US House passes sweeping new bipartisan assault on Medicare

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By Kate Randall
27 March 2015

In a 392-37 vote, the US House on Thursday approved a bill that makes sweeping changes to the Medicare program that provides health insurance to more than 54 million seniors and the disabled. The Medicare Access and CHIP Reauthorization Act must be approved by the US Senate and signed into law by President Obama, who indicated his support for the measure earlier this week.

The bipartisan bill, drafted by Republican House Speaker John Boehner and Democratic Leader Nancy Pelosi, ties future payments to doctors for Medicare services to “quality of care,” shifting away from traditional fee-for-service payments. And for the first time, the universal Medicare program will institute means testing for higher-income seniors, requiring higher premiums for these individuals to access benefits.

The bill constitutes a historic attack on the Medicare program. Boehner called it the “first real entitlement reform in nearly two decades”—a reference to the assault on welfare launched under the Clinton administration in 1996. “Today is about a problem much bigger than any doc-fix or deadline. It’s about solving our spending problem,” he said.

Pelosi echoed Boehner’s comments, declaring that it had been a “privilege” to work with the House leader, and that she hoped the agreement “will be a model of things to come.”

The coming together of the Republican and Democratic Party leadership behind the overhaul exposes the unanimity within the ruling class on the need for sharp cuts in “entitlement” programs—Medicare, Medicaid and Social Security.

It provides a permanent “fix” to a 1997 law that tied doctors’ Medicare fees to overall economic growth. As overall health care costs have risen sharply, that formula threatened deep reimbursement cuts to doctors, cuts that Congress has blocked with patchwork measures 17 times since 2002.

The House bill will do away with the scheduled payment cut, set to kick in April 1, and replace it with a 0.5 percent yearly raise in payments through 2019. After this, a new payment system based on “quality of care” will be implemented.

Such language has been adopted by Medicare in other frameworks, and is generally measured by readmission rates and similar statistics. In other words, doctors who see more of their patients readmitted will receive cuts in reimbursement. However, readmission is closely correlated with poverty and other social factors, thus cutting spending on health care in lower-income and working class areas.

By disconnecting reimbursements from services provided, doctors will also be incentivized to ration care and cut back on testing—the overarching aim of all the health care “reform” proposals backed by both Democrats and Republicans. The change will result in reduced services for Medicare patients overall and deep spending cuts by the government.

This shift has long been promoted in the private insurance sector. It is also a key goal of the Obama administration, which earlier this year set a goal to tie the vast majority of Medicare payments to programs promoting cost-cutting.

The second main feature of the bill would institute means testing for Medicare recipients, requiring higher-income seniors to pay more toward Medicare premiums for insurance and prescription drug coverage. Initial estimates are that this change would result in Medicare savings of around $30 billion over the next decade.

Congressional Republicans and Democrats alike are well aware that this fundamental change opens the floodgates for transforming a program that for the last half-century has provided health care insurance to those over the age of 65, regardless of income, into a poverty program available to only those poorest segments of society. This is seen as a first step in it being starved of funds and ultimately dismantled.

Boehner, salivating at these prospects, commented, “We know we’ve got more serious entitlement reform that’s needed. It shouldn’t take another two decades to do it.” He indicated that the Republicans would continue to push for funding cuts to other federal benefit programs.

Some Congressional Republicans balked at the overall cost of the measure, which the Congressional Budget Office estimates at $214 billion over the next decade. This would be paid for through $141 billion in new spending, with the balance divided between higher monthly premiums for higher-income Medicare recipients and payments by nursing homes and other health care providers.

Boehner and the Republicans see the implementation of means testing—and the subsequent savings for government—as a starting point for future overhauls to Medicare and other federal programs. This particularly applies to Social Security, the universal retirement program enacted in 1935 in the wake of the Great Depression.

Both Medicare and Social Security are not “gifts” by the government, but benefits based on the funds workers pay into these programs for their entire working lives through deductions from their paychecks.

As window dressing, the bill also provides two more years of funding to the Children’s Health Insurance Program (CHIP), which serves 8 million low-income children, as well as to the nation’s 1,200 community health centers. While Pelosi and the White House had pushed for four-year extensions for both of these programs, the majority of Congressional Democrats willingly compromised on this issue in order to push through the changes to Medicare.

The bill also includes abortion funding restrictions at community health centers, incorporating components of the so-called Hyde Amendment, which forbids federal funding of abortion except in the cases of rape, incest, or the endangered life of the mother.

Leaders of the House “pro-choice” caucus assured skeptical Senate Democrats that the bill’s language provides no additional abortion restrictions beyond those that already apply. In fact, the Obama administration acceded to these reactionary and unconstitutional restrictions in language in the Affordable Care Act (ACA).

Speaking Wednesday on the occasion of the fifth anniversary of his signing into law of what is popularly known as Obamacare, the president indicated his support for the new bipartisan Medicare bill. “I’ve got my pen ready to sign a good bipartisan bill,” he said.

