Archive for October, 2012

EU’s dilemma: austerity or job growth?

Austerity, or job growth?

If there was a time in history that has shown the spectacular failures of neo liberalism and free market fundamentalism, it is now. Those who still push for austerity measures as a solution to the economic abyss they have created globally, but in particular, in Greece, Portugal and in Spain are incapable of recognizing the disastrous reality their economic regime has created.

Citizens are enduring the most extreme form of fiscal austerity imposed on them by their governments. This past Summer at Los Cabos, a statement released at the end of the G20 meeting spoke about “the leaders of the world’s largest economies have agreed to step up efforts to boost growth and job creation”. What we have seen since then is the same austerity policy being enforced.

Now in Berlin, the heads of five of the world’s most influential finance and economic organizations have met for talks on the global economy. (OECD Secretary General Angel Gurria, WTO Director General Pascal Lamy, ILO Director General Guy Ryder, IMF Director Christine Lagarde and World Bank President Jim Yong Kim). It seems the focus of the meeting was on growth as a solution to the economic crisis Europe is in. You don’t say. No, really. At least in theory, they are almost there. What policies the EU will follow to create job growth still remains a mystery.
Professor Mekonen Haddis



Read Full Post »


The Foreign Policy debate: the absence of neocons’ hideous plans.

In spite of the heavy handed list of neocons advising Romney on foreign policy issues, their advice and wishes were not evident at the debate. It was a shrewd political move by Romney as Republicans well understand that the U.S. public is not interested in a confrontational foreign policy that calls for more American military engagements.

It is clear that the neocons have Romney buy in to creating confrontations with China, Russia and most particularly, Iran. These issues did not air during the foreign policy debate because it should remain their secret until the Republican electoral victory.

Professor Mekonen Haddis

P.S. The following article by Lawrence Rosenthal sheds more light on the issue.

Neocons and the Foreign-Policy Presidential Debate: The Ism That Dare Not Speak Its Name

In Monday’s final presidential debate, President Barack Obama came full circle and more from his conflict-averse showing in the first debate. Obama not only attacked his opponent, but, in the absence of much challenge from Mitt Romney, took it upon himself to raise the very points required to mount his attacks.

For the most part, when the debate was not sidelined back to the domestic economy, Romney tended to endorse Obama’s specific policies, while offering weak and generic bromides about being strong and increasing defense spending. On critical matters, like Afghanistan, Romney’s earlier campaign-trail objections seemed to turn ethereal. As Obama observed in a discussion of sanctions on Iran:

I’m glad that Governor Romney agrees with the steps that we’re taking. There have been times, Governor, frankly, during the course of this campaign, where it sounded like you thought that you’d do the same things we did, but you’d say them louder and somehow that would make a difference.

On point after point, Obama brought up earlier statements and positions that Romney has enunciated during his long run to the nomination and since. And a notable list of topics it was: Russia, Iraq, Afghanistan, Osama bin Laden, Libya, Syria. It was as though Obama himself needed to conjure up the foreign policy adversary he was debating with — the Romney from the campaign trail, not the Romney sitting beside him.

But there was good reason for Romney’s failure to offer his counter foreign-policy positions, much less a competing foreign-policy vision. He has taken on a foreign policy team that, above all, needs to be kept out of sight as much as possible from the American public. He has resurrected the neoconservatives, and they are spoiling for an attack on Iran.

Fully 17 of Romney’s 24 special advisers on foreign policy served in the Bush administration. His key advisers on the Middle East are all neocons…Romney’s advisers — most of whom supported the Iraq war — have already concluded that war with Iran is essential.

The names pass by in baleful parade: Kagan, Senor, Bolton, Chertoff, Cofer Black, Carlucci. As the authors of the Bush administration’s disastrous Iraq invasion, it would be hard to think of a more profoundly discredited foreign-policy vision than neoconservatism — or one more anathema to a public drained and disappointed by a decade of war.

In fact, the neoconservatives have always been aware that their ideas unvarnished would seem baffling and Strangelove-like to most Americans. The invasion of Iraq was the linchpin of a strategy cooked up years before and awaiting a pretext like 9-11 to turn into policy. Even then, it was sold to the American public and the world (remember Colin Powell at the UN) not on the neocons’ strategic vision of an interventionist American hyperpower, but on the fictive threat of weapons of mass destruction, playing on post-9-11 fears.

