On the Centenary of the October Revolution

7 November 2017

One hundred years ago today, on the morning of November 7, 1917, the Military Revolutionary Committee of the Petrograd Soviet, chaired by Leon Trotsky, issued a proclamation to the citizens of Russia. It stated:

The Provisional Government has been overthrown. State power has passed into the hands of the organ of the Petrograd Soviet of Workers’ and Soldiers’ Deputies, the Military Revolutionary Committee, which stands at the head of the Petrograd proletariat and garrison.

The cause for which the people have struggled—the immediate offer of a democratic peace, the abolition of landlord ownership of land, workers’ control over industry, the creation of a Soviet government—this has been assured!

Long live the revolution of workers, soldiers and peasants!

Vladimir Lenin

Later that afternoon, Lenin—who had been denounced just three months earlier as a state criminal by the bourgeois Provisional Government—received a thunderous ovation as he emerged from hiding and entered the hall where the Soviet delegates were assembled. Witnessing the extraordinary events of that day, the American socialist journalist John Reed left behind a memorable description of the Bolshevik leader, “loved and revered as perhaps few leaders in history have been.” Lenin, he wrote, was a “strange popular leader—a leader purely by virtue of intellect,” possessed “with the power of explaining profound ideas in simple terms, of analyzing a concrete situation. And combined with shrewdness, the greatest intellectual audacity.”

After he had made his way to the speaker’s lectern, Lenin began his address to the delegates with the following words: “Comrades, the workers’ and peasants’ revolution, about the necessity of which the Bolsheviks have always spoken, has been accomplished.”

As Russia still adhered to the old Julian calendar, the overthrow of the Provisional government entered into history as the October Revolution. But though the Russian calendar lagged 13 days behind that of Western Europe and North America, the Bolshevik seizure of power catapulted Russia, in political terms, to the forefront of world history. The insurrection led by the Bolsheviks was the culmination of a political struggle that had begun eight months earlier, in February 1917, with the overthrow of the tsarist autocracy, which had ruled Russia for more than 300 years.

Women’s march during the February Revolution

The uprising in February-March 1917 unleashed a protracted struggle over the political perspective and historical significance of the revolution that had erupted in Russia. The bourgeois Cadet party, the reformist Mensheviks, and the peasant-based Socialist Revolutionaries viewed the revolution in primarily national terms. The overthrow of the tsarist regime, they insisted, was no more than a national-democratic revolution. The tasks of the revolution were confined to replacing the tsarist regime with some sort of parliamentary republic, modeled on that of France or Britain, dedicated to promoting the development of the Russian economy on a capitalist basis.

In actual practice, the bourgeois Cadet party, fearful of the revolutionary upheaval and despising the masses, opposed any changes in the existing social structure that threatened their wealth. As for the Mensheviks and Socialist Revolutionaries, their reformist programs excluded any significant encroachment on capitalist property. Russia, they insisted, was not ripe for a socialist revolution. Decades of capitalist development would be required before a transition to socialism could be considered a realistic possibility.

Within the framework of this perspective, the political overthrow of the capitalist class and the assumption of power by the working class were absolutely rejected. The political subordination of the working class to bourgeois rule meant continued support for Russia’s participation in the bloodbath of the imperialist world war that had begun in 1914.

Prior to Lenin’s return from exile in April 1917, the main Bolshevik leaders in Petrograd—Lev Kamenev and Joseph Stalin—had accepted the Menshevik subordination of the working-class soviet (council) to the Provisional Government. Flowing from this, Kamenev and Stalin accepted the Menshevik argument that, with the overthrow of the tsarist regime, Russia’s participation in the imperialist war had been transformed into a democratic struggle against autocratic Germany, which should be supported by the working class. The blatantly imperialist interests of the Russian bourgeoisie were sugarcoated with hypocritical phrases about a “democratic peace.”

Lenin’s return to Russia on April 16 led to a dramatic change in the orientation of the Bolshevik Party. In opposition to the allies of the Provisional Government in the Petrograd Soviet, as well as a substantial faction of the Bolshevik leadership, Lenin called for the transfer of power to the soviets. The basis of this revolutionary demand, which stunned not only the Mensheviks but also most of Lenin’s comrades in the Bolshevik leadership, was a profoundly different conception of the historical significance of the Russian Revolution.

Soldiers demonstration in February, 1917

Since its very beginning in August 1914, Lenin had insisted that the imperialist world war marked a new stage in world history. The bloody carnage unleashed by the war arose from the global contradictions of capitalist imperialism. The contradictions of the imperialist system, which the capitalist regimes sought to resolve through war, would necessarily evoke a revolutionary response from the international working class.

This understanding of the world historical context of the Russian Revolution formed the basis of the policies that were to guide the Bolshevik Party following Lenin’s return. Lenin insisted that the Russian Revolution had to be understood as the beginning of the world socialist revolution. Upon opening the Seventh Congress of the Bolshevik party in April 1917, he stated:

The great honor of beginning the revolution has fallen to the Russian proletariat. But the Russian proletariat must not forget that its movement and revolution are only part of the world revolutionary proletarian movement, which in Germany, for example, is gaining momentum with every passing day. Only from this angle can we define our tasks.

In the months between April and October, Lenin wrote scores of articles in which he imbued and elevated the consciousness of party members, and the tens of thousands of workers who read Bolshevik pamphlets, newspapers and leaflets, with an understanding of the international character of the revolution. Those who claim that the Bolshevik revolution was a “putsch” or coup d’état plotted in secret simply ignore the fact that Lenin’s appeals for a socialist revolution were being read, studied and debated in factories, in soldiers’ barracks and in the streets of all the major cities of Russia.

In September, just a month before the seizure of power, the Bolshevik Party published Lenin’s pamphlet, The Tasks of the Proletariat in Our Revolution. There was nothing ambiguous, let alone surreptitious, in Lenin’s presentation of the Bolshevik Party’s program and intentions. With an astonishing level of historical consciousness, Lenin explained the objective necessity of which Bolshevik policies were an expression:

The war is not a product of the evil will of rapacious capitalists, although it is undoubtedly being fought only in their interests and they alone are being enriched by it. The war is a product of half a century of development of world capitalism and of its billions of threads and connections. It is impossible to slip out of the imperialist war and achieve a democratic non-coercive peace without overthrowing the power of capital and transferring state power to another class, the proletariat.

The Russian revolution of February-March 1917 was the beginning of the transformation of the imperialist war into a civil war. This revolution took the first step towards ending the war; but it requires a second step, namely the transfer of state power to the proletariat, to make the end of the war a certainty. This will be the beginning of a “breakthrough” on a worldwide scale, a breakthrough in the front of capitalist interests; and only by breaking through this front can the proletariat save mankind from the horrors of war and endow it with the blessings of peace.

In the aftermath of the “July Days”—the brutal suppression of the working class by the Provisional Government—Lenin was forced into hiding. Leon Trotsky, who had returned to Russia in May and soon joined the leadership of the Bolshevik Party, had been imprisoned. But he was released in September, in the aftermath of the aborted counterrevolutionary coup of General Kornilov, and was elected chairman of the Petrograd Soviet. In the weeks that followed, Trotsky emerged as the greatest mass leader and orator of the Revolution. He played the decisive role in the strategic planning and organization of the Bolshevik insurrection.

Leon Trotsky

There was, without question, an element of genius in Trotsky’s leadership of the Bolshevik insurrection. But Trotsky’s role in the October Revolution was, no less than Lenin’s, prepared on the basis of his analysis of the place of the Russian Revolution in world history. In fact, Trotsky, in his elaboration of the theory of permanent revolution, had been the first to foresee, as far back as 1905, that the democratic revolution against tsarist autocracy in Russia would necessarily develop into a socialist revolution that would transfer power to the working class.

Trotsky’s analysis challenged claims that the political tasks of the working class were determined by the economic backwardness of Russia, which was supposedly “not ready” for a socialist revolution. “In an economically backward country,” he wrote in 1905, “the proletariat can come to power sooner than in a country of the most advanced capitalism.”