The coinciding of the ACA’s anniversary and the current bipartisan bill is noteworthy. From the start, Obama’s health care overhaul has been aimed at a fundamental restructuring of the health care system, aimed at lowering costs for the government and corporations while slashing health care services for the vast majority of Americans.

Taking its cue from Obamacare, the change in Medicare represented by Pelosi and Boehner’s bill will set an example that can rapidly be extended throughout the health care system. Despite many Congressional Republicans’ vocal opposition to the ACA and vows to see it repealed, they are in agreement with its aim of rationing care and funneling more money to the health care industry.

Although the bill faces some opposition in the Senate, it is expected to pass, either before Congress leaves for spring recess today or on its return in two weeks. If it does not pass before the recess, Congress will likely pass a temporary fix to the Medicare payments to doctors.

 

http://www.wsws.org/en/articles/2015/03/27/medi-m27.html

“BOYHOOD” THE MOVIE

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I watched “Boyhood” last night. Didn’t think I could deal with a film running nearly three hours focused on the reality-based coming of age theme. I was, however, much impressed by the epic technical achievement the film represents, and I was deeply moved by the genuinely human intimacies shared throughout. The ending was a powerful insight into the human condition.

Got me to thinking about the values of the tech-fueled Bay Area where I live.

I really loath, truly hate, the materialistic, money-fueled tech culture that has enveloped San Francisco. And it’s not the technology per se. I’ve been using and building computers since 1985. It’s the disgusting excess and glorification of same.

Interestingly, watching “Boyhood” last night reminded me that there are other, more appealing, lifestyles and choices still available in the country. The main character in the film was not obsessed with tech. He questions the value of the ubiquitous smart phone. He works after school. Middle class. He doesn’t dream of going to Stanford or MIT, etc., to get a degree in CS and code. Hell, he wants to be an artist. He’s interested in the meaning of life. Like people I used to know in school and throughout my life. He represents my American Dream. Not this SF version with conspicuous consumption and phony hipster culture.

 

 

Another financial crisis coming?

Growing warnings of another financial disaster

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25 March 2015

Global financial markets are on the road to another crash, with consequences even more serious than the collapse of September 2008. There have been a series of dire warnings from within the ruling class itself that present monetary policies have created massive financial bubbles with devastating consequences.

In an interview with the Financial Times, James Bullard, the head of the Reserve Bank of St Louis, and a non-voting member of the Federal Open Market Committee, said the Fed had to start normalizing interest rate policy as soon as possible. Continuing the present near-zero rate would feed into an asset price bubble which would “blow up out of control.”

Bullard and others are pointing to what has now become an obvious fact, that the combined effects of quantitative easing (i.e., printing money) and interest rate cuts by central banks are powering a feeding frenzy in global equity and bond markets.

Last week, an analysis of the S&P 500 Index from the Office of Financial Research, attached to the US Treasury Department, concluded that the US stock market had entered a situation comparable to patterns seen in 1929, 2000 and 2007. That is, a major downturn, if not a crash, was looming. Entitling his report “Quicksilver Markets”, the author noted: “Quicksilver markets can turn from tranquil to turbulent in short order.”

There are growing fears of a “liquidity crunch” if all the major investors and speculators, which operate on basically similar financial models, try to make an exit at the same time, only to find that there are no buyers.

According to a report in the Financial Times on Tuesday, some fund managers have warned “not since the collapse of Lehman Brothers in September 2008 and the freezing of money markets in August 2007 has there been such widespread concern over the structure of fixed income [i.e., bond] markets.” It said that prices of bonds had risen appreciably as investors had “gorged” on the cheap money provided by the low-interest rate regime of central banks and warned that there could be a “liquidity crunch” if they “collectively run for the exits.”

The same situation has developed in corporate and government bond markets, which have surged ahead on cheap money, making commonplace the previously extremely rare phenomenon of negative yields. (The price of the bond moves in the opposite direction to the yield.)

Negative yields mean that investors are in effect paying governments for the privilege of lending them money. The phenomenon is the result of a situation in which, despite the fact that bondholders would make a loss if they held the high-priced bond to maturity, they can still make a capital gain because the outflow of central bank finance will push bond prices still higher. They can simply sell the bond to another investor, who is himself operating under the assumption that he can do the same.

In effect, corporate and bond markets have been turned into a giant Ponzi scheme where profits can continue to be made so long as money continues to pour in. In other words, the modus operandi of what started as a criminal venture in the US during the 1920s has now become the central operating principle of the global multi-trillion dollar financial markets.

The official justification for this system advanced by its promoters is that these measures are necessary to stimulate economic growth. Such claims are refuted by facts and figures. The world economy as a whole is characterized by growing deflationary trends coupled with stagnant or low growth rates.

