Thursday, July 2, 2015

Heritage, history and Arkle; the greatest horse that jumped a fence



Richard Mellor

I wrote a commentary a few days ago in response to a piece I read that the musician Charlie Daniels wrote about the Confederate Flag and what it meant to him. He talked, as others have about heritage and it was this heritage, the connection to his geographical roots and the memories of the home and place he came from. It had nothing to do with racism or hatred of blacks for him. I am not about to repeat my differences with him on this you can read it here.

But I just watched this race above, the Gallagher Cup won by the greatest steeplechaser of all time, Arkle.  I watched this race back then as I did many other races.  My father had a pub in the country (you don't own these places) and he was a bit of a bookie and loved racing, a bit of a hustler we Americans might say. While a sport of kings and the rich, communications and the modern era racing is watched by millions of people in Britain and there are many many courses. Arkle is a legend.

I sat watching this, wiping the tears from my eyes. "What is the matter with me" I said to myself. It's not so much a result of sadness but this powerful swelling of emotion.  As Arkle came round the last bend, beating his old rival Mill House and another great steeplechaser  Rondetto all horses I remember and bet on at times-----but never against Arkle---- it got worse. The scrappy Arkle at 17 hands shorter and somewhat less regal than Mill House took off. He was conceding  16 pounds to the great Mill House and 35 pounds to champions like John O' Groates that won the race previously, some of the best steeple chasers of the era..

When he was beaten a half length by Stalbridge Colonist in the Hennessy Gold Cup he was conceding 35 pounds to the winner. Stalbridge Colonist's jockey Stan Mellor, (I always bet Mellor but not against Arkle) said of the race: “The way we went past Arkle, and then the great horse battled back, the champion actually went up in my estimation – even in defeat." Last minute of that race here.

What drives me to tears watching these two races is two fold.  There was something magical about Arkle. He was a scrappy horse lovely to watch and a bit ungainly at times, unlike the regal Mill House. Look at the difference between their gaits, Arkle had a tendency to cross his legs when he jumped. But the other is that I'm looking at part of my heritage.  What I mean about this is the era in which I grew up, the 1960's. Not only was it a revolutionary decade with the colonial revolutions, the rise of the women's movement, the Civil Rights movement here in the US, the labor movement at home and the French General strike a few years after this race.  Art and culture was rapidly changing as Bob Dylan said in song, or poetry with music really. It was a decade that changed British music for ever as the black bluesmen from the US came over and transformed it. So did Chuck Berry and many more as well the European American musicians themselves influence by black American musical culture, Eddie Cochran, Gene Vincent, Elvis, etc.

Georgie Best was transforming the way a footballer should look. He had long hair, was a ladies man and liked to party. He once said, "I spent most of my money on booze, birds and fast cars, the rrst I just squandered." This was not the way to behave back then.  The image of Bobby Charlton, Stanley Mathews, an image steeped in 1950's conservatism was passing. The staid good old boys did not like Georgie Best. I cried when he died too because he refused to conform. It's a shame it came out more in self destruction than political struggle but the pressure is intense.

I confess in my shame, I was not sufficiently political enough to dive deep in to this political typhoon but, like all of us, it engulfed me in one way or another.  After all what is Big Bill Broonzey's Black White and Brown but a political message. You don't have to have a sociology degree to impart some historical knowledge. I may not have been conscious enough of it but it went in. But for me, apart from the music,  I was lucky enough to to live in a time to see the greatest horse that ever jumped a fence.

It's this combinations of things that make our heritage.  There were other things that affected me negatively too, that is not "my" heritage. I was for a brief moment and not in an active way drawn to the anti-immigrant racist vies of Enoch Powell, the politician. He was an academic, a member of the intelligensia.  In my mind, if we sent immigrants back, there'd be more jobs for us. That the British invaded their countries not the other way round didn't occur to me but it didn't take long to change that line of thinking. The Irish came over in droves to avoid starvation.

The British racists that govern society are much more refined than their American counterparts. I often say the British capitalists went around the world stealing everything that wasn't nailed down but they did it with the right grammar. When Americans watch Downton Abbey and witness the genteel and educated way they talk to each other and swoon over it, this was not how they related to those they considered beneath them.  They were ruthless in their treatment of their lessers.

Arkle's skeleton 
We all have these memories that take us back and watching Arkle for me is one of the ones I treasure. Watch him in these races and glory in seeing the greatest of all time. His odds once were 1-10. Here's how great he was.

"The racing authorities in Ireland took the unprecedented step in the Irish Grand National of devising two weight systems — one to be used when Arkle was running and one when he wasn't. Arkle won the 1964 race by only one length, but he carried two and half stones more than his rivals."

I'll give another example of heritage and emotion. I have a good friend who is Mexican American. I met his nephew once having a drink and I mentioned I know his uncle. He said he hadn't seen him in a while but last time he did he walked in the house and his dad and his uncle were sitting there drinking Tequila listening to Mexican music and crying like babies. That's what thinking about heritage and life can do for you (Tequila can help release some suppressed feelings I'll say.)  It's good heritage. They weren't thinking of profits, or their employees or their portfolio and crying tears of happiness and reflection on that. Hateful heritage like that the confederate Flag represents may run alongside our own, but that doesn't mean we have to adopt it as ours and must recognize as I did with regard to British capitalism's murderous history, including toward it's own workers,  that when we do we we are wrong. Young people will not be as attached to these memories as the ties between community and families is being so assaulted and working class culture so-coopted that heritage becomes corporatized. But that will change.

Here is a great tribute to Arkle. His skeleton stands at the Irish National Stud. I missed getting there last time I was in Ireland but I hope to make it next time.

Greece: What Syriza needs now is solidarity.


Roger Silverman in London *

What SYRIZA needs right now is solidarity, not learned criticisms from the sidelines. Denunciation is easy; you have to be able to win people to your ideas, and you don’t do that with scattergun accusations of treachery and betrayal.

This is a government which has shown the courage to publicly expose the IMF and the EU as criminals, blackmailers and bullies. It has defied the bankers, defaulted on its debt to the IMF, and appealed to the people to reject their insulting demands. While forced to negotiate with them, it has done so in full public view, reporting back to the people step by step. What a contrast to the cowards and traitors at the head of the old European socialist parties and their soulmates in PASOK.

There are grave dangers at this juncture. In an atmosphere of widespread fear of the consequences of defying the troika, there is a risk that SYRIZA’s well-intentioned but misplaced attempts to reassure wavering voters that a fair settlement can still be reached could cause confusion and weaken popular support for a NO vote in Sunday’s referendum. A majority for YES or an indecisive result could place in jeopardy the hopes of worker activists throughout Europe for a decisive defeat for the bankers, and set back the continental-wide struggle against austerity for years.

What is urgently needed now is a decisive strategic plan to mobilise the people and build a new Greece: to seize control of the economy out of the hands of the oligarchy, nationalise the banks and major enterprises, impose capital controls, occupy the larger workplaces, and appeal to the working class throughout Europe to follow their example. This could transform Europe.

Roger Silverman is a member of the Workers' International Network  and author or co-author of  some of the WIN documents at the top of this blog.