But how would the working class sustain its revolution? Trotsky, far in advance of the events of 1917, wrote that the working class

will have no alternative but to link the fate of its political rule, and, hence, the fate of the whole Russian revolution, with the fate of the socialist revolution in Europe. That colossal state-political power given it by a temporary conjuncture of circumstances in the Russian bourgeois revolution it will cast into the scales of the class struggle of the entire capitalist world. With state power in its hands, with counterrevolution behind it and European reaction in front of it, it will send forth to its comrades the world over the old rallying cry, which this time will be a call for the last attack: Workers of all countries, unite!

* * * * *

Amidst the nightmarish reality of the First World War, which by October 1917 had already cost the lives of millions of soldiers, the news of the Bolshevik insurrection passed like an electric shock through the consciousness of the masses. The February Revolution was a Russian event. But the October Revolution was a world-changing event. What had been merely a “specter” in 1847 now existed as a revolutionary government, which had come to power on the basis of a working class insurrection.

Rosa Luxemburg

Rosa Luxemburg, learning of the Revolution while still in prison, wrote to a friend of the impatience with which she awaited the morning newspapers in order to follow the developments in Russia. She expressed doubts as to whether the revolution could survive in the face of the armed opposition of world imperialism. But of the greatness of the revolutionary event she had no doubt, and she beheld with admiration what Lenin and Trotsky—comrades whom she had known for many years—had achieved. The Bolshevik-led insurrection, Luxemburg wrote, “is a world-historical act, whose example will live for eons.”

Many years later, celebrating the twenty-fifth anniversary of the October Revolution, the American Trotskyist leader James P. Cannon recalled the impact of 1917 on socialists throughout the world:

For the first time, concentrated in revolutionary action, we had a demonstration of the real meaning of Marxism. For the first time, we learned from the example and teachings of Lenin and Trotsky and the leaders of the Russian revolution the real meaning of a revolutionary party. Those who remember that time, whose lives became welded to the Russian revolution, must think of it today as the greatest inspiring and educational force that the oppressed class of the world has ever known.

The October Revolution ranks among the greatest and most progressive events in world history. It is part of the chain of world-historical events—such as the Reformation, the American Revolution and the French Revolution—that rank as great milestones in the development of human civilization.

The global impact of the October Revolution was incalculable. It was an event that ignited a worldwide movement of the working class and the oppressed masses against capitalist exploitation and imperialist oppression. It is all but impossible to think of a significant political or social conquest of the working class in the twentieth century, anywhere in the world, which did not owe some substantial portion of its realization to the October Revolution. The establishment of the Soviet state was the first great achievement of the October Revolution. The victory of the Bolshevik Revolution demonstrated in practice the possibility of the working class conquering state power, ending the rule of the capitalist class, and organizing society on a non-capitalist and socialist basis.

However, while the establishment of the Soviet Union was the immediate product of the Bolshevik-led insurrection, the creation of this state does not encompass the full historical significance of the October Revolution. The establishment of the Soviet state in October 1917 was only the first episode in the new epoch of World Socialist Revolution.

This distinction between episode and epoch is critical to an understanding of the fate of both the Soviet Union and the contemporary world. The dissolution of the Soviet Union in 1991 marked the end of the state founded in 1917. But it did not mark the end of the epoch of world socialist revolution. The dissolution of the Soviet Union was the outcome of the abandonment, which began in the early 1920s, of the international socialist perspective upon which the October Revolution was based. The Stalinist program of socialism in one country, promulgated by Stalin and Bukharin in 1924, was a turning point in the nationalist degeneration of the Soviet Union. As Trotsky warned, Stalinist nationalism—which found political support in a rapidly growing bureaucratic elite—separated the fate of the Soviet Union from the fight for world socialism. The Communist International, which had been founded in 1919 as an instrument of world socialist revolution, was degraded into an appendage of the Soviet Union’s counterrevolutionary foreign policy. The treacherous and disorienting policies of Stalin led to devastating defeats of the working class in Germany, France, Spain and many other countries.

In 1936, Stalin launched the Great Terror, which during the next four years resulted in the physical extermination of virtually all of the leading representatives of revolutionary internationalism within the working class and socialist intelligentsia. Trotsky was assassinated in Mexico in 1940.

* * * * *

The dissolution of the USSR in 1991 was hailed as a momentous victory for world capitalism. At long last the specter of communism and socialism had been eradicated. History had come to an end! The October Revolution had ended in ruins! Of course, such proclamations were not supported by a careful examination of what had occurred during the previous 74 years. No account was given of the enormous achievements of the Soviet Union, which included not only its central role in the defeat of Nazi Germany in World War II, but also the immense advances in the social and cultural conditions of the Soviet people. But aside from its efforts to obliterate from collective memory all recollection of Soviet achievements, the essential falsification of twentieth-century history has been the effort to define the fate of socialism on the basis of a nationalist narrative of the October Revolution, in which the Bolshevik seizure of power is presented as an aberrant, illegitimate and even criminal event in Russian history. The original Bolshevik conception of October must, in turn, be either ridiculed or ignored. No enduring historical and political relevance can be attributed to the October Revolution.

Red Guard unit at the Vulkan factory in Petrograd during the revolution

This reactionary narrative, aimed at divesting the October Revolution of all legitimacy, relevance and honor depends, however, on one small thing: that the world capitalist system has resolved and transcended the contradictions and crises that gave rise to war and revolution in the twentieth century.

It is precisely here that the efforts to discredit the October Revolution and all future efforts to realize socialism fall apart. The quarter-century that has passed since the dissolution of the USSR has been marked by relentless and intensifying social, political and economic crisis. We now live in an age of perpetual war. Since the initial US invasion of Iraq in 1991, the number of lives destroyed by American bombs and missiles easily surpasses one million. With geopolitical conflicts intensifying, the outbreak of a third world war is seen more and more as inevitable.

The economic crisis of 2008 exposed the fragility of the world capitalist system. Social tensions are mounting against the backdrop of levels of inequality that are the highest in a century. As the traditional institutions of bourgeois democracy are unable to bear the pressure of escalating social conflict, the ruling elites turn ever more openly to authoritarian forms of rule. The Trump administration is merely one disgusting manifestation of the universal breakdown of bourgeois democracy. The role of the military, police and intelligence agencies in the running of the capitalist state is becoming ever more open.

Throughout this centenary year, innumerable articles and books have been published whose aim is to discredit the October Revolution. But the declarations of the “irrelevance” of October are belied by the tone of hysteria that pervades so many of these denunciations. The October Revolution is treated not as a historical event, but as an enduring and dangerous contemporary threat.

The fear that underlies the denunciations of the October Revolution found expression in a recently published book by a leading academic specialist in historical falsification, Professor Sean McMeekin. He writes:

Like the nuclear weapons born of the ideological age inaugurated in 1917, the sad fact about Leninism is that, once invented, it cannot be uninvented. Social inequality will always be with us, along with the well-intentioned impulse of socialists to eradicate it… If the last hundred years teaches us anything, it is that we should stiffen our defenses and resist armed prophets promising social perfection.

In an essay published in the New York Times in October, columnist Bret Stephens warns:

Efforts to criminalize capitalism and financial services also have predictable results… A century on, the bacillus [of socialism] isn’t eradicated, and our immunity to it is still in doubt.

The anxiety expressed in these statements is not without foundation. A newly published poll shows that among American “Millennials” (people below the age of 28), a greater percentage would prefer to live in a socialist or communist society than in a capitalist one.

* * * * *

Throughout this centenary year, the International Committee of the Fourth International has celebrated the anniversary of the October Revolution by studying and explaining its origins and significance. It conducted this important historical work as the only political tendency in the world that represents the program of international socialism upon which the October Revolution was based. The defense of this program is rooted historically in the struggle waged by Trotsky—first as the leader of the Left Opposition and later as the founder of the Fourth International—against the nationalist betrayal and perversion of the program and principles of the October Revolution by the Stalinist bureaucracy. While defending all that was achieved within the Soviet Union as a consequence of the October Revolution, this never assumed the form of an adaptation, let alone capitulation, to the reactionary policies of the bureaucratic regime.

