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Friday, October 7, 2011

Guarding America's Bull-Crap!

Dissident Voice: a radical newsletter in the struggle for peace and social justice

Occupy Wall Street: Surrounding the Bull

Hundreds of cops, some on horsebacks, are now protecting Wall Street 24 hours a day. At Bowling Green Park, they have also blocked access to the Merryll Lynch bull. To be warmed by the methane gas of a healthy market, no doubt, a group of New York’s Finest gathered near their sacred bovine’s digestive exit, just below its up-lashing tail.

“They’re all guarding the bull’s asshole,” I said to this middle aged black woman standing across the street.

“Yeah, they’re all guarding the bullshit!” She laughed.

It was nearly 10PM. At Wall Street and Broadway, I met a young protester from Austin. Twenty five years old, he’d been sleeping at Liberty Park since September 24th.

“What do you guys do when it rains?”

“We just have to deal with it. We sleep under tarps.”

“Man, that must really suck. You probably can’t sleep too well.”

“Yeah, sometimes I get up and my body aches all over, but we just have to deal with it. We’re not leaving.”

“And it’s fucked up they won’t let you guys use tents.”

“Yeah, it’s fucked up, so we’ll have to set up tents at some point. It’s getting colder, and we can’t just sleep like that if it snows.”

“You think the cops will come in and get rid of the tents?”

“I don’t know. Who knows.”

“You know in California and other places, cops have slashed tents of the homeless.”

“Yeah, I know, but the whole world is watching us now, so if they do that, the whole world will see it.”

I asked him about demands, about how everyone is demanding that these protesters make demands, but so far, nothing.

“We did put out a Declaration.”

“Yeah, but that’s a long list of grievances, without concrete demands.”

“Well, we don’t want to narrow it down to a few demands, because each community has issues that it wants to address. This protest is spreading, and a list of demands from here can’t address all the problems.”

“But what about educating the public? If you can highlight a few key issues, then the public will have a clearer idea of what is wrong?”

“I hear you, but there are already people doing that. Writers. They may not be in our group but they are sympathetic to us. The explanations are out there. There are already people explaining what is wrong.”

Naomi Klein was scheduled to speak at Liberty Park the next day, as a matter of fact, so he was right. All the explanations are out there, if only people would pay attention. I then asked about them having no leaders or spokesmen.

“We don’t want to designate a spokesman or a leader, because we don’t want all the pressure to be on him. We don’t want him to be harassed by the FBI, for the FBI to tap his phone. Look at all the protest leaders from the past. Look at how they killed Martin Luther King and Malcolm X. If they want to tap the phone, they’ll have to tap all of our phones.”

“Yeah, but some people are better at speaking than others, so these will emerge naturally, right?”

“You’re right, and they already have, but we can all talk. We all know what to say. We’ve taught each other what to say.”

He believed the country was solidly behind this protest, and support will only grow, “People love us, man. They send us all kinds of stuff. They send us money. People love us.”

Speaking of solidarity, I wouldn’t have been able to observe the protest if a dozen readers of my blog hadn’t sent me hundreds of dollars this past month alone. Part of this cash was used to fix my broken camera. With a poisoned media, untrained citizens must anoint themselves journalists.

Though protesters have released no official demands, many of the signs at Liberty Park are clear enough, “END THE WARS,” “END THE FED” and “TAX THE RICH.” These demands are also shouted out by protesters on their marches.

And the marches are getting larger and more representative. Everyone is here, basically, from tiny children to senior citizens, egg heads to hard hats, pacifists to war veterans. Black, white, yellow or brown, they are all here shouting in unison, “Wall street got bailed out. We got sold out,” “Tax the rich! End the wars!” and, “This is what real democracy looks like!”

About the only types who aren’t marching are Wall Street suits and, well, cops. It is sad to see so many policemen protecting the very people who have also ripped them off. At a Starbucks near the New York Stock Exchange, some cops have even become bouncers.

Running around trying to find a place to charge my camera batteries, I saw a Starbucks, but its entrance was blocked by a police-manned barricade spanning the street. I approached, “Can I go in?”

“I need to see an ID,” a cop said.

In the new America, one needs to show an ID just to enter a Starbucks? I pulled out my long expired Virginia driver’s license.

“So you’re not from New York?” The cop interrogated.

“No, I live in Philadelphia.”

“What are you doing in New York?”

“Just visiting.”

“Why did you come up?”

“Just to hang out in the city. No reason.”

This cop gave me a long hard look. I had neither tattoos nor piercings, and my hair and clothes were more or less neutral. I mean, I don’t dress to make a statement, and I don’t like to wear slogans on my person. He gave me a long, hard look, and I could tell that he didn’t quite believe I wasn’t a trouble maker of some kind, or maybe even a terrorist ready to plant a robust pipe bomb inside Ben Bernanke’s lying quiche hole, but goddamn it, this was only a stupid Starbucks, though it happened to be within sight of the New York Stock Exchange.

Had the cops moved their barrier five feet back, the public could enter this business unmolested, but they couldn’t do that, you see, because that would inconvenience the Wall Street denizens arriving from the other direction.

So there you have it. While 99% of us are losing our present and future, as we’re harassed and groped and sleep in the rain, in protest or for good, as some of us are sent overseas to get our nuts blown off, a banker must never be made uncomfortable, even when his errand, or, rather, even when his secretary’s errand is nothing more than to grab her (and the cops’) boss a frappucino.

Linh Dinh is the author of two books of stories, five of poems, and a just released novel, Love Like Hate. He's tracking our deteriorating socialscape through his frequently updated photo blog, State of the Union. Read other articles by Linh.

Wednesday, October 5, 2011

Corporate Reform in an Age of Intensified Class Warfare





Corporate Reform in an Age of Intensified Class Warfare


In a system where corporations are central in economic activity, economic crises have always and necessarily produced plans and programs of renovation and improvement designed to make corporations more responsive to the public interest. Of course, there have always been some who urged nationalization or worker control; i.e., the replacement of the corporate system with a genuinely new order. Thus far, the system has been able to fend off all such demands, although government ownership has sometimes spurted in emergencies, so far only briefly (e.g., during World War II and as a result of the Savings & Loan crisis), followed by subsequent divestment. Over time, government ownership has declined as the business system has sought to occupy all space in which profits can be made. Thus, as the military budget has grown, in-house arms production has largely disappeared, displaced by the "contract state." The triumph of neo-liberalism and the parallel intensified class war has been associated with further "privatization," which has not only opened up more avenues for private profits, but also weakened the state as a potential agent of ordinary citizens.

A similar point can be made as regards worker control. It does not fit well into a neoliberal system in which worker protection at all levels tends to be eroded in favor of "flexible" labor markets. Workers' rights got a major boost during the Great Depression, with the Wagner Act and the federal government serving to some extent as an employer of last resort. But class warfare was renewed with the 1947 Taft-Hartley Act and the "red scare" and purges of the Truman-McCarthy era. It subsided for the next decade or so, but the Vietnam War, peace and civil rights protests, and new competition from abroad revitalized business class war aggressiveness. The resultant decline of the labor movement and reduced labor bargaining power has manifested in a weakened safety net, stagnant wages, greater inequality, and increased worker insecurity and loss of control.

Other long-standing reform strategies have been decentralization—breaking up the large corporations so as to reduce their political muscle and enhance competition—and regulation, sometimes involving the establishment of government bodies to oversee corporate activities and approve or disapprove corporate decisions. These have a long history, reflected in antitrust laws and policies and regulatory authority over many activities, from railroads, banks, and public utilities to alcoholic beverages and waste dumps. Regulation surged in the Great Depression, forcing the separation of commercial and investment banks and establishing the SEC and securities regulation. Antitrust was revitalized and public utility holding companies were broken up.