Transhumanism, malinvestment and instability

Order this book here
by Michael Roberts

Camp Alphaville (https://live.ft.com/Events/2015/Camp-Alphaville-2015), the FT’s one-day jamboree on all things economic and financial, had all sorts.  There was a session by Zoltan Istvan, a ‘futurist philosopher’ who has formed a party to stand in the US presidential election to promote ‘transhumanism’, using science and technology to overcome human mortality. According to Istvan, he wants to promote technologies such as bionic hearts, mind uploading, exoskeleton technology, robotics, nootropics, 3-D printed organs, and cranial implants. They also aim to use Artificial Intelligence to reach the Singularity – a point where intelligence is so advanced it becomes unrecognizable to humans. Collectively, these technologies and ambitions will forever alter the human species and make human life on Earth transhuman. Subsequently, they will also create vast amounts of new wealth, commerce, and industry.

Indeed, exotic technological developments was a theme of the FT’s day. But of course, there was a discussion of how to use AI, not in meeting the necessities of humanity but in how to make money from it: how it might soon be deployed in the financial market and how hedge funds are employing machine learning experts and neuroscientists!  AI, robots, singularity and the extension of human life is something I shall try and consider in a future (!) post.

More immediate was the question of whether the world economy, particularly its financial sector, was heading for another fall. There were two interesting points of view: that coming from the Austrian school of economics and that coming from the post-Keynesian Minsky school. Alas, yet again, no Marxist economic alternative got a hearing – perhaps not surprising in a City of London event.
The Austrian school was represented by Claudio Borio.  He is head of Monetary and Economics Department at the Bank for International Settlements (BIS). In 2003, Claudio Borio was one of the few to warn that excessive borrowing, partly encouraged by monetary policy, could lead to a devastating crisis in the rich countries. Since then, he has researched how conventional measurements of “potential” growth fail to take account of unsustainable financial risk-taking, hidden fragilities that can be spotted in the gross flows of the balance of payments, and why consumer price deflation is harmless compared to falling asset prices.

I have commented on Borio’s work before in various posts and his position is really the classic one of the Austrian school, that crises are caused by central banks artificially lowering interest rates below where they should ‘naturally’ be and by pumping in extra liquidity. This creates ‘malinvestment’ by companies and banks because projects that are not really viable become so with less than ‘natural’ costs of borrowing. This malinvestment in property and stocks etc rather than productive investment leads to low productivity growth and stagnation.

Borio presented evidence to suggest that when credit gets very high relative to trend GDP growth over a period, there was an 80% chance of financial crash (see the paper, The financial cycle and macroeconomics: What have we learnt? borio395). Borio predicted the financial crash of 2007, one of the few economists to do so. Now Borio has claimed to have identified what he calls a ‘financial credit cycle’, similar to the cycle of boom and slump in capitalist economies, or to the pr0fit cycle that I have identified (see my book, The Great Recession). Borio argues that “it is not possible to understand business fluctuations and the corresponding analytical and policy challenges without understanding the financial cycle.”

Borio points out that, as traditionally measured, the business cycle (by which he means the cycle of boom and slump in modern capitalist economies) involves frequencies from 1 to 8 years . By contrast, he finds that there is a financial cycle in seven industrialised countries since the 1960s of around 16-18 years. The length of this cycle is similar to 16-18 year profit cycle that I have identified for the US economy (with slightly different lengths for other capitalist economies), although with different times for turning points.

The BIS under Borio has been pushing the prospect of a new crash in financial markets. The unending printing of money and credit injections was creating financial and property asset ‘bubbles’ that would eventually burst and renew the financial crash of 2008 (http://www.bis.org/publ/arpdf/ar2014e.htm).
Jaime Caruana, head of the BIS, has said recently that the international system “is in many ways more fragile than it was in the build-up to the Lehman crisis”. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since then. Credit spreads have fallen to wafer-thin levels. Companies are borrowing heavily to buy back their own shares. Caruana correctly pointed out how stock and bond markets were racing up to new highs but the ‘real economy’ of output and investment was stuck in very low rates. This suggests a dangerous bubble as higher risk corporate leverage (debt) has risen to new highs.  Indeed, in its very latest report, the BIS argues that a bursting bubble is not far away. http://www.bis.org/publ/arpdf/ar2015e1.htm

In a similar vein, but from the other end of the heterodox economics rainbow, post-Keynesianism, Steve Keen, head of economics at Kingston University UK, was also at Camp Alphaville. For Keen, a future financial bust would not be due to central banks and ‘malinvestment’, as Borio and the Austrians argue, but because of ‘excessive private sector debt’ which has not been deleveraged since global financial crash. This debt causes financial instability and could lead to a new crash, if not globally, but in Asia, for example.

For my take on Keen’s views, see my recent post on Rethinking Economics (https://thenextrecession.wordpress.com/2015/06/30/rethinking-economics-value-irrationality-and-debt/), where Keen also appeared. Clearly, the Minsky (debt instability) view of crises has become popular in both heterodox and mainstream economic circles and even in the City of London.

Wednesday, July 1, 2015

Karen Lewis and CTA leadership help Emanuel out, support cuts in education.


Former IDF soldier and Chicago mayor Rahm Emanuel
By Richard Mellor
Afscme Local 444, retired

Rahm Emanuel, friend of Obama and mayor of Chicago is having an easy time destroying public education in the Windy City, made all the easier when the leadership of the teacher’s union is so cooperative when it comes to handing over their members’ wages and benefits and a community resource.

Chicago’s schools and the education of working class children is being devastated by the same forces that are waging a war on the Greeks and a war on Detroit.. "School will start, but our ability to hold the impact of finances away from the classroom, that's going to change," Emanuel is quoted as saying in today’sChicago Tribune.  This is his goal all along.

Tuesday evening his school board agreed to borrow $1 billion from moneylenders in order to pay some $600 million it owes the teachers pension fund.  In order to pay the loan, some 1500 jobs will be eliminated as well as other cuts.  Chicago Teachers Union President Karen Lewis said at a press conference last week , “We understand that there is a serious financial problem and we are willing to work within that framework. We accept that there will be a 0 percent raise. But give us something to make that 0 percent feel better.”  (see the CTU press conference on the union’s You tube channel here.)

Of course, in other statements Lewis, like most of the union hierarchy admit that these crises, the lack of social spending and downright cuts are “manufactured”, is austerity amid plenty, or to use their phrase, “Broke on purpose”, but when faced with capitulation or a fight they choose capitulation.  Karen Lewis and the union’s Vice President, Jesse Sharkey, who is a socialist apparently, both accept that the cuts have to be made as do all of them. As we have pointed out on this blog many times in the past, union officials rarely, if ever have to work under contracts that they and the employers impose on union members, contracts that are also extremely detrimental to working class children and communities especially communities of color.

Lewis (left) and Sharkey, Not time for raises.
Think about the language they use, “we accept that there will be a 0% raise.”, WTF, as they say in modern day text speak. Jesse Sharkey said on WGN radio, “When we say ‘broke on purpose,’ both parts are important, including the recognition that CPS is broke. We don’t think it’s a good time to be asking for big raises or really expensive reforms.”  

Haven’t we heard that before?  Now’s not the time. During the 1990’s boom when profits hit a 40-year high and labor was so tight market forces forced fast food employers to pay above the legal minimum the labor hierarchy mobilized no one.  It is never the time for them.  CTA officials also talk of Emanuel and the board “giving us” this or “giving us” that. The bosses’ have never “given” workers anything. Workers have waged heroic struggles against the most brutal opponent in order to bring us this far and it is the present union leadership that is doing the “giving” handing over the results of this struggle without a fight.

