Tuesday, December 30, 2008

Toyota Republicans

This piece is ripe with American nationalism, but it does offer some critical information on the "Toyota Republicans", some of the underlying struggles behind the bailout initiative for the Big 3, and the question of who owns the US South.

Toyota Republicans Should Cut Their Own Pay

By Leo Gerard

December 22nd, 2008

Campaign for America's Future


President Bush took to the TV Friday to announce that
he wouldn't walk past the financial crash of America's
Big Three automakers and do nothing to save their

Refusing resuscitation, Bush said, would be
irresponsible during the worst economic crisis since
the Great Depression.

A week earlier, 31 GOP Senators, mostly from Southern
states, voted to avert their eyes and allow American
auto companies to die. They opposed $14 billion in
federal loans for GM and Chrysler, revealing that their
loyalty lies not with America, not even with their own
states, but with South Korea and Germany and Japan.

They are Toyota Republicans.

Toyota has non-union manufacturing plants in Alabama,
Kentucky, Mississippi and Texas -- states whose senators
led the GOP quest to slay the Big Three American auto
manufacturers -- Richard Shelby, R-Ala.; Mitch
McConnell, R-Ky, and John Cornyn, R-Tx. Here's the
Republican from Mississippi, Sen. Thad Cochran,
explaining why he'd vote against the loans, "Things
have changed. It's not just the Big Three anymore," he
said, pointing out that Nissan and Toyota employ more
Mississippians than General Motors, Ford and Chrysler.
But, he said, the foreign companies would not share "in
the benefits of that automobile bailout program."

No. But Mississippi did give Nissan and Toyota more
than $650 million to entice them to locate in the
state. GM, Ford and Chrysler didn't share in those
benefits, Sen. Cochran.

The Toyota Republicans are all for helping the rich
with tax breaks and shelters, and they're all for
aiding foreign auto manufacturers with billions worth
of tax forgiveness and government-paid infrastructure

But their disdain for the working class couldn't be
clearer as they organized defeat of loans to the Big
Three under this command: "Republicans should stand
firm and take their first shot against organized

They haven't gotten the message sent out by the
electorate in November. Voters rejected politicians
prolonging the same old policy of protecting themselves
and the rich. The nation's voters want selfless leaders
who will perform in the best interests of the entire
country. They want change.

Clearly the allegiance of the 31 Republicans who
opposed the loan to save GM and Chrysler is not with
the United States of America, which would lose 900,000
jobs if just GM closed, and more than 2.1 million if
the Big Three did. Those job losses would occur during
the worst economic downturn since the Great Depression.
In November, the 11th consecutive month of job losses,
another 533,000 people were thrown out of work,
swelling the pool of unemployed to 10.3 million. The
Toyota Republicans were willing to increase that.

They voted against the interests of their own states as
well. Consider what would happen in a few of those
Southern States whose senators led the charge against
preserving the Big Three. If just GM collapsed,
Kentucky would lose 20,000 jobs; Alabama, 21,000;
Georgia, 23,000, and Tennessee, 29,400, according to
calculations by the Economic Policy Institute.

Sen. Cochran just didn't think it was right for the
U.S. government to aid its auto industry. But
apparently he's fine with foreign governments providing
subsidies to the transplant automakers in his state.
And, apparently, he's okay with spending state and
federal money to help foreign automakers locate
manufacturing plants in the U.S.

Korean and Japanese automakers -- including Nissan and
Toyota with plants in Cochran's Mississippi -- benefit
from manipulation of currencies by their governments, a
factor that, according to EPI estimates, reduces their
costs by between 10 and 20 percent. In addition,
nationalized health care in countries such as Japan and
Germany serves as a subsidy.

Also, the Toyota Republican opposed federal money for
American companies but supported state and federal
money for foreign auto makers estimated at $3.6

Shelby, for example, got $3 million in federal funds to
improve roads near the Hyundai plant in Alabama after
the state gave $250 million to the Korean automaker.

Shelby opposed loaning one federal cent to the U.S.
automakers, though, telling "Face the Nation" that they
should die: "Companies fail every day and others take
their place... There's not a bank in this country that
would loan a dollar to these companies."

But for foreign auto companies, his home state of
Alabama couldn't provide enough taxpayer cash -- more
than three quarters of a billion. In addition to the
quarter billion it gave the Korean automaker, it handed
another quarter billion to German Daimler for a
Mercedes-Benz plant, nearly a quarter billion to
Japanese Honda and $29 million to Japanese Toyota.

Similarly, Jim DeMint, another senator who led the
Toyota Repubicans' rebellion against the loans to GM
and Chrysler, told the "National Review" recently,
"Government should not be in the auto industry." Yet,
his state, South Carolina, got into the auto industry
with nearly a quarter billion -- $230 million -- in gifts
to a German auto company -- BMW.

The same is true in Kentucky, home of Sen. Mitch
McConnell, who said of loans for the Big Three,
"Government help is not the only option. It's not even
the best option." But government help was fine when
Kentucky was providing grants for Toyota, which got
$371 million from taxpayers since 1986.

It's clear that the real problem was not a
philosophical one. All of these lawmakers were willing
to flick free market capitalism out the car window like
a cigarette butt if their states could use taxpayer
dollars to buy a foreign auto plant. No, what really
gags them about the Big Three is that they pay good,
middle class wages and benefits as a result of
contracts with the United Autoworkers.

Repeatedly, the Toyota Republicans insisted that UAW
members bear the brunt of the cost of the bailout. The
senators insisted that UAW wages be lowered to match
those of non-union auto workers at foreign-owned
manufacturers. Toyota Republican Sen. Bob Corker of
Tennessee, wrote an amendment to the bailout bill that
would have required UAW members to accept pay cuts by a
specific date in 2009. When Republicans defeated the
bailout, DeMint blamed that on the union, saying, "It
sounds like the UAW blew up the deal."

The Toyota Republicans then conferred the American auto
industry to bankruptcy. They said they favored
bankruptcy because it would enable the Big Three to
break pledges made in labor contracts and promises for
health care and pensions made to retirees. The Toyota
Republicans want the wages of American workers pulled
down. To them, UAW members making an average of $28 an
hour, accounting for less than 10 percent of the cost
of a car, are earning just too much money.