Yesterday it was announced that in Britain consumer prices for February had failed to show a rise for the first time in 55 years, a sure indicator of economic contraction. At the same time, a key indicator of manufacturing activity in China fell to an 11-month low. Decreases occurred in the key areas of new orders, export orders, employment and output prices.

The day before in Europe, projections prepared by the European Central Bank found that its quantitative easing program, aimed at pumping more than €1 trillion into financial markets over the next 18 months, would do virtually nothing to boost employment. The jobless rate will continue to remain at above 10 percent even after the program has been completed.

The main effect of the QE measures has been to boost European stock markets, which so far this year have risen at a faster rate than in the US, even as European economic output still remains below where it was in 2007, with investment in the real economy down by more than 25 percent on pre-crisis levels.

While the corporate and financial aristocracy continues to enrich itself, the conditions for the working class are subject to an unending austerity drive. The dictates of the financial oligarchy with respect to Greece are the consummate expression of what is a global program: the forcible impoverishment and starvation of ever-wider sections of the population.

In the aftermath of the devastation of the Great Depression of the 1930s, the political representatives of the ruling classes—desperately fearful of socialist revolution—claimed that they could regulate the worst effects of the profit system through so-called Keynesian measures based on government spending to simulate growth and secure a return to “normalcy.”

For a very short period, in historical terms, these policies seemed to bring success. However, they rested on the strength of US capitalism and the boost that its more productive methods provided for the global economy as a whole.

The situation today has been completely transformed. The US economy is no longer the center of economic expansion but is the headquarters of global parasitism. The central position in the world economy is no longer occupied by corporations such as Ford and General Motors, but by Goldman Sachs, JPMorgan Chase and their equally parasitic counterparts internationally, which are not engaged in the creation of new wealth but in its appropriation, often through outright criminal methods.

The utter bankruptcy of the entire profit system is exemplified by the policy debate now taking place in ruling financial and economic circles. It is between those who maintain that the cheap money policies of the central banks must be continued lest a disaster result, and those who insist the taps have to be turned off, and the system purged, if necessary through bankruptcies and financial collapses, in order to try to prevent an even bigger catastrophe.

The various defenders of the profit system, in the media, academic circles and in pseudo-left organisations such as Syriza in Greece, maintain that the perspective of a planned world socialist economy is not possible and therefore the only alternative is to try to “save capitalism from itself”.

In fact, the perspective of international socialism is the only viable and realistic answer to the historic crisis of capitalism.

Nick Beams

 

http://www.wsws.org/en/articles/2015/03/25/pers-m25.html

Behind the tensions between Obama and Netanyahu

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24 March 2015

One week after the Israeli election victory of Prime Minister Benjamin Netanyahu’s right-wing Likud Party, tensions between Washington and Tel Aviv remain at a level unseen in decades.

President Barack Obama on Sunday gave a videotaped interview to theHuffington Post in which he recounted a mealymouthed rebuke that he said he had delivered to Netanyahu over his 11th-hour appeals to the most reactionary and racist sections of the Israeli electorate to win the seats needed to secure his reelection.

On the eve of the vote, the Israeli prime minister issued a clear statement that as long as he remained in office, there would be no Palestinian state. Netanyahu declared that giving up Israeli-occupied territories would amount to “simply yielding territory for radical Islamic terrorist attacks against Israel.” Asked whether that meant there would be no Palestinian state as long as he remained Israel’s premier, he replied, “Indeed.”

On election day itself, in an openly racist appeal for right-wing Zionists to vote for Likud, Netanyahu warned: “The right-wing government is in danger. Arab voters are heading to the polling stations in droves. Left-wing NGOs are bringing them in buses.”

In his interview, Obama said he had told the Israeli prime minister in a telephone conversation the day before: “…we continue to believe that a two-state solution is the only way for the long-term security of Israel, if it wants to stay both a Jewish state and democratic. And I indicated to him that given his statements prior to the election, it is going to be hard to find a path where people are seriously believing that negotiations are possible.”

The US president’s problem is that in his desperate bid for a fourth term in office, Netanyahu clearly proclaimed the real policies of his government and the entire ruling Zionist establishment in Israel, exposing the so-called “peace process” brokered by Washington as a cynical fraud.

For over two decades, since the signing of the Oslo Accords in 1993, Washington, Tel Aviv and the Palestinian Authority (PA) in the West Bank town of Ramallah have all promoted the notion that a “two-state solution” could be achieved at the negotiating table. During this period, the Israeli regime has steadily created new “facts on the ground,” doubling the number of Zionist settlers in the occupied West Bank to over 300,000, while leaving 2.7 million Palestinians trapped in bits of discontiguous territory divided one from the other by Israeli settlements, checkpoints, military outposts, walls and security roads.

Another 1.7 million are imprisoned within the Gaza Strip, blockaded by both Israel and Egypt and subjected to continuous military assaults such as the criminal Israeli siege of last summer that claimed the lives of over 2,300 men, women and children.