Thus, the Fourth International is the contemporary expression of the program of World Socialist Revolution. In the present period of insoluble capitalist crisis, this program once again is acquiring intense relevance. The October Revolution lives not only in history, but in the present.

We call on workers and youth throughout the world to join the fight for world socialism.

http://www.wsws.org/en/articles/2017/11/07/pers-n07.html

Advertisements

Survivors of Northern California fires face new ordeal of recovery

By Therese Leclerc
6 November 2017

The fires are out in Northern California. The California Department of Forestry and Fire Protection has announced that all the wildfires that have ravaged the counties of Napa, Lake, Sonoma, Mendocino, Butte and Solano, north of San Francisco, since October 9 have been completely contained.

At the height of the blaze, 42 residents lost their lives as 10,000 firefighters, many of them volunteers, worked shifts of up to four days straight to battle the infernos. Crews were mobilized from throughout the state. Others came in from neighboring Nevada and Oregon and from as far away as Canada, Mexico and Australia.

With the extinguishing of the flames, however, the ordeal for the survivors has entered a new stage.

The fires are the most severe California has ever faced. Some 15,000 homes and 3,000 vehicles were destroyed or damaged.

Figures released by the state insurance commissioner’s office last week put the damage at over $3 billion. That figure is certain to rise.

For the first time, this year’s fires, driven by up-to-50-mph winds, engulfed urban areas, such as the city of Santa Rosa, where the Coffey Park neighborhood was reduced to ashes after the flames jumped six lanes of Highway 101.

Homeowners and renters, still in makeshift accommodation, are currently tackling the onerous task of cleaning up, attempting to retrieve any of their belongings that may have survived and applying for insurance and what federal assistance is available.

California has declared a public health emergency in the fire area. Mobile homes that were incinerated in Santa Rosa were found to have contained asbestos. Freon from air conditioners and heavy metals such as arsenic, copper and lead pose health risks throughout the area as well.

Recent rain—and the rainfall to come with the approach of winter—risks carrying the hazardous waste down into waterways, and even into water treatment plants, downstream of destroyed forests and charred neighborhoods.

Some homes have been designated toxic waste sites, further complicating the job for residents trying to salvage belongings.

There are residents who face even more obstacles to regaining their homes and jobs. These are the undocumented workers, who form the core workforce of the main industries in the region—hospitality, tourism and the wineries. It is estimated that some 28,000 undocumented adults and children lived in the region worst affected by the flames.

These workers do not qualify for Federal Emergency Management Agency (FEMA) aid. One of the many details required on the FEMA application forms is a social security number, denied to these residents, some of whom have lived in the area for up to 18 years. Children of these families who are American citizens do qualify for federal aid, but there is a fear that if the family seeks aid, other family members will be detained and deported.

This fear also kept many out of the shelters set up for residents who lost their homes or were ordered to evacuate endangered areas. Members of the National Guard were stationed at the shelters.

In the days following the outbreak of the fires, dozens of these families slept in cars and on beaches along the California coast.

Officials have said it will take years for the region to recover, socially and economically. Judging by the experience of residents in the wake of other recent disasters in the United States and its territories, that may be an understatement.

In Houston, recently flooded after the passage of Hurricane Harvey, the disaster is worsening the level of social inequality in the region.

NBC reported on October 23 that the poor in the Houston area are likely to fall further into poverty and homelessness while the wealthy are moving ahead with rebuilding.

Those who have been receiving temporary assistance from FEMA over the last two months now find themselves struggling to regain a foothold in their lives.

“Displaced renters have found themselves reliant on the whims of landlords or the generosity of friends,” the NBC report stated. “Homeowners without flood insurance are in a similar bind, while those who have it are waiting for their claims to go through. Some are maxing out their credit cards, or moving back into damaged houses.

“In some prosperous neighborhoods,” the report added, “certain homeowners aren’t bothering to wait for their insurance checks—if they had flood insurance at all—and are paying their contractors up front.”

An even more extreme situation exists in Puerto Rico, devastated by Hurricane Maria in late September. Most residents have been told they will be without power until January or February, with some of those in the outlying areas having to wait until spring or summer, according to the Army Corps of Engineers.

The hardship experienced by people in these situations can become permanent. In New Orleans, flooded in the wake of Hurricane Katrina in 2005, residents were temporarily removed to neighboring states, far from their homes and jobs. Twelve years later, many are still displaced. While some have managed to start again in their new location, those who would prefer to return face expenses most people cannot meet. There is a lack of affordable housing in the city and new safety standards for elevating homes. Some people will never be able to return.

In Northern California, those who manage to overcome all the obstacles to rebuilding may encounter a further problem: insurance rate hikes.

In a press conference on Tuesday, state insurance commissioner Dave Jones warned that in the wake of the disaster insurers were likely to reevaluate the risk that wildfires pose to structures previously considered low-risk to such threats.

“I am concerned the fire we just experienced is not an anomaly and may represent a new normal,” Jones said.

http://www.wsws.org/en/articles/2017/11/06/cali-n06.html

Chomsky: Imagine a World Without Neoliberals Privatizing Everything in Sight

NEWS & POLITICS
A proposal for a progressive social and economic order for the United States.

Noam Chomsky.
Photo Credit: screenshot via Democracy Now!

This is the first part of a wide-ranging interview with world-renowned public intellectuals Noam Chomsky and Robert Pollin. The next installment will appear on October 24.

Not long after taking office, it became evident that Donald Trump had engaged in fraudulent populism during his campaign. His promise to “Make America Great Again” has been exposed as a lie, as the Trump administration has been busy extending US military power, exacerbating inequality, reverting to the old era of unregulated banking practices, pushing for more fuel fossil drilling and stripping environmental regulations.

In the Trump era, what would an authentically populist, progressive political agenda look like? What would a progressive US look like with regard to jobs, the environment, finance capital and the standard of living? What would it look like in terms of education and health care, justice and equality? In an exclusive interview with C.J. Polychroniou for Truthout, world-renowned public intellectuals Noam Chomsky and Robert Pollin tackle these issues. Noam Chomsky is professor emeritus of linguistics at MIT and laureate professor in the department of linguistics at the University of Arizona. Robert Pollin is distinguished professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst. Their views lay the foundation for a visionary — yet eminently realistic — progressive social and economic order for the United States.

C.J. Polychroniou: Noam, the rise of Donald Trump has unleashed a rather unprecedented wave of social resistance in the US. Do you think the conditions are ripe for a mass progressive/socialist movement in this country that can begin to reframe the major policy issues affecting the majority of people, and perhaps even challenge and potentially change the fundamental structures of the US political economy?

Noam Chomsky: There is indeed a wave of social resistance, more significant than in the recent past — though I’d hesitate about calling it “unprecedented.” Nevertheless, we cannot overlook the fact that in the domain of policy formation and implementation, the right is ascendant, in fact some of its harshest and most destructive elements [are rising].

Nor should we overlook a crucial fact that has been evident for some time: The figure in charge, though often ridiculed, has succeeded brilliantly in his goal of occupying media and public attention while mobilizing a very loyal popular base — and one with sinister features, sometimes smacking of totalitarianism, including adoration of The Leader. That goes beyond the core of loyal Trump supporters…. [A majority of Republicans] favor shutting down or at least fining the press if it presents “biased” or “false news” — terms that mean information rejected by The Leader, so we learn from polls showing that by overwhelming margins, Republicans not only believe Trump far more than the hated mainstream media, but even far more than their own media organ, the extreme right Fox news. And half of Republicans would back postponing the 2020 election if Trump calls for it.