The Toyota Republicans did not, however, make that
claim about the white collar workers on Wall Street who
got this country into the financial fiasco that led to
the dire circumstances for automakers. And not just for
American ones. Domestic car sales declined by 40
percent last month, but Asian producers' sales dropped
too -- by 35 percent.

The average salary of white collar, Wall Street
employees -- workers in "securities, commodity contracts
and investments" -- is four times that of those laboring
in the rest of the economy. Remember, these are the
guys who are so smart that they took down Bear Stearns,
Fannie Mae, Freddie Mac, Washington Mutual, AIG and
Lehman Brothers - in less than a year -- and ultimately
required $700 billion from taxpayers to bail them out.

The top executives of Wall Street banks receive
billions of dollars in year-end bonuses. The New York
Times detailed those at Merrill Lynch in a story Dec.
17 entitled "On Wall Street, Bonuses, Not Profits Were
Real." In 2006, the firm gave its top executives
between $5 billion and $6 billion in bonuses, which
means, for example, a trader earning $180,000 a year
got a $5 million bonus.

Merrill's $7.6 billion earnings that year turned out to
be bogus. The company's losses now have exceeded all of
the profits it earned over the previous 20 years. To
prevent collapse, it sold itself to Bank of America in
September. But then, Bank of America took $15 billion
of that $700 billion in bailout money. Despite the gift
of taxpayer dollars, the CEO of Bank of American has
not publicly announced that he will decline a bonus,
and Bank of America plans to tell Merrill Lynch workers
the amounts of their bonuses beginning Friday, the New
York Times reported Thursday.

When those Toyota Republicans voted in favor of
providing $700 billion for Wall Street -- including both
of Tennessee's senators, Bob Corker and Lamar
Alexander; Kentucky's Mitch McConnell; Georgia's Saxby
Chambliss and Johnny Isakson; South Carolina's Lindsey
Graham, and Texas' Kay Bailey Hutchinson and John
Cornyn -- none asked for high-paid white collar workers
to take pay cuts or give up their million dollar
bonuses. There was a feeble attempt to limit the pay of
chief executives, but that applied only to firms that
received federal money under one particular method, and
the treasury decided not to hand out the $700 billion
that way.

And no lawmaker asked white collar workers or
executives who got billions in bonuses based on false
profits to return them.

But those Toyota Republicans want middle class, blue
collar workers who don't get year end bonuses, who
don't celebrate with five-figure dinners, to take wage
cuts. They want autoworker pensioners to lose the
monthly benefits they earned with a lifetime of labor.

And at no time did those Toyota Republicans suggest
that they should cut their own salary or top-notch,
government-paid health benefits or pensions. Like the
reckless speculators on Wall Street, Congress bears
responsibility for the crisis condition of the American
economy because it deregulated financial markets.

In 2002, during a downturn in Japan, the House of
Councillors reduced the pay of Diet lawmakers by 10
percent, and ended the transportation allowance,
portrait-painting and pension given senior lawmakers.

If the Toyota Republicans believe the Japanese way of
pay is so great for autoworkers, they should first
impose it on themselves.

Monday, December 29, 2008

Facing the Economic Crisis

Facing the Economic Crisis

December 27, 2008 By Stanley Aronowitz
Source: T h e B u l l e t

Stanley Aronowitz's ZSpace Page

The main news these days is the global economic crisis, an event ascribed by economists and most pundits alike to a "financial" meltdown caused by the irresponsibility of mainly, but not exclusively, U.S. lending institutions and consumers in offering - and accepting - "sub-prime" mortgages. The variable mortgages, initiated during the credit driven bubble of the 1990s, and welcomed by the Clinton administration but accelerated in the first six years of the new century, require home buyers to put no money down. Interest rates, which begin at 5%-9% are fated to rise within a few years, after which they could double, triple or more. In September 2008 we began to hear of massive foreclosures in almost all sections of the country as the first round of ballooning rates took effect, and the projections for 2008 and 2009 were for 2 million homes, six percent of the U.S. total to go into serious default. New home construction came to a screeching halt and commercial building suffered only slightly less pain.

In a few weeks of October, bloated with bad loans they themselves had sold, several major banks had failed, prompting the Fed to inject billions of dollars ostensibly to save them from bankruptcy and liquidation; others, like Merrill Lynch merged with more stable partners. But the historic Lehman Brothers was fated to fail when the Treasury Secretary and the Fed chair refused to extend bailout funds. Of course, goliaths like Citibank, Bear Sterns, the insurance giant AIG and a few others were deemed by the Treasury Secretary, former Goldman Sachs executive, Hank Paulson "too big" to be allowed to go under. By the end of the month the banking system, which held trillions of dollars in "bad" paper - unredeemable mortgage, business and credit card loans - was teetering on disaster, and the crisis was widely described as a "financial meltdown." Almost all leading investment banks disappeared and those that remained were converting to traditional commercial banks.

By October, mobilized by Paulson and backed by the Fed chair, Ben Bernanke, Congress quickly passed a massive $700-billion bailout to financial institutions without scrutinizing the fine print. For different reasons, only a significant band of arch-GOP conservatives and a few liberal Democrats were prepared to let the system collapse in the hopes that either the market would self correct - the Smithians - or, in the case of the progressives, force an extensive re-regulation that had been rescinded by the Carter administration and a Democratic Congress in 1978 and followed rigorously by Democratic and Republican administrations alike. We don't like to recall bad memories, but it is useful to remember that the Clinton administration initiated a program of corporate "self-regulation" that further weakened the system and the Bush regulators simply went on a long vacation in every field, most dramatically its neglect of all manner of investment and commercial transactions that has led to the infamous Madoff scandal.