Today, as in 2003, neoconservatives understand that Americans are loath to support their militaristic vision of the world. To a wide audience both here and abroad, the neocons resemble spiteful school children playing Risk. It was never clear to what extent they sold George W. Bush a bill of goods, playing on that president’s ignorance of the world and personal issues both oedipal and napoleonic. Romney’s own lack of worldliness became clear in his July gaffe-filled international tour. His ignorance came through in his Palinesque observation in the debate that “Syria is Iran’s…route to the sea.”

Hence the baffling bifurcated Romney Obama faced in debate—the Romney present and the Romney absent. The latter was the Romney of the stump who Obama was obliged to summon from the campaign deeps. Of the former, the President observed, speaking of Syria:

What you just heard Governor Romney say is he doesn’t have different ideas, and that’s because we’re doing exactly what we should be doing to try to promote a moderate, Syrian leadership and a — an effective transition so that we get Assad out. That’s the kind of leadership we’ve shown. That’s the kind of leadership we’ll continue to show.

The neoconservatives are employing a Trojan horse strategy to return to the helm of foreign-policy decision-making in this country. More than anything else, they needed to get through the foreign policy debate without showing their hand. It looks like they succeeded.

Lawrence Rosenthal
The Berkeley Blog


Read Full Post »

The coming age of austerity.

Capitalism’s Two-Step Survival Plan

The Coming Age of Austerity

The coast is clear, the media tells us; economic disaster has been averted. The Euro Zone is finally stable and the U.S. economy is recovering. Whew!

Why, then, are government policies internationally still pursuing extremist measures? In the U.S., a third round of excess money printing —called Quantitative Easing — began recently in which banks are directly profiting by unloading their toxic mortgages on the Federal Reserve’s balance sheet (another backdoor bailout paid by taxpayers).

After the U.S. presidential election, both Democrats and Republicans are committed to different versions of historic cuts to social services, education, Medicare, unemployment benefits, and very likely Social Security. This bi-partisan plan is often referred to as a “grand bargain,” the details of which both parties are still haggling over.

In Europe things are no better. After the Euro Zone central bank promised investors its full backing to bailout all Euro Zone members — by printing money — the world economy sighed a heavy relief. But still the Euro Zone — along with the U.S. — is pursuing a two-pronged solution for an extreme economic crisis: austerity measures and the less-discussed “structural reforms.”

What are these policies? Austerity is simple enough: government cuts to social spending, health care, education, pensions, etc. — to balance heavily indebted public budgets (at the expense of working people, rather than taxing the rich and corporations). Austerity can also be achieved through privatization, where once publicly run programs/facilities are sold cheaply to private firms to make a profit, thus taking the cost off the government’s budget.

Structural reforms on the other hand are meant to boost economic (corporate) growth, by government intervention in commodity markets — most commonly the labor market. It’s called structural reform because markets are usually relatively stable. For example, the labor market is deep-rooted in powerful social forces — wages, benefits, and working conditions are heavily influenced by unions, who use their organization and strike threat to pressure corporations and governments to pay living wages. Non-union workers benefit directly by the unions’ ability to alter the national labor market, since non-union companies have to compete with union companies for workers, who naturally go where wages are higher. Professional, higher-paid workers benefit too, since society expects them to get higher wages than, say a carpenter.

In Europe, structural reforms targeting the labor market — alongside austerity measures — are rousing the unions and broader community into the streets with massive demonstrations: Spain, Portugal, Greece, and other countries are fighting reforms that politicians are euphemistically calling “labor market flexibility.” This simply means that unions will be undermined by their inability to protect workers’ jobs, making firing easier (“flexibility”), which results in compelling workers into accepting lower wages and benefits.

The pro-corporate Economist magazine reports about Portugal:

“With his decision to finance a reduction in company [corporate] costs through a sharp cut in workers’ take-home pay, Pedro Passos Coelho, Portugal’s prime minister, appears to have taken reform past the limit of what is deemed acceptable by large sections of the electorate.”