The employers, their politicians and the hedge fund managers and other coupon clippers cannot but revel in the glory and how easy it is. The union officials are joining forces with politicians of both capitalist parties in attacking workers and our communities. And this comes after Emanuel was successful in closing 5O schools but there’s more to come as hedge fund owner Ken Griffin, the wealthiest man in Chicago, wants Emanuel to close another 75, while at the same time opening private charter schools. Judging by the leadership’s performance so far this shouldn’t be a problem. The more the union officials give, the more the bosses’ want. The Republican governor of Illinois, Bruce Rauner is attempting to ban strikes and from what I understand, my former union, AFSCME, is supporting the legislation.

What lies behind this treachery in the form of open class collaboration on the part of workers’ leaders is the Team Concept ideology that I have written about in the past.  This is the view that workers and bosses have the same interests, that it is in our interest to help the boss compete and win “market share” from their rivals.  In public employment this takes the form of “competitive bidding” or did when I was still working. We were told that we have to compete, have to work more efficiently, which to so-called free market proponents means eliminating benefits and any workplace control’s workers have input in so that our work is not contracted out to the private sector.

This has been disaster for workers as we compete with each other in order to increase the bosses’ welfare.  We cannot build the solidarity and unity necessary to drive back this offensive of the 1% and build an offensive of our own with this philosophy and the concessionary strategy and tactics that flow from it. One Chicago teacher tells Facts For Working People:

“Of course, we can blame Emanuel and Rauner and their backers for what has transpired. But Karen Lewis, Jessie Sharkey and those rank-and-file members who are supporting them have to be held accountable as well. Lewis and Sharkey said they were blindsided by last night's announcement that 1400 teachers would be laid off. Are they really that stupid? What did they expect? They spent $5 million trying to unseat Emanuel. Did they really think that he would not retaliate? While Lewis and Sharkey's jobs and hefty salaries, benefits and salaries will continue to be protected, teachers are losing jobs, working conditions are deteriorating further for those who are left as class sizes increase and excessive standardized testing continues and they continue to pay union dues. For what? At this rate, the teachers unions will be destroyed within 10-15 years. And once they have been picked off the transit workers will be next followed by the firefighters. That will leave a bunch of cops as the only public sector workers who have union jobs.”

The situation is no doubt bleak. But we have been here before, much worse in fact.  By the early 1930’s the AFL was down to a couple million members.  The bosses were on the offensive in the wake of the Great Depression.  Great textile strikes covering hundreds of thousand of workers were defeated. Then in 1934 we saw three general strikes in Toledo, Minneapolis and San Francisco, led by the Mustieites, Trotskyists and the Communist Party respectively.  In the Toledo strike the unemployed join the battle, in Minneapolis,  the strike drew in many other workers other than those directly involved and local farmers as well.  In San Francisco, the Hiring Hall job list was won liberating the worker from the absolute power of the dock bosses. Soon after, thousand of auto-workers occupied factories culminating in the historic 44-day Flint occupation in 1936-37.  The AFL-CIO was formed and some 10 million workers flocked in to the unions in this period.

There are differences today but this is our history. The bosses’ gave us nothing.  Coming on the heels a victory over the UAW rank and file, it is the public sector that is next. Some 35% of us are organized in unions compared to under 7% of our private sector brothers and sisters---bringing that down is the goal of Rahm Emanuel and his class.  At some point the bosses will not need the present union officials at all and the members certainly don’t.

Despite the setbacks, the labor movement in Chicago is potentially the most powerful force in that city. The Chicago Labor Council has some 300 affiliated locals. This body has the potential to shut down this major US city.  We know the present labor leadership will not mobilize this power; in fact they suppress it. In the Waste Management strike here in San Leandro Calif. we had Teamster officials and the management escorting Teamster drivers across the waste material sorter’s picket lines. This is how bad it is.

But beyond Emanuel and the likes of Lewis and Sharkey we have to say that the rank and file also has a responsibility. We cannot continue to sit back.  We cannot continue to complain about the present situation and avoid a political confrontation with the stifling bureaucracy that sits atop organized labor.  We cannot avoid a fight any longer. Opposition caucuses must be built at the rank and file level that openly challenge and campaigns against the present leadership and its policies. Yes, the obscene salaries and jobs for life in many cases are a problem. But it their ideological bankruptcy that is at the root of their betrayals.  Opposition caucuses that we build must also reach in to our communities and draw them in to the battle. We must take positions on international affairs and build links there.  We must openly discuss and take on sexism, racism and other divisions that weaken working class unity. The absence of the voice of organized labor in the increased murder and terrorist attacks on African Americans is criminal. 

We must avoid being overly optimistic. We are in a struggle against a powerful enemy and, as Warren Buffet said, his class is winning. The influence of radical forces that were around in the 30’s are not yet present today but there are struggles taking place throughout the country and at some point these struggles will come together. We cannot manufacture a movement. But despite the confusions, defeats and victories we will see in the period ahead, increased resistance to the austerity being imposed by the 1% and their representatives in Washington and the White House.

Tuesday, June 30, 2015

Brittany "Bree" Newsome's heroic stand for humanity

We are reprinting this interview with Brittany “Bree” Newsome that was published at Blue Nation Review. It is a powerful statement from an powerful and beautiful human being. In all honesty it is difficult for me to write I am so moved emotionally by it. It reaches out to us with a lifeline that we must all grasp.  Thank you Brittany "Bree "Newsome and those who are with you for fighting for us all. Now we must beware those, not so much our enemies but hose who pose as our friends who will do their utmost to coopt a historic moment in history. Facts For Working People Admin.

***************

EDITOR’S NOTE: Over the weekend, a young freedom fighter and community organizer mounted an awe-inspiring campaign to bring down the Confederate battle flag. Brittany “Bree” Newsome, in a courageous act of civil disobedience, scaled a metal pole using a climbing harness, to remove the flag from the grounds of the South Carolina state capitol. Her long dread locks danced in the wind as she descended to the ground while quoting scripture. She refused law enforcement commands to end her mission and was immediately arrested along with ally James Ian Tyson, who is also from Charlotte, North Carolina.
Bree Newsome arrest feature
Earlier this week, social justice activist and progressive blogger Shaun King offered a “bounty” on the flag and offered to pay any necessary bail bond fees. Newsome declined the cash reward, asking that all proceeds go to funds supporting victims of the Charleston church massacre. Social media users raised more than $75,000 to fund legal expenses. South Carolina House Minority Leader Todd Rutherford, a renowned defense attorney, has agreed to represent Newsome and Tyson as they face criminal charges.

Newsome released the following statement exclusively to Blue Nation Review:

Now is the time for true courage.

I realized that now is the time for true courage the morning after the Charleston Massacre shook me to the core of my being. I couldn’t sleep. I sat awake in the dead of night. All the ghosts of the past seemed to be rising.

Not long ago, I had watched the beginning of Selma, the reenactment of the 16th Street Baptist Church bombing and had shuddered at the horrors of history.

But this was neither a scene from a movie nor was it the past. A white man had just entered a black church and massacred people as they prayed. He had assassinated a civil rights leader. This was not a page in a textbook I was reading nor an inscription on a monument I was visiting.

This was now.
This was real.
This was—this is—still happening.

I began my activism by participating in the Moral Monday movement, fighting to restore voting rights in North Carolina after the Supreme Court struck down key protections of the 1965 Voting Rights Act.

I traveled down to Florida where the Dream Defenders were demanding justice for Trayvon Martin, who reminded me of a modern-day Emmett Till.

I marched with the Ohio Students Association as they demanded justice for victims of police brutality.

