Trump calls for $1.7 trillion in social cuts

23 May 2017

The Trump administration will unveil a fiscal year 2018 budget today that includes $1.7 trillion in cuts to major social programs. The plan marks a new stage in a bipartisan social counterrevolution aimed at eviscerating what remains of programs to fight poverty and hunger and provide health care for millions of workers.

The unveiling of the budget underscores the reactionary character of the Democrats’ response to a gangster government headed by a fascistic-minded billionaire and composed of Wall Street bankers, far-right ideologues and generals. The Democratic Party has chosen to base its opposition to Trump not on his assault on working and poor people, his attacks on democratic rights, or his reckless militarism, but on his supposed “softness” toward Russia.

In the political warfare in Washington, the Democrats are aligned with those sections of the intelligence apparatus and the “deep state” that are determined to compel Trump to abandon any notion of easing relations, and instead continue the Obama administration’s policy of escalating confrontation with Russia. As the Democrats and the so-called “liberal” media pursue their anti-Russia campaign, the Trump administration continues to advance its brutal domestic agenda.

Trump’s budget is the opening shot in a stage-managed tussle between the two big business parties over social cuts that will end with the most massive attack on core social programs in US history.

The budget includes a cut of $800 billion over a decade in Medicaid, the health insurance program for low-income people jointly administered by the federal government and the states. More than 74 million Americans, or one in five, are currently enrolled in Medicaid, including pregnant women, children and seniors with disabilities.

Like the American Health Care Act (AHCA) passed earlier this month by the Republican-controlled House of Representatives, Trump’s budget plan would put an end to Medicaid as a guaranteed benefit based on need, replacing it with per capita funding or block grants to the states.

The AHCA would also end the expansion of Medicaid benefits under Obamacare and allow states to impose work requirements for beneficiaries. The Congressional Budget Office estimated that an earlier version of the Republican plan would result in 10 million people being stripped of Medicaid benefits.

Trump’s budget would also cut $193 billion over a decade from the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, a 25 percent reduction to be achieved in part by limiting eligibility and imposing work requirements.

Welfare benefits, known as Temporary Assistance for Needy Families, would be cut by $21 billion. Spending on the Earned Income Tax Credit and Child Tax Credit, which benefit mainly low- and middle-income families, would be reduced by $40 billion.

The budget reportedly includes changes in funding for Social Security’s Supplemental Security Income program, which provides cash benefits to the poor and disabled.

While gutting social programs, Trump proposes to sharply reduce taxes for the wealthy. In addition to slashing income tax rates for the rich, he is proposing to dramatically cut estate, capital gains and business tax rates. At the same time, he is demanding a huge increase in military spending.

While Democrats will make rhetorical criticisms of the Trump budget, the fact is that the administration is escalating a decades-long assault on the working class overseen by both big business parties.

The outcome can be seen in the reality of social life in America:


More than 13 percent—some 43.1 million Americans—were living in poverty in 2015. Of these, 19.4 million were living in extreme poverty, which means their family’s cash income was less than half of the poverty line, or about $10,000 a year for a family of four. The poverty rate for children under 18 was 19.7 percent.

These are the official poverty rates, based on absurdly low income baselines. In reality, at least half of the population is living in or on the edge of poverty. These are precisely the people targeted by Trump’s proposed cuts to Medicaid, welfare and food stamps.


Almost one in eight US households, 15.8 million, were food insecure in 2015, meaning they had difficulty providing enough food for all their members. Five percent of households had very low food security, meaning the food intake of household members was cut. Three million households were unable to provide adequate, nutritious food for their children.

Lack of health care

In 2016 under Obamacare, 28.6 million people of all ages, or about 9 percent of the US population, remained uninsured. Many of those insured under plans purchased from private insurers on the Obamacare exchanges were unable to use their insurance because of prohibitively high deductibles and co-pays. Many who gained insurance under Obamacare did so as a result of the expansion of Medicaid. Trump plans to reverse this, throwing millions of people back into the ranks of the uninsured.

A bipartisan assault

In the wake of Trump’s budget proposal, the Democrats have responded with their standard empty rhetoric. Senate Minority Leader Charles Schumer—one of Congress’ biggest recipients of Wall Street campaign money—decried Trump’s “hard-right policies that benefit the ultra-wealthy at the expense of the middle-class.” Just three weeks ago, Schumer and House Minority Leader Nancy Pelosi were hailing the passage of a bipartisan fiscal 2017 budget that cut food stamps by $2.4 billion, slashed funding for education and the environment, and added billions more for the military and border control.

Obamacare paved the way for the present assault on Medicaid and the coming attacks on Medicare and Social Security by further subordinating health care to the profit demands of the insurance and pharmaceutical industries and imposing higher costs for reduced benefits on millions of workers.