It is also worth bearing in mind that among a significant part of his worshipful base, Trump is regarded as a “wavering moderate” who cannot be fully trusted to hold fast to the true faith of fierce White Christian identity politics. A recent illustration is the primary victory of the incredible Roy Moore in Alabama despite Trump’s opposition. (“Mr. President, I love you but you are wrong,” as the banners read). The victory of this Bible-thumping fanatic has led senior party strategists to [conclude] “that the conservative base now loathes its leaders in Washington the same way it detested President Barack Obama” — referring to leaders who are already so far right that one needs a powerful telescope to locate them at the outer fringe of any tolerable political spectrum.

The potential power of the ultra-right attack on the far right is [illustrated] by the fact that Moore spent about $200,000, in contrast to his Trump-backed opponent, the merely far-right Luther Strange, who received more than $10 million from the national GOP and other far-right sources. The ultra-right is spearheaded by Steve Bannon, one of the most dangerous figures in the shiver-inducing array that has come to the fore in recent years. It has the huge financial support of the Mercer family, along with ample media outreach through Breitbart news, talk radio and the rest of the toxic bubble in which loyalists trap themselves.

In the most powerful state in history, the current Republican Party is ominous enough. What is not far on the horizon is even more menacing.

Much has been said about how Trump has pulled the cork out of the bottle and legitimized neo-Nazism, rabid white supremacy, misogyny and other pathologies that had been festering beneath the surface. But it goes much beyond even that.

I do not want to suggest that adoration of the Dear Leader is something new in American politics, or confined to the vulgar masses. The veneration of Reagan that has been diligently fostered has some of the same character, in intellectual circles as well. Thus, in publications of the conservative Hoover Institution at Stanford University, we learn that Reagan’s “spirit seems to stride the country, watching us like a warm and friendly ghost.” Lucky us, protected from harm by a demi-god.

Whether by design, or simply inertia, the Republican wrecking ball has been following a two-level strategy. Trump keeps the spotlight on himself with one act after another, assuming (correctly) that yesterday’s antics will be swept aside by today’s. And at the same time, often beneath the radar, the “respectable” Republican establishment chips away at government programs that might be of benefit to the general population, but not to their constituency of extreme wealth and corporate power. They are systematically pursuing what Financial Times economic correspondent Martin Wolf calls “pluto-populism,” a doctrine that imposes “policies that benefit plutocrats, justified by populist rhetoric.” An amalgam that has registered unpleasant successes in the past as well.

Meanwhile, the Democrats and centrist media help out by focusing their energy and attention on whether someone in the Trump team talked to Russians, or [whether] the Russians tried to influence our “pristine” elections — though at most in a way that is undetectable in comparison with the impact of campaign funding, let alone other inducements that are the prerogative of extreme wealth and corporate power and are hardly without impact.

The Russian saboteurs of democracy seem to be everywhere. There was great anxiety about Russian intervention in the recent German elections, perhaps contributing to the frightening surge of support for the right-wing nationalist, if not neo-fascist, “Alternative for Germany” [AfD]. AfD did indeed have outside help, it turns out, but not from the insidious Putin. “The Russian meddling that German state security had been anticipating apparently never materialized,” according to Bloomberg News. “Instead, the foreign influence came from America.” More specifically, from Harris Media, whose clients include Marine Le Pen’s National Front in France, Benjamin Netanyahu in Israel, and our own Donald Trump. With the valuable assistance of the Berlin office of Facebook, which created a population model and provided the needed data, Harris’s experts micro-targeted Germans in categories deemed susceptible to AfD’s message — with some success, it appears. The firm is now planning to move on to coming European races, it has announced.

Nevertheless, all is not bleak by any means. The most spectacular feature of the 2016 elections was not the election of a billionaire who spent almost as much as his lavishly-funded opponent and enjoyed fervent media backing. Far more striking was the remarkable success of the Sanders campaign, breaking with over a century of mostly bought elections. The campaign relied on small contributions and had no media support, to put it mildly. Though lacking any of the trappings that yield electoral success in our semi-plutocracy, Sanders probably would have won the Democratic Party nomination, perhaps the presidency, if it hadn’t been for the machinations of party managers. His popularity undimmed, he is now a leading voice for progressive measures and is amassing considerable support for his moderate social democratic proposals, reminiscent of the New Deal — proposals that would not have surprised President Eisenhower, but are considered practically revolutionary today as both parties have shifted well to the right [with] Republicans virtually off the spectrum of normal parliamentary politics.

Offshoots of the Sanders campaign are doing valuable work on many issues, including electoral politics at the local and state level, which had been pretty much abandoned to the Republican right, particularly during the Obama years, to very harmful effect. There is also extensive and effective mobilization against racist and white supremacist pathologies, often spearheaded by the dynamic Black Lives Matter movement. Defying Trumpian and general Republican denialism, a powerful popular environmental movement is working hard to address the existential crisis of global warming. These, along with significant efforts on other fronts, face very difficult barriers, which can and must be overcome.

Bob, it is clear by now that Trump has no plan for creating new jobs, and even his reckless stance toward the environment will have no effect on the creation of new jobs. What would a progressive policy for job creation look like that will also take into account concerns about the environment and climate change?

Robert Pollin: A centerpiece for any kind of progressive social and economic program needs to be full employment with decent wages and working conditions. The reasons are straightforward, starting with money. Does someone in your family have a job and, if so, how much does it pay? For the overwhelming majority of the world’s population, how one answers these two questions determines, more than anything else, what one’s living standard will be. But beyond just money, your job is also crucial for establishing your sense of security and self-worth, your health and safety, your ability to raise a family, and your chances to participate in the life of your community.

How do we get to full employment, and how do we stay there? For any economy, there are two basic factors determining how many jobs are available at any given time. The first is the overall level of activity — with GDP as a rough, if inadequate measure of overall activity — and the second is what share of GDP goes to hiring people into jobs. In terms of our current situation, after the Great Recession hit in full in 2008, US GDP has grown at an anemic average rate of 1.3 percent per year, as opposed to the historic average rate from 1950 until 2007 of 3.3 percent. If the economy had grown over the past decade at something even approaching the historic average rate, the economy would have produced more than enough jobs to employ all 13 million people who are currently either unemployed or underemployed by the official government statistics, plus the nearly 9 million people who have dropped out of the labor force since 2007.

In terms of focusing on activities where job creation is strong, let’s consider two important sets of economic sectors. First, spending $1 million on education will generate a total of about 26 jobs within the US economy, more than double the 11 jobs that would be created by spending the same $1 million on the US military. Similarly, spending $1 million on investments in renewable energy and energy efficiency will create over 16 jobs within the US, while spending the same $1 million on our existing fossil fuel infrastructure will generate about 5.3 jobs — i.e. building a green economy in the US generates roughly three times more jobs per dollar than maintaining our fossil fuel dependency. So full employment policies should focus on accelerating economic growth and on changing our priorities for growth — as two critical examples, to expand educational opportunities across the board and to build a green economy, while contracting both the military and the fossil fuel economy.

A full employment program also obviously needs to focus on the conditions of work, starting with wages. The most straightforward measure of what neoliberal capitalism has meant for the US working class is that the average wage for non-supervisory workers in 2016 was about 4 percent lower than in 1973. This is while average labor productivity — the amount each worker produces over the course of a year — has more than doubled over this same 43-year period. All of the gains from productivity doubling under neoliberalism have therefore been pocketed by either supervisory workers, or even more so, by business owners and corporate shareholders seeing their profits rise. The only solution here is to fight to increase worker bargaining power. We need stronger unions and worker protections, including a $15 federal minimum wage. Such initiatives need to be combined with policies to expand the overall number of job opportunities out there. A fundamental premise of neoliberalism from day one has been to dismantle labor protections. We are seeing an especially aggressive variant of this approach today under the so-called “centrist” policies of the new French President Emmanuel Macron.