I watched in horror as black Americans were tear-gassed in their own neighborhoods in Ferguson, MO. “Reminds me of the Klan,” my grandmother said as we watched the news together. As a young black girl in South Carolina, she had witnessed the Klan drag her neighbor from his house and brutally beat him because he was a black physician who had treated a white woman.

I visited with black residents of West Baltimore, MD who, under curfew, had to present work papers to police to enter and exit their own neighborhood. “These are my freedom papers to show the slave catchers,” my friend said with a wry smile.

And now, in the past 6 days, I’ve seen arson attacks against 5 black churches in the South, including in Charlotte, NC where I organize alongside other community members striving to create greater self-sufficiency and political empowerment in low-income neighborhoods.

For far too long, white supremacy has dominated the politics of America resulting in the creation of racist laws and cultural practices designed to subjugate non-whites. And the emblem of the confederacy, the stars and bars, in all its manifestations, has long been the most recognizable banner of this political ideology. It’s the banner of racial intimidation and fear whose popularity experiences an uptick whenever black Americans appear to be making gains economically and politically in this country.

It’s a reminder how, for centuries, the oppressive status quo has been undergirded by white supremacist violence with the tacit approval of too many political leaders.

The night of the Charleston Massacre, I had a crisis of faith. The people who gathered for Bible study in Emmanuel AME Church that night—Cynthia Marie Graham Hurd, Susie Jackson, Ethel Lee Lance, Depayne Middleton-Doctor, Tywanza Sanders, Daniel Simmons, Sharonda Coleman-Singleton, Myra Thompson and Rev. Clementa Pinckney (rest in peace)—were only doing what Christians are called to do when anyone knocks on the door of the church: invite them into fellowship and worship.

The day after the massacre I was asked what the next step was and I said I didn’t know. We’ve been here before and here we are again: black people slain simply for being black; an attack on the black church as a place of spiritual refuge and community organization.

I refuse to be ruled by fear. How can America be free and be ruled by fear? How can anyone be?
So, earlier this week I gathered with a small group of concerned citizens, both black and white, who represented various walks of life, spiritual beliefs, gender identities and sexual orientations. Like millions of others in America and around the world, including South Carolina Governor Nikki Haley and President Barack Obama, we felt (and still feel) that the confederate battle flag in South Carolina, hung in 1962 at the height of the Civil Rights Movement, must come down. (Of course, we are not the first to demand the flag’s removal. Civil rights groups in South Carolina and nationwide have been calling for the flag’s removal since the moment it was raised, and I acknowledge their efforts in working to remove the flag over the years via the legislative process.)

We discussed it and decided to remove the flag immediately, both as an act of civil disobedience and as a demonstration of the power people have when we work together. Achieving this would require many roles, including someone who must volunteer to scale the pole and remove the flag. It was decided that this role should go to a black woman and that a white man should be the one to help her over the fence as a sign that our alliance transcended both racial and gender divides. We made this decision because for us, this is not simply about a flag, but rather it is about abolishing the spirit of hatred and oppression in all its forms.

I removed the flag not only in defiance of those who enslaved my ancestors in the southern United States, but also in defiance of the oppression that continues against black people globally in 2015, including the ongoing ethnic cleansing in the Dominican Republic. I did it in solidarity with the South African students who toppled a statue of the white supremacist, colonialist Cecil Rhodes. I did it for all the fierce black women on the front lines of the movement and for all the little black girls who are watching us. I did it because I am free.

To all those who might label me an “outside agitator,” I say to you that humanitarianism has no borders. I am a global citizen. My prayers are with the poor, the afflicted and the oppressed everywhere in the world, as Christ instructs. If this act of disobedience can also serve as a symbol to other peoples’ struggles against oppression or as a symbol of victory over fear and hate, then I know all the more that I did the right thing.

Even if there were borders to my empathy, those borders would most certainly extend into South Carolina. Several of my African ancestors entered this continent through the slave market in Charleston. Their unpaid toil brought wealth to America via Carolina plantations. I am descended from those who survived racial oppression as they built this nation: My 4th great grandfather, who stood on an auction block in South Carolina refusing to be sold without his wife and newborn baby; that newborn baby, my 3rd great grandmother, enslaved for 27 years on a plantation in Rembert, SC where she prayed daily for her children to see freedom; her husband, my 3rd great grandfather, an enslaved plowboy on the same plantation who founded a church on the eve of the Civil War that stands to this day; their son, my great-great grandfather, the one they called “Free Baby” because he was their first child born free, all in South Carolina.

You see, I know my history and my heritage. The Confederacy is neither the only legacy of the south nor an admirable one. The southern heritage I embrace is the legacy of a people unbowed by racial oppression. It includes towering figures of the Civil Rights Movement like Ida B. Wells, Martin Luther King, Jr., Fannie Lou Hamer, Rosa Parks, Medgar Evers and Ella Baker. It includes the many people who rarely make the history books but without whom there is no movement. It includes pillars of the community like Rev. Clementa Pinckney and Emmanuel AME Church.

The history of the South is also in many ways complex and full of inconvenient truths. But in order to move into the future we must reckon with the past. That’s why I commend people like Sen. Paul Thurmond for having the courage to speak truth in this moment.

Words cannot express how deeply touched I am to see how yesterday’s action inspired so many. The artwork, poems, music and memes are simply beautiful! I am also deeply grateful to those who have generously donated to the defense fund established in my name and to those who have offered to cover my legal expenses.

As you are admiring my courage in that moment, please remember that this is not, never has been and never should be just about one woman. This action required collective courage just as this movement requires collective courage. Not everyone who participated in the strategizing for this non-violent direct action volunteered to have their names in the news so I will respect their privacy. Nonetheless, I’m honored to be counted among the many freedom fighters, both living and dead.

I see no greater moral cause than liberation, equality and justice f­­or all God’s people. What better reason to risk your own freedom than to fight for the freedom of others? That’s the moral courage demonstrated yesterday by James Ian Tyson who helped me across the fence and stood guard as I climbed. History will rightly remember him alongside the many white allies who, over the centuries, have risked their own safety in defense of black life and in the name of racial equality.

While I remain highly critical of the nature of policing itself in the United States, both the police and the jailhouse personnel I encountered on Saturday were nothing short of professional in their interactions with me. I know there was some concern from supporters on the outside that I might be harmed while in police custody, but that was not the case.

It is important to remember that our struggle doesn’t end when the flag comes down. The Confederacy is a southern thing, but white supremacy is not. Our generation has taken up the banner to fight battles many thought were won long ago. We must fight with all vigor now so that our grandchildren aren’t still fighting these battles in another 50 years. Black Lives Matter. This is non-negotiable.

I encourage everyone to understand the history, recognize the problems of the present and take action to show the world that the status quo is not acceptable. The last few days have confirmed to me that people understand the importance of action and are ready to take such action. Whether the topic is trending nationally or it’s an issue affecting our local communities, those of us who are conscious must do what is right in this moment. And we must do it without fear. New eras require new models of leadership. This is a multi-leader movement. I believe that. I stand by that. I am because we are. I am one of many.

This moment is a call to action for us all. All honor and praise to God.
#TakeItDown #BlackLivesMatter #FreeBree

Monday, June 29, 2015

Rethinking economics: value, irrationality and debt

This is a really interesting report from Marxist economist, Michael Roberts.  In my personal view, Roberts writes about economics in a way that can keep the attention of interested workers and anyone else who gets no relief from dry mainstream economics.  Part of that is due to Marx or course but messages are not always delivered in a way the intended reader can read them. Roberts is due credit for that.  Richard Mellor.


