Producing more but earning less around the world

We are working more and earning less. Productivity is up, but paychecks don’t keep pace. Average wages have been stagnant for four decades as the one percent has enjoyed spectacular gains in wealth.

The disproportion between increases in worker productivity and wages is perhaps most pronounced in the United States and Germany, but is common among the world’s advanced capitalist countries. This upward flow of income has long-term implications because the mass of wealth concentrated into few hands has led to an increase in destabilizing financial speculation — there are not enough opportunities for productive investment and consumer spending erodes because working people have less to spend.

In turn, reduced spending means there is little or no incentive for capitalists to invest, leading them to plow more money into speculation and to move production to newer low-wage havens because their profit margins are squeezed. Round and round the world has gone as the global economic crisis has persisted for half a decade with no end in sight.

The U.S. economy is still the world’s largest and is the model that its powerful capitalists work to export around the world; moreover, the massive U.S. trade deficit means the U.S. is to some extent propping up the world economy. Yet unemployment remains stubbornly high in the U.S. (even if lower than in the European Union). The U.S. economy simply isn’t creating jobs fast enough — that is the conclusion of a February 1 report issued by the Economic Policy Institute. The report, written by Heidi Shierholz, says:

“The U.S. labor market started 2013 with fewer jobs than it had 7 years ago in January 2006, even though the potential workforce has since grown by more than 8 million. The jobs deficit is so large that at January’s growth rate, it would take until 2021 to return to the pre-recession unemployment rate.”

Apologists for austerity as the “solution” to economic downturn often claim that the problem is a mismatch between the skills of job seekers and the skills needed by businesses. It is true that unemployment is lower among more educated people and higher among lesser educated people, but the rate of the increase in unemployment since the economic crisis began has been similar among all groups; in fact it is slightly higher among those with some college or a college degree than those with high school or less.

Among workers age 25 or older who are not high school graduates unemployment has risen 1.7 times since 2007, the Economic Policy Institute reports, while for college graduates it has risen 1.9 times. Among all workers, the rate of long-term unemployed has more than doubled during the past six years. The report says:

“The fact that we still have large numbers of long-term unemployed is unsurprising given that the ratio of unemployed workers to job openings has been 3-to-1 or greater since September 2008.”

Job growth lags behind GDP growth

The economies of the advanced capitalist countries simply aren’t growing fast enough to generate jobs. Because of competitive pressures that lead to layoffs, plant shutterings and moves to locations with much lower wages, and the increasing sophistication of computers and machinery, capitalist economies only increase employment during periods of robust growth, when demand requires more production. Unemployment ordinarily decreases only when an economy grows at least three percent annually.

Fred Magdoff and John Bellamy Foster, authors of the book What Every Environmentalist Needs to Know About Capitalism, summarized this conundrum:

“Capitalism is a system that constantly generates a reserve of unemployed workers. Full employment is a rarity that occurs only at very high rates of growth, which are correspondingly dangerous to ecological sustainability. As Christina Romer, former chair of President Obama’s Council of Economic Advisers, tells us, ‘We need 2.5 percent growth just to keep the unemployment rate where it is. … If you want to get it down quickly, you need substantially stronger growth than that.’ … [I]t is clear that if the GDP growth rate isn’t substantially greater than the increase in the working population, people lose jobs.” [pages 56-58]

As competition for jobs steadily becomes more acute, the dynamics of capitalism dictate that wages will be buffeted by strong downward pressures. Over the long term, not only the past few years, that has happened. A study published in the Spring 2012 edition of the International Productivity Monitor demonstrates the extraordinary mismatch between productivity gains and wages. The authors, Lawrence Mishel and Kar-Fai Gee, write:

“During the 1973 to 2011 period, the real median hourly wage in the United States increased 4.0 percent, yet labour productivity rose 80.4 percent. If the real median hourly wage had grown at the same rate as labour productivity, it would have been $27.87 in 2011 (2011 dollars), considerably more than the actual $16.07 (2011 dollars).” [page 31]

Almost every penny of the income generated by that extra work went into the pockets of high-level executives and financiers, not to the workers whose sweat produced it.

Around the world, workers see little of the gains

Workers in other advanced capitalist countries did not fare quite as badly, but the general pattern is there.

In Canada, for instance, labor productivity increased 37.4 percent for the period 1980 to 2005, while the median wage of full-time workers rose a total of 1.3 percent in inflation-adjusted dollars, according to a Fall 2008 report in the International Productivity Monitor. The authors of this report, Andrew Sharpe, Jean-François Arsenault and Peter Harrison, provided caveats as to the direct comparability of productivity and wage statistics, but find the mismatch to be real as labor’s share of Canadian gross domestic product has shrunk. The authors note that, in Canada, almost all income gains have gone to the top one percent. They write:

“If median real earnings had grown at the same rate as labour productivity, the median Canadian full-time full-year worker would have earned $56,826 in 2005, considerably more than the actual $41,401 (2005 dollars).” [page 16]

Wage erosion is also at work in Europe. Making a few calculations from International Labour Organization statistics on labor productivity and wages, provided for individual countries, I found that average real wages in Germany declined 0.5 percent per year for the period of 2000 to 2008 while German labor productivity increased 1.3 percent per year. (This was the only period for which I could find statistics for both categories.)

The prosperity of German manufacturers is built on the backs of German workers, who have absorbed a decade of pay cuts. Because the International Labour Organization uses average, rather than median, figures, the disparities are likely made to appear smaller than they might be because the wealthiest are increasing their share of income faster than anybody else, distorting the average. (“Average” is the halfway point between highest and lowest; an average will rise if the highest has risen while all others are stagnant. “Median” is the number representing someone at the 50th percentile, or the middle number if everybody was arranged in order, and thus is more representative.)

Using the ILO statistics, French workers’ average wages kept pace with productivity growth for the period 2000 to 2008 while Spanish workers lagged, earning 0.5 percent more in wages per year while productivity increased 0.9 percent per year. Income inequality has increased in France since the mid-1990s, an indication that growth in pay for the highest earners likely masks declines for most workers and therefore could account for the statistical stability in the French wage/productivity ratio.

