The Myths of US Exceptionalism

Exceptional in Health, Education & Retirement?

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by JACK RASMUS

One of the elements of cultural ideology in the USA is that the United States is somehow exceptional compared to other countries; that is, it is different in a number of positive ways that distinguish it from all other countries.

Exceptional in Health, Education & Retirement?

In a perverted way, there is some truth to this. The United States is exceptional in that it is the only advanced economy in the world that has failed to provide universal health care for its citizens. It has a large, parasitical for-profit health care system, dominated by multi-billion dollar profit making private health insurance companies that suck $1 trillion a year from the wallets of US consumers for pushing paper around, a vast network of ‘for profit’ hospital chains that suck another $900 billion a year, pharmaceutical drug companies that charge $94,000 for drugs to treat someone with hepatitis C (that’s $1,125 per pill) and charge patients $14,000 to $64,000 a month for cancer drugs, and it has the highest paid professional medical personnel in the world. The US spends more than $3 trillion a year, and rising, on health care. That’s about 18% of its $17.4 trillion annual GDP, or almost one dollar out of every five spent on everything is for healthcare. That’s the highest spending on healthcare in the industrial world. In return for that massive spending , it ranks 39th in infant mortality rates, 42nd in adult mortality, and 36th in life expectancy. Yes, the US is exceptional in health care.

It is also exceptional in education. Its college students have become, in effect, indentured servants to the education establishment of overpaid administrators and bankers, owing more than $1.1 trillion in debt just to get a college education—more per capita higher education debt than any other country in the world. The cost of attending a four year college today is, on average, $30,000 to $60,000 a year for a four year undergraduate education. For those who can’t afford college there’s no meaningful job training programs available any longer. Meanwhile, 70% of college professors and instructors in the US are part time/temp workers, many of whom earn poverty wages and have no benefits. That too is ‘exceptional’, I suppose.

US workers work the longest hours among the industrial economies, have the shorted annual paid vacations (on average 7 days paid a year), and face the prospect of poverty when they retire or can no longer work. Social security pensions average only $1,100 a month, private pensions (called 401k plans) average less than $50,000 total savings for those age 60 and approaching retirement, and more than half of US workers live pay check to pay check with no personal savings whatsoever. As 70 million ‘baby boomers’ born after 1945 start to retire, tens of millions of them face the prospect of a penniless, poverty-ridden retirement. No wonder the fastest growing segment of the US workforce is those aged 65-74, as many return to work just to make ends meet.

Income inequality in the US is also the most extreme among the advanced economies, and growing worse every year. CEOs of US corporations make around 400 times the average pay of the average worker in their company—the biggest gap in the industrial world. (In 1980 they made only 35 times).The wealthiest 1% households (investor class nearly all), gained no less than 95% of all the net income growth in the US since 2010, which compares to 65% during the George W. Bush years, 2001-2007, and to 45% during the Clinton years in the 1990s. Meanwhile, the median family income has been declining in the US at 1%-2% every year for the past decade. (Ok, maybe that’s not exceptional, since pay for workers has been steadily declining in Europe and Japan too).

US workers may get only 6 months unemployment benefits, at less than one-third their pay, when they lose their jobs, compared to German workers, for example, who get up to two years in jobless benefits and job retraining to boot. But, what the hell, we got more aircraft carriers than the Germans.

Yes, the US is exceptional. Its workers are the sickest, most indebted, most overworked, insecure, and among the least compensated and the most fearful of the future than any in the advanced industrial world.

The US is also exceptional in that it spends more on its military than all the rest of the advanced economies combined. The US’s true ‘war budget’ is about $1 trillion a year, not the reported $650 billion or so for the Pentagon, which is stuffed away in dozens of corners in its annual economic budget. It has more than 1000 military bases worldwide. It is engaged constantly in more wars worldwide than any other country by far. And it spies every day on more of its, and rest of the world’s, citizens than all the ‘spooks’ in the rest of the world do combined. ‘Exceptional’? You bet.

The Myth of US Economic Exceptionalism

Another favorite focus of late for the ‘US is exceptional’ crowd is the US economy.

Japan may be in its fourth recession since 2009. The Eurozone may be slipping in and out of recession every couple of years. But the US economy is in full recovery. So we’re told. It is growing nicely, while the rest of the world lags behind. Or so the ideological spin goes.