Today there is talk of breaking up the giant financial conglomerates that are "too big to fail" and there is some possibility that large companies like GM and Chrysler, as well as AIG, might be sold off in pieces as part of bankruptcy proceedings (and government ownership actions as regards AIG). But with respect to the largest financial institutions, there has been a tendency to favor them with extraordinary subsidies and guarantees and to encourage them to merge into still larger entities. The situation is still volatile, but major decentralizations would appear less likely than greater concentration, along with an increased unwillingness to allow the super-giants to fail and an even closer relationship between big finance and big government.

Regulatory changes in the 1930s included the splitting off of commercial and investment banks, required disclosure of corporate developments, bans on insider trading, tightened supervision of banks and bank holding companies, and the regulation of investment companies (mutual and closed-end funds). Equally important, of course, was that the regulators in the early years tended to believe in regulation and often actually tried to enforce the law. We had William Douglas in charge of the SEC in the 1930s, a rather marked contrast with the regulation-hostile (and incompetent) Christopher Cox chairing the SEC in the Bush-Cheney era.

Regulation in the 1930s and afterwards put a fair amount of weight on disclosure in the belief that compelling business to reveal all the relevant business facts would protect buyers of securities and other products from abuses like insider trading and market manipulation and would make markets work more efficiently. In the oft-quoted line by Louis D. Brandeis, "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." There is some truth in this and there is little doubt that required disclosure has been economically beneficial. But it has its limitations, as truth can be buried in an avalanche of irrelevancies ("kitchen-sinking"), important facts may not be meaningful without context, and weak regulation may make it good business to suppress inconvenient truths. The explosion in executive (over-)compensation took place in a world of theoretical "full disclosure," but with the media and government doing their duty for the vested interests, this explosion was only brought under some limited constraint by the 2007-2009 economic collapse.


In the midst of each economic crisis, there is also a regular outcry at the failure of corporate boards to keep managers in line and prevent their suddenly more evident and better publicized personal aggrandizement and mistaken policies. There is also criticism of large investors, individual and corporate, who failed to press the boards and managers to do the right thing. There is a demand for new laws and improved regulation of corporations, more independent directors, and a change in the outlook and sense of responsibility of these directors and stakeholders who should be guiding and constraining the managers.

There also has been an important line of thought that the managers themselves should take a more generous and community-oriented view and self-transform the system. This kind of thinking was encouraged by the 1932 publication of The Modern Corporation and Private Property by A.A. Berle and Gardiner Means, which argued and gave empirical evidence for the view that the wide dispersion of stock and management control of the proxy machinery led to the dominance of managers in the leading corporations. This gave the managers a fair amount of discretion, and, arguably, they could use it to benefit a range of stakeholders.

This line of argument was pursued later by A.A. Berle in articles and books on corporate responsibility and managers as trustees. The phrase "corporate soul" is traceable back to Berle, who thought corporations had them and whose soulfulness and trustee service in the larger social interest should be encouraged and would develop further. It should be noted that these ideas were evolving in the 1930s crisis, at a time when the corporate system was very much on the defensive and regulation and antitrust thinking was on the upswing. The corporate soul and corporate trustee role for society were last gasp ideas of a system and ideology in retreat, and Berle, who was an official in the New Deal and later a noted Cold War hawk, served that ideology, which later made such a spectacular comeback.

As we know, the reformers of the 1930s didn't depend on soulful managers doing their duty to society, but from then up to the present corporate law was grounded in the belief that the directors, and especially the independent directors, would keep managers in line, and in particular help make them agents of the shareholders. This has never worked, because the directors are not very independent—they are selected or approved by the top managers, who may be their friends, are well paid, lack the knowledge or time needed for effective surveillance or challenge, and who may have or want business relationships with the companies they serve as directors. Deference by leaders of other companies may be part of a system of reciprocal behavior. It is especially hard to actively intervene and constrain managers when companies prosper.

Of course, in theory and law the directors represent the shareholders, but the managers themselves are also supposedly agents of the shareholders. There is a long tradition of belief that, especially with the growth of large institutional holdings of stock by mutual funds, pension funds, bank trust departments, and other substantial investors, that these would intervene, individually or collectively, to press the directors and keep managers from looting or making grave decision errors. This also has never worked because the big holders don't have the staff to intervene and, more important, don't want to disaffect the managers and lose access to useful corporate information. When they lose faith in the managers, they sell the companies' stock and go elsewhere. This is called the "Wall Street Rule."

It is interesting and even amusing to see Gretchen Morgenson in the New York Times building the case for activating those big investors as the route to corporate reform, using as her source John Bogle, the retired head and founder of the Vanguard Group of money managers and mutual funds ("He doesn't Let Money Managers Off the Hook," April 12, 2009). Bogle complains that the big investors have failed to serve as shareholder agents, as they did 50 years ago. He calls for passing a law "establishing the basic principle that money managers are there to service their shareholders...[and that] fiduciaries act with due diligence and high professional standards."

As it happens, in 1962 a Wharton School group, of which I was a member, working under the auspices of the SEC, published "A Study of Mutual Funds," the first large-scale study of that rapidly growing institution. John Bogle was one of a group of mutual fund representatives who met with the group and worked hard to soften any criticisms of the industry. The study was critical of the high management fee rates charged by the funds, which often failed to decline as a rate even with major asset growth; and it pointed up the fact that investment advisers charged higher fees to their affiliated mutual funds than to outside clients (a continuing problem mentioned by Bogle to Morgenson, but definitely not new). The study also described the wide use of mutual fund brokerage to reward people who sold a lot of mutual fund shares, a use of brokerage fees that served the advisers but surely not the mutual fund shareholders.

Most interesting, the 1962 study featured the fact that the mutual funds were quite inactive in using their holdings to discipline portfolio company managers (this was a part of the study that I worked on and wrote). Rather than intervening to serve the fiduciary interests of the company's shareholders, they followed the Wall Street Rule when managerial behavior displeased them. So there was no golden age of mutual fund (or other institutional investor) behavior 50 years ago. John Bogle has changed and become something of a moral force and conscience in the industry, but he remains an exception. Laws and exhortations are not going to make institutional investors into manufacturers of a corporate soul.

Z

Edward S. Herman is an economist and media analyst. He is professor emeritus of finance at the Wharton School at the University of Pennsylvania and author of numerous articles and books, among them Manufacturing Consent (with Noam Chomsky).

From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/corporate-reform-in-an-age-of-intensified-class-warfare-by-edward-herman

Tuesday, October 4, 2011

The Big Picture: A 40-Year Scan of the Right-Wing Corporate Takeover of America or the Hard Right Turn

AlterNet.org


Author and public intellectual Colin Greer tells us how we got where we are today. It's not a pretty picture, but hope is on the way.

At this moment, there are growing protests on Wall Street in Manhattan, in Boston at the Bank of America, and in cities around the country. These embryonic and creative efforts are targeting the greed of the banks, the collusion of the corporate class with their corrupt elected officials, the high level of unemployment, the huge burden of student loans in a time of diminished opportunities, the increasing numbers of poor and hungry people, and much more. These protests, along with those earlier in Wisconsin, Michigan and Ohio, are signs of revival of a long tradition of popular revolt against excesses of wealth and the corporate class.

The new protests come after a long dark period -- specifically the last 11 years of George W. Bush and Barack Obama -- during which time conservatives have gained more power and ability to control the national debate than they have in the past 75 years. The current right-wing power presence, spiked by the corporate media's obsession with Tea Party protests, came most immediately as a result of the Great Recession caused by the housing bubble and obscene corruption of the banks. This crisis was exacerbated by large-scale anger about the subsequent bank bailout, and corporate-backed attacks on the health care reform package passed by Congress. But that is just part of the latest political news.

The conservative ascendancy is hardly an overnight phenomenon. Rather, it represents a dynamic shift in American politics that has taken place over more than 40 years, beginning in the 1970s. During this time, conservative billionaire donors, corporations and the Chamber of Commerce, all invested in conservative think-tanks and communications infrastructure, while Fox News, Rush Limbaugh and a broad and deep media network of right-wing pundits have come to dominate the public discourse.