These predations have underscored the reactionary, antidemocratic character of any so-called Palestinian “state” that might emerge under the aegis of US imperialism, the Zionist ruling elite and the Palestinian bourgeoisie, should that ever come to pass. It would be an impoverished, discontinuous, demilitarized entity, essentially a prison for the Palestinian masses.

Under these conditions, the pretense that the so-called “peace talks” provided a way out for the Palestinian people was not merely a fiction, but an obscenity. Yet the pretense served a useful purpose for all those involved.

For Israel, it provided a mask for the predatory policies it pursued in effectively annexing ever-greater portions of the territories it seized in the 1967 war. For the Palestinian Authority, it served as a rationale for the Palestine Liberation Organization’s transformation into a client regime of US imperialism and an auxiliary police force for the Israeli occupation, securing in the bargain foreign aid and loans that flowed into the pockets of the corrupt leadership around PA President Mahmoud Abbas.

For Washington, the “peace process” allowed it to posture as a neutral party attempting to secure a just settlement for both Israel and the Palestinians, a lie seen as essential to its attempt to secure the collaboration of Arab states in US imperialism’s unending wars of aggression in the region.

Everyone—most of all the Palestinians—knew that the process was a fraud, but those directly involved were not supposed to say so publicly. In his explicit rejection of a Palestinian state, Netanyahu has cut across US interests in the region.

This comes on top of his March 3 anti-Iranian tirade to the US Congress, which was organized in league with the Republican Party leadership in an attempt to sabotage any negotiated agreement on Tehran’s nuclear program. The Israeli regime remains intent on using the spurious claims of a nuclear threat from Iran to draw the US into a war for regime change in order to further Israel’s own strategy of exercising unassailable dominance over the countries of the region.

This runs counter to the current policy pursued by the Obama administration, which aims at reaching at least a temporary accommodation with Tehran as Washington prepares for new military confrontations around the globe.

While Obama vowed that, his disagreements with Netanyahu notwithstanding, “our military and intelligence cooperation to keep the Israeli people safe continues,” the recent clashes underscore the crises gripping both US imperialism and its obstreperous Zionist client state. Both seek a way out of their respective crises by military means, but their immediate timetables and agendas are significantly at odds.

For both the Palestinian and Israeli working class, the reelection of Netanyahu on a platform of unconcealed Zionist aggression and reaction only underscores the absence of any way forward based on the program of nationalism.

For Jewish workers in Israel, Zionism is a trap, subordinating their interests to those of a narrow oligarchy of capitalist billionaires and multimillionaires, while the ruling establishment seeks to divert the immense tensions generated by poverty, rising prices, austerity cutbacks and record inequality into ever more dangerous military provocations against the Palestinian people, the surrounding Arab countries and beyond.

For Palestinians, the protracted fraud of the “peace process” has laid bare the dead end of Palestinian nationalism and all of its variants, from Fatah to Hamas, all of which articulate the interests not of the working masses, but of rival sections of the Arab bourgeoisie.

Nowhere is the necessity for the international unity of the working class posed more sharply than in the Middle East. There is no way out of the present impasse and the threat of ever bloodier catastrophes outside of Arab and Jewish workers uniting against imperialism and its Zionist and Arab bourgeois agents.

Bill Van Auken

 

http://www.wsws.org/en/articles/2015/03/24/pers-m24.html

Poor fetishes, poor critiques: gentrification as violence

By Gloria Dawson On March 23, 2015

Post image for Poor fetishes, poor critiques: gentrification as violenceHating on hipsters is not the answer to gentrification. If we want to reclaim our cities, we should organize for genuinely affordable housing in common.
Recently, ROAR published an article entitled The Poor Fetish. The piece argues that in cities like London, bored and alienated middle-class people working in ‘bullshit jobs’ are driving gentrification because they pursue and participate in the commodification of ‘working-class’ and minority cultural pursuits and spaces. While I agree that this process of commodification exists, I want to counter some of the ways in which the author uses general observations about class and culture to draw incorrect conclusions about the social and cultural exclusions and enclosures that occur in major cities today.As someone who researches and organizes around the displacement and immiseration of those of us on low incomes, I think that at least a basic understanding of the political economy of cities is essential for the effort of formulating an appropriate answer to gentrification and displacement.

Hating on hipsters

The article, like several others that have been doing the rounds recently, follows some of the common themes of what I call the ‘hating on hipsters’ critique of gentrification, according to which it’s the consumption patterns of individuals that are ultimately to blame for the displacement of working class communities. I don’t have any substantial dispute with the claim that people often practice a form of cultural tourism (while at the same time trying to keep other cultures at arm’s length) or that for most people in the cities of the Global North work is emotionally demanding, demeaning and pointless. However, a critique of forms of consumption and affective labor doesn’t get us very far in correctly and powerfully understanding the violence of gentrification.

