they would like following a negative shock to the economy. This keeps wages from falling, but it also further reduces the demand for workers, contributing to the rise in unemployment. Accordingly, the higher wages come with more unemployment than would occur if wages were flexible and could be fully reduced.”

The “problem” of wages stubbornly refusing to drop as much as corporate executives and financiers would like is referred to as the “sticky wages” problem in orthodox economics. Simply put, this “problem” is one that orthodox economists, themselves not necessarily subject to the market forces they wish to impose on others, have long struggled to “solve.” You perhaps will not be surprised to hear that “government” is the problem. Consider this remarkable passage published on the web site of the Mises Institute, an advocate of the Austrian school of economics:

“Much of the alleged ‘stickiness’ of wages is due to government policies. … [T]he trouble stems from workers not being willing to take pay cuts. When the demand from employers drops, at the old wage rate there is now surplus labor — a.k.a. unemployment. Only when market wages drop to a lower level, so that demand once again matches supply, will equilibrium be restored in the labor market.”

Collapsing wages in the Great Depression didn’t help

According to this author, Robert P. Murphy, an “associated scholar” of the Mises Institute, failing to drive down wages is such a big mistake that it caused the Great Depression. He writes:

“After the 1929 crash, Herbert Hoover gathered the nation’s leading businessmen for a conference in Washington and urged them to allow profits and dividends to take the hit, but to spare workers’ paychecks. Rather than cut wages, businesses were supposed to implement spread-the-work schemes where workers would cut back their hours. The rationale for Hoover’s high-wage policy was that the worker supposedly needed to be paid ‘enough to buy back the product.’ … The idea was that wage cuts would just cause workers to cut their spending, which would in turn lead to another round of wage cuts in a vicious downward spiral.”

Herbert Hoover was not vicious enough! Although it was Hoover’s Treasury secretary, Andrew Mellon, who advocated the government “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate” so as to “purge the rottenness out of the system,” and not Hoover himself, the president did take hard-line right-wing positions. Michael Parenti, in discussing Hoover in his book History as Mystery, wrote:

“Like so many conservatives then and now, Hoover preached the virtues of self-reliance, opposed the taxation of overseas corporate earnings, sought to reduce income taxes for the highest brackets, and was against a veterans’ bonus and aid to drought sufferers. He repeatedly warned that public assistance programs were the beginning of ‘state socialism.’ Toward business, however, he suffered from no such ‘inflexibility’ and could spend generously. He supported multimillion-dollar federal subsidies to shipping interests and agribusiness, and his Reconstruction Finance Corporation doled out about $2 billion to banks and corporations.” [page 261]

Hoover’s concern for working people was demonstrated when his troops fired on veterans demanding payments owed to them and burned their camps. His laissez-faire policies led to manufacturing wages falling 34 percent and unemployment rising to about 25 percent by 1933. That collapse in wages did not bring better times; only the massive government spending to wage World War II put an end to the Depression. Such wage declines, in the real world, actually make the economy worse, argues Keynesian economist Paul Krugman:

“[Y]ou could argue that a sufficiently large fall in wages could restore full employment now — but it would have to be a very large wage decline, and the positive effects would kick in only after deflation had first driven just about every debtor in the economy into bankruptcy.”

How many formulae can be written on the head of a pin?

Although orthodox economics is often nothing more than ideology in the service of capitalist elites, its practitioners like to believe themselves scientific because they base their theories on mathematical models. Unfortunately, these formulae are divorced from the real, physical world; the economy and the human behavior that animates it are not reducible to mathematics.

Robert Kuttner, a heterodox economist, explored these shortcomings in an article originally published in Atlantic Monthly. He wrote:

“The [prevailing] method of practicing economic science creates a professional ethic of studied myopia. Apprentice economists are relieved of the need to learn much about the complexities of human motivation, the messy universe of economic institutions, or the real dynamics of technological change. Those who have real empirical curiosity and insight about the workings of banks, corporations, production technologies, trade unions, economic history or individual behavior are dismissed as casual empiricists, literary historians or sociologists, and marginalized within the profession. In their place departments are graduating a generation of idiots savants, brilliant at esoteric mathematics yet innocent of  actual economic life.”