Subsequently, the liberal/progressive side of the political equation has lost much of its influence from the period of the 1970s and early '80s. How this has happened over time is little understood. In fact, the lack of protest and effective organizing against the right wing during the Tea Party ascension especially has been a mystery to many, and a source of great frustration.

Colin Greer, a transplanted Brit, has observed and engaged in every phase of progressive politics. Greer is the author of a number of books (with his best-known being The Great School Legend), has been a professor at Brooklyn College of CUNY, and for many years has served as president of the New World Foundation, known in the philanthropic world for its commitment to supporting grassroots organizing and providing seed money for many of the most effective progressive political efforts over the last decades. Over this long period, Greer has had a cat-seat view of all the forces that have shaped our last 40-plus years. He has a big-picture take on the turmoil and politics of this period, as major shifts -- globally, economically and culturally; the tectonic plates of change and reaction -- have reshaped our world in ways we have yet to fully understand. AlterNet sat down with Colin Greer in his office in New York in late September.

Don Hazen: Why have conservatives succeeded so dramatically in this period, and liberals and progressives are arguably the weakest in decades?

Colin Greer: There is no single causal factor. The shaping of these two divergent paths begins in the 1980s when you had the last flourish of an expansive society. But the last three years of the '70s were characterized by stagflation and disappointment and took a great toll, forfeiting a real sense that the constant growth of openness in American society and economy was endlessly sustainable. Fast-forward to the present and we have the twin dominance of austerity, i.e. eviscerating public spending as the solution to economic crises; and aristocracy, represented by the protected tax and profit oasis of the wealthiest 1 percent.

It’s instructive to note that events in the U.S. are not in isolation. Back in the '60s and '70s when progressive movements were in ascendency, the liberation themes of the time were part of a global anti-colonial uprising, and broad disgust at the war in Vietnam. Today, trade policies and globalization means that the other major economies of the world are also in the grips of a greed and hyper-profit which is in the process of discarding hard won values, rights and decent living conditions.

DH: That was Carter and also the hostage crisis too at the end of the '70s, yes?

CG: Yeah, it’s about how social and economic consciousness changed. Carter’s inability to act effectively in the hostage crisis or to defeat stagflation reinforced a national feeling of malaise and weakness. That’s why Reagan campaigned on "hope in America" versus Carter's kind of dismal, high-standing morality, an apparent inability to act from strength. It was the beginning of a long term of undermining the presumption of multi-dimensional social and economic expansion, which had flourished since World War II.

So in the 1980s you had Reagan, along with the last flourish of direct political action on the left and the last gasps of the global social change that characterized the 1960s and '70s; i.e. the fight against apartheid, which succeeded in turning the Reagan administration around to support the anti-apartheid/ divestment movement, and you had the Nuclear Freeze movement.

DH: These were the last grassroots successes of the left?

CG: Yes. Although one can never do a one to one equation, the Freeze was a factor in Reagan's shift in nuclear arms negotiations with the Russians and the anti-apartheid divestment strategies, fueled by a popular movement with strong student leadership, which created shantytowns on campuses throughout America, helped win that struggle.

But then there was a dramatic change in direction when the air traffic controllers went on strike. Reagan seized the moment, and fired the air traffic controllers, destroying PATCO, their union. That was the beginning of the end of the labor deal with capital; a deal that was carved out in the Cold War in which labor got negotiated settlements here at home for its support for the Cold War abroad. In a sense it was anti-red internationally and social democratic here in the United States. And that deal went through the beginning of the 1980s, until Reagan, responding to the conservative base, changed the ground rules. And with it, labor's guaranteed negotiating strength ended.

We have seen a diminishing power of labor since. And we've also seen a shrinking power of popular movements on the left as well, so that by the time we got to the invasion of Iraq, a million people in the street could be ignored. How different that was from the last gasps of enduring popular protest against Reagan’s contra-aid and its illegal processes.

DH: Those demonstrations against the Iraq invasion seemed like a big deal at the time, a major accomplishment, and around the world as well.

CG: Yeah, but for only one day. What is required is the ability to constantly bring people out and not end it when there’s no popular response. You need to get the news story, and push the politicians to shift. We're up against the kind of new politics in which they didn't shift and we didn't come out with continual resistance, and that inability to resist played out in the 1990s when you have a Democratic president who was disappointing over and over, with no popular mobilization against his deregulation of the finance industry or his welfare reform initiative.

DH: Is it possible to have a popular movement against a disappointing Democratic president?

CG: I think it was in 1992, but only theoretically; it didn't happen. By the 1990s, because progressives in a sense had been disciplined by the reduced power of labor, by the new power of the right, the visceral fear that Republicans would be worse, and the fact that a certain amount of administration figures came from progressive organizations and might still influence policy, all contributed to a lack of action against Clinton policies And there is another crucial point: by the time we get to late 1980s and 1990s, social movements on the left were essentially demobilized into NGOs and legislative agendas, so progressive politics became more about winning elections, seeking legislative reform, and building not-for-profit institutions that represented progressive vision and options. There no longer was a base beyond labor, which was itself shrinking.

DH: How sudden was this shift from more popular movements to foundation-funded projects?

CG: It happened over time. The trends were growing in the early '70s because progressives had control over a lot of federal spending, and a lot of activists had access to all the major agencies. There was a kind of flourish of success and even progress under Nixon. Legislative efforts were working. We especially got environmental legislation, and it looked like the courts were on our side. Meanwhile the right, in earnest, started building both its base and its options, with think tanks, organizations and communications capacity. But by 1990, the left so to speak, except for labor, had become almost entirely dependent on foundation support, which was based in the IRS 501 (c) (3) tax structure which required grant recipients to be non-partisan. But it was influential at the level of government and so it felt like it could deliver through the lobbying capacity of NGOs and by winning in the electoral, legislative and judicial spheres.

In the '80s, when they saw the right-wing agenda through Reagan taking serious root, many groups worked on voter registration to expand the electorate, but were constrained again by the IRS rules. It took a Jesse Jackson presidential campaign as a reminder that you need a popular base to move an agenda and to build a popular base to undercut the climate of low taxes, high profits, and the growing transfer of public assets into private control. Jackson created a social movement—he went to organized farmworkers, he worked with gay activists, he really did see that campaign as a progressive, social movement campaign.

But after Jackson (‘84 and ‘88) that kind of campaign mobilization didn't happen again until Obama. And Jackson did exactly what Obama did. He demobilized his campaign agency. He turned into a kind of not-for-profit organization, and Obama turned it into the Democratic Party. But they are two moments -- and it's interesting that both black figures produced the sense of a national movement. But the end of the Jackson campaign coincided with end of '80s, and that was where the Democratic Leadership Council, that Clinton led, emerged strongly and represented the shift to a "new progressive politics" where they made progressive mean something else. Imagine if the Jackson campaign had remained mobilized in relation to the Clinton administration and/or if the Obama campaign had remained live going into the 2010 elections when victories on the right were won by small margins.

DH: I assume when you say progressive came to mean something else, it meant moderate?

CG: In a sense once you had Murdoch and Fox and a growing conservative infrastructure, it labeled the DLC—transfused Democratic party—as the left. Any real left was marginalized into virtual invisibility and anonymity, the center was moved significantly to the right, and progressives increasingly pushed into protecting eroding rights and benefits, without a political infrastructure or national leadership of its own. In the electoral arena, in the media, and in the mainstream foundation world, moderate was called left or liberal, and leaders in pursuit of public office more and more have eschewed the liberal label by moving ever so profoundly to the right.

DH: So the middle became the left, and the conservatives keep moving successfully to the right -- a trend we have seen reach the present moment of the far, far right influencing the political process. And there has been no pendulum swinging back, that's for sure.

CG: Yes, and one of the critical ingredients in this huge shift rightward over the last few decades, as I inferred earlier, was the end of the Cold War. The collapse of the Soviet Union had a profound effect on two things: 1) the idea that there was a left alternative, and that there was a path to reform that had the best interest of the public at large as its highest priority, and had the "state" involved directly in business and the interest of public; and 2) the shift of states in the Soviet orbit to capitalism basically made capitalism the world model. So then it was a question of what you did in the framework of capitalism, not challenging its framework. That's been the umbrella for China, India, Brazil. All over, left groups moved into the electoral arena, and didn't challenge the capitalist model. As a result, we now have a global context that advances austerity and aristocracy in support of a global capitalism that has declared war on the social contract.