It is true that people who are not poor get off on poverty chic and it is also true that that this appropriation can be hurtful if you happen to be poor (and I mean poor in many senses, rather than just having little money). It is also true that people make money from that desire for a certain kind of consumption; this is a form of commodification. But we should avoid the assumption that we profess to despise: that there is somehow an ‘authentic’ culture which can only be produced and consumed by the poor, people of color, and the underclass. The logical extension of some of these arguments can be fairly damaging.

For example, alongside some persistent, intersectional and effective organizing around social and private rents in Berlin (another hotspot for both cultural appropriation and gentrification), there have been attacks on middle-class students and foreign workers in the name of ‘anti-gentrification’. These incomers represent a ‘hipster’ dweller resented by those who see themselves as ‘indigenous’ and authentic to the area, and rightly or wrongly see their claim to that area under threat. Here we see that even in the multicultural cities of the Eurozone, culture-based analyses of gentrification can lead to xenophobia.

In another example, a recent US blog on gentrification in West Coast cities recommended its middle-class, incomer reader to combat gentrification in their neighborhood by shunning culturally appropriative spaces like chic lo-fi coffee bars and instead stick to ‘mom and pop’ shops that had existed in the neighborhood before they moved in.

The problem is that a consumption-based analysis of gentrification leads people to attempt to preserve the ‘authentic’ nature of a particular area. If only all of us had lived long enough to understand that in no meaningful way are cities everlike they were before. As this excellent piece on aesthetics and gentrification puts it, “the failure to challenge the formal identity between aestheticisation and commodification makes any attempt by first-wave gentrifiers to somehow ‘stay true’ (on an aesthetic level) to the spirit of the areas they are gentrifying seem ludicrous, if not… downright offensive.”

The urban middle class: privileged or precarious?

My main issue, however, is with the author’s claim  that “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.”

Here, the author equates ‘middle-class’ with ‘property-owning’. Yet many fully middle-class professionals on higher than median wages can only ever dream of buying property, especially in London and the South-East. On the other hand, many older working-class people own their own homes. Indeed, the ‘right to buy’ council housing has been a specific policy driven by the ideology that cities must be ‘regenerated’ — in other words, placed in the hands of private (individual and business) ownership — in order to promote and expand the ‘home-owner’ class.

The class analysis of the article thereby manages to exclude practically everyone I know. The author claims that “never will they [the middle-class consumer] 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.” With the growing precarization of even previously stable forms of ‘middle-class’ labor (medicine, law,  teaching, especially in higher education), few of us are really immune from these anxieties and risks. Yet according to this piece, the middle-classes never suffer wage repression, retaliatory eviction, redundancy, battles with the JobCentre, and so on.

Secondly, even if this class delineation were correct, the power over property ownership in cities like London does not primarily lie in the hands of middle or higher-income workers, but in the hands of private developers, large-scale landlords, and government itself. Gentrification, as Rachel Brahinsky puts it, is “capitalism playing out in the landscape. It is essentially our economy’s urban form.” It is a process involving time, land and rent, and it cannot occur without a planning and governmental framework to support it. The root of gentrification is the ability of landlords to command higher and higher rents after a ‘rent gap’ has been established in an area that has experienced less investment than other areas (or, in London, just that it’s not as expensive as everywhere else).

It’s capitalism, stupid!

Gentrification is therefore complex and cyclical, and undoubtedly the presence of coffee shops allows landlords to charge more to (housing and business) tenants. It also concurrently involves wholesale privatization of public spaces, especially retail. But if poverty and culture are sometimes commodified, buildings and land always are. The Poor Fetish article identifies gentrification as “different kinds of shops opening up,” but apart from its odd presentation of the significance of property ownership, it doesn’t actually talk about housing. Espresso Bars are symptoms of gentrification far more than they are the underlying causes.

The problem, of course, is that the causes of gentrification are hard to spot — by the time the coffee shop has opened, or the big art gallery, or the enormous utopian hoarding has gone up, a lot of its processes have already taken root in the area. Contracts have been signed. Money has moved. Investment funding has been leveraged. Visible and objectionable as they may be, cultural appropriation or ‘fetishisation’ is not what’s violently displacing low and middle-income people in the capital; it’s capitalism, stupid!

In my work on traditional retail markets and city center regeneration, I see how the consumption and culture-based analysis of gentrification I am critiquing here quickly becomes an argument about changing consumption preferences. This argument is then repeatedly used as a reason to privatize, reduce and displace small businesses, despite them being popular and profitable. In other words, local government and the private sector use the very arguments made by ‘hating on hipster’ critics to entrench socio-economic divisions and displace low-income businesses and consumers.

Yet even as a critique of retail gentrification, the piece fails, because it pins consumption patterns on the preferences of individuals and cultural groups, and not on the way in which regeneration and commercial rents are largely controlled by state and private actors. Indeed gentrification (in its guise as ‘regeneration’, which usually involves retail, business, leisure, other amenities and housing destruction and redevelopment) is often at its most vicious and comprehensive when conducted by these actors in the name of ‘regeneration’ and ‘renewal’.