Nothing less than a mass movement of the working class will prevent the destruction of Medicaid, Medicare, Social Security, food stamps, public education and every other social gain won by the working class. But this movement must be completely independent of the Democratic Party, the historic graveyard of social protest in America. That includes left-talking demagogues like Bernie Sanders and Elizabeth Warren.

It is not a matter of appealing to or seeking to pressure the Democrats or any other section of the political establishment. They are all in the pocket of Wall Street.

The working class needs its own program to secure its basic social rights—a decent-paying job, education, health care, a secure retirement. These rights are not compatible with a capitalist system that is lurching inexorably toward world war and dictatorship.

Workers and youth must intervene in this crisis with a socialist and revolutionary program geared to the needs of the vast majority, not the interests of an obscenely rich and corrupt financial oligarchy.

Kate Randall

Undercover report of super-exploitation in China’s iPhone factories

By Robert Campion
22 May 2017

A New York University (NYU) graduate recently reported his experiences working undercover at one of China’s largest Apple iPhone factories, owned by Pegatron, in Shanghai. His experiences highlight the oppressive and poor working conditions in China, which remains a cheap labour platform for global capitalism.

Dejian Zeng undertook his trip in pursuit of a Master of Public Administration in 2016, in partnership with China Labor Watch (CLW), a New York-based organization. CLW and the BBC have previously exposed super-exploitation, including excessive and illegal overtime work, at Pegatron Shanghai, which currently employs around 60,000 workers.

Zeng related his experiences on the assembly line in an interview on the Business Insider web site.

“One line might have about a hundred stations,” Zeng said, “each station does one specific thing … What I did is that I put the sticker on the case and I put a screw on it … It’s like, that’s the work. I mean it’s simple, but that’s the work that you do. Over, over, over again. For whole days.”

Zeng repeated this particular task 1,800 times a day, to the point where he could perform the task blindfolded. He regularly worked 10.5-hour days, 6 days a week. Factoring in unpaid break times and security clearances, this amounted to 12.5 hours a day spent at the factory.

Zeng reported that it was usual for managers to yell at workers and keep them working at full capacity. Many workers became fatigued with the prolonged intensity of their tasks and struggled to catch sleep in the breaks.

“Sleep is really a thing in the factory. You can see that in the lounge; we have a lot of like long sofas but it’s not really very comfortable … It’s like you can feel the iron.”

“People just sit there and sleep. But you can’t lay down. There are people walking around. If they see you lay down they will swipe the ID and take a record on it. And they put the record in your profile. And then they will publish it to your whole assembly line. So your manager would come and yell at you later. Sometimes if it happens multiple times they deduct money.”

After finishing their shifts, Zeng and his co-workers returned to 8-bed dormitories, with little energy or time left for leisure, or access to culture.

“The time left in your life is very, very limited. It’s just a couple of hours. And then there’s not much you can do … you really need to go to bed. And then the other day you wake up at 6:30. Again. And that’s just a routine.”

Zeng noted that a fellow employee worked 11 days straight.

In 2010, the world was shocked by reports of 14 suicides at iPhone factories operated by Foxconn, prompting Apple to introduce a minimal set of standards and marginally improve worker’s pay and conditions. Pegatron emerged as one of Apple’s principal manufacturing suppliers in the aftermath, taking advantage of its ability to better exploit its workforce.

As Zeng’s experiences testify, the oppressive conditions still persist, evidenced by the crude installation of suicide nets around buildings and inside stairwells, as well as bars around all windows. Toward the end of Zeng’s employment in August, the Wall Street Journal would report the suicide of a Foxconn worker in Zhengzhou.

Pegatron and Foxconn are monolithic corporations based in Taiwan. They are able to operate on low margins by brutally exploiting workforces of hundreds of thousands. One facility operated by Foxconn in Shenzhen is known as “Foxconn City.” The walled-off compound houses an industrial army of approximately 420,000, with a population density roughly five times that of the world’s most populous city, Mumbai.

In 2014 the Pegatron factory where Zeng was employed was profiled by the BBC, which found breaches of numerous of the standards supposedly put in place by Apple. These included excess overtime, bypassing the use of ID cards to record worker’s shifts, and exploitation of juvenile workers. One undercover reporter was required to work 18 days in a row, despite repeated calls for a day off.

Apple’s standards and appeals to its manufacturers to uphold them are cynical window-dressing. Details of the horrendous working conditions are also suppressed by the Beijing regime, which enforces police-state conditions on behalf of conglomerates such as Apple.

But the social tensions in China are increasingly erupting to the surface. The China Labour Bulletin recorded 2,663 strikes and protests in 2016, double the total of 2014. The real figures are likely to be higher.