In the Scandinavian model, they're more responsive to public conditions, but not to challenging capitalism itself. I'm not arguing that we need a left to challenge capitalism because it isn't clear that we do have that option. But what we're faced with now is that any system that has monopoly status moves toward tyranny. So we're now seeing that 40 years of the rogue rise of the right has produced a tyrannical right. All of the conditions, the improvements around tolerance and cultural openness and responsibility for the poorest of the poor, the perspective that a healthy society is one that has a priority to care for all its people -- those standards have so diminished so that you have candidates now talking about the fact that people may have to starve. And that’s now a legitimate thing to say. Killing gets cheered by the GOP grassroots. The four GOP debates so far are really interesting because they indicate something really seriously bad.

DH: The rise of the Tea Party, aided by its intense promotion by the corporate media, has given the public the sense that there is a powerful angry grassroots movement underway. How does that play out?

CG: Tyranny grows first of all in the establishment of a legitimation of its point of view, even on the margins. You can see it in Swift Boat attacks on John Kerry, a war hero, and with Murdoch and Roger Ailes growing Fox. There is the constant testing of a model that is very similar in tone to the most successful moment of progressives in the 1960s. It reaches into high levels of rhetorical hysteria. When we were on the streets 40 years ago there was a kind of hysteria -- police were the enemy. There's a similar level of hysteria now. What that means is basically that on the road to power, most people committed to power will use the "crowd" -- they construct a crowd. You need the crowd, even if it's only a tiny fraction of the population. If the crowd is visible through spectacle then you start conditioning the public's readiness to act, and you encourage readiness of others not to act.

So in the present political reality, you have the convergence of the crowd's mentality, with the readiness to be tyrannical in leadership, with leaders in Congress like Jim DeMint, Eric Cantor, and of course funding for it all from the Kochs. This tyrannical style of leadership has grown through the Bush years to a dramatic level, and has not been effectively challenged by Obama. You have the growth of the crowd and the paralysis of public at large. When you look at poll data there is no way in which the public agrees with the Tea Party or with right-wing political figures, but it is paralyzed, and paralyzed serially over time.

A million people on the street didn't get listened to over the Iraq invasion, or the defeat of Kerry through usurping of the public stage by Swift Boat in 2000. Then the inability of Gore to fight for his election followed by the Supreme Court decision which gave us eight years of Bush. The choice to fight or not is rarely a popularly held prerogative until the public bursts forth as perhaps in the Arab Spring. Until such moments, leadership is top down, especially in the electoral arena, where money and incumbency determine authority and good judgment.

The Tea Party is the latest in a series of experiments -- remember the Promise Keepers and the Christian Coalition back in the '80s -- to advance right-wing politics from the margins to a new center. We've been holding them off time and time again but not by producing anything for the future. Instead we have benefitted from the cultural victories of the '70s and '80s that have become enshrined in entertainment conventions and interpersonal lifestyles. In both realms we have taken great strides to persuade Americans that young people should have the vote at 18, that women are equal, that abortion is pretty much something you can argue rhetorically but hard to lose practically, but now we're losing ground on everything. The death penalty for a while looked like we were humane, we don't just kill people -- we're losing ground on that. We didn't go to war casually -- we've lost ground on that.

DH: Without tension of competing systems, is there an inevitable march to the extreme? Is there a theory that most extreme seems to always win out?

CG: The fact is, a society grows into tyranny over time as the most powerful cultivate extreme crowd behavior, which, unless resisted can have a contagion effect into the public at large, paralyzing resistance and recruiting frightened supporters. While clearly minority politics, the Tea Party zealots who cheered at death and execution much as Sarah Palin once called on us to “Drill, baby, drill!”ought to be a reminder and a warning. But I don’t know any mainstream media that treated the cheers for the death penalty and barbarous inhumanity to the sick as a story truly worth engaging. The crowd is the critical thing that tyranny requires eventually -- the mobilization of the crowd. With recessions every 10 years, the circumstances periodically creates the possibility for angry people to be organized into a crowd. Progressives did that. The New Deal was about using the circumstance of the depression to organize a progressive crowd.

DH: Mostly organized by the Communist Party. But we have no capacity to do that now?

CG: and the Socialist party. But there was a plethora of organizations. And no, we have no apparent capacity do that now, although we desperately need it. New protests and organizing efforts are definitely sparks of hope. But that kind of action is primarily on the right.

DH: It's a resource question, too?

CG: Yes, and it's also a planning and leadership question. The Socialist party, Catholic Workers, Communists -- they were planners, they had an agenda not limited by electoral and legislative politics, and not dependent on foundation resources for scale. Forty years ago a dozen small progressive foundations could help support strong action and analysis. The big checks now come from professionalized, very mainstream foundations that do not, as was the case with the earlier funders, institutionally identify with a progressive world view.

DH: The Kochs write the big checks for the right today. So is the weakness primarily an issue of class -- resources staying in the educated class?

CG. No. It is that and it is something deeper, more psychological. When I was in England a bit ago, I was talking to a Syrian cab driver, this was in the middle of the Arab Spring. I said, why is it that you've got (this was before the riots) English kids protesting at Trafalgar Square against tuition increases? You've got women in Rome -- a million people -- protesting against Silvio Berlusconi. The next day they've all gone home, the kids have gone home. In America we had the resistance against the Iraq war, they went home. But in Egypt they came back every single day. In Yemen they come back every day. And he said, "Well, we in the West have freedom. They don't have the freedom."

So there is someway in which we have the consciousness here that we have something that could be lost that we don't want to risk. In the Middle East, there is nothing left to be lost.

DH: So fast-forward to the present. How has the right-wing philosophy which has dramatically increased its influence, changed the nature of government?

CG: What we are up against is the constant reduction of compassion as the highest priority in how you make public policy and deliver public goods. The right wants to take public space. They want to take public resources. In response, progressives get lost in the message of to trying to re-instill belief in government. With the government argument, I think we're missing the point, both in terms of compassion but also that it's not not about belief in government. It's about who owns government and what it's for. Despite the right's anti-government rhetoric, their practice is pro government. But it is government for them. So we must challenge the principle of who owns government. We are saying they've diminished the belief in government, but why does Rick Perry want to become president of the United States and, in effect, CEO of the nation’s investment engine, that is, government.

It's not because he doesn't believe in government, it's because he wants to control government. They want to control and privatize government resources. Capitalism is exhausted here. It needs more public money. It’s always needed public money, it needs more now. When you look at the growth of capitalism in America from railroads all the way to the computer, it's publicly funded. I say to people what do Velcro and GPS have in common? They were both created by the military. And who is making a profit from that? Does the public get any return for its investment?

But if we had a conception of government that was not only tax agent, service deliverer, but also an investor in the economy like a bank, and it was entitled to a return just the way a bank gets return, we'd have plenty money. But we don't treat ourselves as the investor. But every major technological growth has been publicly invested in. If we were a shareholder in Microsoft because we invented the computer, it would be a very different terrain. So the reinvention of capitalism is the issue, and the reinvention of government is what is happening. So capitalism is directly claiming public investment now.

DH: Can you provide a current example of the privatization impulse?

CG: Charter schools are a very good case study for the impulse. Forget anti-unionism; forget whether or not they work, because they don't. But even if they did they are not cheaper. Charter schools are simply the transfer of public money to profit-making activity. That's the system they are steadily building -- prisons, schools, public parks, there's a conversion of the whole system into an investment of capital which is a major extension of what's always been true.

It's a way of government supporting the expenditure of money, but it has been organized so that it stays in private control. And in private control it's become increasingly privileged in how the decisions are made. So you've got hedge fund people now funding charter schools -- they are the largest engine behind charter schools. And so they care about education. Some of them even believe public schools are so bad we need this alternative.