And France:

“… [President] Hollande has given union leaders and bosses until December to negotiate [anti-union] labor-market changes. On the table are various options, including making it possible for firms [corporations] to reduce hours and salaries in a downturn against a guarantee of job security, along the lines introduced by [Germany’s prime minister]… in 2003.”

And Spain:

“… the new [labor] law makes it easier and cheaper to lay off workers. For most firms, maximum lay-off payments [unemployment benefits] will be reduced from 42 months’ pay to 12 months… it will hugely boost business confidence.”

Reducing unemployment benefits is a very popular labor market structural reform for the 1%, since it makes workers more desperate for work, and thus more accepting of low-wage jobs — consequently lowering workers’ power in the labor market overall, as wages are lowered nationally.

And while Europe’s austerity and structural reforms are on the front page of international media — due to the giant protests and general strikes against them —  the exact same policies have been pursued by the U.S. with barely a murmur. Were it not for the labor upsurges in Wisconsin and more recently Chicago, these policies would be completely off the public’s radar.

The Wisconsin uprising was in response to a labor-market structural reform pursued by Republicans, denying unions bargaining rights — effectively destroying the union.  Democrats, however, are pursuing anti-labor structural reforms — weakening unions — as national policy also, though less directly, by demanding that unions across the country take massive concessions in wages and benefits — a slower, yet more effective form of labor market restructuring.

The teachers in Chicago went on strike against another form of anti-labor structural reform pursued by both Democrats and Republicans. The media-hype around “firing bad teachers” is really a labor-market reform in disguise; the real intention is to bust unions, who are only able to stay strong by their ability to protect the jobs of their members (of course there already exists ways to fire bad teachers).

Teacher merit pay is yet another labor reform measure aimed to weaken unions, since it effectively lowers wages by preventing raises (there is zero evidence that merit pay raises education standards, or that charter schools outperform public schools). It means that every teacher’s salary is negotiated individually, and it allows management to punish its critics by denying them merit pay raises.

The teachers are especially targeted in the U.S. because they are the strongest union in the country, due to their numbers, organization, and connections to the community. If they are forced to give “structural” concessions, other unions will be heavily pressured to do so, and thus the labor market will be altered to the benefit of the corporations.

The labor reform attacks — combined with austerity budget cuts — are happening in different forms on a city, state, and federal level with the full backing of the Democrats and Republicans (there is no “debate” in the presidential election about education policy). Thus, if not for the Wisconsin and Chicago struggles, there would be little social consciousness around these issues.

The reasons that austerity and structural adjustment have not produced a Europe-like movement yet is because most labor unions have increasingly accepted these concessions without putting up a real fight. Many labor leaders would simply rather accept these policies, since fighting them would put them in conflict with their “friends,” the Democratic politicians pursuing these anti-labor policies.

Hopefully, the post-Occupy movement can show the labor movement the way forward. On November 3rd there will be  protest demonstrations against austerity in a number of cities across the country. These protests are targeting the ongoing state by state cuts — and federal post-election cuts — to education, transportation, health care, social programs, and public-sector workers. The protests are challenging the very concept of austerity, as working people refuse to pay for the crisis created by the rich and corporations. There is a potential for these protest demonstrations to teach the American public the word “austerity,” assuming they are large enough and connect with the broader community that directly experiences these policies.

Regardless of the results of November 3, demonstrations about the austerity issue in the U.S. will inevitably continue, since even mainstream economists mostly agree that there will be no return to the pre-recession economy. The policies of austerity and structural reform — along with war — are long-term survival strategies of capitalism, which is evolving to survive a global-wide crisis of corporate growth rates by creating a “new normal” of social expectations: lower wages and fewer social programs.

The first step in fighting these measures is mobilizing working people and the broader community in massive Europe-like demonstrations. This tactic educates the whole nation about the issues, which would otherwise remain in the dark. Once the 99% is in the streets together screaming collective demands with a united voice, the movement will decide how best to act, whether it be the general strikes or new political parties that have emerged in Europe.

The U.S. post-election austerity surprises will give new opportunities for millions of people to get into the streets. They will no longer be able or willing to remain ignorant about the nation’s new normal.

Shamus Cooke

Read Full Post »