The Elephant and Castle regeneration scheme in South-East London, a partnership between a large local authority and a large international property developer, is perhaps the most outstanding example of this in London at the moment. Have a look at wonderfully comprehensive web archives like HeygateWas Home or Ward’s Corner Community Coalition and tell me whether you still think it’s the art students shopping at small businesses and markets and entrepreneurs opening up coffee shops who are the problem here.

Reclaiming our cities as commons

Perhaps the most unhelpful aspect of articles like this one (and they are, as I have indicated, all too frequent) is that they give no indication that this situation can be changed. In the ‘hating on hipsters’ vision of gentrification, the middle classes are bound to live boring lives and their escape from these boring lives is fundamentally doomed. The working class, meanwhile, can only look on in horror as their authentic culture is destroyed. No one has any agency. Indeed the article itself, like the system it identifies, serves mainly to blame the individual while offering no legitimate means by which they can escape.

For few years now I have been working on, organizing around and thinking about how we can reclaim and rebuild cities that are, for want of a better phrase, held in common; and I see a great deal of inspiring action and a very effective push-back against these gentrification phenomena, especially in London. Thanks largely to committed, cross-tenure, networked organizing, condemned social housing is being re-occupied, tenants are staying in their homes, community-led regeneration plans are receiving planning permission, and some local authorities (mainly due to the pressure from below and their appallingly long housing lists) are actually building social rented housing.

Networks of organization around the principles of the right to the city are forming, recognizing that we are all people who live, work and purchase things and experiences. There is not always a simple class struggle in this process, but there are alliances and commonalities around the principles of displacement, community and the public housing system which bring together huge numbers of people who are realizing what they share. Those who stand in the way of these commons are now being named: large private developers, politicians and unelected council officers, and complex multi-actor mechanisms known as Private Finance Initiatives (PFI).

The answer to gentrification is not agonizing over where you sip your coffee, snort your coke (if you must) or choose your cauliflower. If we actually want to build a city for everyone, we should support and participate in those organizing efforts against displacement, against privatization, for housing held in common and at rents everyone can afford. Those of us writing about the misery-inducing phenomena produced by capitalism have a constant responsibility to understand and explain these issues in terms that allow us the possibility to destroy, re-form and transcend them.

Gloria Dawson is a writer and researcher, focusing on housing (particularly precarious and temporary housing) regeneration and social movements. Originally from London, she now lives in Leeds, UK. She blogs attrespassingassemblies.tumblr.com.

 

http://roarmag.org/2015/03/gentrification-critique-structural-violence/

 

BLOGGER COMMENT:

The gentrification problems, the terrors of displacement and cultural annihilation, are directly attributable to the forces of “free markets.” libertarian excess, or what we currently call “capitalism.” Hard to define the system these days — oligarchy? — but the forces of capital in the hands of a few — venture capitalists, real estate investors, and, in San Francisco at least, the tech corporations — have created an imbalanced social structure that begs for redress.Personally, I don’t blame individuals, tech workers, wealthy “hipsters” and the like, for creating the problems. The anger should be directed at big, voracious corporations like Google, Apple, and FaceBook as well as the overvalued “unicorn” corps.

On a more existential level, however, I think much of the negative class conflict in SF arises from the arrogance and elitist attitudes of many of the tech workers towards those who have less than they, or who are not members of the tech class.

 

To move beyond boom and bust, we need a new theory of capitalism

Finding one is the the holy grail of economics
VARIOUS

The trouble is that people are asking the wrong questions. Photograph: Martin Lee/Rex Features

Terry Jones’s documentary film Boom Bust Boom hits the cinemas this month. Using puppetry and talking heads (including mine), Jones is trying to popularise the work of Minsky, a US economist who died in 1996 but whose name has become for ever associated with the Lehman Brothers crash. Terrified analysts labelled it the “Minsky moment”.

Minsky’s genius was to show that financially complex capitalism is inherently unstable. Under conditions of stability, firms, banks and households will, over time, move from a position where their income pays off their debt, to one where it can only meet the interest payments on it. Finally, as instability rises, and central banks respond by expanding the supply of money, people end up borrowing just to pay back interest. The price of shares, homes and commodities rockets. Bust becomes inevitable.

This logical and coherent prediction was laughed at until it came true. Mainstream economics had convinced itself that capitalism tends towards equilibrium; and that any shocks must be external. It did so by reducing economic thought to the construction of abstract models, which perfectly describe the system 95% of the time, but break down during critical events.

In the aftermath of the crisis – which threatens some countries with a phase of stagnation lasting decades – Minsky’s insight has been acknowledged. But his supporters face a problem. The mainstream has a model; the radicals do not. The mainstream theory is “good enough” to run a business, a finance ministry or a central bank – as long as you are prepared, in practice, to ignore that theory when faced with crises.