But there's not a lot of thinking about about whether profit is compatible with learning. If profit is the major goal and keeping costs down is the major goal, then how do you have learning be the major goal? That's exactly the contradiction. If you're going to have learning be the major goal, you have to invest in it like you would a war. You don't in a war say the major goal is how to make profit and we'll only fight the war according to the profit.

DH: With the enormous investment in military arms, and more recently mercenaries, it seems like we are headed there.

CH: Well, that is one reason we have more war. But in the end you can't sell to the public that the measure of our success here is profit. And in education, were saying basically you can trust profit. The market will give you better results. There's no reason to believe that. The public hasn't accepted it, although it's getting pushed on them because of the power that's established in the state houses. Also, what's not well understood, is there are three kinds of charters. So the privatization has three identities and they're being merged. One is public school experiments with the charter system. The second is not-for-profit charters run by not-for-profit organizations are closer to the base. The third is the for-profit charter.

The first two models are perfectly fine. We have private schools and parochial schools which have tax exemptions so they're only quasi private. Those two forms are part of the American education fabric, so having another thing called charters wouldn't be a problem. It's nice to experiment with different forms of government organization and curriculum. But the for-profit charter is a very different entity and to allow it to be conflated with the other two is basically to let the Trojan horse in.

DH: As a longtime foundation executive, how has philanthropy exacerbated the progressive weakness?

CG: Foundations mostly gave money according to sociology or class, so people gave money to organizations led by people most like them, or slowly there was entry of people who were not like them but were being identified by people like them, and also very little money when you think about it. If you take the most successful community based organization in philanthropy at community based building level, it's probably SCOPE in Los Angeles.

And they went from a $5,000 grant to its founder from New World Foundation to a $3 million, maybe a $4 million budget, which took 25 years to get to. We have a number of very strong local and state organizations that have built powerful bases to influence local politics, pioneering such inventions as “living wage,” and “community benefits.” But to date this is a record of policy reform and some electoral victories for local leaders, all of which is very important. It is, however, not yet a coherent, comprehensive and compelling base for challenging the structural realignment of capitalism in our time.

DH: What are the consequences of that lack of a base to challenge the excesses of capitalism?

CG: So middle-income workers and people in impoverished communities are all under serious attack by this realignment, and are not yet organized in an aggressive agenda of their own within a worldview they share. I think there’s a sense that we have more to lose than to gain in such action at this time, but time may be running out on that one. Most people do have a certain level of freedom, they have a lot of harassment -- but they have a certain level of freedom. And for the average African American who is now 25 -- they have family that experienced the change so they are freer than they were.

They don't get off the street curb when they're coming up to a white person. They can be on the street with a white date or partner. There have been significant changes, not necessarily lasting changes, but changes that make you feel you've got something. The real danger is now that the economy can't produce the benefits it was producing, and the greed in capitalism has gone to such an extreme, that the Captains of capitalism seem not to be concerned about the social order dangers that the extreme inequalities create, which opens the gates to fascism.

When you have the a tyrannical crowd, you have the tendency to tyranny, you have the crowd behaving the way they did in those four Republican debates. So while they're only a minority, they're setting a tone. In the first debate nobody was willing to say that a dying child, a very ill child, should get medical care. In the second debate you've got cheering for the death penalty. In the third debate you've got the call to kill, for a young man who's on life support. And in the fourth debate the gay soldier is booed. So you've got this extreme hysteria that is not being challenged.

DH: So you can imagine serious political repression here in the USA? Where is the hope?

CG: I think we know what’s going to come down. I think people know. People are afraid. There's an implicit fear. And also there are moments when spontaneity breaks out. Who knows, we may be lucky enough that spontaneity e.g. at Occupy Wall Street that will help produce a social movement. And all that's been funded and developed will be ready to move. We don't have that now. There was a kind of serial violence that you couldn't have predicted, when Martin Luther King was assassinated. The Nuclear Freeze movement was not predictable when it suddenly flourished. You can't predict them. But it's obvious why after they happen.

So we don't know that we don't have the ground for something major to happen. In almost every state, strong organizations have been developed that might well be the basis for movement capacity when forces outside of their own terrain call them to new and unified action. If one looked at the black churches before the Civil Rights Movement flourishes of the 1960s, they probably would not have looked as strong one by one as they did when called to unified action. So too with their leaders. Indeed, so too with the Tea Party and right-wing movements. The external call for the latter has been heavy duty private money and a driving corporate agenda that is committed to reversing the deals it made since the 1930’s.

But what’s observable is the right has established an ideology and a worldview, a sense of what’s right and what’s wrong that has captured enough of public to dominate news with visible activism, and to paralyze public at large. That doesn't mean they can hold onto it, but that’s the phenomenon were facing. The economy has no ability to buy the public back into the equation. This recent disaster relief controversy is an example. We are unable to buy back into the equation of what looked like we had won forever -- that is the public good. We've lost a major piece of the ideology that was built over 40 or 50 years -- that we care about people in pain. If we don't have the ideolology that we care about people in pain as your basic ethical compass, then you have the kill mentality. Because we're always balancing between compassion and fear. If compassion doesn't dominate and you don't have resources to feel you can be compassionate without paying a high price yourself, then you're going to turn to fear to protect what you've got, or reach your hand out for what you can get.

I think the health care debate is an interesting case to consider in all this. Obviously, the social benefit is intrinsic to a progressive perspective. The kind of health care reform we’ve received is, for a variety of reasons, insufficient and insecure. Foundation funding for advancing public education and lobbying ran to the millions of dollars but it was all silo policy oriented and for the most part, top down. If that kind of money could have been used to help build a comprehensive foundational commitment to social welfare and organizational capacity, a partial achievement might well have helped produce a powerful movement advance.

DH: Does that loss of the moral compass, along with the fear, have to translate into passivity? How do we combat that?

CG: Well, I don't know that were not doing some of what is necessary. We have to reinvest in the ideology… lots of organizations have gotten lost in the idea that you have to invest in resurrecting belief in government. This is about messages. Elections may be fought on messages. Social movements are about consciousness. We have still to invest psychically, financially and organizationally in rebuilding a shared consciousness for a threshold number of Americans that is characterized in the idea that we want a compassionate society and that government is the best vehicle to deliver that.

One thing I didn't mention about the '80s that the assault on government that Reagan led, the left created earlier. We talked about problems of welfare system, about the ineffectiveness of the education system -- that was us. Cloward and Piven, me, everybody. We undermined that system. We didn't have a sense, probably because we were young, that you win a victory and then you evolve the maturity of that victory. We wanted it to be correct, and the right will suffer the same hubris -- they're moving way beyond their ideological reach, beyond the ability to deliver it.

DH: So, what happens in the interim? What about political repression?

CG: As Eric Cantor said, "People could starve." He said, "If you haven't saved for a rainy day yourself, that's your responsibility."

That's the opposite of compassion; that generates fear. And if you have violence on the street, they will have their own excuse for political repression. If there is an excess of even the right-wing on the street you could have the excuse of police intervention that looks like it's in public interest. But we have work to do, not least is to protect the moment. By that I mean, we should give serious thought about the impact of colluding in the electoral defeat of this president by undermining him publicly and reducing his viability as a candidate. The alternative is truly dangerous.

At the same time, we must think of ourselves in a political era that calls for breaking from the conventions of recent political discourse that has narrowed our social and political vision. It’s time to name what is happening in our country without hysteria, but to be clear that the next elections are part of a struggle for a social and cultural threshold that will determine the quality of life and democracy in this country.

And we need to keep in mind what's always been true in the politics of social movements -- they are the province of the young. Just look for example at how the brave young people in the Dream Act campaigns have actually won victories against inhumane ICE practices. They took and they take risks. Now, as other young people are stepping up to make powerful statements, take risks, try new tactics, they need our support and understanding.

Don Hazen is the executive editor of AlterNet.

Colin Greer is president of the New World Foundation in New York. Among his books is A Call to Character (HarperCollins, 1995).