Rethinking economics: value, irrationality and debt

by Michael Roberts

I had to cut short my attendance at this year’s Rethinking Economics conference in London (http://www.rethinkingweekend.org/).  That was because of the surprise developments in Greece which required my attention under the instructions of the God Mammon.

So I was deprived the opportunity of attending a number of presentations and seminars.  Here is the agenda of the two-day conference
(http://www.rethinkingweekend.org/wp-content/uploads/2015/05/Conference-Programme-27-28-June.pdf).
Also, here are my previous posts on last year’s London and New York conferences.
https://thenextrecession.wordpress.com/2014/06/30/rethinking-economics/
https://thenextrecession.wordpress.com/2014/09/16/rethinking-economics-in-the-backwater/

Rethinking Economics is an international organisation of academics and graduate students in economics seeking to develop an alternative and pluralist economics discipline beyond the stifling orthodoxy of mainstream neoclassical theory that dominates nearly all economics departments in universities and colleges.

This year’s looked well attended to me.  The opening contribution was by France Coppola, an economist from the financial sector who regularly blogs at http://coppolacomment.blogspot.co.uk/
Coppola treated us to a short lecture on value theory.  She criticised Adam Smith’s distinction between use value and exchange value from his famous example of water having great use value but no exchange value and diamonds having low use value but high exchange value.  She pointed out that the use value of water is much lower in Scotland which is abundant with water than in the Sahara where water is scarce.  Thus the degree of scarcity will affect the level of use value and also the exchange value, as the cost of water has been rising faster than the value of gold in recent years.
Coppola sought to expose Adam Smith’s value theory in this way and thus presumably pose more heterodox alternatives.  The problem with this is that scarcity is not Adam Smith’s value theory.

Smith held to a labour theory of value, as did all the classical economists.  The diamond-water example is, in a way, exceptional to the classical or Marxist approach to value, namely that, under capitalism and market forces, the value of something depends ultimately on the labour time expended to produce it.  It was the neoclassical counter-revolution in economics that turned this objective theory of value into a subjective psychological one of marginal utility (or use value) based on individual consumer ‘preferences’.  I’m not sure Coppola was helping the audience on this question with her approach to value.

Talking of the psychological approach to economic behaviour, the conference was honoured to get Daniel Kahneman, the veteran Nobel prize winning behavioural economist, to speak at a plenary session.  Kahneman is an Israeli-American psychologist, notable for his work on the psychology of judgement and decision-making. His empirical findings challenge the assumption of human rationality prevailing in modern economic theory. In 2015, The Economist listed him as the seventh most influential economist in the world.  Thinking, Fast and Slow is his best-selling book, which summarizes research that he conducted over decades.

Kahneman developed what he called ‘prospect theory’ in criticising the traditional utility theory of value promoted in all the mainstream economics textbooks.  Kahneman’s research has shown that people do not behave as mainstream marginal utility theory suggests: namely making ‘rational’ choices.  Instead people have ‘behavioural biases’.  For example, they are more likely to act to avert a loss rather than look to achieve a gain in any investment or spending decision.  In other words, people have higher utility in avoiding losing than in winning; there is not equal utility, as marginalist theory assumes.

Kahneman argues that there is “pervasive optimistic bias” in individuals.  They have an irrational or unwarranted optimism.  This leads people to take on risky projects without considering the ultimate costs – again against rational choice assumed by mainstream theory.  In an echo of the famous saying by George W Bush’s neo-con defence secretary, Donald Rumsfeld, Kahneman reckons that people usually just make choices on what they know (known knowns), sometimes even ‘known unknowns’, but never consider unknown phenomena, ‘unknown unknowns’, like a financial crash.  People do not consider the role of chance and falsely assume that a future event will mirror a past event.

Kahneman’s work certainly exposes the unrealistic assumptions of marginal utility theory, the bedrock of mainstream economics.  But it offers as an alternative, really a theory of chaos, that we can know nothing and predict nothing.  This was a ready excuse used by the bankers and monetary policy officials to explain the global financial crash in 2008. The official leaders of capitalism and the banking ‘community’ then fell back on the argument of Nassim Taleb, an American financial analyst, that the crisis was a ‘black swan’ – something that could not have been expected or even known until it was, and then with devastating consequences: an ‘unknown unknown’.

Before Europeans ‘discovered’ Australia, it was thought that all swans were white. But the discovery in the 18th century that there were black swans in Australia dispelled that notion.  Taleb argues that many events are like that. It is assumed that something just cannot happen: it is ruled out. But Taleb says, even though the chance is small, the very unlikely can happen and when it does it will have a big impact.  The global credit crunch (and the ensuing economic crisis) has been suggested as an example of the Black Swan theory.

From a Marxist dialectical point of view, the Black Swan theory has some attraction. For example, revolution is a rare event in history. So rare that many (mainly apologists of the existing order) would rule it out as impossible.  But it can and does happen, as we know. And its impact, when it does, is profound. In that sense, revolution is a Black Swan event. But where Marxists would disagree with Taleb (and Kahneman?) is that he argues that chance is what rules history. Randomness without cause is not how to view the world. This is far too one-sided and undialectical. Sure, chance plays a role in history, but only in the context of necessity.

The credit crunch and the current economic slump could have been triggered by some unpredictable event like the collapse of some financial institution or the loss of bets on bond markets by a ‘rogue trader’ in a French bank. And the oil price explosion may have been the product of the ‘arbitrary’ decision of President Bush to attack Iraq.  But Marxists would argue that those things happened because the laws of motion of capitalism were being played out towards a crisis. Similarly, the recent spout of natural disasters like tsunamis, earthquakes, flooding etc are not an act of God.  Global warming is man-made.  The current economic crisis was no chance event that nobody could have predicted.

Kahneman’s work leads to that of behavioural economists like Nobel prize winners, Robert Shiller and George Akerlof.  This school argues that changes in a capitalist economy can be best explained by changes in the unpredictable behaviour of consumers and investors.  This is the inherent flaw in a modern economy: uncertainty and psychology.  It’s not the drive for profit versus social need, but the psychological perceptions of individuals. Thus the US home price collapse came about because consumers have a bias towards precaution and savings as debt mounted – just like that.
Shiller argues that investors and economic agents are so irrational that speculation, ‘herding’ and uncertainty can lead to instability and economic crisis. He wrote a book with George Akerlof, called Animal Spirits, the Keynesian term for investment motivations.  Akerlof is married to Janet Yellen, the successor to Ben Bernanke as head of the US Federal Reserve (see my posts
https://thenextrecession.wordpress.com/2013/10/14/the-noblest-fama-and-shiller/
and
https://thenextrecession.wordpress.com/2013/05/10/the-cat-is-stuck-up-a-tree-how-did-it-get-there-and-how-do-you-get-it-down/).

What worries me with the ‘irrational exuberance’ theory of crises is it leaves economics in a psychological purgatory, with no scientific analysis and predictive power.  Also, it leads to a utopian view of how to fix crises.  Shiller says markets can get out of line and then cause busts.  This is due to the irrational behaviour of human beings, not to the drive for profits by private capital.  The answer is to change people’s behaviour; in particular, big multinational companies and banks need to have ‘social purpose’ and not just want to increase profits.  That is really like asking a lion if he would keep his claws in while stroking the lamb (see my recent post on Inclusive capitalism, https://thenextrecession.wordpress.com/2015/06/26/lady-rothschild-thomas-piketty-and-inclusive-capitalism/).