According to CLW, workers’ pay was cut significantly in the eight months prior to Zeng’s employment, by eliminating bonuses, ending compensations for meals and sharing insurance payments with workers. As a result, despite Pegatron reporting an increase in wages, the hourly wage decreased from $US1.85 in 2015 to $1.60 in 2016.

Zeng spent six weeks at the factory, earning a monthly wage of 3,100 yuan ($480). This paltry figure places out of workers’ reach the products of their own labour. His 200-person assembly line churned out 3,600 iPhones a day, but workers could not afford to buy them. Instead, they worked overtime out of economic necessity in order to support themselves and their families.

“Can they save two month’s wages to get an iPhone?” asked Zeng, “They won’t do that. The phones they generally use are Chinese productions like Oppo or something like that.

“The only thing that we’re thinking about is really money, money, money. I need to get some money for my family, I need to support my life, support my kids. That’s the only thing in their mind, sometimes they don’t even care how tired they are.”

One perverse measure of the extreme exploitation at play is the $378 million “compensation” package granted to Apple’s CEO Tim Cook upon employment—it is more than 65,000 times the annual salary of a Pegatron worker.

The GOP’s biggest budget lies

Debt isn’t a big problem and it’s not caused by social spending — and Republicans aren’t better economic managers

The GOP's biggest budget lies: Take these down, and progressives will start to win

Mitch McConnell; Paul Ryan (Credit: AP/Evan Vucci//Getty/Mark Wilson)

In mid-March, President Donald Trump’s “skinny budget” proposal drew widespread criticism for its short-sightedness,senseless cruelty and betrayal of his base. It was bad for science, education, the environment and public health, and even for Norman Rockwell-style popular programs like Meals on Wheels. Congressional Republicans freely criticized it immediately, despite its red-meat military spending hikes. “These increases in defense come at the expense of national security,” said renowned hawk Sen. Lindsey Graham, R-S.C., referring to Trump’s proposed deep cuts to diplomatic and foreign aid programs. But in early May, the budget deal to keep the government open was a clear victory for Democrats, leading Trump to call for a government shutdown in frustration.

That’s hardly the end of the budget fight, though. Both Trump and congressional Republicans are preparing to do it all over again, despite how unpopular the first go-round was, and despite how damaged they are politically by the widening Trump-Russia scandal. Which is why it makes sense to take a step back and look at some of the big-picture lies shared by all Republicans — and far too many Democrats as well.

Three of these in particular completely disorient any attempt at sane, sensible budget discussions: First, the idea that the debt is a huge problem and should form a framework for budgetary decision-making. Second, that the debt is due to social spending, mostly on the welfare state. Third, that Republicans are “more responsible” and “better managers” than Democrats. For Democrats and progressives to win this fight — both short-term and long-term — they will have to take on these big lies. Let’s examine each of them in turn.

The idea of the federal debt as a huge problem has a very long history. Andrew Jackson was the only president to ever get rid of the debt — which he hated especially because of his own personal experience — but that lasted less than two years. The dominant rhetoric — echoed by President Barack Obama in 2011 — is to see national debt as household debt writ large, reflected in the title of his weekly radio address on Feb. 12 of that year, “It’s Time Washington Acted as Responsibly as Our Families Do.”

Obama framed his address in terms of a story told to him in a letter from a woman named Brenda Breece, a special-ed teacher in Missouri whose husband had to take early retirement after nearly four decades working at a local Chrysler plant. They had to scrimp and save, but that’s not all. “Like so many families, they are sacrificing what they don’t need so they can afford what really matters,” putting their daughter through college, Obama said. Then he continued:

Families across this country understand what it takes to manage a budget. They understand what it takes to make ends meet without forgoing important investments like education. Well, it’s time Washington acted as responsibly as our families do. And on Monday, I’m proposing a new budget that will help us live within our means while investing in our future.

My budget freezes annual domestic spending for the next five years — even on programs I care deeply about — which will reduce the deficit by more than $400 billion over the next decade.

At Washington Monthly’s blog, Steven Benen said it showed “how to use the wrong comparison the right way,” since Republicans were bound to invoke that very same “family budget” metaphor, but without the emphasis on investing in the future. It was a valid point, of course, and surely reflected how Obama himself must have felt. But that’s really only a defensive parry, and fundamentally at odds with the sweeping promise of “hope and change” on which Obama was elected in 2008. Benen passed over that, but he did point out how fundamentally wrong this rhetoric was:

The line has a certain intuitive charm that much of the public likes, which masks how wrong it is — the government needs to step up even more to keep the economy going when families and businesses pull back. It’s how FDR and Democrats ended the Great Depression in the 1930s, and how Obama and Dems prevented a sequel in 2009.

The need for government to spend more when private spending falters is one of the most basic insights of macroeconomics. It goes to heart of why macroeconomics and microeconomics are different fields, each with its own logic. How whole economies work differs from how individual economic entities do, just as team performance differs from individual performance in any team sport.