By contrast, in Britain, a Resolution Foundation paper found a differential between productivity and wage gains, although smaller than that of the United States, but also that British workers did not lose as much ground as did French, German, Italian and Japanese workers. That conclusion is based on a finding that the share of gross domestic product going to wages in those countries has steeply declined since the mid-1970s.

What we have is a structural problem, not a problem confined to a particular country, caused by a government nor solvable by adopting a specific monetary policy. Nor is personal greed the underlying cause, regardless of the personal qualities of individual capitalists.

Intensified competition over private profits, and that “markets” should determine social outcomes, inexorably leads to a consolidation in which industries are dominated by a handful of giant corporations, and those corporations gain decisive power over governments and relentlessly reduce overhead (especially wages and benefits) in a scramble for survival. More inequality means less pay for employees, reducing demand and weakening economies, which leads to more unemployment and less leverage for employees in wage negotiations as corporations use any means necessary to maintain their profit margins.

That a new boom or bubble might occur in the future does not alter the overall picture; such a development would only be a temporary blip. If it is the structure that is the problem, then only a different structure can be the solution.

Tuition battles, debt and union-busting: The many faces of neoliberalism

The eleven students who barricaded themselves inside Cooper Union’s tower have ended their occupation, but their struggle resonates well beyond the New York City university. Inextricably bound up in the movement to save Cooper Union’s tradition of free tuition and enable meaningful student and faculty participation in the affairs of the university is a struggle against neoliberalism.

The victorious students who endured police violence and heavy-handed legal tactics during the months of the Québec student strike earlier this year; the unsustainable student debt burying students across the United States; the union-busting offensives in Wisconsin; and the latest anti-union effort in Michigan — to name only some of the struggles from 2012 alone — should not be looked at in isolation but rather are part of a continuum of which Cooper Union is one manifestation.

Workers’ struggles and students’ struggles are linked, and not simply because today’s students are tomorrow’s workers. Education is now treated as a commodity — professors are increasingly part-time adjuncts and students are expected to hand over ever larger sums of money for tuition, and students are encouraged to think of higher education in mercenary terms, as nothing more than technical training for a job rather than (or in addition to) an opportunity to improve oneself through study. Being an employee in a capitalist enterprise is indistinguishable from oneself being reduced to a commodity — we have no choice but to sell our labor if we intend to eat and keep a roof over our heads.

All this requires atomization of society: set off at each other’s throats, fiercely competing over scraps. It is solidarity that breaks this pattern. Thus it was not surprising when a Cooper Union spokesman, presumably speaking for the president, Jamshed Bharucha, issued a statement claiming that the occupiers “do not reflect the views of a student population of approximately 1,000 architects, artists and engineers.” Did they do a survey? One suspects not.

The suggestion here seems to be that the strikers are unreasonably “spoiled,” an intimation made during recent student occupations at nearby New York University and the New School. Note that the student strikers in Québec were similarly denounced when they took to the streets in massive numbers to block an increase in tuition although Québec already had the lowest tuition of any Canadian province.

This is a favorite neoliberal tactic — attempt to engender jealousy that somebody has something you don’t have, and loudly proclaim that something should be taken away from them. This tactic was on ample display during Wisconsin Governor Scott Walker’s unilateral attempt to eliminate collective bargaining for Wisconsin state-government employees and impose draconian cuts to education and social programs. Government workers and unions were the designated scapegoats, making their pensions easy targets; Republican Party operatives went to rural counties and made sure to play up the fact that most people no longer have pensions, while government workers do.

Although a similar effort was defeated in Ohio, by forcing a referendum that was won, Michigan legislators this week approved legislation banning automatic payroll deductions of union dues. In states with such laws, unions are required to represent all workers despite receiving dues from only a portion of them, leaving unions with less resources and therefore weaker, and fueling the neoliberal ideology of hyper-individualism because “free riders” gain the benefits of collective bargaining by the union, funded by members, while not contributing dues.

Using the force of the state to break unions on behalf of capitalists to force reductions in wages is simply neoliberal austerity in legislative clothing.

Continued free tuition would be a victory for all students

Similar to higher union wages setting a higher bar for everybody’s wages, continued free tuition at Cooper Union should be defended as a gain for all students. Once lost, it is unlikely to be regained. The public City University of New York system had free tuition until 1975; tuition has risen fivefold since it was first instituted, well above the rate of inflation and a pattern replicated by public and private universities.

With that in mind, the demands of the Cooper Union student occupiers and their supporters, which have not been rescinded, are straightforward:

• The administration must publicly affirm the university’s commitment to free education.
• The Board of Trustees must immediately implement structural changes to create open flows of information and democratic decision-making, including making board minutes publicly available and the appointment of a student and faculty members.
• President Bharucha steps down.

The students say Cooper Union’s weakened finances are a result of mismanagement. The university has been on a building spree of late, leveling two of its three main buildings and replacing them with expensive new buildings. In ending their occupation but vowing to continue to struggle, the students said:

“The problems at Cooper Union strike a nerve with millions of others struggling with student debt, administrative bloat, and expansionist agendas. We live in a world where massive student debt and the rising costs of higher education remain unchecked, where students are treated as customers and faculty as contracts. Cooper Union’s mission of free education affords equality and excellence and offers an alternative for a better future of higher education.

For over a century, the Cooper Union has sustained the mission of providing free education to all admitted students. After decades of financial mismanagement, the administration now seeks to implement tuition-based programs. Rather than dedicating themselves to the difficult task of maintaining the promise of free education — Jamshed Bharucha’s administration and the Board of Trustees have chosen to pass the consequences of financial and institutional mismanagement on to the shoulders of the college’s students, faculty, staff, alumni, and future generations. They’ve taken the easy way out.”

Not dissimilar to how working people are expected to bear the burden of an economic crisis caused by financiers while the financiers’ institutions are bailed out. Those same financiers are hungrily circling Social Security, falsely blaming one of the few remaining strands of the social safety net so that they can get their hands on it and plunder it for their personal profit.