The purpose of the bailout legislation was to permit the government to purchase vast quantities of the bad securities at, or near, nominal value, in effect, a major infusion of cash into the banking/insurance systems, without imposing stringent conditions on how they must spend the money. However, within weeks of President Bush's signing the bill into law, in the wake of the banks refusal to loosen consumer and business credit Paulson announced that this strategy was being replaced by a policy of purchasing bank shares, a direct infusion of cash in return for which the government would assume a measure of temporary partial ownership of banks that chose to apply for help, but would not, as the British government did, assume outright ownership and management of the system. Nor, as it turned out, did the Federal government closely supervise the use of the funds they had so generously given. Within weeks, complaints resounded throughout the economy that the banks were not loosening their lending policies but, instead, were holding the money close to their chests. Of course, business loans were tightened, but many would-be buyers of homes, cars and other durable goods, let alone borrowers of much needed cash to pay their bills were turned away on one pretext or another, most notably because their credit rating was not top of the line.

Economic Recession and the Jobs Crisis

Meanwhile, jobless rates began their steep ascent. The November 2008 figures showed that 513,000 jobs had been lost and applications for jobless benefits soared. In fact, for at least seven consecutive months the economy had shed jobs and the official unemployment rate crept up to more than 6.5% or 10 million. In reporting the spectacular job losses, even the New York Times ran a complimentary investigative story that argued the official figures were only a fraction of the extent of joblessness. According to the Times the number of discouraged job seekers who left the labour market, premature retirees who had no prospects but to accept inadequate pensions, and recent high school and college graduates who simply did not look for work, might swell the actual figure by four or five percent. At 11% actual unemployment, the number increases from 10 to about 13 million.

By early December, the National Bureau of Economic Research (NBER) reported that the economy had been in recession since December 2007, a year before they declared the recession "official." This revelation, which any sensible observer knew for at least a year, caused no leading politician or economist to ask why the information had taken so long to be determined and revealed. The conservative NBER explained that it often takes that long to check their calculations and come up with a definitive judgment. That they felt obliged to offer an explanation responded to the unspoken suspicion that the delay had something to do with the presidential election. Many believe that if the recession had been declared in the midst of an election season, Democratic Presidential candidate Barack Obama could have repaired to Hawaii for much more than a few days.

The NBER admission that the economy was in recession at least ten months before the financial meltdown, poked a huge hole in the initial view that excessive and wanton lending was at the core of the troubles and that the crisis was essentially financial in nature. Since 2002 the emerging recessionary signs were assiduously ignored by all virtually mainstream quarters. Fall 2006 witnessed the beginning of sagging economic growth, by the measure of aggregate Gross Domestic Product (GDP) which includes spurious categories within the service sector, falling housing prices that prompted a severe slowing of new housing starts and sales, and gradual increases in jobless applications.

Stagnation of manufacturing employment belied glowing reports of healthy increments in retail sales, on the premise that industrial production was no longer an important indicator of economic health. That throughout the first decade of the new century plants continued to close and reduce workforces, and not only in the Midwest but in the South as well, was not registered as signs of a slowdown in the midst of so-called "prosperity" were barely noticed in official circles. According to the conventional wisdom, the U.S. economy was "post-industrial" - well on the way to realizing the prognostication that ours was a service economy, and it was better to let others like the Chinese and Koreans to produce material goods because industrial production caused pollution, and were inconsistent with our collective aspiration to become a nation of what Bill Clinton's Labor Secretary, Robert Reich had termed "symbolic analysts." If the U.S. remained a major producer of food, armaments (for national security reasons), aircraft, heavy machinery such as machine tools, trucks and specialty steels, these were necessary to maintain our trade balances, but were not otherwise fundamental for insuring economic health. Our future lay in specializing in various forms of "immaterial" production.

So, we could afford to lose the remnants of the once huge garment and textile production industries and, in the future, the U.S. might not be the center of basic steel and car production. That foreign auto companies were locating production facilities in the Southeastern and border states was a testament to the idea that union labour, not corporate malfeasance, had produced the steep decline in manufacturing. Software, research, and the growth of higher education, both as the center of innovation and, in terms of employment and capital formation, a major industry, pharmaceuticals and other activities linked to the health care industry, and entertainment would surely fill the gap left by the demise of the "rust belt," even if some regions of the South had suffered capital flight and become a major source of foreign investment, especially automobiles. And so what if the past thirty years were times of wage stagnation and decline, we had perfected a magnificent credit system (the main spur to consumption) that seemed to know no limits.

The bare truth is that what has been taken as economic expansion since the early 1970s was a symptom that the United States (and the UK and other European countries) have survived a genuine period of economic decline by means of a dramatic increase in the creation of huge amounts of fictitious capital. Fictitious capital is money that has no material basis, but is a speculation on future economic performance. Fictitious capital is an ordinary function of the credit system. Manufacturers borrow and lend money from each other and from banks to finance purchases of raw materials and labour on the promise of a near-term repayment when the value of their respective products were realized through sales, either within the production sector or through wholesale and retail purchases. But when these loans are exchanged by banks to businesses and non-commercial consumers on a long- term basis at exorbitant interest rates, and these loans become the basis of at least 2/3 of economic activity; when consumers or business owners, some of which are banks themselves, default on a large scale on payments, and the bubble bursts the whole system reverberates collapse.

Which is exactly what happened in Fall 2008. Small producers, retailers and building contractors routinely borrowed money from banks or other lending institutions with which to purchase raw materials, rent stores or industrial facilities and hire labour on the premise that consumers who purchased their goods, and not only homes would, in turn, receive loans from lending institutions and have income sufficient to pay their credit debt on time. For nearly two decades real estate boomed, prices of all commodities - food, clothing, homes and other durables - climbed. The accumulation of debt, which underlay the fictitious accumulation of capital on a wide scale, finally collapsed like a house of cards. As Rick Wolff has argued the discrepancy between high levels of labour productivity - abetted not only by falling wages but also by labour-saving technological changes - has led to over accumulation. We have entered what Marx has termed a "realization" crisis - commodities cannot be sold at profit rates that are sufficient to stimulate further investment in plant, equipment, construction and the labour that underlies them and other affected industries. In order to alleviate their inventory glut business up and down the line is obliged to reduce prices, but this tactic may take years before capital investment on a grand scale resumes. But as long as deflation lingers new investment is bound to remain tepid. Then comes the period of layoffs, falling prices, to the point where in many cases the value of the mortgage loan, for instance, exceeds the exchange value of the home. Wallowing deep underwater this leads to foreclosures and a precipitous decline of housing starts and sales of used homes.