The insight — long neglected — dates back to Bernard Mandeville’s controversial 1714 book, “The Fable of the Bees: or, Private Vices, Public Benefits.” Thrift might be individually virtuous, Mandeville argued, but general prosperity was increased by expenditure rather than by saving. It was actually a difficult struggle for Franklin D. Roosevelt to realize this. A brief summary page from the FDR library tells the tale: “FDR: From Budget Balancer to Keynesian.” Roosevelt started out as a conventional thinker, in basic economics:

Roosevelt believed that a balanced budget was important to instill confidence in consumers, business, and the markets, which would thus encourage investment and economic expansion. As the economy recovered, tax revenues would increase making budget balancing even easier. This traditional view that deficits were bad was also supported by public opinion polls.

But these beliefs simply didn’t match the dire conditions of the times. So for years Roosevelt maintained his fundamental belief, bracketing it with the recognition that he faced an extraordinary situation:

From 1933 to 1937, FDR maintained his belief in a balanced budget, but recognized the need for increased government expenditures to put people back to work. Each year, FDR submitted a budget for general expenditures that anticipated a balanced budget, with the exception of government expenditures for relief and work programs.

All through this time, Roosevelt assumed that once the emergency had passed, things would return to normal, the extraordinary measures would be put away and a balanced budget would return. He argued passionately for the basic human decency of the path he embarked on, in a speech during his 1936 re-election campaign:

To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.

It was only after that, however, that Roosevelt had his own rude awakening. In 1937, he did as he had always promised, based on how much things had improved:

From 1933 to 1937, unemployment had been reduced from 25% to 14% — still a large percentage, but a vast improvement. FDR’s reaction was to turn back to the fiscal orthodoxy of the time, and he began to reduce emergency relief and public works spending in an effort to truly balance the budget.

The result was a renewed economic plunge — the recession of 1937-8. It was only in response to this unexpected turn of events that FDR finally adjusted his fundamental frame of reference. Some of his advisers still pushed for the conventional balanced-budget approach, but others accepted the theories of John Maynard Keynes, who argued that “permanent budget deficits or other measures (such as redistribution of income away from the wealthy)” were necessary “to stimulate consumption of goods and to maintain full employment.” Consequently, it was “the reduction of federal spending that these advisers viewed as the cause of the recession,” and FDR came to agree. In is 1938 annual message to Congress, he defended his decision, noting how self-contradictory his critics were:

We have heard much about a balanced budget, and it is interesting to note that many of those who have pleaded for a balanced budget as the sole need now come to me to plead for additional government expenditures at the expense of unbalancing the budget.

With the onset of World War II, opposition to deficit spending vanished, and full employment ensued. By the end of the war, public views had changed as a result:

The obvious connection between deficit spending and economic expansion was not lost on many Americans, including business leaders who much preferred large deficits to Keynes’s alternative of massive redistribution of wealth through taxation as a way to sustain America’s prosperity in peacetime.

Four decades later, Reaganomics would represent a perverse twist of this realization. Despite lip service to the contrary, Reagan produced record deficits to sustain prosperity while dramatically concentrating wealth. Although Reagan claimed he would magically balance the budget in four years, he actually did quite the opposite. From Harry Truman through Jimmy Carter, every presidential term but one — the Nixon/Ford term from 1973 to 1977 — had seen the debt shrink as a percentage of GDP. It fell from a peak of 117.5 percent during World War II to to 32.5 percent by the time Reagan took office, and has never been anywhere near that low since. It jumped more than 20 percent during Reagan’s two terms, and Bill Clinton has been the only subsequent president to reduce the debt-to-GDP ratio.

But let’s not lose sight of what Roosevelt accomplished, in creating the foundations for America’s broad middle class, which had never existed before on such a scale:

FDR’s support for deficit spending was yet another shift in the relationship between the government and the people that took place during his Administration. President Roosevelt expressed his vision for a country where each citizen was guaranteed a basic level of economic security most eloquently in his Economic Bill of Rights speech on January 11, 1944:

“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.’ People who are hungry and out of a job are the stuff of which dictatorships are made.”

These were the hard-won lessons of the Great Depression and World War II, but as so often happens in history, those who did not live through that suffering only learned the lessons second-hand, and never knew them in their bones. So we lost our way again, which is why we got Reagan in the 1980s and now have Donald Trump. We need to remember what made the American middle class great in the first place: a commitment to activist government spending money on public needs when the private sector fell short. Short-term debt-obsession was the enemy of everything Roosevelt accomplished — not a guide to sound economics.