What about climate change and jobs? A view that has long been touted, most vociferously by Trump over the last two years, is that policies to protect the environment and to fight climate change are bad for jobs and therefore need to be junked. But this claim is simply false. In fact, as the evidence I have cited above shows, building a green economy is good for jobs overall, much better than maintaining our existing fossil-fuel based energy infrastructure, which also happens to be the single most significant force driving the planet toward ecological disaster.

It is true that building a green economy will not be good for everyone’s jobs. Notably, people working in the fossil fuel industry will face major job losses. The communities in which these jobs are concentrated will also face significant losses. But the solution here is straightforward: Just Transition policies for the workers, families and communities who will be hurt as the coal, oil and natural gas industries necessarily contract to zero over roughly the next 30 years. Working with Jeannette Wicks-Lim, Heidi Garrett-Peltier and Brian Callaci at [the Political Economy Research Institute], and in conjunction with labor, environmental and community groups in both the states of New York and Washington, we have developed what I think are quite reasonable and workable Just Transition programs. They include solid pension protections, re-employment guarantees, as well as retraining and relocation support for individual workers, and community-support initiatives for impacted communities.

The single most important factor that makes all such initiatives workable is that the total number of affected workers is relatively small. For example, in the whole United States today, there are a total of about 65,000 people employed directly in the coal industry. This represents less than 0.05 percent of the 147 million people employed in the US. Considered within the context of the overall US economy, it would only require a minimum level of commitment to provide a just transition to these workers as well as their families and communities.

Finally, I think it is important to address one of the major positions on climate stabilization that has been advanced in recent years on the left, which is to oppose economic growth altogether, or to support “de-growth.” The concerns of de-growth proponents — that economic growth under neoliberal capitalism is both grossly unjust and ecologically unsustainable — are real. But de-growth is not a viable solution. Consider a very simple example — that under a de-growth program, global GDP contracts by 10 percent. This level of GDP contraction would be five times larger than what occurred at the lowest point of the 2007-09 Great Recession, when the unemployment rate more than doubled in the United States. But even still, this 10 percent contraction in global GDP would have the effect, on its own, of reducing carbon dioxide (CO2) emissions by precisely 10 percent. At a minimum, we would still need to cut emissions by another 30 percent within 15 years, and another 80 percent within 30 years to have even a fighting chance of stabilizing the climate. As such, the only viable climate stabilization program is to invest massively in clean renewable and high energy efficiency systems so that clean energy completely supplants our existing fossil-fuel dependent system within the next 30 years, and to enact comparable transformations in agricultural production processes.

The “masters of the universe” have made a huge comeback since the last financial crisis, and while Trump’s big-capital-friendly policies are going to make the rich get richer, they could also spark the next financial crisis. So, Bob, what type of progressive policies can and should be enforced to contain the destructive tendencies of finance capital?

Pollin: The classic book Manias, Panics, and Crashes by the late MIT economist Charles Kindleberger makes clear that, throughout the history of capitalism, unregulated financial markets have persistently produced instability and crises. The only deviation from this long-term pattern occurred in the first 30 years after World War II, roughly from 1946-1975. The reason US and global financial markets were much more stable over this 30-year period is that the markets were heavily regulated then, through the Glass-Steagall regulatory system in the US, and the Bretton Woods system globally. These regulatory systems were enacted only in response to the disastrous Great Depression of the 1930s, which began with the 1929 Wall Street crash and which then brought global capitalism to its knees.

Of course, the big Wall Street players always hated being regulated and fought persistently, first to evade the regulations and then to dismantle them. They were largely successful through the 1980s and 1990s. But the full, official demise of the 1930s regulatory system came only in 1999, under the Democratic President Bill Clinton. At the time, virtually all leading mainstream economists — including liberals, such as Larry Summers, who was Treasury Secretary when Glass-Steagall was repealed — argued that financial regulations were an unnecessary vestige of the bygone 1930s. All kinds of fancy papers were written “demonstrating” that the big players on Wall Street are very smart people who know what’s best for themselves and everyone else — and therefore, didn’t need government regulators telling them what they could or could not do. It then took less than eight years for hyper-speculation on Wall Street to once again bring global capitalism to its knees. The only thing that saved capitalism in 2008-09 from a repeat of the 1930s Great Depression was the unprecedented government interventions to prop up the system, and the equally massive bail out of Wall Street.

By 2010, the US Congress and President Obama enacted a new set of financial regulations, the Dodd-Frank system. Overall, Dodd-Frank amount to a fairly weak set of measures aiming to dampen hyper-speculation on Wall Street. A large part of the problem is that Dodd-Frank included many opportunities for Wall Street players to delay enactment of laws they didn’t like and for clever lawyers to figure out ways to evade the ones on the books. That said, the Trump administration, led on economic policy matters by two former Goldman Sachs executives, is committed to dismantling Dodd-Frank altogether, and allowing Wall Street to once again operate free of any significant regulatory constraints. I have little doubt that, free of regulations, the already ongoing trend of rising speculation — with, for example, the stock market already at a historic high — will once again accelerate.

What is needed to build something like a financial system that is both stable and supports a full-employment, ecologically sustainable growth framework? A major problem over time with the old Glass-Steagall system was that there were large differences in the degree to which, for example, commercial banks, investment banks, stock brokerages, insurance companies and mortgage lenders were regulated, thereby inviting clever financial engineers to invent ways to exploit these differences. An effective regulatory system today should therefore be guided by a few basic premises that can be applied flexibly but also universally. The regulations need to apply across the board, regardless of whether you call your business a bank, an insurance company, a hedge fund, a private equity fund, a vulture fund, or some other term that most of us haven’t yet heard about.

One measure for promoting both stability and fairness across financial market segments is a small sales tax on all financial transactions — what has come to be known as a Robin Hood Tax. This tax would raise the costs of short-term speculative trading and therefore discourage speculation. At the same time, the tax will not discourage “patient” investors who intend to hold their assets for longer time periods, since, unlike the speculators, they will be trading infrequently. A bill called the Inclusive Prosperity Act was first introduced into the House of Representatives by Rep. Keith Ellison in 2012 and then in the Senate by Bernie Sanders in 2015, [and] is exactly the type of measure that is needed here.

Another important initiative would be to implement what are called asset-based reserve requirements. These are regulations that require financial institutions to maintain a supply of cash as a reserve fund in proportion to the other, riskier assets they hold in their portfolios. Such requirements can serve both to discourage financial market investors from holding an excessive amount of risky assets, and as a cash cushion for the investors to draw upon when market downturns occur.

This policy instrument can also be used to push financial institutions to channel credit to projects that advance social welfare, for example, promoting investments in renewable energy and energy efficiency. The policy could stipulate that, say, at least 5 percent of banks’ loan portfolios should be channeled to into clean-energy investments. If the banks fail to reach this 5 percent quota of loans for clean energy, they would then be required to hold this same amount of their total assets in cash.

Finally, both in the US and throughout the world, there needs to be a growing presence of public development banks. These banks would make loans based on social welfare criteria — including advancing a full-employment, climate-stabilization agenda — as opposed to scouring the globe for the largest profit opportunities regardless of social costs…. Public development banks have always played a central role in supporting the successful economic development paths in the East Asian economies.

Editor’s note: This interview has been lightly edited for length and clarity.

Copyright, Truthout. Reprinted with permission.

 

 

C.J. Polychroniou is a regular contributor to Truthout as well as a member of Truthout’s Public Intellectual Project. He is the author of several books, and his articles have appeared in a variety of publications.

https://www.alternet.org/news-amp-politics/chomsky-imagine-world-without-neoliberals-privatizing-everything-sight?akid=16283.265072.yNcENf&rd=1&src=newsletter1084478&t=6

Trump and the GOP Fuel Fantasies of White Victimhood

A crowd of Trump supporters in Washington, D.C. (Susan Walsh / AP)

Fifty-five percent of white Americans believe there is discrimination against whites in the U.S., according to a recent NPR poll. But when asked about specific instances in which they personally experienced discrimination, less than 20 percent responded that their whiteness hurt them in job applications, pay equity and promotions and college applications. Reality does not match the perception of the poll respondents, but it does reflect an increasingly common belief—one that Donald Trump has promoted and exploited virulently—that white victimhood is a large-scale problem.