The ‘exceptionalists’ like to refer to last summer 2014’s US economic growth figures of 4% to 5% in GDP growth rates, its 200,000 a month new jobs created in 2014, and its ever-rising stock and bond markets as evidence of such economic exceptionalism. But a closer look, at last year’s much hyped 5% GDP growth in the 3rd quarter 2014, and at the data for most recent months in early 2015, show there is nothing exceptional about the US economy.

Long term, it continues to grow at an annual rate about half of what is normal in past decades.

Over the past six years, occasional quarter GDP growth rates of 4-5% typically are followed by a sharp collapse of GDP growth, or even negative GDP, within months. This in fact has happened four times since 2009 resulting in a ‘stop-go’ economic recovery: in the first quarter of 2011, fourth quarter of 2012, first quarter of 2014 last year—and it appears it may happen again a fifth time in the recent first quarter, January-March 2015.

The US economy’s ‘yo-yo’, or ‘seesaw’, economic trajectory is nothing special or exceptional. Japan and Europe have been experiencing the same. Their ‘bouncing’ along the bottom is just at a level closer to the bottom (or even below it) than has been the US economy’s the past five years. Whereas the US economy’s growth spikes up to 4% or so on occasion, only to collapse back again to zero or less growth, the US economic growth longer term has been averaging about 1.7% annually the past five years. That’s about half its normal growth rate compared to US recoveries from recessions in the past. Japan and Europe might spike to only 2% on occasion, but then slip to negative growth—i.e. into a bona fide recession.

So it’s ‘stop-go’ recovery for all three, occurring just at different levels of ‘go’ and of ‘stop’. Nothing exceptional or different economically over the longer term, in other words.

Comparing the US temporary 5% economic growth of last July-September 2014, to what will almost certainly prove to be a 1% or less growth rate for the January-March 2015 period when the final numbers come in later this May, shows that temporary, ‘one-off’ factors occurred last summer 2014 to produce the brief 4%-5% GDP US growth. Those temporary factors have since reversed or disappeared in the first three months of 2015. Take away those one-off factors of nine months ago, and one gets the less than 1% growth likely to register for the most recent three months, January-March 2015. Here’s a brief explanation:

Shale Gas/Oil Industrial Production Boom

In early 2014 the shale gas/oil boom was in full swing in the US. That boosted what is called Industrial Production and much of last year’s jobs growth. But when the global oil price glut began last June, precipitated by Saudi Arabia and its emirate friends attempt to drive the shale gas/oil producers in the US into bankruptcy, the shale boom in the US came to an abrupt halt. Industrial production slowed rapidly after the summer and has continued ever since, turning negative since December. Jobs began to disappear. It is projected that jobs in Texas, the largest shale producer, will decline by 150,000 in early 2015. 

Manufacturing & Exports

In early 2015 US manufacturing and exports continued to grow, as the US dollar remained low giving US exports an advantage. But the collapse of world oil prices and the simultaneous talk by the US central bank it would raise interest rates resulted in a 20% rise in the dollar. Japan and Eurozone QEs pushed it still higher. The result was the beginning of a collapse in late 2014 of the contribution of US manufacturing and exports to US economic growth. That continues into 2015. Manufacturing orders have declined every month since December 2014.

Obamacare Consumer Health Spending

Another one-time boost to US GDP in mid-2014 was the signing up of 9 million of US consumers into the government’s new privatized health insurance coverage program, who couldn’t get health insurance. They started paying monthly premiums, and using health care services. That provided a boost to consumer spending that didn’t previously exist. But by 2015 the sign ups have leveled off. No more additional boost consequently in 2015.

Auto Buying Boom Goes Bust

Another consumer spending element that was peaking last summer was the boom in auto sales in the US. That too has now come to an end, as the market in the US has become saturated in terms of auto sales after four years. Auto sales since December, usually a strong month for auto sales, declined and have continued declining through February. The auto boomlet in the US is over.

General US Consumer Spending

Consumer spending in general has turned negative, starting in December. The US indicator, the Personal Consumption Expenditures Index (PCE) declined in December-January, was flat in February and suggests no change in March. Consumer spending was supposed to surge, according to mainstream economists, as consumers enjoyed lower gasoline prices. Instead, consumers saved the lower gasoline prices or used it to help pay off their massive debt loads (which this writer predicted would be the case last year). US retail sales, which constitute the largest part of consumer spending, grew at a 4%-5% rate over last summer. But once again has turned negative since December 2014, falling by -1.0%, -0.9%, -0.6%, December through February, and likely falling again in March 2015. So both retail sales and consumer spending in general have turned negative.