Another hidden fact: for thirty five years, the private sector has not produced a net increase in jobs. The growth of jobs in computer-mediated services and software production was counterbalanced by losses in manufacturing; mergers and acquisitions in the retail industry were barely matched by growth in fast food employment. In the past decade as the private sector failed to create new jobs but relied increasingly on contingent and temporary labour to meet their short-term labour requirements, the public sector - especially education and health care - became the main source of new, decent paying jobs. And as the Federal government abdicated responsibility for a variety of services, state and local bureaucracies added jobs.

Of course, besotted by the conventional neoliberal ideology that only the private sector is a job creator, economists and politicians conveniently ignored this fact and continued to insist that whatever the service, the private sector can do it better, and more efficiently. What net increases in private sector employment occurred were largely, if not exclusively, the result of contracts awarded by federal, state and local governments who adopted both the mantra and practice of privatizing public goods. Although industrial production held steady, factory jobs stagnated during the boom because computer-mediated production began to dominate key industries and, contrary to the hype that computer-based manufacturing creates more jobs than it destroys, the reverse is actually the case. And, eventually the technology sector, of which the bubble in software and communications (dot.com) companies were the leading edge, burst. As early as 2000, this sector began to experience mass layoffs, the effects of which were notices for about fifteen nano-seconds but quickly relegated to the back burner.

The Obama Administration and the Employment Challenge

Fast forward to U.S. President-elect Barack Obama's post-election series of declarations about the crisis: where five prior administrations beginning with Carter relied on monetary policy to address economic problems(reduction of interest rates were their major tool) had strenuously avoided using the tool of fiscal stimulus to address economic grief. Repeating his campaign promise, the President-Elect said his administration would create (or save) 2.5 million jobs in his first term. Immediately, he pledged to find huge funds, presumably by issuing tens of billions in treasury bills (previously known as deficit financing) that the Chinese and some American investors would buy, to address the serious deterioration of America's infrastructure - roads, bridges, urban streets, schools, public facilities, and the like. In a flash, state after state reported they had billions of dollars worth of projects "ready to go." Given the depth of the crisis, we can expect an Obama administration to inject more substantial funds that the tiny $25-billion it originally pledged. Some jobs will be created, to be sure, but we should not expect miracles.

To begin with, Obama has warned that the 2.5 million job figure is a long term projection. How much money would it take to create 1 million jobs, about 7% of current unemployment? This is a tricky calculation. Would the program(s) be contracted out to private employers or would the government be the direct employer? If contracts are let at 30% gross profits, fewer jobs would be created. And what average wage would be offered? Would the government insist on "prevailing wages" as in the current construction industry? If the new jobs paid 50% above the poverty level, for example, they would match the current national average of about $15 an hour. The sum required to create a million jobs at prevailing wages, would range from $50 to $75-billion depending on whether the Obama administration replicated the New Deal practice of government as direct employer or continued the extant policy of privatization.

We have seen almost no discussion of the real problem of job composition, particularly the relation of skilled to unskilled labour in the stimulus package, issues of training and education and the role of unions in these programs. And, of course official policy remains tied to the illusion that technology is a net job creator. For example, lost in the rush to stimulate the economy by infrastructure development is a little known fact: unlike the Great Depression era when the federal government undertook road building as a major employment program on the basis largely, of manual labour, today's road construction industry is highly mechanized. The main "forces" of construction are earth-moving machines, machine spreaders to lay down asphalt and concrete (which are produced, automatically, on trucks). Manual labour is still employed, but not nearly to the extent as the older production regime.

On the other hand, school, hospital, recreation facilities and other public buildings employ a variety of mostly craft labour: electricians, plumbers, carpenters, among other crafts and a fairly substantial corps of labourers to haul materials and perform finishing work. Facilities construction would do more for alleviating unemployment for the skilled, less for the semi- and unskilled. Then there is the question of costs: capital intensive activities are expensive, but not nearly as costly as human labour. So, unless the administration intends to build facilities as well as improve roads and such infrastructure as water treatment and waste disposal plants, the job payoff might not be as substantial as Obama believes.

Then there is the problem of contracting out these activities. During the Depression, the Works Projects Administration, a government agency, was the direct employer; today, in the era of privatization federal and state governments often contract to private companies to perform these tasks. This means that profits must be factored into all expenditures; like the privatized U.S. health care system, it is more expensive than socialized production and the job payoff is less. Moreover, under this contracting regime there are fewer controls over hiring practices; people of color tend to be shortchanged. In which case, the level of oversight would need to be much more stringent than any administration has been willing to implement. What is the warrant for believing that Clinton era appointees will be willing to reverse past practices, especially if the Obama administration wishes to reassure the private sector?

Obama promises to create millions of "green" jobs. Some of these might be included in infrastructure plans, if windmills, geothermal, solar and other alternative forms of energy are substituted for existing power stations that run on oil and coal. Capital could be raised to build or reconvert metalworking factories to produce these products; water treatment and waste disposal plants might be constructed and put on line to fulfill the "green" objective. But there will be the problem of the administration's apparent fondness for nuclear energy as a "clean" source or its flirtation with chimerical "clean" coal projects. In our haste to applaud an apparent jobs program, we need to examine what kind and how many jobs green and infrastructural activities will produce.

The most promising sources for job creation on a large scale are in services, environmental maintenance, and the arts. One of the least understood aspects of the 1930s New Deal's WPA (Works Progress Administration) was its many cultural, service and clean-up activities, all of which were labour-intensive. Youth were sent into the forests and fields to clean them up; rivers and streams were cleaned by manual labour. The federal government created a system of national parks and allocated funds for cities and towns to build playgrounds, swimming pools and sponsored a program of public housing construction. Artists, writers, theatre people, social service workers, health care workers and many other groups were put to work in local communities, some directly employed by the Feds and some employed by local governments and non-profit organizations using federal funds. Writers, musicians and artists were sent into schools to teach and to paint murals. There has been little or no discussion of this aspect of job-creation in recent times, although the Johnson and Nixon administrations did create and finance "public service" programs, some of which had training and education aspects.

A Left Challenge to the Obama Administration?