A recent email from a white listener of my radio program offers a perfect example of this type of dissonance. She complained that I focus too much on white supremacy in my news coverage and that in doing so I am “promoting the destruction of the middle class.” She went on to complain that at the McDonald’s she had visited that morning, all 12 employees were Hispanic, and not a single one Caucasian. She lamented the fact that everyone in the computer engineering department of her local university is “mostly Asian or foreign,” and that almost all of her local female leaders are Jewish or have Jewish husbands. She railed about the corporate media and banking industry being mostly run by Jews (“just a fact,” she offered almost apologetically). She also noted that while she is against allowing undocumented immigrants to stay in the country, she does support the Black Lives Matter movement and had voted for Barack Obama. Ultimately, she said, she isn’t seeking privilege or supremacy—she just wants a decent job to pay her bills.

Ignoring the racist themes of her email, I responded to her in the following manner:

What you are describing is what communities of color have suffered for decades while most whites remained silent because it was not impacting them. Now that the horrible state of the economy is spreading its malaise far and wide into white communities, you are feeling the terrible toll of capitalism. No one should have to suffer trying to make ends meet, trying to get a decent job with decent pay. Is your suffering the fault of people of color and Jews or is it the fault of the Donald Trumps and Hillary Clintons, and wealthy elites?

I think we are on the same side. Racism does not need to be the answer to capitalist failings. It’s too easy to scapegoat another person rather than point the finger at the wealthy people and corporations that are laughing all the way to the bank.

After digging into the listener’s background, I realized she is highly educated, with multiple degrees in technical fields. Still, like so many white Americans who are hurting financially, she blames communities of color for her struggles rather than finding common cause with them.

While this woman appeared to be critical of President Trump as well, her frustration with the state of the economy is real, and reminiscent of many voters’ reasons for supporting Trump. Indeed, her assertions about people of color appear to be informed by much of the disinformation and “fake news” that passes as fact these days and fuels Trump’s power. Trump has often promoted easily refutable lies on his Twitter account, feeding such propaganda. In November 2015, a year before his election win, he retweeted an infographic about violence in communities of color that contained not one single truth among its multiple assertions about whites, blacks and violence.

Yet this week, the president accused the press of publishing false stories, citing a Politico poll that found nearly half of all Americans think the media fabricate news about him. (Incidentally, Trump has railed against Politico several times in the past but had no problem promoting the results of its poll.)

Evidence and polls do not seem to alter the perceptions of some white Americans who consider their personal experiences indicative of the norm. This comes as no surprise, given the propaganda being flung around by conservative activists and politicians who want to assure white Americans that their racial resentment is valid, despite evidence to the contrary. Just last week, on his Twitter feed, Trump erroneously attributed Britain’s 13 percent rise in overall crime to “radical Islamic terror,” while staying silent on horrific gun violence in the United States. Sebastian Gorka, who briefly served as a White House adviser, said on a television panel Monday that “our big issue is black African gun crime against black Africans. … Black young men are murdering each other by the bushel.” Setting aside the casual and ignorant racism of the term “black Africans,” Gorka cited the standard right-wing, pro-gun trope about “black-on-black” violence that reinforces racist stereotypes.

Even the government’s specific actions serve to justify the fantasy that people of color are perpetrators and whites are victims: The FBI under Trump is focusing on “black identity extremist” organizations, which experts say is “fiction.”

News headlines are rife with instances of violence that dispute these racist stereotypes. Take one recent example: A white man’s mass shooting in Las Vegas on Oct. 1, which led to nearly 60 deaths and hundreds of injuries. Or the lynching threat made against Florida Rep. Frederica Wilson after she boldly stood up to Trump and chief of staff John Kelly. There are many other recent examples of violence and threats of violence in our country, and there also are plenty of studies offering irrefutable evidence of systematic racism (a topic I covered in an earlier column).

Author Joan Williams identifies the phenomenon represented by the listener who emailed me, saying in a recent interview with The Washington Post, “White people who are not privileged feel belittled. They feel stereotyped. They feel openly ridiculed and they are really, really angry because of what elite white people are doing to them. … Now, because of this poisonous dynamic among white people, guess who’s paying the price?”

Others have summarized this idea in slightly different ways, but it is important to articulate: To those who have been used to privilege all their lives, equality may feel like oppression. The challenge facing progressive whites and people of color is to identify the mistaken assumptions about who the perpetrators of social and economic violence actually are, and address these perpetrators head on. Along with growing anti-fascist movements nationwide, we need to articulate and promote a vision of economic justice that will benefit the majority of struggling Americans. We need to simultaneously underscore that people of color are here to stay and that wishing them away will not solve anyone’s economic problems. If we don’t meet this challenge, we will find ourselves in the midst of a race war that obscures the class war the rich are waging against us all.

Sonali Kolhatkar
Columnist
Sonali Kolhatkar is a columnist for Truthdig. She also is the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV (Dish Network, DirecTV,…

US moves to abolish estate tax…world’s billionaires pile up another $1 trillion

world’s billionaires pile up another $1 trillion

By Andre Damon
27 October 2017

The Swiss bank UBS and PricewaterhouseCoopers (PwC), two leading global advisors of the ultra-wealthy, have released their annual Billionaires Insights report, showing that the total wealth of the world’s billionaires shot up 17 percent last year.

Driven by a roaring global stock market, the total number of billionaires increased by 10 percent, to 1,542, while their combined wealth increased by nearly a trillion dollars, hitting $6 trillion, or more than the GDP of either Germany or Japan.

The growth rate for the wealth of these billionaires was three times higher than the rate of global economic growth, and more than twice the rate of growth of the global stock market during this period.

According to the report, financial speculation was the main driving force. “Movements in financial markets and currencies dominate the picture from year to year,” it states.

Asia now has more billionaires than the United States, including 318 in China, up by 67 since 2015. However, the US still has the largest number of billionaires of any country by far, with 563, including 25 new billionaires in 2016. Almost half of the wealth of the world’s billionaires, $2.8 trillion, is concentrated in the US.

The dizzying enrichment of the financial oligarchy is matched by growing poverty and social misery on the broad mass of the population, expressed perhaps most directly in the declining life expectancy in the United States amid an epidemic of what one researcher called “deaths of despair.”

While the top-tier wealth advisors who put together the report are looking forward to the massive fees they will receive for managing this hoard of wealth, the report nevertheless strikes a worried note.

Its authors say the world is in a new “gilded age,” and are troubled about the prospect of it coming to an end. “This period of great wealth creation is now approaching the longevity of its predecessor, which according to most historians lasted from 1870 to 1910. In our opinion, today’s started in 1980 and has lasted for more than 35 years.” The report concludes, “We believe that great wealth creation has cycles, tending to move in S-curves rather than growing linearly.”

Commenting on this analysis, Josef Stadler, head of global ultra-high net worth at UBS, told Business Insider, “The last gilded age led to the Sherman [Antitrust Act of 1890] Act,” which broke up monopolies. “We’re at the peak point again now,” he said, “Will that happen next?”

The biggest problem, according to the report’s authors, is how the wealth piled up by the billionaires is to be passed on. “The biggest idiosyncratic risk is succession,” Stadler told Business Insider.

More than two-thirds of American billionaires, the report notes, are self-made, having created their wealth during the period since 1980, which has seen a phenomenal run-up in stock markets and social inequality, fueled by policies of deindustrialization and easy money in the US and other major capitalist countries.

Few of the top ten richest people in the world were born into extreme wealth. Bill Gates, worth $88 billion, now 62 years old, was the son of a lawyer. The biological father of Jeff Bezos operates a bike shop in Glendale, Arizona. Bezos, aged 53, has a net worth of $83.5 billion. The father of Spanish business tycoon Amancio Ortega, now the world’s fourth-richest man, was a railway worker.