In contrast, in another keynote session, Will we crash again?, Professor Steve Keen, now head of Kingston University economics, presented an objective and empirically testable theory of crises based on the excessive growth of private sector debt.  Keen is noted for his strong post-Keynesian critique of mainstream marginalist equilibrium economics in his excellent book, Debunking Economics and also for being one of the few economists to predict the 2008 crash (I would claim to be another – but that is another long story!).

Keen went through the conditions that led to the current crisis and showed that the conventional wisdom got the crisis back to front – in effect, they blamed the symptom for causing the disease. The real cause – the bursting of a private debt bubble – still hasn’t been addressed and lies in waiting ready to cause the next crisis in the next 2-5 years. To escape, economists need to embrace unorthodox thinking and so must policymakers, but the odds are that they will not.
I have written on Keen’s views in several places on my blog.  See
https://thenextrecession.wordpress.com/2011/10/07/riccardo-bellofiore-steve-keen-and-the-delusions-of-debt/
https://thenextrecession.wordpress.com/2012/04/21/paul-krugman-steve-keen-and-the-mysticism-of-keynesian-economics/

Keen’s focus on the growth of private sector debt as a key trigger of financial crashes (following the work of Hyman Minsky), is very relevant.  Take the new evidence going back to 1870 on where the dangerous concoction of excessive debt and asset price bubbles can lead (http://conference.nber.org/confer/2015/EASE15/Jorda_Schularick_Taylor.pdf).

However, both the Keen-Minsky debt school and the behaviourist ‘animal spirits’ school have one thing in common.  They see the flaws of capitalism in the financial sector only. In contrast, Marx posits the ultimate cause of capitalist crises in the capitalist production process, specifically in production for profit.  That does not mean the financial sector and, in particular, the size and movement of credit does not play any role in capitalist crises.  On the contrary, the growth of credit and fictitious capital (as Marx called speculative investment in stocks, bonds and other forms of money assets) picks up precisely in order to compensate for the downward pressure on profitability in the accumulation of real capital.

And that’s the point. Capitalism only grows if profitability is rising.  In the US, with profitability declining after 2005, the huge expansion of credit (or what Marx called fictitious capital) could not be sustained because it was not bringing enough profit from the real economy. Eventually, the housing and financial sectors (the most unproductive parts of capitalist investment) stopped booming and reversed.

Rethinking Economics is a very good development, opening the doors to more heterodox thinking in academic economics.  But all the conferences that I have attended have been dominated by the views of orthodox Keynesians (Robert Skidelsky was there this year) or post-Keynesians (Keen, Ann Pettifor etc).  The views of Marxist economics were notable by their absence.

Charlie Daniels has other options. He can influence people.


It less about what this means to you Charlie than what it means to others
by Richard Mellor
Afscme Local 444, retired

I don’t know too much about Charlie Daniels, but I do like his music. I know he’s from the South and proud of it.   Mr. Daniels has weighed in on the controversy around the Confederate Flag, the Southern Cross) in the aftermath of the terrorist attack on a black church in Charleston South Carolina that killed nine people.

I think Mr. Daniels makes some important points in his column and would like to offer my own thoughts on it. I think he is speaking from his heart and being completely honest when he writes, “The Confederate battle flag was a sign of defiance, a sign of pride, a declaration of a geographical area that you were proud to be from. That’s all it is to me and all it has ever been to me.”  (My added emphasis). But he is not thinking about this in depth.

This controversy is not about what the flag means to Charlie Daniels and perhaps many working class people from the South whose ancestors fled poverty and oppression in Europe. It's about a bankrupt racist, terrorist regime. The Irish, Scots, Germans that came and settled there were more likely escaping poverty themselves, driven from their lands that they loved. The Southern plantation owners needed labor and that labor came from both Africa and Europe and the chief industry was agriculture, producing commodities like cotton, sugar and tobacco.

Ultimately, the wealth of the planter class rested primarily on the backs of chattel slavery, and the chattel slavery of people with black skin, people of African descent. In this system, a human being with black or dark skin was owned in total and received no wages for their labor power. The Confederacy fought to maintain this system. And we must not forget that Abraham Lincoln had no interest in freeing the slaves in states that rejected secession. In his inaugural Address in 1861 he assured the Southern Slave owners that he had no intention of interfering with their right to own slaves, “I have neither the power nor the desire to do so” he assured them.* The issue for him was secession, and maintaining the Union. This was a struggle between two ruling classes atop two different systems of production, the Industrial capitalists of the North freed from the restraints as former colonists, and the Slave owners of the South. It was the war to unify the nation state which is an aspect of all emerging capitalist nations.

Many northern capitalists saw that they could not compete with a system that paid its workers no wages and many workers couldn’t either.  In the North, workers were free in the sense that they could sell their labor power to the owners of capitalists as technically they owned it, they were free. The southern black worker didn’t even own their own labor power. 

There were rebellions in early US history where the poor and oppressed of all races and backgrounds united against their exploitation. This was a huge threat to the planter class. So, in order to maintain this system and undermine opposition to it, the Southern ruling class, Europeans with white skin, conferred on all other white people, similar privileges that their power and position as a ruling class gave them.  They created this idea that there is a white race. No person of color could testify against a white man for example. The British had similar laws in countries they colonized like Ireland and China.

If a white man raped a female slave, even the poorest of poor whites and there were many poor whites, it was not a crime like a felony for example, but a “mere trespass on a master’s property” The Georgia Supreme Court ruled in 1851 that the killing of a “negro” was also not a felony but damaging an owner’s property for which they should receive compensation. ** If a Southerner, accompanied by a slave he owned traveled to a Northern state where slavery was illegal he demanded the right to do so as no person should have his property confiscated by another state. This is states’ rights expressed. This is the system that the forces symbolized by the Confederate Flag fought a war for.  For more information about these events also check out, The Developing Conjuncture on Jeffrey B Perry's website.

So despite the privileges with regard to the black population that the white ruling class had conferred on all white people, not all white skinned Europeans were the same with regard to social status. The term “White Trash” most likely originated among the white elite who wanted to make sure they weren’t associated with the poor whites, and became fashionable among some sections of the black population able to look down on people who were somewhat worse off than them. But even to this section of the white population, having white skin gave them rights above the most prestigious black member of a community.

Mr Daniels, like many writers have in defense of the flag, is basically saying that it is part of his Southern heritage.  I am not familiar with Mr. Daniel’s class background, I assume he’s not from one of those ancestral Southern families that owned plantations. But I would argue it is not a part of a Southern working class person’s heritage and he should reject it for what it is, a symbol of slavery, class oppression, white supremacy and violence. Had the system that this symbol represents won the Civil War, white workers would have been denied democratic rights, trade unions, suffrage etc.

Having fond memories and close ties for places we grew up, is not the same as worshiping a national heritage that also has extremely oppressive, racist and violent aspects to it. I don't worship British colonialism. I have to admit that I didn’t separate these different histories adequately growing up.  I was, as are most of us, somewhat conditioned by nationalism. Even though I was raised as a Catholic and am of Irish ancestry, I never felt Irish in any way and although going to Catholic schools where many a lay Irish teacher as well as nuns taught, I don’t recall the history of the British occupation of Ireland being described in depth. Being culturally English I could not see the vicious role of English/British capitalism there, nor in the colonies that followed, my nationalist sentiment wouldn’t allow it; I had to break from this national identity linked with British capitalism. The idea that a system based on class exploitation and the nation in which it operates is “one nation undivided” is a con game.