That, effectively, describes the situation among the policymaking elite today. They are trying to wrestle the economy back into a state where their models can cope with it again, using measures their theories say are not needed: quantitative easing, bank nationalisations, partial debt defaults and currency devaluations.

The radical, pro-Minsky faction is at a disadvantage because it does not possess a complete alternative model of capitalism. Some have generated computer programs showing how financial crises happen. But, by their own admission, they do not have a complete alternative model of how capitalism works. They are, admits Dutch finance professor Theo Kocken, “roughly right” rather than “exactly wrong”. Kocken’s solution is to concentrate on why we misperceive risk. Behavioural economics has had a field day since 2008, identifying problems for the human brain when faced with complex risks: oversimplification, overconfidence and “confirmation bias”, where we ignore facts that challenge our existing beliefs. But adding behavioural insights to the Minsky model of financial mania does not turn it into a theory of capitalism.

Here, the parallels with events in physics are obvious. After Einstein’s big breakthrough, we were left with two competing – and mutually incompatible – accounts of the laws of physics. Einstein himself was dissatisfied with this, pursuing from the 1920s a “theory of everything”. It is a laudable aim in economics too. And this is where we come to the turning point. The defenders of orthodox economics and the Minsky rebels are, essentially, asking the same question: “What does capitalism normally look like?” The one answers “stable”; the other “unstable”. But it’s the wrong question. The right question is: Where are we in the long arc of capitalist development? Nearer the beginning, the middle or the end? But that question goes to the heart of darkness.

For the mainstream, their convictions about equilibrium and abstract models were always founded on the belief that capitalism is an eternal system: the social arrangement most completely reflecting human nature. Minsky’s followers, as with all followers of JM Keynes, assume that a better understanding of financial mania can stabilise an inherently unstable system. But even physicists, who study a universe that has lasted 13bn years, are prepared to countenance – indeed, are obsessed with modelling – its death.

So the pursuit of theory is obligatory in economics. The holy grail is not a new orthodoxy, cobbled together from Minsky and the remnants of mainstream thought so that bankers can construct trading models to iron out problems created by the way our brains work. The aim should be something bigger to model capitalism’s current crisis within an understanding of its destiny.

For me, the most fundamental question in economics still concerns the 2008 crisis. Was this event the last in a series of shocks needed to allow a third technological revolution to take off? Or was it evidence that capitalism’s tendency to adapt and reshape in response to technology has stalled, or is even finished? That is the shadow we have to jump over in economics. Amid a mania for “new economic thinking”, it is what we need to think hardest about.

Paul Mason is economics editor of Channel 4 News. Follow him @paulmasonnews

http://www.theguardian.com/commentisfree/2015/mar/22/to-move-beyond-boom-and-bust-need-new-theory-capitalism?CMP=fb_gu

 

 

The fraud of Obama’s “Student Aid Bill of Rights”

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By Nancy Hanover
23 March 2015

Last week President Obama announced a series of executive actions that he dubbed a “Student Aid Bill of Rights.”

The initiative is partially an exercise in damage control. It follows a series of lawsuits and scandals involving the Department of Education (DOE). The government agency has become the target of growing anger for protection of predatory student loan collection agencies, its bailout of the for-profit career college chain Corinthian and its overall profit-taking from student loans.

Obama’s initiative, in the form of a memorandum directed to the DOE, calls for:

  • a new web site where all federal loans will be visible by July 2016
  • requiring loan servicers to notify debtors when their loans are transferred or payments are late
  • instructing loan servicers to apply prepayments to loans with the highest interest rate
  • a “state-of-the-art” complaint system.

In addition, the administration will launch a two-year pilot program in which the federal government will directly collect the defaulted debt of a small number of loan borrowers.

It is farcical to call such rudimentary accounting and communications procedures a “Bill of Rights.”

The language merely emphasizes that there is not even a pretense of a right to higher education in this country. The 43 million Americans who owe some $1.3 trillion in student loan debt were offered zero forgiveness. In fact, Obama does not propose even one measure to actually lessen the ever-escalating cost of college or encroach on the lucrative business of student loan debt. All the “rights” remain in the hands of the government, the banks and hedge funds.

To add insult to injury, the centerpiece of the memorandum is the promise of a web site system—in a distant 15 months—from an administration who has not recovered from the political debacle of the Affordable Care Act web site.

Meanwhile Obama’s new budget calls for further cuts to students on the Income Based Repayment (IBR) and Public Service Loan forgiveness programs. These cuts will reduce government write-offs and drive up student loan volumes.

The “Student Loan Bill of Rights” is, however, something of an admission of guilt. The Department of Education has been on the hot seat for some time over its cozy relationships with debt collectors using unscrupulous and outright illegal methods and the fact that the federal government is directly profiting from student loans, to the tune of about $10 billion per year.