In his announcement of appointees to cabinet and key administrative posts dealing with the economy and with business regulation Obama revealed that, contrary to his campaign mantra of "change," nearly all of these crucial appointees were recruited from the alumni of the Clinton administration. From National Economic Council chair, Lawrence Summers to his appointee to chair the Securities and Exchange Commission, Mary Shapiro, Obama has signaled to the financial sector that, despite brave talk about rigorous business regulation, they have little to worry about. None of his key appointees has a reputation that might inspire fear among those who have benefited from the long wave of business deregulation and bailout that began in 1976.

In mid-December, after a virtual unconditional giveaway to banks and insurance companies of $350-billion by the Bush administration, half of the $700-billion bail-out package remained to be disbursed. On December 19, President Bush announced a $17-billion bridge loan to the major auto corporations. The remaining $333-billion could be spent on assisting homeowners suffering foreclosure or its imminent threat and putting a substantial down payment on the job creation part of the stimulus program. But there is little hope that this scenario will come about unless organized labour and social movements insist on such emphasis. For this to happen, some of Obama's most fervent supporters on the Left would have to cut the assumed six months honeymoon short. They would be required to actively intervene on a number of fronts:

a set of proposals for a labour-intensive jobs program to accompany infrastructure development;

demand the governments be the direct employer, and only absolutely necessary private contracts be let for specialized services;

demand that the new jobs pay a living wage at least equal to the national average;

demand creation of labour-intensive jobs in public services and the arts;

demand enactment of the Conyers Bill HR 676 providing medicare for all. Universalizing health care would create hundreds of thousands of new jobs;

implement the Green Jobs program by re-opening and retooling abandoned auto and parts plants as well as building new plants to produce solar panels, windmills, geo-thermal machinery, water treatment technology and waste disposal products. These should be owned and operated by workers' cooperatives as well as letting contracts to existing manufacturers of these goods; and

demand rigorous oversight of employment programs to insure employment opportunities for blacks, Latinos women and the disabled.

Progressives have advanced hope that Obama will usher in a 'new' New Deal. But the New Deal of yesteryear was never intended to pull the United States out of the depression. While it did employ more than a million workers in government projects, even considering that these might have produced three times or 3 million jobs, as late as 1940, unemployment hovered at about 20% of the labour force. What the New Deal accomplished went well beyond its relatively modest economic impact; more important was its ideological and political force.

In contrast to Herbert Hoover and the first New Deal's focus on stimulating economic activity by pouring capital into business corporations, controlling prices and wages in order to foster profits and limiting its direct aid to the unemployed to feeding the hungry, the so-called "second" New Deal put money in the pockets of the jobless through public works and service programs, promised to save small farms from foreclosure through government purchases of crops and paying farmers to retire part of their growing capacity in a land bank. But it was the farmers themselves who, through direct action and mass organizing, sometimes prevented evictions, created cooperative enterprises to oppose the big processing corporations and, even before the depression became official, created their own political vehicles.

And, after the mass industrial strikes of 1933 and 1934 conducted without a legal framework for union recognition, in 1935 the National Labor Relations Act guaranteed workers the right to organize unions of their own choosing, established a procedure for official union recognition and collective bargaining, and outlawed company unions and competitive unionism within the same bargaining unit. In short, the second New Deal was a consequence of a popular upsurge, not only the brainchild of FDR and his advisors. It remains an open question as to whether the organizations at the base of the Obama administration will match, let alone exceed, the achievements of the New Deal. There is little or no prospect that, within the current framework of neoliberal, market capitalism, the deepening economic crisis can be significantly reversed. Will the Left urge direct action to address the crisis, open a dialogue about its capitalist roots and propose possible radical solutions?

Discussion on Our Future - What Next for Progressives for Obama?

Discussion on Our Future - What Next for Progressives for Obama?

An Organizing Proposal for a Left-Progressive National
Network and Clearinghouse

by Carl Davidson and Bill Fletcher, Jr.


[Introductory Note: We're using some metaphors from the
language of IT and the internet here because  our old
organizing models-hubs and spokes on a wheel, pyramids
of blocks in organization charts-don't help that much
these days, given how people actually relate. Better to
use the metaphor of a large fisherman's net, with the
knots at the intersections of the strings being groups
of people, and the strings being the relations between
and among them. There's two ways of looking at a net-
seeing mainly the knots first or seeing mainly the
strings first. At the risk of sounding sexist, men
usually see the knots first; women usually see the
interconnecting strings first. Nor is the net
completely flat and even. It's rumpled and tattered,
with little peaks and valleys, and some parts in dire
need of repair. Having said all that, the IT and
internet part is still merely a tool. What's most
important are the real world face-to-face, and group-
to-group meetings, discussions and joint efforts that
need to take place in the period ahead, as it always
has been.]

How can the people brought together by the
`Progressives for Obama' project make a transition into
a broader and ongoing post-election nationwide network?
How can that network continue to serve as a left-
progressive pole within the broader alliance of Obama
activists and voters, while contributing to the
organization of the instruments for popular political
power? What follows is an outline of the organizing
tasks and components of such an effort, with an
invitation to wider discussion among our community of
supporters and activists.

Starting Points

The most important node on the new network is the base
community. This is a grassroots group of left-
progressive voter-activists situated where people live,
work or go to school.

1.      Where people live can be a neighborhood, a
township, precinct, church parish, temple or mosque, a
ward, town or city, state legislative districts or
congressional districts. It can be any combination or
variation of these, but the main point is that they
have a set of elected officials or governmental body as
a target.

2.      Where people work is important because of the
potential power of organized labor, whether their
workplace is currently organized or not.  That power is
multiplied by the direct engagement of the rank-and-
file in base organizations, committees and such.

3.      Where people go to school is important because
of the powerful role of youth as a critical force,
often serving to awaken the wider society to
injustices, local and global. School is the most common
place they come together, but faith, culture and sports
venues are also important here.