Saturday, October 1, 2011

How Companies Plunder and Profit from the Nest Eggs of American Workers

AlterNet.org


How Companies Plunder and Profit from the Nest Eggs of American Workers

What really happened to the retirement benefits of millions of Americans at thousands of companies.

By Ellen Schultz


The following is an excerpt from Retirement Heist: How Companies Plunder and Profit From the Nest Eggs of Americans Workers, by Ellen E. Schultz by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) Ellen E. Schultz, 2011.

In December 2010, General Electric held its Annual Outlook Investor Meeting at Rockefeller Center in New York City. At the meeting, chief executive Jeffrey Immelt stood on the Saturday Night Live stage and gave the gathered analysts and shareholders a rundown on the global conglomerate’s health. But in contrast to the iconic comedy show that is filmed at Rock Center each week, Immelt’s tone was solemn. Like many other CEOs at large companies, Immelt pointed out that his firm’s pension plan was an ongoing problem. The “pension has been a drag for a decade,” he said, and it would cause the company to lose 13 cents per share the next year. Regretfully, to rein in costs, GE was going to close the pension plan to new employees.

The audience had every reason to believe him. An escalating chorus of bloggers, pundits, talk show hosts, and media stories bemoan the burgeoning pension-and-retirement crisis in America, and GE was just the latest of hundreds of companies, from IBM to Verizon, that have slashed pensions and medical benefits for millions of American retirees. To justify these cuts, companies complain they’re victims of a “perfect storm” of uncontrollable economic forces—an aging workforce, entitled retirees, a stock market debacle, and an outmoded pension system that cripples their chances of competing against pensionless competitors and companies overseas.

What Immelt didn’t mention was that, far from being a burden, GE’s pension and retiree plans had contributed billions of dollars to the company’s bottom line over the past decade and a half, and were responsible for a chunk of the earnings that the executives had taken credit for. Nor were these retirement programs—even with GE’s 230,000 retirees—bleeding the company of cash. In fact, GE hadn’t contributed a cent to the workers’ pension plans since 1987 but still had enough money to cover all the current and future retirees.

And yet, despite all this, Immelt’s assessment wasn’t entirely inaccurate. The company did indeed have another pension plan that really was a burden: the one for GE executives. And unlike the pension plans for a quarter of a million workers and retirees, the executive pensions, with a $4.4 billion obligation, have always been a drag on earnings and have always drained cash from company coffers: more than $573 million over the past three years alone.

So a question remains: With its fully funded pension plan, why was GE closing its pensions?

That is one of the questions this book seeks to answer. Retirement Heist explains what really happened to GE’s pensions as well as to the retirement benefits of millions of Americans at thousands of companies. No one disputes that there’s a retirement crisis, but the crisis was no demographic accident. It was manufactured by an alliance of two groups: top executives and their facilitators in the retirement industry—benefits consultants, insurance companies, and banks—all of whom played a huge and hidden role in the death spiral of American pensions and benefits.

Yet, unlike the banking industry, which was rightly blamed for the subprime mortgage crisis, the masterminds responsible for the retirement crisis have walked away blame-free. And, unlike the pension raiders of the 1980s, who killed pensions to extract the surplus assets, they face no censure. If anything they are viewed as beleaguered captains valiantly trying to keep their overloaded ships from being sunk in a perfect storm. In reality, they’re the silent pirates who looted the ships and left them to sink, along with the retirees, as they sailed away safely in their lifeboats.

The roots of this crisis took hold two decades ago, when corporate pension plans, by and large, were well funded, thanks in large part to rules enacted in the 1970s that required employers to fund the plans adequately and laws adopted in the 1980s that made it tougher for companies to raid the plans or use the assets for their own benefit. Thanks to these rules, and to the long-running bull market that pumped up assets, by the end of the 1990s pension plans at many large companies had such massive surpluses that the companies could have fully paid their current and future retirees’ pensions, even if all of them lived to be 99 and the companies never contributed another dime.

But despite the rules protecting pension funds, U.S. companies siphoned billions of dollars in assets from their pension plans. Many, like Verizon, used the assets to finance downsizings, offering departing employees additional pension payouts in lieu of cash severance. Others, like GE, sold pension surpluses in restructuring deals, indirectly converting pension assets into cash.

To replenish the surplus assets in their pension piggy banks, companies cut benefits. Initially, employees didn’t question why companies with multi-billion-dollar pension surpluses were cutting pensions that weren’t costing them anything, because no one noticed their pensions were being cut. Employers used actuarial sleight of hand to disguise the cuts, typically by changing the traditional pensions to seemingly simple account-style plans.

Cutting benefits provided a secondary windfall: It boosted earnings, thanks to new accounting rules that required employers to put their pension obligations on their books. Cutting pensions reduced the obligations, which generated gains that are added to income. These accounting rules are the Rosetta Stone that explains why companies with massively overfunded pension plans went on a pension-cutting spree and began slashing retiree health benefits even when their costs were falling. By giving companies an incentive to reduce the liability on their books, the accounting rules turned retiree benefits plans into cookie jars of potential earnings enhancements and provided employers with the means to convert the trillion dollars in pensions and retiree benefits into an immediate, dollar-for-dollar benefit for the company.

With perfectly legal loopholes that enabled companies to tap pension plans like piggy banks, and accounting rules that rewarded employers for cutting benefits, retiree benefits plans soon morphed into profit centers, and populations of retirees essentially became portfolios of assets and debts, which passed from company to company in swirls of mergers, spin-offs and acquisitions. And with each of these restructuring deals, the subsequent owner aimed to squeeze a profit from the portfolio, always at the expense of the retirees.

The flexibility in the accounting rules, which gave employers enormous latitude to raise or lower their obligations by billions of dollars, also turned retiree plans into handy earnings-management tools.

Unfortunately for employees and retirees, these newfound tricks coincided with the trend of tying executive pay to performance. Thus, deliberately or not, the executives who green-lighted massive retiree cuts were indirectly boosting their own pay.

As their pay grew, managers and officers began diverting growing amounts into deferred-compensation plans, which are unfunded and therefore create a liability. Meanwhile, their supplemental executive pensions, which are based on pay, ballooned along with their compensation. Today, it’s common for a large company to owe its executives several billion dollars in pensions and deferred compensation.

These growing “executive legacy liabilities” are included in the pension obligations employers report to shareholders, and account for many of the “growing pension costs” companies are complaining about. Analysts, shareholders, and others don’t understand that executive obligations are no different from pension obligations for rank-and-file workers and retirees—they are governed by the same accounting rules, and they represent IOUs that a company has on its books. In some ways, executive liabilities are like public pensions: large, growing, and underfunded (or, as in the case of the executives, unfunded).

Unlike regular pensions, the growing executive liabilities are largely hidden, buried within the figures for regular pensions. So even as employers bemoaned their pension burdens, the executive pensions and deferred comp were becoming in some companies a bigger drag on profits.

To offset the impact of their growing executive liabilities on profits, many companies take out billions of dollars of life insurance on their employees, using the policies as informal executive pension funds and collecting death benefits when workers, former employees, and retirees die.

With the help of well-connected Washington lobbyists and leading law firms, over the past two decades employers have steadily used legislation and the courts to undermine protections under federal law, making it almost impossible for employees and retirees to challenge their employers’ maneuvers. With no punitive damages under pension law, employers face little risk when they unilaterally slash benefits, even when promised in writing, since they can pay their lawyers with pension assets and drag out the cases until the retirees give up or die.

As employers curtail traditional pensions, employees are increasingly relying on 401(k) plans, which have already proven to be a failure. Employees save too little, too late, spend the money before retiring, and can see their savings erased when the market nosedives.

But 401(k)s have other features that ensure that the plans, as they exist, will never benefit the majority of employees. The plans are supposed to provide a level playing field, the do-it-yourself retirement vehicle so perfect for an “ownership” society. But the game has been rigged from the beginning. Many companies use these plans as part of a strategy to borrow money cheaply, or in schemes to siphon assets from pension funds.