Now for the second big lie, that the debt is primarily due to welfare-state social spending. Here I’d like to quote myself from 2011 (“Enshrining the lies of the US’ 1%“):

Indeed, as Thomas Ferguson and Robert Johnson explained just over a year ago, in their paper “A World Upside Down? Deficit Fantasies in the Great Recession”, all of the US long-term federal debt is due to just three oligopoly sectors: the military-industrial complex (the backbone of empire, with bases all around the world and almost half the world’s military spending), the medical-industrial complex (with twice the per capita costs of other systems), and the financial sector (which has recently cost trillions of dollars in lost wealth and economic activity).

All three of these are enormous cash cows for the one per cent, and equally enormous cost-centres for the 99 per cent. Without the costs imposed by lack of competition, regulation and accountability in these sectors, the US would have no long-term debt problem. We would be paying it down, rather than running it up.

In that paper’s abstract, the authors write:

In an era of unbridled money politics, concentrated interests in the military, financial, and medical industries pose much more significant dangers to U.S. public finances than concerns about overreach from broad based popular programs like Social Security, which is itself in good shape for as many years as one can make credible forecasts.

Concerns about Social Security are vastly overblown, they note, and uncertain worries about two decades from now should not dominate our attention. Medicare is another matter, only because the American health care system as a whole is so expensive. They drew on an analysis by Dean Baker, which compared projected health care costs in the U.S. with projections based on the cost structures of other countries.

The U.S. spends a far higher percentage of its GDP on health care than any other country. It also gets less health for it than any other major country, in the sense other countries do just as well or better on most health indicators, though they spend much less.

Why is no mystery, despite all the sound and fury of the health care “debate.” The U.S. health care system is in no sense a competitive marketplace. Instead, it is a chain of private oligopolies connected to each other by streams of payments administered by a vast, non-competitive private insurance network and the federal government. Producers and insurers together dominate government policymaking, at both federal and most state levels.

The rate of cost increase has been reduced under the ACA since the paper was written, but we’re still far from universal coverage, and the problems of oligopoly remain — most notably in the way insurers have withdrawn from some marketplaces. The failure to even include a public option in the ACA left insurers in positions of tremendous coercive power. And GOP repeal plans could wipe out all the ACA gains and leave us facing a grim future.

The military-industrial complex, the authors note, is commonly taken to make up about 20 percent of the budget, but if we include all related functions — homeland security and intelligence agencies, plus significant parts of other departments, including Energy, Transportation and State — with the military share of the debt, that total nearly doubles: “One careful effort at a more comprehensive reckoning suggests that perhaps 39% of the proposed Fiscal Year 2011 budget goes toward defense.”

Finally, there’s the enormous costs inflicted by the financial meltdown of 2008, triggering the Great Recession, and the high probability of future such disasters. These costs are obviously more difficult to assess than the excessive costs of the U.S. health care system. But they are certainly much greater than the amounts involved in the Social Security system, much less Meals on Wheels.

This sort of realistic appraisal is not a popular perspective among political elites, who are largely funded by the oligopolies involved. But it is popular with the public — see Bernie Sanders’ approval ratings as one indication. Yet, these major sources of long-term debt pressure never seem to enter the deficit-cutting debate.

Now for the third big lie, the claim that Republicans are “more responsible” and “better managers” than Democrats are, an assumption that permeates the air whenever the economy is discussed. I’ve already referred to the fact that Republican presidents since Reagan have been terrible at managing debt reduction, but the point at issue is a broader, more fundamental one: There is no aspect of economic management where Republicans do as well as Democrats. None whatsoever. Here, the best single source is a slim volume, “They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010“ by Eric Zuesse. As explained in the publishers’ synopsis:

The Democratic and Republican Parties are virtual opposites of each other in their economic records, going back to the earliest period for which economic data were available, around 1910. More than a dozen studies have been done comparing economic growth, unemployment, average length of unemployment, stock market performance, inflation, federal debt, and other economic indicators, during Democratic and Republican presidencies and congresses, and they all show stunningly better performance when Democrats are in power, than when Republicans are. These studies are all available online, and they are all summarized and discussed in this path-breaking book, which settles, once and for all, the question of whether there’s any significant economic difference between the two Parties. Not only is there a difference, but — shockingly — it always runs in favor of Democrats in power.

Democrats are superior for the economy as a whole — GDP growth, unemployment rate, inflation — for the stock market, and for controlling government deficits too. One example Zuesse cites is from Kevin Drum, back in September 2002. Responding to a story in Slate reporting that since 1900, Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republicans only an 8 percent return,” Drum wrote:

This is actually an old story, and Slate doesn’t know the half of it: Democratic administrations, it turns out, manage virtually every facet of the economy better than Republicans.