Business Spending 

In the third quarter, July-September, of the year for the past five years, businesses in the US have boosted their spending, building up their inventories, in anticipation of a rise in year end holiday consumer spending. But the holiday spending then typically falls short of expectations, and businesses ‘work off’ the inventories in the first quarter, January-March, of the following year. This has happened yet again in 2015. Another element of business spending, on new equipment, is barely inching along, growing only 0.6% in the fourth quarter of 2014 and likely no more or even less in the first quarter.

Government Defense Spending 

It is a well-known and documented fact that in the US, every other year in which there is a national election, the federal government holds off spending early in the year so it can release it in the summer before the election. That occurred in 2012 before the national presidential elections and in 2014 before the midterm Congressional elections. That government spending gives an added boost in the July-September quarter, as politicians try to create the impression the economy is doing better than it is longer term. That too happened last summer. But that spending will contract early in 2015 relative to last summer.

US Jobs Creation 

Job creation always lags the real economy. And after growing jobs at a rate of 200,000 a month last year (mostly low paid, part time/temp, service jobs), jobs growth in March rose by only 126,000. Preceding months of January-February were also reduced. The employment data thus are now confirming the general economic slowdown in the first quarter 2015 as well. Apologists for the politicians will no doubt use the excuse of ‘bad weather’ for the feeble March jobs numbers. But what’s really happening is job creation is, and will continue, to slow due to real reasons. The ‘canary in the jobs mine’ is jobs in the goods producing sector, which have been slowing rapidly for several months and now turned negative in March. That reflects the collapse in manufacturing, mining, and good production that began late last year and now continues. The

Ideology of US Exceptionalism

In short, there is nothing exceptional about the US economy when one looks behind the ideological spin. It continues on its stop-go trajectory of the past five years. The economy weakens significantly every 4th quarter/1st quarter and the weak growth is ‘made up’ the following summer. Smoothing and averaging it all out over the year produces the longer term sub-historical average growth rate of around 1.8%–i.e. half of normal. And nothing exceptional. Japan and Europe are doing the same, just at a lower level of ‘stop-go’, sub-normal.

Long term US GDP growth is averaging 1.8% vs. 0.5% (Europe) vs. 0% (Japan). Does that make the US economy exceptional? Not really. 20 million are still jobless in the US; roughly the same as in the Eurozone. That’s not exceptional. Prices are now flat in the US (i.e. no change) and heading toward deflation; price stagnation also exists today in Europe and Japan . Real investment is declining in the US as in Europe and Japan—again nothing exceptional. And real wage incomes continue to decline for median income workers in the US—as they do for workers in Europe and Japan.

One of the favorite ideological strategies of ruling elites and classes is to convince their working classes that they are exceptional—i.e. meaning their situation may not be great, and may even be declining, but at least they are not as bad off as others. ‘It could be worse, just look at those poor workers in country X and Y. It may not be great here, but what the hell, we’re not so bad off, are we?’ The appeal to exceptionalism is just another ideological ploy to get working classes to accept their deteriorating conditions. It’s just another ideological tool to immobilize people. To accept their reality as their fate. To make them believe that, as their living conditions are getting worse, it’s not really that bad. But it is….

Jack Rasmus is author of the forthcoming book, ‘Systemic Fragility in the Global Economy’, published by Clarity Press, 2015; and the previous works, ‘Epic Recession: Prelude to Global Depression’, Pluto Press 2010, and ‘Obama’s Economy: Recovery for the Few’, Pluto Press, 2012. He blogs at jackrasmus.com.

This piece first appeared at TeleSur.

 

http://www.counterpunch.org/2015/04/08/the-myths-of-us-exceptionalism/

Greek activists welcome much needed breathing space

By AK Malaboca On April 4, 2015

Post image for Greek activists welcome much needed breathing spaceMany Greeks have low expectations of SYRIZA, but with the coalition in power a space has opened up that allows for the creation of an alternative economy. 

Editor’s note: this article is a short introduction to the brochure ‘What’s next for Greece?’ (click here to download the PDF), which has been published at the initiative of AK Malaboca, a group of German activists from Frankfurt and Bremen. In February, they visited several activists and initiatives across Greece in order size up the situation of the changing conditions and debates among activists after the victory of the SYRIZA-ANEL coalition

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“We have some breathing space again,” says Makis, a teacher and street art activist from Athens. For more than twenty years he has been part of different anarchist groups and initiatives, so you really wouldn’t think of him as someone naively celebrating the new Greek government. But as many others we meet in Athens, just three weeks after the electoral success of the SYRIZA-ANEL coalition, he is using this metaphor to describe his feelings about the recent change of government.