I have strong feelings about the place where I grew up. I love the beauty of the English village that has changed little in 1000 years despite being one of the millions of people who couldn’t afford to live in one.  I miss the pub life, the social institution that was in many small towns and villages the center of social life when I was young. I love London, that great old city where the Romans first erected a bridge over the Thames more than 2000 years ago.  I love its cosmopolitan character and that some 50% of its residents are foreign born, I’m proud of that not afraid of it. I am grateful to my Indian friends here in the US who suffered such nasty racial prejudice when they first came to England’s shores and who are now my link to back home. They have helped liberate me to an extent. I have no fondness and I won't defend the way British society treated the Irish,  Indians and the immigrants that came from other colonial possessions of British capitalism.

As for the Queen and her offspring, they can go get a job.  I had a natural dislike of the rural landowners and remnants of aristocratic rule and didn’t worship the entrepreneur or shipping magnate as someone whose position I should strive for, even those of us with limited class consciousness knew well enough that they weren’t our friends. I am proud of the miners that fought that pig Thatcher. And I am proud that I once belonged to an organization that contributed to her downfall. This is my history.
 
I came to appreciate and love the history of my own class and reject the “official” history of those whose ancestors sent children and whole families in to the belly of the earth to dig coal and built financial empires through plunder and violence; people who were “English” like me; people with white skin. Queen Victoria was made Empress of India by the British parliament, unfortunately the Indian people had no say in that.  When I visited Iraq as a young man in the early 1970’s I made it clear to the Iraq’s I met that I may look like those who came and occupied their lands, I drink tea like the Queen and speak the same language, (with a different class accent) but the similarity ends there, they are not my people. I can speak of the beauty of England and what Britain means to me without identifying with the sons and daughters of Harrow or Eton who are more often the face of a nation like Cheney, Bush, Obama or Clinton are here---representatives of the 1%.  The British working class has, like the American, the Irish or the workers of any state, a rich, vibrant history.

So Mr. Daniels can have strong feelings for his Southern home, the land and environment that nurtured him. But he should reject the heritage and culture of the class that ruled it and continues to do so. And he should recognize that due to being offered certain privileges as white skinned people, the Southern white worker has played the most reactionary role. The Christianity practiced there as well as the role of trade union leaders in the US contributed to this reactionary nature.  

The other side of it that we are all products of our time and we could all be said to be guilty of apathy in the face of injustice. The US capitalist class and its government is the most violent and destabilizing force on earth. Its actions are the source of anti-American feeling. It has killed millions of people throughout the Middle East and at least three million in Vietnam, a people (the list is long) a population on which it sprayed the poisonous substance Dioxin in the form of Agent Orange. Who knows who they drugged, hooded, and sent to Guantanamo? Americans en mass distrust their government. Yet so many of us go about our business day to day fearful to question in case we are forced to engage in the struggle to change things. Or with some, blinded by religious fervor, the chief component of uncritical thinking. 

People fear the costs, job losses, isolation, slander.  I’m not making excuses for apathy that might exist now, nor for white silence in the South, but the price for whites standing in unity with blacks against the slaveocracy and the Jim Crow terrorism that followed Reconstruction  was high as Lerone Bennett points out in his book, The Shaping of Black America:

“The whole system of separation and subordination rested on official state terror. The exigencies of the situation required men to kill some white people to keep them white and to kill many blacks to keep them black.  In the North and South, men and women were maimed, tortured, and murdered in a comprehensive campaign of mass conditioning. The severed heads of black and white rebels were impaled on poles along the road as warnings to black people and white people, and opponents of the status quo were starved to death in chains and roasted slowly over open fires.  Some rebels were branded others were castrated. The exemplary cruelty, which was carried out as a deliberate process of mass education, was an inherent part of the new system.” CH. 3 P74

This is the Southern heritage the flag represents.  John Brown, although not a Southerner, is the heritage we should all be proud of. The right side won the Civil War.

I also sympathize strongly with Mr. Daniels’ criticism of these corporations who have now come out against the flag. The power behind them cares nothing about black or white workers and their traditions, their motivation is purely profits; it's a business decision. Does Mr. Daniels realize that the same motivation drive the US wars in the Middle East and its support for the Apartheid Zionist regime.

Mr. Daniels also spoke of the nasty way that southerners are portrayed in the mass media and US society as a whole. I agree with this criticism and condemn it. He writes that the “South was looked upon by what seemed to be a majority of the Northern States as an inbred, backward, uneducated, slow-talking and slower-thinking people, with low morals and a propensity for incest.”

This is how the English ruling class characterized the Irish and their own working class as well. It is not the Southern aristocratic ruling class that is portrayed this way, it is workers and the poor. Things can be said and jokes can be told about southern white workers and poor people in the mass media that would cause a national furor if they were said about Jews or blacks. I met a guy recently and found out he was from the South. I couldn’t tell and asked him where that lovely accent was. He told me that he got rid of it when he got to California because people assumed he was a racist and stupid.  That’s oppression.

However, I dismiss Mr. Daniel’s references to Satan and God and the implication that Roof’s action was in some way caused by the balance of power between these two dueling forces.  And the championing of good Christian Southern folk doesn’t hold much water either as the white skinned European Christian American population were anything but an ally of their black Christian “brothers” during the Civil Rights Movement of the 1950’s and 60’s. Many of them, most perhaps, were on the side of those who supported separatism and the white skinned privilege conferred on them by the Southern white ruling class.  This evangelical Christian mythology is one of the fundamental obstacles to understanding the world as it really is.

I would ask Charlie Daniels that he should include in his love of his Southern Heritage the rise of the Civil Rights Movement and his Southern black brothers and sisters heroic centuries old struggle against racial oppression and violence that the Confederate Flag represents. It helped to liberate those with white faces also.

And finally he writes, The bottom line is that the flag in question represents one thing to some people and another thing to others.”

It does indeed, and Charlie has to make a choice; with which “others” he stands?

* Quoted in British Labor and the American Civil War, p 25 by Eric Foner

** Theodore Allen The Invention of the White Race pages 46 and 47.

Sunday, June 28, 2015

Greece: Syriza, the Troika and the ironies

by Michael Roberts

The ‘impossible triangle’ for the Syriza government was 1) reversing austerity 2) staying the Eurozone; and 3) Syriza staying in power (see my post, https://thenextrecession.wordpress.com/2015/01/21/syriza-the-economists-and-the-impossible-triangle/). The Troika prepared to break that triangle. What the Troika wanted was a Greek government carrying out a full programme of austerity (running a government budget surplus in the middle of a depression) and ‘structural reforms’ (ending labour rights, deregulating services and finance and privatising state assets). The previous Samaras government got bailout funds in return for such ‘conditionalities’. When Syriza wanted to change those conditions, not only did the Troika not concede, it actually tried to impose even harsher ones on Syriza.

This is partly because the Greek economy and government revenues have deteriorated during the five-month bailout extension. But it is also because the Troika wants to break Syriza and end a government pledged to oppose fiscal austerity and neo-liberal reforms. This is to ‘encourage’ the others.

The most forceful exponents of applying these even harsher measures include the IMF (which wants its money back); the German finance minister, Schauble, some small Eurozone states which are poorer than even Greece; and conservative governments in Portugal, Ireland and Spain which have imposed severe austerity on their electorates and now face anti-austerity movements at home. All these forces outweighed any forces for compromise that came from the French, the Italians and the European Commission.