And just as the new accounting rules led to such mischief, so too did new anti-discrimination rules. Implemented in the 1990s, the rules were intended to ensure that employers didn’t use taxpayer-subsidized 401(k) plans for the favored few, but would make them available to a broad swath of workers. But thanks to the creativity of benefits consultants, employers have used the discrimination rules to shut millions of low-paid employees out of their plans and to provide them with less generous benefits, while enacting other restrictions that make the plans more valuable to managers and executives, at the expense of everyone else.

Today, pension plans are collectively underfunded, hundreds are frozen, and retiree health benefits are an endangered species. And as executive pay and executive pensions spiral, these executive liabilities are slowly replacing pension obligations on many corporate balance sheets.

Meanwhile, the same crowd that created this mess—employers, consultants, and financial firms—are now the primary architects of the “reforms” that will supposedly clean it up. Under the guise of improving retirement security, their “solutions” will enable employers to continue to manipulate retirement plans to generate profit and enrich executives at the expense of employees and retirees. Shareholders pay a price, too.

Their tactics haven’t served as case studies at Harvard Business School, and aren’t mentioned in the copious surveys and studies consultants produce for a gullible public. But the masterminds of this heist should take a bow: They managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets. And they’re still at it. It might not be possible to resuscitate pension plans, but it isn’t too late to expose the machinations of the retirement industry, which has its tentacles into every type of retirement benefit: profit-sharing plans, 401(k)s, employee stock ownership plans (ESOPs), and plans for public employees, nonprofits, small businesses, and even churches.

The retirement industry has exported its tactics, using them to achieve similar outcomes in retirement plans in Canada, Europe, Australia, and elsewhere, and has big plans for Social Security and its overseas equivalents as well. Unless it is reined in, the global retirement industry will continue to capture retirement wealth earned by many to enrich a relative few.

Ellen Schultz, an investigative reporter for the Wall Street Journal, has covered the retirement crisis for over a decade.


Monday, September 26, 2011

Why Privatization Is A Move Backwards

Dissident Voice: a radical newsletter in the struggle for peace and social justice


Privatization: A Move Backwards

Republicans, neo-conservatives and tea party fanatics are all clamoring for “privatization,” characterizing it as the panacea for America’s economic woes. And, as privatization moves forward rapidly in the United States, there has been no overall collective discussion among the citizens of this country as to whether we want it or not.

The corporate oligarchs, who have stolen the wealth of the entire country (and are hoarding it for their own benefit) love privatization, because, for them, it translates into the demise of governmental control and regulations affecting their businesses. They can act without any need for accountability or adherence to the responsibilities that come from government oversight.

With privatization, the billionaires can ignore the environmental impact of their actions, as well as the social implications of creating non-union, unregulated working conditions. For them, it’s similar to re-instituting slave labor, with the minimal wages and benefits needed to placate an unorganized workforce.

The goal is simple. As Naomi Klein describes this “rapid-fire privatization”:

First, governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that corporations could be running at a profit. And third, they should dramatically cut back funding of social programs.1

In short, for the super rich, privatization means that natural resources and human resources are controlled by the employer, and not by any public or community group. The only recourse individuals have for corporate abuse is to quit working for a particular employer, and seek employment from another tyrant, who most likely shares the same power and control as the first employer.

It is obvious why the oligarchs are fighting tooth and nail for privatization. But why in the world would anybody but the rich support such a system?

There are three possible reasons why the average American might assist the oligarchs in obtaining their goals:

1) The working class has been duped into believing that bureaucratic structures and governmental waste is the source of our crumbling economy. This theory suggests that if it weren’t for Washington insiders, the distribution of wealth in the country would not be so unbalanced and unfair, but would reflect the healthy growth associated with Apple, Exxon and Google.

2) America’s white working class has been persuaded by the oligarchs and their lapdogs in the media that minorities, foreigners, the unemployed and the mentally infirm are the cause of the failing economy; therefore, the theory goes, assistance provided to any of these groups threatens the economic security of working people. The only solution oligarchs put forth is to cut all social services and benefits to anybody but the rich.

3) A third significant factor is that the oligarchs have so devastated our natural resources and economy that the working class is barely surviving. Again, people who are struggling to survive hunt for scapegoats, and it points towards the weak and the dispossessed — not towards the rich and powerful. Working people look in the wrong direction for solutions to their problems.

What is so pathetic about this particular moment in history is that the drive for privatization is the worst possible solution for our problems. In fact, it will result in even more chaos and poverty for the great majority of our people. There are several reasons for this:

1) A healthy economy requires a healthy, educated populace. Because this is so, public education should be free, and a right for all. Instead of making a college education so expensive that it is a form of indentured servitude, it should be the responsibility of the state to make it available to all who can participate.

2) Similarly, a healthy population is a mentally and physically productive one. Health care should be the responsibility of the government, and 100% of the population should be protected by our health care system. An unhealthy population is unable to support itself.

3) Those who want to work and are able to do so should be assured of a job. Their employment should not depend upon the whims of a corporate oligarch, who is seeking to maximize profits; but rather, the representatives of the entire society who benefit from full employment.

4) A just society protects its citizens, and finds the best possible alternatives for those unable to work and live independently. Corporate oligarchs couldn’t care less about people who don’t bring them profit. But the society needs to nurture and assist those who, for any number of reasons, are unable to remain productive members of society. We don’t euthanize the elderly, the sick and the weak, simply because they can’t find employment at the local Walmart. Instead, a strong nation does its best to protect this segment of the population.

The underpinnings of why privatization is so counter-productive is that the resources of the entire nation should be in the hands of the majority, whose motivation for action is the collective need, and not in the hands of oligarchs, whose motives revolve around profit and personal aggrandizement. It is the government, and not corporate oligarchs, who recognize the waste and implications of short-term profit over long-term needs. Decisions about the allocation of resources, full employment, health and educational benefits should lie in the hands of the citizenry, and not as the personal property of a select few.

When one reviews the history of privatization throughout world history, one sees those institutions and periods in which that theory thrived: the feudal ages, private kingdoms, and ruling dynasties. Unfortunately, the direction of the future points to “privatization” as a right of an anointed royalty, and not of the people, who would seek to place the needs of all and the wealth of the nation in the hands of the many, and not the few.

  1. Klein, Naomi, The Shock Doctrine, Metropolitan Books, NY, 2007, p. 57 []

Luke Hiken is an attorney who has engaged in the practice of criminal, military, immigration, and appellate law. Marti Hiken is the director of Progressive Avenues. She is the former associate director of the Institute for Public Accuracy and former chair of the National Lawyers Guild Military Law Task Force. Read other articles by Marti Hiken and Luke Hiken, or visit Marti Hiken and Luke Hiken's website.

Friday, September 2, 2011

U.S. Awash in Oil and Lies, Report Charges

CommonDreams.org

Published on Friday, September 2, 2011 by Inter Press Service

With four times as many oil rigs pumping domestic oil today than eight years ago and declining domestic demand, the United States is awash in oil. In fact, the U.S. exports more oil than it imports, according to the U.S. Energy Information Administration - and has done so for nearly two decades.

The country's oil industry is primarily interested in who will pay the most on the global marketplace. They call that "energy security" when it suits, but in reality it is "oil company security" through maximizing profits, say energy experts like Steve Kretzman of Oil Change International, an NGO that researches the links between oil, gas and coal companies and governments.



A young woman holds a sign in front of the white house urging President Obama to reject the keystone pipeline. She was joined by 46 others who engaged in civil disobedience and were arrested on August 25th, 2011. (photo: Milan Ilnyckyj / Tar Sands Action)

The only reason U.S. citizens may be forced to endure a risky, Canadian-owned oil pipeline called Keystone XL is so oil companies with billion-dollar profits can get the dirty oil from Canada's tar sands down to the Gulf of Mexico to export to Europe, Latin America or Asia, according to a new report by Oil Change International released Wednesday.