Solidarity achieves tuition freeze in Québec

The struggle for a sane higher-education system is one that must be fought everywhere. The struggle to maintain free tuition at Cooper Union is not separable from the struggle to rein in out-of-control tuition increases elsewhere. The successful student strike in Québec, although centered on Francophone students in Montréal, nonetheless was a province-wide struggle that drew enormous support from working people. It was so successful, in fact, that it caused the provincial government to fall.

It also helped that students were already organized in three student province-wide associations. The Québec government, then controlled by the Liberal Party, intended to raise tuition by 75 percent over three years. Protests and strikes quickly blossomed, shutting down universities and leading to street battles as police repeatedly attacked near daily demonstrations that sometimes numbered more than 100,000. The Liberal government dug in its heels, not only refusing to negotiate seriously but passing a law making the demonstrations illegal.

That move backfired, as the demonstrations over what become known as the “Maple Spring” in a nod to last year’s “Arab Spring” only grew bigger. After months of struggle, the government called an early election, which it lost, ushering in a Parti Québecois government that promptly rescinded the tuition increases, canceled the anti-demonstration laws and, in an environmental gesture, reversed the Liberal support for fracking. That victory did not come easily (the process is called “struggle” for a reason). A supporter of the strike who is long past being a student himself wrote on the Waging Nonviolence web site:

“The revolting students paid a heavy price. They put their academic year in jeopardy and many were beat up by the cops. Over 200,000 students maintained a strike for five months, 3,387 were arrested and hundreds injured — some seriously by plastic bullets and batons.”

Moreover, students estimate that the provincial government spent C$200 million, citing police and related costs, the value of canceled classes, the costs of personnel maintaining empty buildings and the cost of making up a lost semester. Martine Desjardins, president of the Fédération étudiante universitaire du Québec, the largest of the province’s student associations with 125,000 members, said to The Montreal Gazette that those costs exceeded what would have been collected from the tuition increases:

“The tuition for seven years was supposed to bring in about $170 million. So you can see it’s not about economics, but about ideology. It just doesn’t make sense.”

Explosion of student debt

College tuition in the United States is far higher than it is in Canada and has risen to the point that student debt is estimated to be more than US$1 trillion. A Center for American Progress report said U.S. tuition has increased more than 1,000 percent during the past three decades. (That is more than three times the official rate of inflation.) The report notes:

“One of the major self-inflicted causes is the consistent decline in state funding for higher education, which had helped colleges keep tuition affordable. The steadily and rapidly increasing cost of college nationwide prompted a dramatic rise in student borrowing—a natural result as families could no longer rely on scholarships, grants, and personal savings, which cannot keep up with the rapidly increasing tuition costs.”

Similar to governments running deficits because they borrow from the wealthy rather than tax them, financiers profit from the explosion of student debt. A major contributor to this mounting debt are for-profit private colleges, many of which enroll huge numbers of students, many unprepared for college, by virtue of government-guaranteed loans given with no oversight.

Just as corporate initiatives attempt to replace public primary and secondary school systems with “charter schools” run by corporations for the profit of executives, the neoliberal model of higher education is to saddle students with heavy debt. Not only is this profitable in the short term, but it also makes the students, once they enter the workforce, more pliable employees due to the massive loans hanging over their heads.

Corporate executives want students drilled for business needs, but refuse to pay taxes needed to support education. And they want students to shoulder the burden of tuition although they, and society as a whole, benefit from an educated workforce.

The idea that anyone achieves success all on their own is preposterous — all of us rely on institutions (including schools) and build on those who came before us. Least of all can capitalists who accumulate fortunes on the backs of students, employees and freelancers, and benefit from government-funded infrastructure, claim to be free of society. The neoliberal cult of individualism is a means to foster jealousy and atomization — and to keep the 99 percent subordinate.

World Bank’s call for slowing global warming ignores own role

Global warming appears, or so it seems, to have begun to be taken more seriously this week as none other than the World Bank issued a report sounding the alarm bells. But let us not grow warm in our hearts just yet that corporate leaders have suddenly decided to yield to science and reality.

What we have here is a case of truly monumental hypocrisy. The policies of the World Bank and its sibling, the International Monetary Fund, have constituted non-stop efforts to impose multi-national corporate control, dismantle local democratic institutions and place decision-making power into the hands of corporate executives and financiers, the very people and institutions that profit from the destruction of the environment.

The World Bank’s report, “Turn Down the Heat,” prepared for it by the Potsdam Institute for Climate Impact Research and Climate Analytics, does incorporate the latest thinking of climate scientists. It paints a dire picture of a world in which the average temperature will increase by four degrees Celsius (seven degrees Fahrenheit) by the end of the 21st century without large-scale policies to reverse the trend. Among the effects of such a rise in temperatures, according to the report:

“[T]he inundation of coastal cities; increasing risks for food production potentially leading to higher under and malnutrition rates; many dry regions becoming dryer, wet regions wetter; unprecedented heat waves in many regions, especially in the tropics; substantially exacerbated water scarcity in many regions; increased intensity of tropical cyclones; and irreversible loss of biodiversity, including coral reef systems.”

The World Bank report advocates that the century’s temperature rise be held to less than two degrees Celsius. The bank says that “more efficient and smarter use of energy and natural resources” can reduce the climate impact of development “without slowing poverty alleviation or economic growth.” Despite the bank’s neo-liberal agenda, a goal stated in these terms is consistent with Center-Left political parties around the world. Among the initiatives proposed by the report are:

“[P]utting the more than US$ 1 trillion of fossil fuel and other harmful subsidies to better use; introducing natural capital accounting into national accounts; expanding both public and private expenditures on green infrastructure able to withstand extreme weather and urban public transport systems designed to minimize carbon emission and maximize access to jobs and services; supporting carbon pricing and international and national emissions trading schemes; and increasing energy efficiency.”

In other words, the very economic system that has brought the world to the brink of a disaster that could arrive in the lifetimes of many people alive today is supposed to magically eliminate the problem, and without significant changes to consumption patterns. Alas, that is wishful thinking.

The very energy corporations that stand to most profit from continued high energy use and increasingly damaging resource-extraction techniques are the biggest sources of misinformation intended to deny the reality of global warming or to claim that climate change is “natural” and to do anything about it would wreck the economy.