Drum analyzed the three main statistics cited above — GDP growth, unemployment and inflation — from 1948 to 2001, and included a time-lag. “In the same way that a pitcher is responsible for runners left on base even after he’s been replaced,” he wrote, “presidents should be responsible for a few years of economic performance after they leave office.” Choosing a variety of time-lags, the results were all the same:

3 Yrs 4 Yrs 5 Yrs
GDP Growth

No matter what time-lag you choose, Democrats post higher GDP growth, lower unemployment, and lower inflation.

This is just one of multiple examples, and the value of Zuesse’s book is that it brings them together. “The myth that conservatives are better for the economy than are progressives, is driven not by the masses but by the elite, the insiders who benefit from this deception,” he writes. But even that’s a dubious proposition sometimes, when — as under George W. Bush — things really go off the rails.

Whatever happens in the months ahead, whatever specific gambits the Republicans trot out, it will always serve us well to keep in mind these three big lies, and remind others why and how they are so wrong: Debt is not a dominant economic problem and should not frame our budgetary decision-making; debt is not primarily due to social spending; and Republicans are not “more responsible” or “better managers” of the economy than Democrats. Take down the big lies, and the little ones will fall apart much more easily.


Paul Rosenberg is a California-based writer/activist, senior editor for Random Lengths News, and a columnist for Al Jazeera English. Follow him on Twitter at @PaulHRosenberg.

Productivity figures and job cuts expose Trump’s growth fraud

By Nick Beams
19 May 2017

One of the factors that led to the election of Donald Trump to the US presidency was his commitment to boost the growth rate of the US economy, striking a chord in industrial states hit by job losses and factory closures.

Just four months into his presidency these promises lie in tatters. Underlying US economic trends continue to worsen, amid increased financial parasitism. The announcement by Ford that it will cut 10 percent of its global workforce is an expression of this process—the ruthless and relentless demands by finance capital for job destruction and cost-cutting to boost “shareholder value.”

The Ford decision is only one manifestation of the parasitic processes in the US and major economies internationally. Some of the effects were highlighted in the results of research conducted by the Conference Board think tank published in the Financial Times earlier this week.

Labour productivity in the US—one of the main drivers of economic expansion—will rise this year by only one-third of the rate that prevailed before the financial crisis of 2008. While the expected increase for 2017 is 1 percent, compared with an increase of only 0.5 percent last year, it is still well below the level of 2.9 percent recorded between 1999 and 2006.

Trump said his policies of lower taxes and deregulation would lift growth in US gross domestic product (GDP) to at least 3 percent, compared with its present level below 2 percent. But their only real effect, if enacted, will be to shovel more money into the hands of the financial elites.

The prospects for growth are no better in the longer term. Even barring the eruption of another crisis, the Congressional Budget Office estimates that the potential growth for the US economy is 1.9 percent from 2012 to 2017, compared to average annual growth of 3.1 percent from 1981 to 2007.

Conference Board chief economist Bart van Ark told the Financial Times: “Even an optimistic productivity scenario would not get close to the Trump administration’s target of 3 percent GDP growth.”

The US figures are part of an international trend. According to the Conference Board, the European Union will experience an increase of 1.1 percent in productivity for 2017, up from 0.8 percent last year, but well below the 1.9 percent level in the years before the financial crisis.

Japan is expected to record a 1.1 percent growth in productivity, up from 0.5 percent in 2016, but less than half the pre-crisis rate.

Commenting on the data, van Ark said the weakness in productivity reflected the impact of the global financial crisis on business investment and the “sluggishness by which new technology has been translated into faster productivity.” Companies would need to lift rates of investment to keep productivity and growth rising. Now was the time to make the investments planned for a long time.

Such expressions of hope run counter to the dominant trends in the US economy and elsewhere. The days when companies used profits to make new investments and expand production, giving rise to economic growth and improved wages, have long gone.

The road to increased profits is now savage cost-cutting in order to free up cash, which is then disbursed to shareholders—predominantly banks and hedge funds—in the form of increased dividends and share buybacks. And those firms deemed by financial markets not to be sufficiently engaged in this process come under intense pressure to change course.

As one recent Australian study noted, financial institutions exercise their power not primarily by holding directorships but “through exit”—the continual threat of withdrawal of funds if the rate of return is not sufficient. Managements, which in an earlier period were concerned with expanding and growing a business through productive investment, must now carry out the dictates of financial markets to strip resources from the firm or be removed.

The Trump administration’s claims that it will boost jobs have also been shattered by figures coming from the retail sector.

According to a report in the Financial Times on Monday, since the election of Trump last November, the retail sector has lost 89,000 jobs—more than the total employment in either coal mining or steel—with more to come. The article began: “Anyone seeking the contemplative peace of a graveyard could do no worse than park at one of America’s strip malls.”

By some estimates, the US retail sector could lose up to one third of its 16 million jobs within Trump’s term, on a par with the scale of job losses in manufacturing industry since the turn of the century.