These billionaires are now growing older, with more than half of all billionaire wealth in the US controlled by those over 70.

The UBS/PwC report notes, “The individuals on our database are getting older and wealthier. Over the coming 20 years, we estimate that those who are 70 years old or more will transfer USD2.4 trillion, up by 16% on the previous year,” noting that this will be a “huge windfall” for their heirs.

Oddly enough, however, “There does not appear to have been any significant wealth handover in the past year,” begging the question, why billionaires are “leaving it late to hand wealth to the next generation.”

The report only hints at the answer when it complains about “complex tax laws” that have made planning wealth transfers “increasingly convoluted.”

A central component of the Trump administration’s tax plan, which it is currently working to push through Congress, is the effective abolition of the estate tax, which applies to wealth being passed down through wills, and can be as high as 40 percent. The Democrats, for their part, have repeatedly stated their openness to working with Trump to “simplify” the tax code.

This plan took a step forward Thursday with the passage in the House of a budget bill allowing for Trump’s tax proposal to be fast-tracked through Congress, with some lawmakers calling for its passage before Thanksgiving.

It doesn’t take an economist to figure out that the world’s billionaires are biding their time for governments in the US and the world to abolish estate taxes.

The abolition of the estate tax would be a major step toward making the United States a hereditary oligarchy, in which wealth is passed down dynastically without any diminution, in the form of Europe’s prerevolutionary aristocracies.

Of course, as the study’s authors admit, such a scenario, which would further impoverish the great mass of the American population and sound a death knell for what remains of democratic forms of government, is far from inevitable. The last “gilded age” led to a wave of revolutionary uprisings throughout the world, whose highest expression was the Russian Revolution of 1917.

What will be the outcome of this new “gilded age”? If the financial oligarchy has its way, it will be the transformation of the United States and the rest of the world into the modern equivalent of medieval Europe, in which the elite has the power of life and death over the working population.

But there is another, socialist, path open to humanity. Instead of allowing the wealth piled up by the financial oligarchy to enslave mankind, the trillions of dollars under their control can, and must, be expropriated and used to solve every social problem, from unemployment to starvation and disease, under the democratic control of the working population.

WSWS

Abolish the debt that is drowning Puerto Rico

We need to organize for immediate disaster relief for Puerto Rico–but we can also expose and oppose the debt disaster that came before the hurricanes.

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

SOCIALIST WORKER supports President Trump in his call to cancel Puerto Rico’s punishing debt.

We can pretty much guarantee you’ll never see the first five words of that sentence here ever again–and the supervisors of the “adult day care center” at 1600 Pennsylvania Avenue are obviously trying like hell to make sure we never have reason to.

But it says a lot about the Wall Street-made catastrophe that has plagued Puerto Rico for years before Hurricane Maria that even a reactionary fanatic like Trump didn’t think twice before stating the obvious.

“They owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said in an interview last week with Geraldo Rivera of Fox News. “I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”

“Wall Street promptly freaked out,” Politico reported the next day. That was an understatement. Heavy trading on the normally stable bond market pushed the value of Puerto Rico’s general obligation bonds–already devalued to 56 cents on the dollar after the island effectively declared bankruptcy earlier this year–down to 37 cents on the dollar.

The White House then “move[d] swiftly to clean up Trump’s seemingly offhand remarks,” Politico continued. Again an understatement. Office of Management and Budget Director Mick Mulvaney was rushed in front of a television camera to tell CNN: “I wouldn’t take it word for word with that.”

Just to make sure Wall Street got the message that no one in the Trump administration had any intention of doing what the head of the Trump administration had just said, Mulvaney was more explicit–and more contemptuous of the Puerto Rican people–in a second interview with Bloomberg: “We are not going to bail them out. We are not going to pay off those debts.”

Anyone want to bet that Trump doesn’t talk about “saying goodbye” to Puerto Rico’s debt again?

But the simple fact is that justice demands exactly that: The cancelation of all of Puerto Rico’s debt repayments, by the action of the U.S. government, taking responsibility for the Wall Street loan sharks who inflicted the damage in the first place.

Puerto Rico is caught in the same kind of debt trap that has ensnared poor countries in hock to the International Monetary Fund and World Bank–or more advanced economies like Greece, at the hands of European bankers and bureaucrats. The aim is to force vulnerable societies to knuckle under to the will of the ruling class.

And now, the devastation of neoliberal policies has made Puerto Rico’s crisis following Hurricanes Irma and Maria much, much worse.

People who want to show solidarity with Puerto Rico today will rightly focus on ways to provide immediate relief to communities desperate for food, water and critical supplies. SW hopes its readers will raise what money they can to donate to grassroots efforts–see the What You Can Do box with this article.

But we have another job to do now, while Puerto Rico lingers in the media spotlight: expose the debt trap that made the island more vulnerable when Maria struck and demand that it end.

– – – – – – – – – – – – – – – –

IN MAY of this year, Puerto Rico’s government went to federal court to file for the equivalent of bankruptcy on a debt that includes over $74 billion in repayments on government bonds and $49 billion in pension obligations. But in return for immediate relief, Puerto Rico will have to abide by even harsher austerity dictates.

The debt burden–which is larger than the annual economic output of the island when pension obligations are added in–is one consequence of a recession that has lasted for more than a decade.

The economic slump began when Corporate America–after many years of making super-profits off operations in Puerto Rico, particularly pharmaceutical production–abandoned the island after favorable tax incentives for investment were phased out starting in the early 2000s. Annual corporate investment in Puerto Rico peaked at 20.7 percent of gross domestic product in 1999–it has fallen to under 7.9 percent as of 2016.

Successive governments–whether led by New Progressive Party, which is aligned with the U.S. Republicans, or the Popular Democratic Party, tied to the Democrats–imposed policies that were guaranteed to make the crisis worse: neoliberal austerity.

Social spending was cut drastically–reductions in the island’s education budget led to hundreds of schools being closed, for example. Public-sector workers have been under intense pressure, with tens of thousands of layoffs and attacks on their unions. Regressive taxes have been hiked, making the sales tax of 11.5 percent higher than any U.S. state.

A succession of state assets were privatized on terms guaranteed to benefit the private purchasers: Back in the 1990s, conservative Gov. Pedro Rosselló González sold off hospitals that were part of a public health care system that was once fairly accessible and affordable at around half their market value.

Austerity measures propelled the vicious circle: Continuing economic decline made shortfalls in government revenues worse, leading to more spending cuts and regressive taxes that caused further economic contraction, and on and on.

The consequences even before Hurricane Maria were dire: Official unemployment is 11.7 percent, well over double the rate in the U.S. as a whole. Just under half of people on the island live in poverty, including three in five children.

– – – – – – – – – – – – – – – –

THROUGH IT all, debt was the straitjacket to make sure Puerto Rico didn’t stray from austerity.

Faced with declining revenues as a result of the contracting economy, various branches and agencies of the Puerto Rican government issued bonds to raise money–but these came not only with the usual obligation to repay the cash with interest, but increasing pressure to intensify neoliberal measures.

The vultures of Wall Street were eager to set up the increasingly complex bond issues. They paid better than most municipal issues, and interest on income from Puerto Rico bonds is exempt from city, state and federal taxes.

But the biggest gamblers on Wall Street see more than a tax loophole in the suffering of the people of Puerto Rico. A 2015 report from the Hedgeclippers.org website paints an ugly picture:

Several groups of hedge funds have bought up large chunks of Puerto Rican debt at discounts and have also pushed the island to borrow at extremely favorable terms for creditors. Hedge fund managers are also recommending the implementation of austerity measures.

Known as “vulture funds,” these investors have followed a similar game plan in other debt crises, in countries such as Greece and Argentina. The spoils they ultimately seek are not just bond payments, but structural reforms and privatization schemes that give them extraordinary wealth and power–at the expense of everyone else.