After the re-election of the right-wing Samaras government in the beginning of 2012 the blunt repression of social movements reached a level even experienced activists hadn’t seen before. Unrestrained police brutality on the streets, racist hunts, political murders by fascists, numerous lawsuits and evictions of squatted houses. Among the new government’s first acts in office were the dismantlement of the police barriers in front of the parliament and the withdrawal of the riot police from Exarchia, where it previously had been posted 24/7 to cordon off the subversive neighborhood in the center of Athens.

These are first steps. Further reforms of the police apparatus are announced, but the relief is palpable. “For the first time in years I can move around freely in my own city without being frightened,” says Fereniki, who is part of the struggle against the privatization of the former international airport of Athens in Hellinikon.

Most people we spoke to considered the coalition between SYRIZA and ANEL not such a big issue. Concerning their economic agenda there was simply no other fit. Also, the Independent Greeks are an inexperienced and therefore unprofessional party, which in the end just adds the necessary two votes to get the 151 seats needed for a majority. “If there are controversial bills, the parliamentarians will decide according to their conviction not their faction. This way, SYRIZA is able to find its majority with votes from outside the coalition parties,” states Achim, who is a member of the anti-racist network Diktyo. For him, ANEL poses no great threat to SYRIZA’s agenda on refugees.

Meanwhile many leftist were preoccupied discussing the meaning and consequences of this devilish deal between Left and Right. This focus of discussion was astonishing for most Greek activists. This harsh criticism might just reflect the disappointment of those, who openly or secretly expected SYRIZA to be the revolutionary messiahs.

SYRIZA never claimed to be revolutionary…

But SYRIZA is not a revolutionary party — at best they can be labelled progressive social-democratic. Those who are now accusing the Greek population or even more so the Greek left to be reformist, are ignoring the consequences of the disastrous economic situation at hand. “To denounce SYRIZA as social-democratic was a luxury we couldn’t afford at that time,” Makis notes referring to aforementioned criticism.

Clearly, this development signals a risk for the initiatives which were set up in times of crisis of the (social)state. But in the past few years it were mostly material conditions that were keeping people from partaking in those groups. “When you have lost your job, when you have no insurance, when you or your family are indebted, than it is very hard to support a self-organized project even if you want to.”

Especially concerning refugee policies, most of the activists hope for tangible improvements. Shutting down the detention camps — in which an estimated 5,000 to 6,000 refugees and migrants are held under inhumane conditions — developed from a demand by anti-racist movements into a promise by the government. Most of the cells, where hundreds of refugees have been held for months without even one day of parole, are emptied out already. A bill, which would give citizenship to all children born in Greece, is on the table. Those may be small steps but they are essential for survival.

…and will fail sooner or later

Many activists assume that apart from the changes for refugees and the easing of the excessive repression the prospect of success for the SYRIZA-ANEL coalition is minor. The Troika’s influence on Greek economic policies is enormous and the options at hand limited: a continuation of austerity measurements as required by the EU would be disastrous – an exit from the eurozone probably would have even more devastating social and economic effects.

There is almost a consensus among activists that the collision course of the new government will fail on the long run. The question most discussed these days is more about the kind of failure. As long as SYRIZA is able to confront the Troika — even at tremendous costs — they would maintain their credibility and secure support of their voters. An apparent slippage in the government’s position on the other hand, would have fatal consequences. It would damage the reputation of the Left in Greece heavily and the Right, maybe even the fascist Golden Dawn party, would see its popularity surge.

Therefore: using the opportunity – creating alternative institutions

The atmosphere nowadays is sceptical, but not hopeless. Ultimately, nobody wishes to see SYRIZA fail, while at the same time nobody is believing in fundamental change either. A way out of this dilemma is focusing on the space opened by the new government to reorganize and extend the sphere of influence of the social movements.

Besides some impressive initiatives which combat the direct effects of austerity policies like foodbanks and solidarity clinics, there is another remarkable development. People are talking about the creation and extension of alternative economic networks – and they already started working on it. In the last years, many cooperatives were born, producer-consumer networks and producer markets were established. Some were established out of pure necessity, but there is also a realization of the fact that there won’t be any fundamental change without alternative economic institutions.