Increase in extreme weather events

Those executives who peddle that ideology will have long ago lined their pockets with outsized profits and will have left this Earth by the time the environmental bill comes due. Last month’s Hurricane Sandy, which devastated the coasts of New Jersey and New York, can’t be seen as anything other than a harbinger of what is coming; similar to the heat waves that destroyed crops in Russia and North America in 2010 and 2012, respectively, and the dramatic retreat of the Arctic ice cap.

Of course, no single storm or single heat wave can be attributed to global warming. But global warming increases the odds of destructive, deadly weather events. One measure is the number of “extreme” weather events (top or bottom ten percent of extremes in temperature, precipitation, and drought) as measured by the U.S National Oceanic and Atmospheric Administration. Through the end of October, 38 percent of the contiguous U.S. land mass had experienced at least one of these extreme weather events in 2012, the second-highest figure since records began to be kept in 1910. The average for the past century is 20 percent; all but four years since 1991 have exceeded this average.

Consistent with the initiatives proposed by the World Bank report, the Obama administration has advocated “green capitalism” to deal with global warming, although in practice (particularly during the just-concluded presidential election campaign) Barack Obama has offered little better than the standard head-in-the-sand ideas of ramping up oil and gas extraction, salted with chimera like “clean coal” and “safe nuclear energy” — two concepts that are the epitome of oxymoronic construction.

Coal throws more global-warming carbon dioxide into the atmosphere than any other energy source and the meltdowns at Fukushima and Chernobyl should be sufficient warnings against building more nuclear power plants even before we contemplate the impossibility of safely disposing nuclear waste.

Energy companies continue to sue to overturn regulations

Hydraulic fracturing of rock — or “fracking” — using jets of water and chemicals to force natural gas from underground is the latest offer from the world’s energy companies. Bitter battles across North America are raging over fracking and the pollution and destruction of water sources left in its wake. But lest we believe the latest World Bank report might induce a pause for thought, consider this: A U.S.-incorporated energy firm, Lone Pine Resources Inc., is suing under the North America Free Trade Agreement (NAFTA) to overturn Québec’s regulations against fracking.

Lone Pine, which is actually headquartered in Calgary, Alberta, despite its formal incorporation in the U.S. tax-haven state of Delaware, is seeking $250 million in compensation, reports The Globe and Mail newspaper of Toronto. (More corporations are incorporated by far in Delaware than any other U.S. state because of its laws specially tailored to benefit corporate executives; the state even has a special court that only adjudicates business disputes.)

Technically, Lone Pine is suing the Canadian government because only the three national governments can be sued under NAFTA. The company is suing under NAFTA’s Chapter 11, which authorizes corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit. The Wall Street Journal reports that Québec “banned shale-gas exploration in parts of the Saint Lawrence Valley and revoked previously issued mining rights as it studied the environmental consequences.”

NAFTA allows a Canadian company to sue the Canadian government in a way it wouldn’t otherwise have been able to do — an excellent deal for polluters.

Because the rules of NAFTA are heavily tilted in favor of business and against labor or environmental regulation, almost every case brought to a tribunal under NAFTA ends with either a hefty payout to the suing corporation or an overly generous settlement by governments seeking to avoid an even bigger payout, and a reversal of regulations passed by democratic governments. These decisions are handed down in secret tribunals in which many judges are attorneys who specialize in representing companies in disputes with governments.

The rules of NAFTA, draconian as they are, are merely the starting point for still harsher rules under the secret Trans-Pacific Partnership being negotiated by nine countries. Moreover, the TPP would require the use of a tribunal controlled by the World Bank, a tribunal already in common use under many existing trade agreements. Each time a tribunal overturns a regulation or protection, it becomes a precedent — that is, a new starting point from which further corporate control of national laws can be launched.

World Bank policies fuel global warming

Environmental laws are frequently the target of corporate assaults under free-trade rules, and the most frequent initiators of these assaults are energy and chemical corporations. Tribunals controlled by the World Bank or other institutions that promote corporate globalization ensure that environmental, labor and other legal protections are eviscerated, thereby accelerating the destructive activities that fuel global warming.

The World Bank has long imposed harsh austerity on countries around the world, in exchange for drowning those countries in debt, which then gives multi-national corporations and itself, which enforces those interests, still more leverage to impose more control, including heightened ability to weaken environmental and labor laws.

The bank also plays a direct role in global warming, having provided billions of dollars to finance new coal plants around the world in the past few years.

The World Bank is a key organization in the concatenation of processes that has brought the world to the brink of catastrophic climate change. To issue a report on the likely future destruction to be wrought by global warming without acknowledging its own role and without calling for a fundamental change in the global economic system that it enforces — which is the root cause of a potentially runaway chain of environmental disasters — is beyond chutzpah.

Capitalism is incapable of reversing global warming. All of its incentives are for private profit without regard to public effect. The maximization of profit in the short term is the aim of a capitalist corporation (indeed, for one listed on a stock exchange, it is required by law to have no other purpose). Its incentive, then, is to shed costs whenever possible — not only to reduce wages, but to offload the costs of pollution and other public nuisances onto governments and, ultimately, taxpayers.

The rigors of competition require that ever bigger profits be made and expansion continually undertaken, under pain of going under if a competitor does this more successfully. Because of the necessity of endless growth, and the lack of need to take into account pollution and of the amount of carbon dioxide thrown into the atmosphere because those are not assigned to the corporate bottom line, every systemic incentive exists to extract and use more natural resources, regardless of long-term costs.

It is impossible for such a system to clean up its own mess. At best, it might, in the future, innovate new technologies for renewable energy, but not in a rational manner. The Chinese government has so over-invested in solar-energy equipment, for example, that it is estimated that capacity is now three times more than demand. This explains why U.S. solar-equipment companies are going out of business despite being granted significant government subsidies.

Capitalism has developed to the point where the very existence of humanity could be at stake in the future; where ever more inequality leads to deepening crises and an inability for humanity to deal logically with these crises, even ones that carry the potential for catastrophic destruction. What could be more unsustainable?