That was written in 1985; little if anything has changed since and arguably has gotten worse. Professor Kuttner points out that the very fact of persistent unemployment contradicts the basic theses of orthodox neoclassical economics. If the belief that markets automatically reach equilibrium were true, then wages would automatically fall until everybody had a job. Rather than acknowledge the real world, orthodox economists simply declare involuntary unemployment an “illusion,” or claim “government interference” with the market is the culprit. “Business cycles were around long before trade unions or big-spending governments were,” Professor Kuttner noted.

Wages are not as flexible as orthodox ideology suggests because within an enterprise preference is ordinarily given to existing workers to fill job openings, thereby buffering wages from external market forces, writes another heterodox economist, Herbert Gintis. In an essay originally appearing in Review of Radical Political Economics, he wrote:

“In particular, there is a tendency for the number of individuals qualified for a position to exceed the number of jobs available, in which case seniority and other administrative rules are used to determine promotion. Hardly do workers compete for the job by bidding down its wage.”

In almost all cases, employees do not even know what wages their co-workers are earning. This top-down secrecy facilitates the disparity in wages, whereby, for example, women earn less than men. If everybody earned what they were worth, there would no such wage disparity. The very fact of disparities between the genders or among races and ethnicities demonstrates the ideological basis of orthodox economics, which assumes that employees who do the work of production are in their jobs due to personal choice and wages are based only on individual achievement independent of race, gender and other differences.

You produce more but don’t earn more

Back in the real world, wages have significantly lagged productivity for four decades; thus, wages, examined against this benchmark, have significantly declined for those four decades. A study by the Economic Policy Institute, written by heterodox economist Elise Gould, reports:

“Between 1979 and 2013, productivity [in the U.S.] grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation.” [page 4]

Middle-class U.S. households earn $18,000 less than they would had wages kept pace with productivity, Dr. Gould calculates. Nor is that unique to the U.S.: Wages in Canada, Europe and Japan have also fallen well short of productivity gains. Canadian workers, for example, are paid at least $15,000 per year less than they would be had their wages kept pace.

To circle back to the San Francisco Federal Reserve paper that began this discussion, the authors claim that wage stagnation will persist until markets “return to normal.” They assert:

“[T]he accumulated stockpile of pent-up wage cuts remains and must be worked off to put the labor market back in balance. In response, businesses hold back wage increases and wait for inflation and productivity growth to bring wages closer to their desired level.”

But as we can plainly see, and as those of us living in the real world experience, wages cuts have been the norm for a long time. The caveat at the end of the paper that it does not necessarily reflect the views of the Fed board of governors should be noted, but the paper was issued as part of a regular series by the San Francisco Fed and the authors are senior members of it, so it is not likely to be at variance with opinions there. It certainly does reflect orthodox economic ideology. Similarly, the argument by the Austrian School’s Mises Institute, stripped of its academic-sounding veneer, is a call to eliminate the minimum wage.

Stagnation, declining wages and the ability of capitalists to shift production around the globe in a search for the lowest wages and lowest safety standards — completely ignored in the orthodox hunt for economic scapegoats — are the norm. Our need to sell our labor, the resulting reduction of human beings’ labor power to a commodity, and the endless competitive pressures on capitalists to boost profits underlie the present economic difficulties.

Collective bargaining through unions and the needs of capitalists to retain their employees can be brakes against the race to the bottom — what the orthodox economists at the Fed and elsewhere are arguing is that these remaining brakes be removed and wages driven down to starvation levels. That is what global capitalism has to offer.

Pete Dolack writes the Systemic Disorder blog. He has been an activist with several groups.

 

http://www.counterpunch.org/2015/02/20/the-new-american-way-work-harder-for-less-pay/