Danea, member of the anti-authoritarian group Alpha Kappa, argues that now that the movements have more “breathing space” a new range of possibilities is presenting itself. “So now it’s the time for us to go beyond this traditional forms of practices, like showing solidarity or any other symbolic action. Now, we can concentrate on building economic relations from the bottom up to offer an alternative to the capitalist market. People are fed up with big words, of how the production or the society will look like in the far future, which is not available to them. They need results here and now and it’s up to us to show them that these ways exist and work for them – here and now.”

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Click on the image to read the brochure.

AK Malaboca is a group of activists from Frankfurt and Bremen which is researching the current situation of social movements in Europe, especially in Greece. They can be reached via d.malaboca@riseup.net.

 

http://roarmag.org/2015/04/syriza-greece-left-movements/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29

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

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

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.

 

Wall Street bonuses at highest level since 2008 crash

wall-street-vs-avg-worker

By Shannon Jones
18 March 2015

The average bonus paid out to employees in New York City’s financial industry hit $172,860, the highest level since the 2008 financial crash, according to figures released last week by the New York State Comptroller. Even after adjusting for inflation, the average Wall Street bonus is five times greater today than it was in 1987.

The bonus pool for Wall Street financial firms rose by some 3 percent in 2014 to reach the astronomical sum of $28.5 billion.

In a report published last week, the Institute for Policy Studies notes that the total bonuses handed to Wall Street employees amount to double the total annual pay for the 1 million US workers employed full time at the federal minimum wage of $7.25 per hour.

The typical Wall Street bonus is three times the annual US median income and almost four times the annual pay of a typical US worker. The report notes that the Wall Street bonus pool was 27 percent higher than in 2009, the last time Congress raised the minimum wage.

According to the New York Post, the average total pay on Wall Street including bonuses is now $355,900—five times the private sector average in New York City.

After several years of decline, total securities industry employment rose to 167,800 in 2014, an increase of 2,300. The securities industry in New York City accounted for 21 percent of all private sector wages paid in the city last year even though it accounts for less than 5 percent of private sector jobs.

The rise in bonus payouts on Wall Street comes despite a 4.2 percent decline in security industry profits. That makes the bonus pool 170 percent of total profits and 40 to 50 percent of total revenues. 2014 was the second year in a row that bonuses have risen despite a decline in profits.

Meanwhile, banking industry CEOs continue to collect massive pay packages. Goldman Sachs chief Lloyd Blankfein received a cash bonus of $7.3 million, up $1 million from the year before, out of a total compensation of $24 million in 2014.

JPMorgan Chase CEO Jamie Dimon received a $4.7 million cash bonus out of total pay of $20 million. Morgan Stanley CEO James Gorman received restricted shares valued at $4.5 million. This is part of a pay package that will reportedly exceed $18 million.

Swelling salaries in the financial sector are part of a broader trend of rising executive pay nationally. This week, US Steel announced that CEO Mario Longhi’s 2014 compensation doubled to $13.2 million, compared with $5.6 million in 2013. The pay of Coca-Cola CEO Muhtar Kent shot up 23 percent last year, hitting $25.2 million.

Meanwhile, Boeing said that its CEO, Jim McNerney, got a 24 percent rise in pay last year to $28.9 million. In 2014 McNerney, with the collaboration of the International Association of Machinists, scrapped the defined benefit pension plan for its unionized employees. That was followed by the freezing of pensions for 68,000 non-union employees and the transition to a 401(k) style plan.

The continued growth of Wall Street pay takes place in a city that is already one of the most economically unequal in the United States. New York City is home to the most billionaires of any city in the world.

For New York State as a whole, the average income of the top one percent of wage earners is $2.1 million, compared to an average income of $44,049. In part due to the concentration of the financial sector in metropolitan New York, both New York state and neighboring Connecticut have the largest gaps between the average income of the top 1 percent and the bottom 99 percent, with a ratio of 48 to 1.

A study authored by the Urban Institute found that 21.4 percent of New York City’s population lived in poverty in 2012. Out of that total, 3.8 percent were in “deep poverty,” meaning they had incomes less than one-half the official poverty level.

According to a report by the National Association of Realtors, the average New York City resident pays 60 percent of their income in rent, leaving only 40 percent for other basic needs such as food, clothing and medical care. According to the same report, rents in New York have risen faster than in any other American city since 2009.

Homelessness is at an all-time high in New York City, with nearly 60,000 people per night depending on the city’s emergency shelter system. Meanwhile, there is a construction boom in the city for residences for the ultra wealthy. A Manhattan penthouse recently set a new record by selling at more than $100 million.

 

http://www.wsws.org/en/articles/2015/03/18/wstr-m18.html