Trans-Pacific Partnership trade pact more draconian than NAFTA

By Pete Dolack

Imagine a world in which which labor safeguards, safety rules and environmental regulations will be struck down because a multi-national corporation’s profits might be affected. A world in which measures to reign in financial speculation are illegal. A world in which the task of governments, codified in law, is to maximize corporate profits.

Imagine a world in which corporations can bypass national laws and courts when they are in a dispute with a government, and instead can have their dispute adjudicated by a closed tribunal controlled by their lawyers.

Unfortunately, the above is not dystopian science fiction; it is the reality of the top-secret Trans-Pacific Partnership. If you like NAFTA, you will love the TPP.

Haven’t heard of the Trans-Pacific Partnership? There is good reason. It is a proposed trade agreement being secretly negotiated that would not only codify the one-sided rules heavily favoring corporate interests exemplified in the North American Free Trade Agreement, it would go beyond them. And many of the harshest rules proposed to be included in the TPP are being pushed by the Obama administration.

Nine countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States — have negotiated for four years. No text has ever been released to the public, and even the U.S. Congress has been left in the dark as to the TPP’s contents. That we know anything at all about it is due to leaks. A portion of the text, the chapter covering investment rules, is posted at http://tinyurl.com/tppinvestment.

What the TPP represents is multi-national corporations going beyond lobbying for deregulation, bending rules and decisively influencing government policy to having their interests in profit maximization regardless of impact written into international law and controlling the tribunals that will adjudicate corporation/government disputes. “Free trade” agreements have become a favored route toward this corporate goal. In the nearly two decades that NAFTA has been in force among Canada, Mexico and the United States, there has been a steady procession of corporations filing complaints alleging that regulations “harm” them.

Thus we have had the spectacle of a U.S. corporate parcel-delivery service suing Canada in an attempt to have the Canadian postal system dismantled and chemical companies suing because a chemical they produce has been banned because it is poisoning water supplies. The key NAFTA provision is Chapter 11, which codifies the “equal treatment” of business interests in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit.

The usual result is either the complaining corporation wins its case or the defendant government settles on terms advantageous to the corporation to avoid a worse result. Multi-national corporations don’t win every time — for instance, Canada was graciously allowed to retain its postal service. The TPP is designed to tilt the scales still more heavily in favor of “investors” — not only via rules granting more “rights” to multi-national corporations, but further expanding the definition of “investor.” There are extensive rules governing the “right” to an near guarantee of profits, but no rules concerning labor, environment, public health or safety.

NAFTA, as draconian as it is, is a starting point. The TPP’s extraordinarily one-sided rules, which go beyond NAFTA in several ways, are intended to be a new floor in the ongoing effort to lock in the domination of industrialists and financiers through the multi-national corporations that they control. The TPP is intended to be “scalable” — that is, other countries can join but are forbidden to oppose any measure already agreed upon. Just two months ago, Canada and Mexico accepted invitations to join, so it is quite conceivable that TPP may supplant NAFTA.

The U.S. watchdog group Public Citizen issued an analysis of the leaked TPP investor chapter earlier this summer. Sounding the alarm, Public Citizen said:

“Over $350 million has been paid to investors by governments under the investor-state provisions in NAFTA alone over toxic waste dump permits, logging rules, bans of toxic substances and more. Currently, there are over $13 billion in pending corporate “investor-state” trade pact attacks on domestic environmental, public health and transportation policy. And, mere threats of such cases have repeatedly resulted in countries dropping important public interest initiatives, exposing their populations to harm that could have been avoided. Yet the leaked text shows that while TPP countries have agreed to impose binding obligations on themselves to provide foreign investors an array of extraordinary new privileges, the TPP countries have not agreed to health, labor or environmental obligations to be required of investors.”

The Public Citizen report notes that the use of international tribunals to overturn regulations has increased dramatically in the past decade:

“Over $719 million has been paid out under U.S. Free Trade Agreements and Bilateral Investment Treaties alone — 70 percent which are from challenges to natural resource and environmental policies, not traditional expropriations. Tobacco firms are using the regime to challenge tobacco control policies, including a case by Phillip Morris against Australia. Absent substantial changes to the leaked text, TPP would greatly increase the number of investor-state attacks on public interest policies and would expose governments to massive new financial liabilities.”

The use of international tribunals is an aspect of bi-lateral and multi-lateral trade agreements often overlooked. The TPP would require the use of the International Centre for Settlement of Investor Disputes (ICSID) — an arbitration board that is an arm of, and controlled by, the World Bank. Cases that go before one of the Centre’s tribunals are decided by a panel of three judges that are selected from a roster. The judges are appointed by the national governments that have signed on to ICSID, which are most of the world’s countries.

Eight of the judges have been appointed by the United States. Each is a lawyer whose career has been spent in the service of large corporations. Six are currently partners in some of the world’s most formidable corporate law firms, one is an academic who formerly was a corporate lawyer and one is a lobbyist for a business group that seeks to codify pro-corporate trade rules under law. Five of the eight U.S.-named lawyers have been counsel to various Republican Party administrations and several of the eight specialize in representing corporations before international arbitration boards.

These are the U.S. panelists who are among those judging the merits of corporate claims against government regulations:

• Fred Fielding: An attorney who bounces back and forth between Republican administrations and corporate law firms; among his clients has been the mercenary military contractor Blackwater.
• William Park: Currently a law school professor but has practiced with three corporate law firms and has been an arbitrator on many business-arbitration boards.
• Daniel Price: A corporate lawyer who represents companies in international arbitration and a former economic adviser to George W. Bush.
• John M. Townsend: A corporate lawyer who represents pharmaceutical companies and specializes in representing companies in arbitrations against governments; he is also a trustee of a business lobbying group.
• J. Caleb Boggs III: A corporate lawyer who specializes in representing financial institutions and other clients before regulators and helped write a law deregulating banks while a Senate aide.
• William A. Burck: A corporate lawyer who specializes in representing companies and corporate officers in disputes with U.S. and other governments; he is a former legal adviser to George W. Bush.
• Ronald A. Cass: The chair of a lobbying group that seeks to tilt international trade law further in favor of business; he was a trade representative for two Republican administrations.
• Emmet Flood: A corporate lawyer who represents companies in disputes against government regulations and a former counsel to George W. Bush; among his past clients are the Koch brothers.