It’s been obvious for several years that Puerto Rico’s debt burden is unpayable, but the hedge-fund vultures are counting on enforcers in the form of the U.S. government.

A law pushed through Congress last year by Barack Obama and the Democrats established a seven-person Fiscal Control Board with broad powers to direct government agencies on the island and dictate laws and policies. It has ordered, for example, exemptions to federal standards on the minimum wage, Medicaid and Temporary Assistance to Needy Families.

To top it off, the seven members of the board include some of the same financiers who imposed neoliberal policies and arranged the deals that caused the debt burden.

Bondholders may still be forced to take a “haircut”–that is, accept less than what they are owed on Puerto Rico’s bonds. But the mission of the Fiscal Control Board is to make sure working people on the island, not investors, pay as much of the price as possible.

– – – – – – – – – – – – – – – –

ALL THIS “reads like the 21st century equivalent of the metropolitan looting of wealth from the colonies,” as Lance Selfa wrote for SocialistWorker.org after Hurricane Maria struck Puerto Rico head on.

And we know who the looters and their accomplices are.

The hedge-fund parasites who are trying to inflict more suffering on Puerto Rico rather than lose a penny from their investment gambles should face pickets outside their offices. Members of Congress–Republican and Democrat alike–should be greeted at public events by solidarity activists demanding that they remove the noose that is strangling the island.

There is much work to be done to organize for immediate relief in Puerto Rico after the hurricane catastrophe. But the left has an opportunity to also expose and oppose the unnatural disaster that came before Irma and Maria.

We may not hear any more about canceling the debt from Donald Trump, but we can raise our own voices to demand that this crushing burden be lifted off the people of Puerto Rico.

https://socialistworker.org/2017/10/11/abolish-the-debt-that-is-drowning-puerto-rico

More than 52 million Americans live in economically distressed communities

By Sandy English
28 September 2017

A new analysis of Census data shows that the so-called economic recovery under the Obama administration was an unmitigated catastrophe for the 20 percent of the American population that live in the poorest areas of the United States and that gains of jobs and income have gone overwhelming to the top 20 percent richest areas.

The 2017 Distressed Communities Report,” published by the Economic Innovation Group (EIG), analyzes the census data for 2011-2015 for people living in each of the nearly 7,500 American zip codes according to several criteria.

The EIG’s Distressed Communities Index (DCI) considers the percentage of the population without a high school diploma, the percentage of housing vacancies, the percentage of adults working, the percentage of the population in poverty, the median income ratio (the percentage of median income that a zip code has for its state), the change in employment from 2011 to 2015, and the change in the number of businesses in the same period.

The report divides the findings for zip codes into five quintiles based on these indicators, rated from worst- to best-performing: distressed, at risk, mid-tier, comfortable, and prosperous.

The results show that distressed communities—52.3 million people or 17 percent of the American population—experienced an average 6 percent drop in the number of adults working and a 6.3 percent average drop in the number of business establishments.

“Far from achieving even anemic growth from 2011 to 2015,” the report notes, “distressed communities instead experienced what amounts to a deep ongoing recession.”

Further, “fully one third of the approximately 44 million Americans receiving SNAP (Supplemental Nutrition Assistance Program or food stamps) and other cash public assistance benefits (such as Temporary Assistance for Needy Families (TANF)) live in distressed communities.” The report notes that most distressed communities have seen zero net job growth since 2000.

Residents in these zip codes are five times more likely to die than those in prosperous zip codes. Deaths from cancer, pregnancy complications, suicide, and violence are even higher. “Mental and substance abuse disorders are 64 percent higher in distressed counties than prosperous ones, with major clusters in Appalachia and Native American communities where rates exceed four or five times the national average,” the report continues.

One other important and alarming fact which the report highlights is that over a third of the distressed zip codes contain so-called “brownfield” sites—areas which are polluted or contaminated in some way. Not only do these have impacts on real estate and business development, they present a whole array of health hazards to the very poorest Americans.

Distressed communities can be found all over the United States but are concentrated in the South: 43 percent of Mississippi’s zip codes are distressed, followed by Alabama, West Virginia, Arkansas and Louisiana. According to the report, [the South] “is home to a staggering 52 percent of all Americans living in distressed zip codes—far above its 37.5 percent share of the country’s total population.”

After this, the Southwest and Great Lakes region have the largest share. In the Northeast, most distressed communities tend to be found in urban areas and in the South, primarily in rural areas.

The biggest cities with the largest numbers of distressed zip codes are Cleveland, Ohio, Newark, New Jersey, Buffalo, New York, Detroit, Michigan and Toledo, Ohio. Mid-sized cities with the highest number of distressed zip codes include Youngstown, Ohio, Trenton, New Jersey, Camden, New Jersey, Gary, Indiana, Hartford, Connecticut and Flint, Michigan.

Urban counties with the highest number of distressed zip codes include Cook County in Illinois, with Chicago at its center, Los Angeles County in California, Harris County in Texas, with Houston at its center, and Wayne County in Michigan, encompassing Detroit. Most of these urban areas were once industrial centers and home to the industrial working class.

Zip codes that have a majority of minorities living in them are more than twice as likely to be distressed as zip codes that are majority white. “In total,” the report notes, “45 percent of the country’s majority-minority zip codes are distressed and only 7 percent of them are prosperous.” At the same time there are numerous distressed communities that are almost completely white. A quarter of the total distressed population is under 18.

The report found that the economic benefits of the recovery after the 2008 recessions have gone to the top quintile of zip codes, where the wealthier layers of the population live, including not only the very rich but also the upper middle class.

These areas, which the DCI terms prosperous, and make up roughly 85 million Americans or 27 percent of the US population, have for the most part the economic wherewithal to finance higher levels of education, have the lowest housing vacancy, highest percentage of working adults, and have had the lion’s share of job and business expansion.

“The job growth rate in the top quintile was 2.6 times higher than nationally from 2011 to 2015, and business establishments proliferated three times faster than they did at the national level,” the report notes. “Prosperous zip codes stand worlds apart from their distressed counterparts, seemingly insulated from many of the challenges with which other communities must grapple. The poverty rate is more than 20 points lower in the average prosperous community than it is in the average distressed one.”

The report makes much less of an analysis of the other three, middle quintiles, the at risk, mid-tier, and comfortable categories, but it does note some factors that address the overall trends nation-wide. “A remarkably small proportion of places fuel national increases in jobs and businesses in today’s economy. High growth in these local economic powerhouses buoys national numbers while obscuring stagnant or declining economic activity in other parts of the country.”

One of the more telling aspects of the report is that extreme poverty in the US is presided over by both capitalist parties: Democratic and Republic politicians have equal numbers of distressed communities in their constituencies. Democrats, in fact, “represent six of the 10 most distressed congressional districts.”

Another observation from the voting data, and one of the few that looks at conditions beyond the bottom and top quintiles, is worth quoting in full:

“President Trump accumulated a 3.5 million vote lead in counties that fell into the bottom three quintiles of well-being (equivalent to 9.4 percent of all votes cast in these counties). A vast array of factors determined voting patterns in the 2016 election, but it stands that the ‘continuity’ candidate performed better in the places benefiting most from the status quo, while the ‘change’ candidate performed better in the places one would expect to find more dissatisfaction.”

Broader figures and the historical view of wealth distribution in the US—that one percent of the population control 40 percent of the wealth or the decades-long decline in the percentage of the national income that goes to the working class—are not brought out in the report but the data add to a complete picture of social conditions across the United States, the character and geographical distribution of social and economic conditions in a country of more than 320 million.

The portrait provided by the EIG report is not simply one of increasing misery and poverty for the bottom 20 percent, and not only one in which only a minority of Americans are achieving anything like “prosperity,” but of growing and explosive dissent among tens of millions.

It exposes as a bare-faced lie the claim that President Obama made at the end of his second term, that “things have never been better” in America.

http://www.wsws.org/en/articles/2017/09/28/pove-s28.html