Left-progressive defines the political orientation,
essentially broad agreement with the principles of the
initial call to `Progressives for Obama', groups like
the Aurora Project, Progressive Democrats of America
and others. The main themes to focus on: Healthcare not
Warfare via HR676, Green Jobs Not War Jobs via
recession-busting infrastructure spending, Alternative
Energy Investments dealing with climate change, College
for All who want to learn for the work and study
required by the 21st Century, wider democracy through
EFCA for unions and other anti-discrimination measures,
and stopping the wars now and cutting defense to help
pay for it

The voter-activists we seek are the kind of people who
hold these politics and either already belong to mass
democratic organizations working on the above, or they
want to join them. They can be ad-hoc single issue
groups, 501C4 nonprofit groups, faith-based and
community based groups, union locals or even clubs of
political parties or the campaign organizations of
local candidates and elected officials. But it's best
if they have individual members, and see themselves
growing by getting more of them. During election
cycles, they are people who vote and work in campaigns.
Between election cycles, however, they are also active
in a variety of other mass campaigns. They have little
problem shifting from one to the other as the situation

Without these base communities, we can talk about
politics and change, but we can't DO anything about
politics and change with much impact.

Second in importance is the local cluster of similar
nodes. This means student groups getting together
across a city, a local labor council, or a citywide
meeting of peace and justice groups, and so on.

Third in importance is the local wider horizontal
network of a variety of local clusters of nodes. This
means a citywide or CD-wide alliance of labor unions,
community organization, student coalitions, peace and
justice activists, as well as others.

Fourth in importance are the broader networks of these
networked clusters reaching both upward and outward.
These are statewide or regional alliances or
federations aimed at mobilizations or longer-term
lobbying and pressure campaigns.

What Links the Networks?

First, already mentioned, is a common political
orientation mentioned above. These can be developed and
improved over time as more forces become involved and
new tasks are demanded of us. Second, and perhaps just
as important, and in some way more so, are common
platforms-packages of immediate and transitional
demands for political reform and economic development.
Immediate demands widen democracy and redistribute
wealth and resources downward. Easier voting, anti-
discrimination laws and the living wage are examples
Transitional demands alter the structure of power in
favor of those at the base-seats for unions on
development authorities, worker buyouts of failed but
still profitable firms, wider community participation
in schools.

The platforms, even though they share a common
depression-busting, popular empowerment theme, have to
be custom-designed for their localities-city, state or
bioregional. Wind farms make no sense in places with
little wind; lock and dam modernization means little to
places without major rivers. But the process of
defining and shaping the platforms of the various
levels of the network are an excellent venue in
bringing people together for an exercise in
participatory democracy. Some of these platform-
templates have already been shaped to some degree by
DC-based groups like the Institute for Policy Studies,
the Blue-Green Alliance, the Apollo Alliance, the Green
Jobs Project and others. But others will have to be
done from scratch.

Third is shared new media. The networks and clusters
need public faces. Naturally, we work to get in the
regular mass media, but one way of doing it is using
the new interactive media of the blogosphere, but
locally. The linked interactivity not only helps people
get organized, but their degree of success using it
also helps them gain entrance to the mainstream media,
locally and nationally. Luckily, the new media doesn't
cost anywhere near as much to put in operation, only
the time and talent of those setting them up and
running them.

Putting it all together

We should acknowledge two things here. First, many of
these organizations and networks already exist, have
recently emerged in the Obama campaign, or exist in
embryo to various degrees. There are many areas where
things have to be done from scratch, but many more do
not. What's needed now is for more interconnections to
be formed, and more of these components to become aware
of each other, sharing ideas, resources and mobilizing
efforts. To borrow from the old Hegelian dialectic, the
wider national network exists in itself, but is not yet
fully conscious and for itself. Second, we should
acknowledge that what we are advocating here, the
organization of a new national network and information
clearinghouse is an interim project.  We can't say for
certain yet what the longer-range organizational
outcome will be or even if there will be a single
outcome-a realigned and fully progressive Democratic
Party, a new third party or labor party, or a new
Grassroots Nonpartisan High-Road Alliance of candidates
from many parties.

`Progressives for Obama' is in a position to play a
catalytic role in moving forward in a major way. But it
should not be alone. Why? Most important is an allied
effort understanding the necessary intersection of
race, class and gender for a lasting left-progressive
alliance. It must also have a grasp on the role and
potential power of organized labor and the working
class more generally. The combination of these two
strengths is what counts.

What is required

First, `Progressives for Obama' needs some close
partners, especially those with base communities of
mass democratic organizations with individual members.
Not a lot, but those are really willing to work right
away. PDA is an obvious choice, but there are more.
Jobs with Justice and The Right to the City groups are
another. It also needs partners with resources to
share-progressive think tanks and several of the new
media projects. Some of the existing socialist
organizations that backed Obama may also be helpful
where they have a degree of strength and influence.

Second, we need some startup money. We probably should
approach individuals first, since we need to start
quickly. Then we need a development director to work
the institutional sources for funding, which take a lot

Third, we need to deploy a designated team of field
organizers, people who can move about various regions
or the entire country, to meet with groups and people,
speak publicly and find the best local area
coordinators for the project. These field organizers
will have to be paid, or at least have their expenses

Fourth, we need a designated team of new media workers,
and the funds to retain a webmaster-manager of our web
site and web-centric infoshop clearinghouse. The
webmaster should be working for the allied project, but
the others can be recruited as allies in the media
projects they are already working for. As a team, their
first task is to develop our `brand' and make a big
splash in the blogosphere, drawing the people and
groups we want to participate in the overall joint

Fifth, we need a designated governance body. Most
likely, it can be a coordinating committee with monthly
conference calls, together with a smaller and more
nimble executive that can write checks. Then main thing
is for everyone who has a stake to have a voice and
seat at the table. That will get us started, but more
formal structures are needed to receive grants.

This needs to be seen as a major new expansion of
`Progressives for Obama' and its allies - and time-
urgent as well. The crisis is unfolding and deepening
rapidly, as are the opportunities and problems related
to the new Obama administration. If we do this well, it
will make a big difference.

Thursday, December 25, 2008

RESIST! and APRN "People's Statement on the Global Crisis"

The People's Statement on the Global Crisis that is initiated by RESIST! and the Asia Pacific Research Network (APRN). RESIST! is an international campaign against neo-liberal globalisation and war. The APRN is a regional network formed in 1998 to develop cooperation among alternative research centres of NGOs, and social movements in the Asia-Pacific region and raise capacity in advocacy and education, particularly in the conduct of research, education, information and advocacy related activities.