The job shedding is the result of two factors. First, there is the general stagnation of consumer spending, flowing from the suppression of wages and rising household debt. The US economy grew at an annual rate of only 0.7 percent in the first quarter of this year, largely as a result of the weakest increase in consumer spending in seven years.

Second, there is the impact of online buying or ecommerce, epitomised by the rise of Amazon.

Amazon’s business model is not based on general economic expansion but at driving more traditional outlets to the wall, resulting in major job losses. In earlier times of general economic expansion, the job losses would have been offset by the growth of employment opportunities in other areas of the economy. But this is not taking place.

It is estimated that for every three retail jobs lost, only one is created in ecommerce. Those displaced from the retail sector are either moving out of the workforce altogether or into lower paid and more precarious jobs in other service industries.

It is this essentially parasitic business model that has made Amazon such a darling of the financial markets.

Over the past 20 years its shares have risen almost 64,000 percent—$100 invested in Amazon stock at the time of its initial public offering would have accumulated to $64,000. Amazon’s market value is now more than $450 billion, compared to $230 billion for Wal-Mart.

The rise and rise in Amazon’s market value, unlike the rise of the giants of a previous era, is not an expression of economic strength. Rather, it is a manifestation of the parasitism, based on an appropriation of real wealth produced elsewhere, that has become the mainstay of profit accumulation in the US economy, and increasingly globally.

Technological innovations in transport and information systems have fueled this rise. But they are not utilised to facilitate economic growth, but rather to enable the sucking up of wealth into the coffers of finance capital.

Did America Ever Really Work?

Slavery, Segregation, and Stagnation

Rather than looking at America through the lens of the present — “oh my god, what did he do today!! “— I want to ask the question: has American society ever worked?

By “worked”, you can think that I mean two economic criteria. First, according to its own standards of life, liberty, and happiness. Second, a little more formally, whether its economy has ever really been capable of delivering rising living standards broadly.

I think this is an interesting question, because most of us believe in the myth of a golden age past. The American Dream, we suppose, is something that came and went. But if we look at history carefully, I think we will see that it never really existed at all.

We can divide American economic history into three periods.

The first, which we sadly don’t need to say much about, is slavery. Obviously, society wasn’t working in the senses above during this period. Whatever gains there were were largely realized at the expense of great and immoral human suffering.

The second was segregation. Segregation was of course immoral as well, in the most basic terms of equality. Economically, it was a way to preserve many of the toxic economic “benefits” of slavery, while making repression palatable and righteous. It created a low cost labor pool, abrogated those costly things called human rights, and so on.

The third period, which we are in now, is stagnation. Note the interesting fact. Segregation ended in 1964. Stagnation began in 1971. That is when wages flatlined.

There was no intervening middle era, no golden age so to speak of. The American economy went directly from segregation to stagnation.

That tells us a few interesting things.

First, it implies that the social contract of America never really worked at all. That it depended on the exploitation (aka, the coercion, if you like) of entire groups to produce benefits for others. That is not a working society in the modern sense, only in the pre modern, the feudal, one.

Second, it implies that the roots of stagnation are deeper than we think. Stagnation has many factors that caused it to continue. The implosion of unions, the evisceration of public sector employment, a tilted playing against labour and towards capital, and so on. But the cause of stagnation cannot be all those, because they simply did not exist yet. The true cause of stagnation is simpler: without a group of people to exploit, the American economy simply began to fail, because it was predicated still on that exploitation to begin with. Except now, it is more or less everyone being exploited, in perhaps softer and less visible ways.

Now, you might object here. All this goes against what you have been taught, if you subscribe to orthodox American history, doesn’t it? So think about carefully. Go ahead and see if you can poke any holes in it. Slavery, then segregation, then stagnation. No intervening grace period. If you clear your mind of ideology, and think clearly about a working society, what does it tell you?

Third, all the above tells us the American Dream never was at all. It’s a truism to say that the American Dream came with hidden costs. Pollution, NIMBYism, and so on. But there’s a deeper truth there. Costs are only one side of the equation. What about benefits? The simple fact all the above tells us is the American economy was never able to generate enough real social benefits to be broadly shared, without exploitation, forced labour, and so on. Remember, it fell it into stagnation as soon as segregation ended, and that implies that it was dysfunctional in terms of its fundamental ability to create value to begin with.

So what going directly from segregation to stagnation tells us, in the end, is this. The faces, the people, the groups involved, changed — but the pattern didn’t. The economy remained predicated, founded on exploitation, only now it was less able to do so effectively, less viciously, less visibly. Hence, stagnation. Today, the economy is still a predatory machine — only it is so for everyone, not just specific ethnic or racial groups. That is the true historic price of the toxic legacy of hate America carries.

I’m often accused of saying “we’re doomed!”. And yet I never do, do I? So the conclusion of all the above isn’t that. Rather, it’s this.