The rules that panelists will adjudicate would supersede national laws. Article 12.7 of the TPP, for instance, provides a long list of prohibitions against government actions; under it, laws imposing capital controls (even to ameliorate a crisis), rules governing domestic content of products or any protections of any domestic industry would be illegal. It then provides a generic exception allowing environmental or other measures “that are not inconsistent with the Agreement; necessary to protect human, animal, or plant life or health; or related to the conservation of living or non-living exhaustible natural resources.”

That exception, however, is meaningless. It specifically requires that excepted rules must be “not inconsistent with the Agreement” — and that is the towering thorn sticking out of the minuscule rose. The key sentence opens Article 12.6: “Each Party shall accord to covered investments treatment in accordance with customary international law.” The “Party” here are national governments, and the “customary international law” is that already established by NAFTA and the decisions made by ICSID and similar arbitration bodies concerning disputes under NAFTA and other trade agreements. Those decisions skew heavily toward corporate complainants.

Venezuela recently became the third South American country to withdraw from ICSID; in doing so, the country’s foreign ministry said ICSID “has ruled 232 times in favor of transnational interests out of 234 lawsuits received throughout its history.” A 2007 report issued by the Institute for Policy Studies and Food and Water Watch, “Challenging Corporate Investor Rule,” said multi-national corporations have won 70 percent of the cases (it did not specify how many of the remainder were a loss for the corporation nor how many were not decided or withdrawn). These tribunals are conducted in secret; only two ICSID cases have been conducted with public attendance in its history.

The World Bank is one of the principal bodies imposing austerity on countries around the world; it routinely conditions loans to governments of developing countries on the swift privatization of state-owned enterprises and public utilities, typically conducted at fire-sale prices as salivating corporate executives are aware of the hammer being held over the selling government. When the buying corporation decides it has not made the profits it expected, it can file a claim heard by ICSID, which is controlled by the very same World Bank.

In one notorious case, the World Bank forced the privatization of the water system in the Bolivian city of Cochabamba. Bechtel, the company that was handed the water system as the sole bidder in a secret process, charged a sum equal to one-quarter of city residents’ average household income and imposed a contract provision banning the collection of rainwater. After massive local protests backed by a global campaign forced it to leave the city, Bechtel sued Bolivia for US$50 million in damages and lost profits although its investment is believed to have been less than $1 million and Bechtel’s revenues are six times the size of Bolivia’s gross domestic product.

Bechtel settled without receiving a payment only because of massive international pressure and because Bolivians continued to resist in large numbers despite being repeatedly fired upon. That pressure was necessary as, according to Earthjustice, World Bank officials refused to disclose when or where the first hearing in the case would take place.

That is a very rare ending. Although developing countries are most often the targets of ICSID actions, regulations anywhere can be overturned. For instance, Canada was sued under the provisions of NAFTA by a U.S.-based chemical company after it banned the use of a gasoline additive already banned in the U.S. because it is a known toxic agent. Thanks to ICSID, Canada had to reverse its ban, pay millions of dollars to cover the company’s “lost profits” and issue an apology to the chemical company.

Among the features of NAFTA to be replicated in the TPP are that:

• Governments pay attorney costs, win or lose, in addition to paying judgments.
• Taxation and regulation constitute “indirect expropriation” mandating compensation (a reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property as required under U.S. law).
• Older decisions become precedents for further expansions of investor “rights” and will be read as the “evolving standard of investor rights” required under the TPP.
• No mention of labor rights, nor any standards for environmental, health or safety that must be met.

A London Court of International Arbitration panel, ruling in July 2005 for a unit of the Occidental Petroleum Corp. in a case heard under the U.S.-Ecuador bi-lateral investment treaty, declared that any change in business conditions constitutes a violation of “investor rights.” If such a ruling is accepted as precedent, any attempt at regulation is potentially illegal.

Among the features of the TPP that go beyond NAFTA are:

• An expansion of who or what constitutes an “investor” — extending those eligible to file a claim to anyone who applies for a permit or license, or who “channels” resources or capital to set up a business, without placing any limits on what qualifies for such a status.
• No language to block frivolous claims.
• The U.S. is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full value of government bonds bought at discounted prices.
• Requiring new intellectual property laws that would criminalize many acts not currently classified as such.
• Significantly tighten corporate control of the Internet and force service providers to hand over personal data.

A separately leaked section of the TPP, covering pharmaceutical products, contains this interesting item on its cover page: “Declassify on: Four years from entry into force of the TPP agreement or, if no agreement enters into force, four years from the close of the negotiations.” What is being hidden? New monopoly rights for pharmaceutical companies and the ability to overturn the policies of countries such as Australia and New Zealand that force much lower prices on drugs, policies that U.S.-based pharmaceutical companies wish to overturn. In addition, Citizens Trade Campaign reports:

“This U.S. intellectual property proposal, which rolls back initial reforms made in a trade pact that the Bush administration signed with Peru only four years ago, would lengthen pharmaceutical monopolies, eliminate safeguards against patent abuse, grant additional exclusive controls over clinical trial data and favor the giant pharmaceutical companies’ monopoly interests at every stage.”

Médecins Sans Frontières/Doctors Without Borders similarly reports that:

“The Obama administration is walking away from previous efforts to ensure that developing countries can access affordable medicines, setting a dangerous new standard that will likely be replicated in future trade agreements with developing nations. The administration is touting a so-called ‘access window’ as a mechanism to boost access to medicines. In fact, the administration is confusing access with affordability. The ‘access window’ is all about getting brand-name drugs to market faster, and giving their producers longer monopoly rights that prevent price-lowering competition and keeping medicines out of the hands of the millions of people who need them.”

The White House claims that “The Obama Administration has been working in partnership with Congress and consulting closely with stakeholders around the country to ensure TPP addresses the issues that American businesses and workers are facing today, and may confront in the future.” That clearly is not true, as senators and representatives are demanding disclosure. Nor does any of the agreement’s text appear on the Web page dedicated to the TPP.

Executives and lobbyists from some of the largest corporations on the planet — commanding revenues much larger than the gross domestic products of the smaller TPP countries — are meeting in secret with government officials to give themselves yet more power and control.