And remember the cruel irony is that all these tortuous negotiations were designed not to provide help to the Greek people, but simply to release funds so that the IMF and the ECB would be repaid without any default. Over 90% of all the loans made by the Troika in the last five years have merely been siphoned back to Greek government creditors without touching the sides of the Greek economy – see my post, https://thenextrecession.wordpress.com/2015/02/21/greece-third-world-aid-and-debt/.
And these creditors were mainly French and German banks and hedge funds who got the value of their speculative purchases of Greek government bonds repaid with only a small ‘haircut’ in 2012. After that, the Eurozone, the IMF took on the debt while the Greek pension funds were stripped of their reserves.

The Syriza government went very far in dropping all its commitments which originally were: cancelling the debt, then halving the debt, reversing austerity, opposing privatisations etc. Eventually, to get a deal, the Syriza government even proposed a tax increase to annual incomes above $33,000 (thus suggesting that individuals in that income bracket rank among the wealthy). Basic food items and services were to carry a 23% VAT. The special VAT rate on Greek islands, which is so crucial for the tourist sector of the economy, was also to be removed. The early retirement age was to be increased as of the start of 2016 and a benefit for low-income pensioners was to be gradually substituted, beginning in 2018.

But on 25 June, the Christine Lagarde/Wolfgang Schäuble duo (IMF chief and German finance minister) wanted the benefit for low-income pensioners to be completely eliminated by 2017. If this proposal for overhauling the nation’s pension system were to be accepted by the Greek government, it would mean that a person who today receives a monthly pension for the amount of, say, 500 euros ($560) – close to 50% of Greek pensioners receive pensions below the official poverty line – would be deprived of nearly 200 euros ($223). This was one step too far for Tsipras and the Syriza leadership.

To understand why is to hear from Greeks themselves in various media reports. Here are the reactions gleaned from the media of Greeks living in Thessaloniki, Greece’s second largest city.

Michalis Nastos, 54, runs a clothing stall selling €10 jeans, €6 shirts and an array of cheap summer dresses, has seen his profits fall by more than 50% after years of crisis, unemployment and tax hikes. Nastos said his main fear was the proposed rise in VAT — an indirect sales tax that would push prices up and indiscriminately affect all shoppers, most of whom are already struggling with the effects of previous tax hikes. “Of course I’m against VAT rises, it’s already very high, it will have a knock-on effect. It’s the little details that will really affect people. The price of bread would go up — that’s important because people in Greece still eat a lot of bread, so you could see the price of a sesame-seed loaf rise from say 50 cents to 70 cents, that would really have an impact. Packaging costs will rise, energy, basics like pasta. Low-income people won’t be able to afford to buy and more and more people won’t be able to make it.”

Michalis Hadji-Athanasiadis, 84, a former police officer who had retired aged 50, said his pension had shrunk from €1,600 a month to €1,000 a month, and his extra benefits had been cut. But his pension was still far higher than the shrinking salary of his 52-year-old daughter who was a high-school teacher and who, like her brother and his wife, still lived with their parents to make ends meet. He said: “People are hungry. For five months it seems there has been no progress and business is down everywhere, a lot of shops have closed. Income is down, with VAT going up everything you need to buy becomes so much more expensive.”

Near the market, one woman in her 50s, who said her main income came from selling black market Balkan cigarettes, described how customers used to buy five or six packets but were now only buying one or two. “It feels like life is over,” she said. “We can barely manage to feed ourselves.” Her adult children, who had lost their jobs as shop-assistants during the recession both lived with her. She adds: “It feels like they’re going after the little guy, all the high-income people got away with it and got their money out of the country.”

The next irony
was that the IMF knows that Greece can never repay a €300bn debt equivalent to 180% of GDP and rising. Greece asked for ‘debt relief’ in return for agreeing to more austerity. And it asked for a long-term package. The Troika refused. It refused to consider debt relief and only offered ‘bailout’ funds for another five months in dribs and drabs, thus keeping Greece in the grip of depression and poverty.

So we have a referendum. Greeks will be asked to vote on a complicated set of proposals put forward by the Troika. The question put is whether they will accept the Troika package or not. If they vote YES, then presumably the Syriza government will return to Brussels saying that they accept any terms offered. If the Greeks say NO, then the Greeks face the prospect of no more funding to pay their government debts and the cutting off of credit by the European Central Bank, which is currently financing the Greek banks to meet the increasing demands of depositors withdrawing their cash by the billions.
Greek bank deposits
The government will have to impose capital controls to stop the flight of money (most of the rich and companies have already taken theirs already); it will possibly have to issue IOUs to pay its government workers and pensioners. These ‘euro IOUs’ will quickly devalue, as ‘real’ euros become scarce.

There are two more ironies here
. The first is that if the Greeks vote yes to the Troika package, there will be no package to agree to. The current bailout programme ends on 30 June. After that, a completely new package will have to be negotiated and the Troika is talking about the impossibility of working with Syriza. They are looking to remove Syriza from power so they can negotiate with an amenable government.

The second is that if the Greeks vote no and the Greek economy is then cut off from euro credit by the ECB and Greece defaults on all its debts, there is no actual procedure for removing a member state from the Eurozone. Under the rules, a member state must ask to leave; it cannot be ejected. This is clearly uncharted waters for Merkel, Hollande and the Euro leaders.

The criticism of the pro-Troika parties in Greece was that Tsipras is using the referendum to avoid taking the decision himself. He is hiding behind the electorate. There is some truth in this but it is not the whole truth because Syriza will campaign for a no vote.

But what if it gets it? Surely, the government must move to end this tortuous mess. It must refuse to recognise the ‘odious’ Troika debt.  It must impose capital controls; it must nationalise the Greek banks; and bring the commanding heights of the economy under the control of labour. The Greek people can start to turn round this depressed economy. But the Greeks cannot do this alone; it requires the combined efforts of European labour to break the grip of capitalist forces on economic policy and investment.

In another post, I shall try and analyse the state of the Greek economy and what could be done to turn it around within a plan for Europe.

Saturday, June 27, 2015

Not such a smooth ride home: for some.


SF Bay Area's light rail system
Cynthia shared her experience during her commute yesterday on FB, and said we could share it here. It seems a democratic collective voice doesn't carry much weight these days.

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Riding home on BART yesterday in the early afternoon before rush hour, was a sleepy, calm, uncrowded ride. The train stopped at Lake Merit and 4 BART police stormed into our car. They demanded to know if there was any trouble on our train.

The few of us on the train all piped up, "NO!" One of them then awoke a peaceable sleeping, likely homeless, man by roughly shaking him and yelling "It's the police!" in his face. The startled man looked TERRIFIED. Another cop demanded from the rest of us whether the sleeping man was causing trouble. We all said no. They demanded of the man where he was going and told him to get off the train. When he said a San Francisco station, they made a circle around him as he got himself shakily up and walked out. Why 4 armed police felt entitled to bully a sleeping man, I have no idea.

They left the car and then came back in and demanded of all of us whether anyone was starting fights on our car. We all yelled, "No!" They left again. They then returned to our car and demanded that the only dark black person - a young woman in her 20s - come with them off the train. She asked why; they did not answer.

They escorted her off the train and one officer returned to our car, demanding to know whether she was starting fights. We all yelled back, "NO!!!!" A few minutes passed and the young woman returned, sat in her seat and started to cry, head down, mortified. The police then left and the train started. Wtf?

BARTing while Black or poor.....