If we are able to see clearly that the American economy, the social contract, was never functional in a genuine substantive sense at all, then perhaps now we can have a more truer discussion about how to make it so. Instead of harkening back to a mythical Golden Age that never existed at all, which is what I call Vox’n’Fox thinking converges to.

Now we can ask the wiser question. What makes societies “work”? What didn’t America develop, by going straight from segregation to stagnation?

We don’t have to look very far or think very hard. What makes Canada, Sweden, etc, work, in the sense that produce shared, enduring prosperity, is public goods. They developed those in the 1950s and 60s. America went straight from segregation to stagnation because it never had public healthcare, transport, higher education, and so on. It simply started exploiting people in a different way — but faces changed, but the pattern didn’t.

Today, it still doesn’t have public goods. And it’s because it failed to develop at precisely the time it should have that it remains stuck today — stuck in the trap of exploitation, which it never really broke to begin with.

To think clearly is to see what has been with an open mind. America is not the historic success that we, educated into the annals of exceptionalism. think. That does not mean that we should feel guilty, ashamed, bad, weak. It simply means that have the opportunity to make it one. There are two choices ahead of us. The third period, stagnation, can go on, into collapse. Or there can be a fourth period, of renewal.

May 2017


Trump establishes commission to attack the right to vote

By Matthew MacEgan
16 May 2017

President Donald Trump signed an executive order May 11 creating the Presidential Advisory Commission on Election Integrity, a bipartisan commission that on the pretext of investigating voter fraud will seek to justify new attacks on the right to vote. This follows Trump’s false claims after the November 8 election that he lost the popular vote due to illegal voting by undocumented immigrants.

Trump won the Electoral College and the presidency, but lost the popular vote to Hillary Clinton by approximately 3 million votes. He declared in January that he would investigate voter fraud in the election, claiming that anywhere from 3 million to 5 million votes were cast by “illegals” and all of those votes went to his Democratic opponent.

“The commission will review policies and practices that enhance or undermine the American people’s confidence in the integrity of federal elections, and provide the president with a report that identifies system vulnerabilities,” stated Sarah Huckabee Sanders, the White House spokesperson. The order makes no mention of voter suppression or unwarranted restrictions on voting, but specifies only “improper” and “fraudulent” registration and voting as issues to be explored. The report is scheduled to be complete in 2018.

Several Democratic Party politicians and civil rights groups in the US have criticized the commission, arguing that “vote fraud” will be used as a pretext to justify voter suppression tactics. Some of them fear that the commission will recommend erecting new barriers to voting such as requiring photo ID cards at the polls. Such measures tend to hinder voting by minorities and youth, who disproportionately lack such ID, and who tend to favor Democrats.

Much of the suspicion about this commission is based on the selection of Kansas Secretary of State Kris Kobach as its vice chairman. With Vice President Mike Pence named as chairman, but unlikely to spend much time on it, Kobach will be the real driving force of the commission’s work.

Kobach is notorious as a proponent of anti-immigrant laws and efforts to make it more difficult for minorities and youth to vote. He was one of the instigators of Arizona’s SB 1070, which requires police to determine a person’s immigration status where there is “reasonable suspicion” that they are undocumented.

He also pushed through a Kansas law that required new voters to produce a passport, birth certificate, or naturalization papers as proof of citizenship. A federal court struck down the state law last year, finding that it had deprived 18,000 state residents of their constitutional right to vote, while not a single “illegal immigrant” voter was detected or prosecuted.

Last month Kobach finally won his first case against an alleged illegal voter, more than six years after taking office in Kansas, and after dozens of elections and millions of votes cast in the state.

Some Democratic state officials have been induced to join the commission and justify its title as “bipartisan,” including New Hampshire Secretary of State Bill Gardner and Maine Secretary of State Matthew Dunlap. Dunlap stated that the commission should go forward and show that the president’s claims will remain unfounded. “I’m as far away politically as you can get to the positions of the President and Vice President, but they’re elected and in office. Give them the benefit of the doubt,” he said.

Past research has shown that voter fraud is negligible and is so insignificant that it has virtually no influence over the outcome of elections. Senator Dianne Feinstein, who sits on the Senate Judiciary Committee, stated that “there’s simply no evidence of widespread voter fraud in this country. Period.” The American Civil Liberties Union (ACLU) filed a Freedom of Information Act request seeking whatever information the Trump administration is using as a basis for creating this commission in the first place.

Nathaniel Persily, a professor of political science at Stanford, who performed such research for a similar commission in 2012, told the New York Times that “there are problems in the registration system that don’t translate into fraud, there are sporadic and very rare instances of fraud, and voter impersonation is the rarest of all. The notion that there is widespread voting by undocumented immigrants or other ineligible voters has been studied repeatedly and found to be false.”