Corporate-written rules for self-benefit are intimately connected with financiers manipulating markets and benefiting from the austerity they insist governments impose. Industrialists extract the surplus value from their from their workers that becomes profit and financiers provide the whip that intensifies the process and create the speculative instruments that profits are poured into. We can have corporate dictatorship, or democracy. But not both.

The high cost of private profit in health care

By Pete Dolack

The United States spends huge amounts of money on health care. But it is only in comparison to other countries that the magnitude of health care spending becomes clear. Because the U.S. health care system is designed for private profit rather than public health, the U.S. spends an extra $1.15 trillion per year beyond what it would otherwise.

If that total astounds you, you are not alone. When I first began making calculations to determine excess spending in health care, the figures were so large that I had difficultly believing them and performed the calculations over again. The result was the same.

The excess spending on health care is not only growing, it is growing much faster than the rate of inflation, in concert with overall health care spending. For instance, the annual average of excess spending for the period of 1990 to 2000 was $685 billion. For the period of 2001 to 2010, the annual average ballooned to $1.15 trillion.

And despite all that extra spending, U.S. residents have poor health results in many key indicators, in comparison to the world’s other advanced capitalist countries. Still more amazing, 51 million people in the U.S. are without health insurance, while all other peer countries have universal care. This is the system that millions of U.S. citizens believe is the best in the world thanks to the world’s most developed public relations and misinformation industries.

The rest of the world is quite in disagreement, to the point that even the harsh austerity-minded Conservative prime minister of the United Kingdom, David Cameron, has repeatedly had to deny (whether or not sincerely I will leave to others) any intention to emulate the U.S. system as he attempts to impose changes on the country’s National Health Service.

Let’s do a bit of digging under the surface of numbers. First off, an explanation of where the $1.15 trillion in annual excess spending comes from. I calculated the number by first obtaining total health care spending per capita* of the three largest economies within the European Union (France, Germany and the United Kingdom) and of Canada, the neighbor of the United States. I then averaged the numbers for the years 2001 to 2010 (the latest for which full statistics are available) as compiled by the Organisation for Economic Co-operation and Development (OECD), the club of the world’s advanced capitalist countries and the largest developing countries.

The composite average of Canada, France, Germany and the U.K. for 2001 to 2010 is US$3,479 per capita per year. That number is less than half of the U.S., which had by far the world’s highest health care spending at $7,325 per capita per year. The differential was then multiplied by 300 million, the approximate U.S. population during the past decade. If you prefer a different measure, the U.S. spent 17.4 percent of its 2009 gross domestic product on health care expenditures, again the world’s largest by a wide margin. The average of the 34 countries of the OECD is 9.6 percent.

And if that is not enough, here is one more astounding comparison: Not only are out-of-pocket expenses by U.S. health care consumers higher than in any of the four comparison countries (no surprise there) but per capita government spending in the U.S. is higher than in any of the four comparison countries. Those four have varying versions of what U.S. right-wing ideologues venomously denounce as “socialized medicine” — health care systems either run or closely regulated and supervised by a federal government paid for through taxation — and yet each government nonetheless spends less than does the U.S. government on a per capita basis.

Despite the massive transfer of money to private insurance companies by employers and employees, on a per-capita basis government health care spending by itself in the U.S. is higher than total health care spending in Canada.**

The authors of the paper “Why is health spending in the United States so high?” (a supplement to an OECD statistical report) attempted to draw conclusions from a mass of data on health care expenditures:

“It does not have many physicians relative to its population; it does not have a lot of doctor consultations; it does not have a lot of hospital beds, or hospitals stays, when compared with other countries, and when people go to hospital, they do not stay for long. All these data on health care activities suggest that U.S. health spending should be low compared with other countries.”

The reason that spending is anything but low is because of the high prices extracted throughout the system. The costs of a range of medical procedures or surgeries are much higher in the U.S. than elsewhere, as are pharmaceutical prices. The authors write:

“Overall, the evidence suggests that prices for health services and goods are substantially higher in the United States than elsewhere. This is an important cause of higher health spending in the United States.”

The OECD is an organization that is representative of the world’s most powerful capitalist countries, so the report does not inquire into underlying causes or in any way challenge the economic system that leads to such results; it merely reports facts and figures. Those facts and figures, however, give us a useful starting point. The wasteful spending on health care are subsidies for pharmaceutical manufacturers, hospital-chain operators, insurance companies, managed-care companies and medical-products manufacturers. Money flows to those corporate entities directly from your pocket and indirectly from you via government spending.

Each U.S. citizen’s annual share of wasteful, excess spending on health care — excess spending that goes into the coffers of some of the country’s largest corporations among the many industry profiteers — amounts to $3,846. Business leaders, their lavishly funded think tanks and pressure groups, and the public-office officials who represent them continually assert that private enterprise is always more efficient. It would seem that the efficiency lies in extracting money and wealth.

Noting that “high administrative costs and lower quality have also characterized for-profit HMOs” (health maintenance organizations funded by insurance premiums that supervise health care), a Journal of the Canadian Medical Association article provides the following figures for the percentage of revenue that is diverted to overhead:**

• For-profit HMOs: 19 percent
• Non-profit plans: 13 percent
• U.S. Medicare program: 3 percent
• Canadian Medicare: 1 percent

In contrast to the rhetoric so often employed, government is far more efficient at delivering health care than the private sector. (This is also true in retirement plans, where the U.S. Social Security program’s overhead is much lower than mutual-fund managers or other financial-industry enterprises.) An important reason is that the government does not skim off massive amounts of money for bloated executive pay nor does it need to generate large profits to enrich financiers.

Such large expenditures also flow from a lack of competition. Few people in the U.S. have a choice of insurance provider, which is dictated by their employer, and insurance companies and HMOs frequently limit choice of doctors, and often deny coverage so as to maximize profits. A company that has stock traded on exchanges is legally required to maximize profits above any other consideration; it is no different because health care happens to be the product. A few summers ago, I found myself in a debate with a Canadian woman who was critical of her country’s health care system. I acknowledged that Canadian health care is not perfect, but then gave the example of a friend who had recently died in his 50s of a heart attack because his insurer decreed that he did not require medication for his weak heart and he could not afford it on his own. Does that happen in Canada?, I asked. She replied with silence.