"Keystone XL will not lessen U.S. dependence on foreign oil, but rather transport Canadian oil to American refineries for export to overseas markets," concludes the report, titled "Exporting Energy Security".

Little of the 700,000 to 800,000 barrels of tar sands oil pumped through the 2,400-kilometre, seven-billion-dollar Keystone XL will end up in U.S. gas tanks because the refineries on the Gulf Coast are all about expanding export markets. One huge refinery operator called Valero has been touting the potential export revenues of tar sands oil to investors, the report found.

Because Keystone XL crosses national borders, President Barack Obama has to issue a permit declaring the pipeline serves the "national interest" in order to be approved.

"The only way Keystone XL could be considered in the national interest is if you equate that with profits for the oil industry," said Kretzman, who wrote the report.

Canada's huge tar sands deposits, located mainly in the far north of the province of Alberta, are the world's second largest oil reserves, but they are landlocked. It's the industry's biggest worry and also Alberta Energy Minister Ron Lieper's biggest concern.

Lieper recently said that without new pipelines "our greatest risk in Alberta is that by 2020 we will be landlocked in bitumen". Bitumen is thick tarry oil from the tar sands that needs lots of high-energy and chemical processing to be useable - one reason it's widely considered the world's dirtiest oil.

The shortest route to the big Asian markets is through the Rocky Mountains to Canada's west coast via the proposed Northern Gateway pipeline. However, Canadian native people live on some of the land and are staunchly opposed, so the industry thought it would be easier to put an export pipeline right through the U.S. heartland, said Kretzman.

"The oil industry would have done the Northern Gateway first but gambled that resistance to the pipeline would be far weaker in the mid-west," he told IPS.

They were wrong.

Thousands of people, including landowners and religious leaders, have gone to Washington DC in the past two weeks to tell President Obama to reject Keystone. Nearly 850 people have been arrested for standing on the sidewalk in front of the White House in what protesters call the largest civil disobedience in the history of the U.S. climate movement.

"It's remarkable, a very dignified and moving protest much like the civil rights demonstrations in the 1960s," said Maude Barlow, chairperson of the Council of Canadians, a large environmental NGO.

"This is about the rights of the environment and future generations. It is the blossoming of a new movement," Barlow told IPS from Washington.

Other massive pipelines are being planned, including ones bringing tar sands crude to New England and the Great Lakes, she said. "Keystone is just the beginning. Once these are built they will have to put something in them."

Infrastructure dictates policy, she stressed. Once pipelines, refineries or power plants are built, it is nearly impossible for governments to shut them down.

Last year, scientists writing in the journal Science concluded there is already enough fossil fuel burning capacity to raise global temperatures by 1.5 degrees C by 2060. Any additional power plants, vehicles, or other fossil fuel burning equipment built from 2011 onward puts humanity at ever greater risk of catastrophic climate change.

"We conclude that sources of the most threatening emissions have yet to built," the scientists wrote.

The Obama administration knows this but the powerful oil lobby can use its unlimited funds to attack Democratic officials during the next election cycle if they don't approve the pipeline, says Kretzman.

Changes to U.S. law in 2010 allow corporations to spend as much as they want on elections, and there is no sector with more money than the oil industry.

"That scares the hell out of the Obama administration," he said.

It's never been clearer that corporations wield the real power in the United States and Canada, activists say.

"This is the beginning of a very big fight for the future," Barlow told IPS.


So Much for the Polar Bears - Arctic Drilling to Begin


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So Much for the Polar Bears - Arctic Drilling to Begin

Written by John Daly
Thursday, 01 September 2011 13:59

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The “good” news for wildlife around the Arctic Circle is that BP, renowned despoiler of the Gulf of Mexico, will not be coming.

BP’s 2010 Deepwater Horizon oil spill (also referred as the Macondo blowout), which surged for three months, has won a place in the Guinness book of records as the largest accidental marine oil spill in the history of the petroleum industry.

The bad news is that U.S. oil international Exxon Mobil has sealed an Arctic oil exploration deal with Russia’s state-owned oil firm Rosneft, following an agreement signed on 29 August in the presence of Russian Prime Minister Vladimir Putin.

Proving that the Cold War is well and truly dead, at least for multinationals, Putin gushed, "New horizons are opening up. One of the world's leading companies, Exxon Mobil, is starting to work on Russia's strategic shelf and deepwater continental shelf. The potential oil fields are some of the largest in circumpolar Arctic offshore area.

The contract stipulates that Exxon Mobil and Rosneft will jointly spend $3.2 billion on deepwater exploration in the Russian federation’s East Prinovozemelskii region of the Kara Sea.

Of course, Exxon Mobil did not walk away empty-handed, as the agreement also allows it to begin oil prospecting in the Black Sea. And Rosneft, pushing away from the casino table, will be permitted to develop fields in the Gulf of Mexico and Texas.

Last but not least, the two companies will also cooperate on the development of oil fields in Western Siberia, where production has been in decline for more than a decade.

But let’s get back to the Kara Sea for a moment.

Sandwiched between Novaiia Zemliia island and the Severnaia Zemliia archipelago, compared to its western neighbor, Compared to the Barents Sea, which receives warm Atlantic currents, the Kara Sea is much colder because of its isolation, remaining frozen for over nine months a year. The ice-locked sea is navigable only during August and September.

Furthermore, as the Kara Sea receives a vast amount of freshwater from the northwards flowing Siberian Ob, Yenisei, Pyasina, and Taimyra rivers, its salinity is variable, introducing yet another hydrological element of uncertainty into the proposed exploration.

Of course, what’s a few oil spills amongst comrades? After all, Russian environmentalist groups have protested for years that Russia’s Arctic regions were used as isolated dumping grounds for nuclear waste, and according to a March 1993 Russian Federation government official White Paper" between 1965-1988 the Soviet Union dumped six nuclear submarine reactors and ten nuclear reactors into the Kara Sea, along with solid high- and low-level wastes unloaded from Northern Fleet nuclear submarines. What are a few errant hydrocarbons gonna do admixed with some becquerels?

In an eerie echo of insistent Republican choruses of “drill, baby drill” for Alaska’s Arctic National Wildlife Refuge (ANWR), the proposed Kara Sea operations will impact the Russian Federation’s Great Arctic State Nature Reserve, the nation’s largest and in fact, the most massive in all of Europe, which was established in May 1993 by Resolution No.431 of the Russian Federation government. The Kara Sea reserve elements included the Sergei Kirov Archipelago, Voronina Island, the Izvestiy TSIK Islands, the Arctic Institute Islands, Svordrup Island, Uedineniya Island and a number of smaller islands.

And how will that precious oil be transported?

By tanker, of course.

In this regard, consider a report by Russian environmental Group Bellona about the 16 March 2009 incident where the nuclear-powered icebreaker Yamal collided with the 16.168 ton tanker Indiga during ice escort duty in the Kara Sea, which was shuttling between the oil terminal in the Gulf of Ob and the floating oil storage vessel Belokamenka in the Kola Bay. The Indiga suffered a 31foot-long crack on its main deck from the impact of the collision, but fortunately the tanker was only carrying ballast at the time.

The Kara Sea oil exploration concept is one of those ideas that look good in boardrooms but bad in reality. The severe climate, combined with the difficulties of oil transport, should give pause to all except those inhaling seven figure salaries and three martini lunches. And never mind the fact that the waters contain some of the world’s richest fishing grounds.

The Exxon Mobil-Rosneft alliance has the tacit blessing of both the U.S. and Russian governments, so it will more than likely go forward.

Offshore drilling comes with attendant risks unlike land-based exploration, which the Macondo blowout proved. If it took BP three months to shut down its well in the relatively shallow and warm waters of the gulf of Mexico, then how do Exxon Mobil and Rossneft propose to deal with a similar incident in waters several hundred miles south of the Arctic Circle that are frozen for all but two months of the year?

Guess we’ll find out.

Good thing that polar bears can’t vote, but then, they’re an endangered species anyway, so even if they could, there are too few to matter.

By. John C.K. Daly of OilPrice.com