People's Statement on the Global Crisis

The people of the world suffer the greatest from the current economic and financial crisis, the worst in a century. Supposed measures to deal with the crisis further aggravate the hardship of the world's poor and flagrantly serve to bail out and perpetuate the oppressive and exploitative system of monopoly capitalism. A radical overhaul is needed and societies must be built that deliver livelihoods, incomes, education, health and housing for the people.

 The crisis is global and the worst in a century. The global economic recession has begun with consumption and production collapsing in the advanced capitalist United States (US), European Union (EU) and Japan which amount to over half of the world economy. World economic growth is currently expected to keep falling to just 3.0% next year, which would already be the slowest in almost a decade. Yet growth estimates are adjusted downwards as often as they are made. Some estimates of the eventual financial losses have been in the order of an unprecedented US$25-30 trillion worldwide and the effects of this in the real economy will be catastrophic. The world faces the double danger of recession and deflation. The adverse consequences of neo-liberal globalisation  in the past decades will be aggravated all over the globe.

The people were exploited and thus impoverished even before the turmoil and will now suffer even more. Poverty and inequality have been worsening in the last decades.  Even if one were to use the underestimated poverty line of $2 per day, there has been a 50% increase in the number of poor people since 1980 to some three billion today out of the world's total population of 6.4 billion. Around 800 million people are jobless or otherwise still needing additional incomes and work, a billion people go hungry every day, and two billion people do not even have access to clean water. The current turmoil guarantees even more rapid increases in misery in the years to come.

Neocolonial economies are already facing falling exports, dropping commodity prices, speculative outflows and dried up capital markets. Even migration and remittances from abroad are at risk. Domestic growth is slowing and production cutbacks and layoffs are already starting. Hundreds of millions of households are struggling with increasing joblessness, declining incomes and deteriorating welfare. The people who have long suffered from the ravages of neoliberal globalization are faced with the terrible consequences of the rapid deterioration of the economy.

The current crisis is particularly severe and worse is to come in the train of recurrent crises under capitalism.Capitalism is inherently caught up in self-contradiction and is constantly imbalanced. The drive of the monopoly bourgeoisie to extract surplus value and maximize private profits is in contradiction with the social character and rise of production.  Thus keeping down wage levels relative to increasing production reduces effective demand.   This is reflected in the so-called 'boom-bust cycle', which underscores the periodic episodes of collapsing production and acute crisis. Throughout this, the incomes and welfare of the working people remain miserably low.

Over the last three decades the advanced capitalist countries have tried to keep their economies and profits growing through the neo-liberal offensive of exploiting cheap labour, seizing raw materials and dominating markets across the globe. Yet the crisis has continued to deepen. In the 1990s, they resorted more and more to financial devices: speculative profits and debt-driven consumption and production. However, the basic imbalance of capitalism remained and delaying the inevitable through inflating financial bubbles only meant an unprecedented accumulation of problems and instability.

There are limits to how far economies can be propped up by debt that is not based on any real economic values created or that could ever be created. The United States is a clear example. Unsustainable debt-driven pump-priming for its wars of aggression and unsustainable debt-driven household consumption are at the core of its financial and economic disorder.

The crisis erupted when the financial illusions and false dynamic of growth could no longer be maintained. Although manifesting first in the US, the world's most advanced capitalist power and also the most indebted and financially troubled, the EU and Japan likewise have the same problems. The big power governments are now scrambling to mobilize public resources for private monopoly benefit.

The responses proposed are principally aimed at reviving corporate profits at the expense of the people. The imperialist powers are quick to take action to save a few giant financial institutions. They mobilized or otherwise committed trillions of dollars in bailouts and support ostensibly to restore confidence in financial systems and stop a descent into even greater turmoil. There is, unsurprisingly, no such rapid and meaningful action to help underdeveloped countries or the billions of poor people even only in terms of keeping residents in their foreclosed homes at reduced rent and in New Deal or Keynesian ways such as reemploying people in public works and expansion of social services in conjunction with reviving manufacturing upon the rise of effective demand. And yet the financial lifelines to finance capital are eventually going to be borne by the people in terms of higher taxes, diminished social services, higher inflation, and greater instability.

The advanced industrial powers are further seeking greater trading and investment opportunities abroad to restore their profits at the expense of the underdeveloped countries. At the same time they are compelled to preserve control of domestic markets, as well as push down wages and the benefits of their workers. There are already efforts to revive the stalled World Trade Organization (WTO) talks and to increase the manipulative influence of the International Monetary Fund (IMF) and World Bank (WB). There is also a determined push to multiply imperialist-dominated bilateral and regional free trade and "economic partnership" deals. Insofar as these consolidate economic territories, they foreshadow economic conflicts over the world's finite labor, natural resources and markets.

The most compliant underdeveloped country governments are already working to further remove trade barriers and investment controls. Neo-liberal globalisation has  destroyed domestic agriculture and industry and made hundreds of millions of peasants and workers poorer in economically backward countries. Farmers and agricultural workers around the world lost their livelihoods and were driven off the land, while factory workers were thrown out into the streets into destitution as entire industries were wiped out.

In any case, the world economy is still continuing to unravel. Capitalism is facing a prolonged recession with industrial closures, firm bankruptcies, wage repression, cutbacks in benefits, lay-offs, rural displacement and greater poverty to come. The global credit squeeze, drastic fall in demand for the raw materials and semi-manufactured exports and the depressed prices of these will aggravate and deepen the exploitation and impoverishment of the people in the Third World. There is in fact, a global depression which is becoming conspicuous as the methods of finance capital for covering deficits, funding consumption on credit and thus fabricating economic growth rates become ineffective.

Only a new social and economic order will prevent the worsening of poverty and a recurrence of crisis. The capitalist world economy is at the limits of being driven by debt, speculation, cheap labor exploitation and war. Household incomes and welfare are worsening rapidly both in the advanced centers of capitalism and in the vast backward hinterlands of the world. The current level of the crisis of monopoly capitalism has been on the make for several decades and is likely to be persistent for several years. The global bond market is expected to collapse soon.