Earlier this month, the Department of Education said that it would terminate its lucrative contracts with five debt collection agencies that systematically lied to or misled student borrowers. The Consumer Financial Protection Bureau provided evidence that student loan collectors told students that they would face legal action when that wasn’t true, and further misled students as to their options and rights.

Despite the terminations, two of the debt collection companies, Coast Professional and National Recoveries, were awarded new contracts in 2014 which may still be valid, according Inside Higher Ed. Such contracts amount to tens of millions of dollars annually. Three of the debt collection agencies, known for their clout on Capitol Hill, have filed suit against the DOE over the contracts.

Separately the Navient-owned Pioneer Credit Recovery (formerly Sallie Mae) has filed a formal protest, one step down from litigation, over the contract termination.

Navient, one of the more notorious violators, paid $97 million in a settlement last year for illegally maximizing late fees on the student loans of military personnel. Over 60,000 loans were affected by the violation of the 6 percent interest rate cap which is afforded to active duty service members. Navient’s contracts amount to $130 million annually, and Obama has come under fire from the American Legion for the administration’s failure to hold Navient liable.

On the other hand, there is worry among the powers-that-be that they are sitting on a political and economic time bomb. Nearly 7 in 10 graduating seniors in 2013, 69 percent of the total, left school with student loan debt, with an average debt of $28,400.

An extraordinary meeting was held by the Federal Reserve Bank of New York on March 4, where the bank’s president William Dudley spoke at length on the macroeconomic consequences of student loans. His remarks make the real purpose of the Obama web site clear: to be an early warning system for a crash of the student loan system.

Dudley pointed to the government’s inadequate knowledge of the student loan crisis and a “data gap.” He also cited statistics that put loan repayment rates at a catastrophically low level.

“New York Fed economists have shown that for the 2009 cohort of graduates, only 17 percent of their original debt had been paid down after five years,” said Dudley. “More than 20 percent of high-balance student borrowers owe more now than when they graduated in 2009. For the 2005 cohort of graduates, only 38 percent of their original student debt had been paid down, on average, nearly ten years after graduation.”

With student loan debt surpassing credit card debt and the only form of debt that continued to grow between 2008 and 2013, the effect on overall financial stability of growing defaults and slow repayments is a concern to the Federal Reserve.

These considerations put into context the policies of a section of the Democratic Party who posture as defenders of indebted students, but are loyal advocates for the financial industry.

The most outspoken of this group is Democratic Senator Elizabeth Warren, who reintroduced last year’s stillborn bill, the Bank on Students Emergency Loan Refinancing Act, last week. Such legislation seeks to rein in the most rapacious aspects of student loans in the hopes of increasing repayment rates and averting a collapse of the $1 trillion loan bubble.

Like Obama’s call for free community college, however, there is little chance the proposal will advance, as the Republican majority is advocating increased student loan interest rates, pegged annually. Even were students to be allowed to refinance their loans at modestly lower rates, as Warren advocates, the substantial spread between the Federal Reserve rate and the student loan rates will still net large profits for the government and banks.

Senator Chuck Schumer (D-NY), one of the most strident defenders of Wall Street, also announced new legislation last week, “Andrew’s Law,” which would require private student loan companies to forgive outstanding debt if a borrower dies. Congresswoman Maxine Waters (D-CA), and senators Sherrod Brown (D-OH), Richard Blumenthal (D-CN), and Tammy Baldwin (D-WI), among others have joined with Warren questioning the bailout of Corinthian Colleges by the DOE and requested clear guidelines on DOE policies for loan discharges. Waters has supported a debt strike by some Corinthian students.

Obama himself floated the idea of allowing private loans (10-15 percent of the student market) to be discharged under personal bankruptcies. The Fairness for Struggling Students Act of 2015, also sponsored by a group of Democratic senators including Warren and Richard Durbin of Illinois, has also been introduced in Congress.

The administration’s nod to the bill, interestingly, was greeted with approval on Wall Street. “Obama’s proposition may encourage Americans to take on more student loan debt,” noted Zack’s, an equity research firm. “This will indeed be a boon for post-secondary education providers like DeVry Education Group Inc., Strayer Education Inc, Apollo Education Group, Inc [Phoenix Universities], Capella Education Co, Universal Technical Institute, Inc. and many more. Share prices of most of these education companies have risen following the announcement.”

This group of for-profit colleges applauded the proposal on private loans, adding the hope that the Obama measures might reverse falling college enrollments and the “decline in student demand due to hesitancy over taking a loan.”

Far from a “Bill of Rights” Obama continues to deliver a fraudulent bill of goods. At every point, his administration has protected the financial industry in looting an entire generation of students, preventing millions of young people from either attaining the education they desire or making them pay through the nose for the rest of their lives.

 

The author also recommends:

Elizabeth Warren speaks at AFL-CIO meeting
[13 January 2015]

 

http://www.wsws.org/en/articles/2015/03/23/stud-m23.html