Efforts at coping with the crisis under the current system will at best restore growth momentarily until the next bout of intensified crisis. The current global trade and investment regime promotes neo-liberal globalisation for the benefit of the world's most powerful monopoly capitalists at the expense of the people's welfare. The system itself needs to be radically overhauled with economies producing not for the profit of a few corporations but for the needs of the many for decent livelihood, goods and services. It is imperative for the people to build an alternative system that is humane, equitable and just. This alternative system is guided by three general principles: social justice and reversing age-old biases against the working people; the economy and its resources serving the needs of the general population and not the profits of a few; and national independence, genuine democratic participation and environmental responsibility. The people must eschew the anarchic economics and social exclusiveness of the phoney free market of monopoly capitalism.

There is no easy way out of the crisis and the people of underdeveloped countries are struggling to assert their economic sovereignty and strive for greater self-reliance and social justice. Among the critical measures that must be taken are:

1. Stop talks on all neoliberal multilateral, regional and bilateral free trade agreements that have grossly disadvantaged the working people and entire underdeveloped countries; and cancel all current deals. An international trade and investment regime that recognize economic sovereignty and self-reliant development and the primacy of the people's welfare must be built. Domestic economies must be freed from imperialist exploitation and must have the leeway to implement development strategies as they see fit.

2.   Oppose maneuvering by the IMF, WB and WTO to exploit the crisis and further impose neoliberal policies on the underdeveloped countries. Their opportunism necessitates the strengthening of  the people's demand for these organizations' closure.

3.  Stop speculative financial flows to underdeveloped countries that introduce instability, reckless speculation in energy and other commodities that causes undue volatility, and irresponsible speculation in food commodities that further disrupts food supplies and feeds hunger.

4.  Execute strategies to build national industry, implement true agrarian reform, realize food sovereignty, and promote gender equality and environmental sustainability.

5.  Carry out genuine agrarian reform which means immediately giving land to the tillers, providing the means to make this productive, and improving means of rural livelihood.

6. Unconditionally cancel foreign debts to stop the outflow of vital domestic resources.

7. Put in place schemes that ensure environmental sustainability, including long-term solutions to climate change that acknowledge the greater accountability of the imperialist powers.

At the same time there is an urgent need for the people to demand and obtain immediate relief against worsening social and economic distress.

 1. Immediate emergency food, expanded unemployment benefits, income and work relief through expanded public works and social services and shelter at reduced rent for people whose homes have been foreclosed.

2. A greater share for the working people of the wealth that they produce through wage increases in industry and a larger share of the agricultural produce for the peasants and farm workers.

3. Adequate and active provision of health care, public education, housing and other social services for the people.

4. Increased public spending on rural infrastructure projects that will directly improve people's livelihoods.

5. Drastic reduction of military spending and elimination of bureaucratic corruption.

6. Reduction of taxes on the poor, and increased taxation on the wealthy and corporations towards a progressive tax system.

Initial list of endorsers:

1.   RESIST!

2.   Asia Pacific Research Network (APRN)

3.   All Nepal Peasants' Federation (ANFPA), Nepal

4.   Andhra Pradesh Vyavasaya Vruthidarula Union -APVVU

5.   Angikar Bangladesk Foundation , Bangladesh

6.    Action, Research, Education Network of Aoteroa (ARENA-NZ)

7.    Advancing Public Interest Trust (APIT), Bangladesh

8.    Asia Monitor Resource Center (AMRC), Hong Kong , SAR

9.    Asia Pacific Mission for Migrants (APMM), Hong Kong , SAR

10.  Balochistan Rural Development and Research Society (BRDRS), Pakistan

11.  Centre for Community Economics and Development Consultants (CECOEDECON), India

12.  Center for Human Rights and Development (CHRD), Mongolia

13.  Center for Women's Resources (CWR), Philippines

14.  Confederation for the Unity, Recognition and Advancement of Government Employees (COURAGE), Philippines

15.  Cordillera Resource Center For Indigenous People's Rights (CRC-IPR)

16.  Documentation for Action Groups in Asia (DAGA), Thailand

17.  DRISTI, India

18.  Ecumenical Centre for Research, Education and Advocacy, Fiji

19.  Ecumenical Institute for Labor Education and Research (EILER), Philippines

20.  Equitable Tourism Options (Equations), India

21.  Equity and Justice Working Group, Bangladesh

22.  Education and Research Association for Consumer (ERAC), Malaysia

23.  Farms Services Center, Pakistan

24.  Food Coalition of Mongolia

25.  Green Movement of Sri Lanka (GMSL), Sri Lanka

26.  IBON Foundation, Inc.  

27.  Incidin, Bangladesh

28.  International NGO Forum for Indonesian Development (INFID), Indonesia

29.  Institute for Global Justice (IGJ), Indonesia

30.  Institute for Motivating Self-Employment (IMSE), India

31.  Institute for National and Democratic Studies (INDIES), Indonesia

32.  Jana Chetana, India

33.  Jobs Creators Development Society , Pakistan

34.  National Network of Indigenous Women, Nepal

35.  Nepal Policy Institute (NPI), Nepal

36.  NGO Federation Nepal

37.  NISARGA, India

38.  PAIRVI, India

39.  Pakistan Institute for Labor Education and Research (PILER), Pakistan

40.  Peoples Workers Union , Pakistan

41.  Proshika, Bangladesh

42.  Roots for Equity , Pakistan

43.  Rural Women's Liberation Movement, India

44.  Rural Workers' Movement, India

45.  SAHANIVASA, India

46.  Sewalanka Foundation, Sri Lanka

47.  Sirumalai  Ever Green Multipurpose Community , India

48.  Society for Rural Education and Development (SRED), India

49.  Tamid Nadu Women's Forum , India

50.  Third World Network (TWN), Malaysia

51.  UBINIG (Policy Research for Development Alternative), Bangladesh

52.  WAVE Foundation, Bangladesh

53.  Vikas Adhyayan Kendra (VAK ), India

54.  Voices for Interactive Choice and Empowerment (VOICE), Bangladesh