As in any other mature industry, most market share has consolidated into a few hands, a condition that is known as an “oligarchy.” Although competition in younger or more fractured industries does result in price reductions, when an industry is reduced to a small number of dominant corporations, price competition is usually a casualty. Health care constitutes several industries — insurance, pharmaceuticals, hospitals and medical equipment, among others — and each adds to the cost. Giant pots of government money are involved, always a lucrative source of private enrichment. And insurers have people over a barrel because health insurance comes through their employer, who make deals with a single insurer, take it or leave it.

Health care provision also has unique attributes that further inflate costs. In “The high costs of for-profit care,” by Steffie Woolhandler and David U. Himmelstein (the Journal of the Canadian Medical Association article quoted above), the authors write:

“Why do for-profit firms that offer inferior products at inflated prices survive in the market? Several prerequisites for the competitive free market described in textbooks are absent in health care. First, it is absurd to think that frail elderly and seriously ill patients, who consume most health care, can act as informed consumers (i.e., comparison-shop, reduce demand when suppliers raise prices or accurately appraise quality). …

“Second, the “product” of health care is notoriously difficult to evaluate, even for sophisticated buyers like government. … By labeling minor chest discomfort “angina” rather than “chest pain,” a U.S. hospital can garner both higher Medicare payments and a factitiously improved track record for angina treatment. It is easier and more profitable to exploit such loopholes than to improve efficiency or quality.

“Even for honest firms, the careful selection of lucrative patients and services is the key to success, whereas meeting community needs often threatens profitability. … [For-profit] hospitals duplicate services available at nearby not-for-profit general hospitals, but the newcomers avoid money-losing programs such as geriatric care and emergency departments (a common entry point for uninsured patients). The profits accrue to the investors, the losses to the not-for-profit hospitals, and the total costs to society rise through the unnecessary duplication of expensive facilities.”

In the spirit of comparison-shopping, here is a brief examination of the five countries under discussion, the United States and the four comparison countries.

• German health care system: Everybody is covered. Workers pay eight percent of their gross income into a “sickness fund,” a nonprofit insurance company; employers pay the same amount. These contributions account for almost all money in the system. Workers choose among 240 sickness funds. There are no deductibles. Everything, including drugs, is free for children younger than eighteen. The government regulates all insurance companies closely.
• French health care system: Everybody is covered. Workers pay 21 percent of their income into a combined retirement and national health care system; employers pay about half that amount. Payroll and income taxes largely fund health care. There are no waiting lists for elective surgery or to see a specialist. Doctors’ fees are negotiated with medical unions, while hospital fees are regulated. Patients with one of 30 long-term and expensive illnesses pay nothing for care.
• British health care system: Everybody is covered. The National Health Service is funded by income taxes, employs physicians and nurses, and owns most of the hospitals and clinics. The service also pays directly for all health care expenses, with prescriptions and dentistry being the two exceptions. There are sometimes long waiting lists, which are commonly attributed to there being no restrictions on services, particularly hospitalization.
• Canadian health care system: Everybody is covered. The federal government sets standards; provincial and territorial governments administer the system. Medically necessary hospital, physician and diagnostic services are free, although most dental care and prescription drugs are not covered. Services are primarily through private providers. Long waiting times for specialists are a problem, with reduced government payments cited as an underlying cause.
• U.S. health care system: 51 million are not covered. Coverage is through an employer (of which the employee pays a portion), or through own purchase of private insurance, but most can’t afford to do so. Insurance companies frequently dictate what, or if, services will be provided. Coverage generally requires out-of-pocket expenses and includes a “deductible” before payments begin. Patient bankruptcies due to inability to pay bills are common.

Another weakness of the U.S. health care system is that is based on the concept of a “family wage” instead of a “social wage.” That is both cause and effect — unlike other countries where health care is a right, in the U.S. health care is a privilege, and the large disparities in the ability to obtain it reflects the canyon-like inequality there and also aggravates social inequities. Not only because health care is tied to an employer, giving a boss more power over employees, but because a family’s health care coverage is tied to the person who has the job that provides it — usually the man in a traditional family. But it could be any one person in a non-traditional family or within a gay or lesbian household.

Feminist pioneer and theorist Kathie Sarachild of the influential group Redstockings, in a July 4 interview on the Joy of Resistance: Multi-cultural Feminist Radio program, summarized this concept. She said:

“The family wage is another way of saying this old idea that men should support the family. [U.S.] society is built on the idea that men should get higher pay than women because men would support the family and women would stay home and take care of the children. … Even though there were always women who worked, they received less pay than men did because of this family-wage concept. …

“A lot of [the European social wage] came out of socialist and communist theory. … The labor movement and the feminist movement in [Europe] have been able to win a social-wage system, which pays to raise the next generation [through universal health care and paid leave when a child is born instead of being dependent on an employer to pay a ‘family wage’ to the man].”

Nationalized health care becomes part of a basket of social benefits, including more vacation time, life-long education and elder care that liberates working people from dependence on an employer. A shorter work week would also bring benefits, Ms. Sarachild said:

“If the work week were shorter … there would be more jobs. There’d be less unemployment because the work week is shorter so there are more paid jobs. There would be more time at home for the father and mother to be with the child. …. [With the introduction of a] social wage, the unfair family wage would not be necessary. … [Women] are not as dependent on the man, and both of you are not so dependent on the employer.”

The lower wages of women in the “family wage” system boost corporate profits on the backs of women, Joy of Resistance host Fran Luck points out, and many women are forced to stay in bad relationships because they would lose their health care.

For men and women, the price of private profit is enormously high: 22,000 people die and 700,000 go bankrupt per year as a result of inadequate, or no, health insurance in the United States.*** The U.S. ranks among the bottom five of the 34 OECD countries in per capita doctor consultations, hospital beds and average length of stay in hospitals,**** and is well below average in life expectancy and infant mortality. The country’s people pay more than $1.15 trillion per year on top of what they should pay to swell corporate profits and executive and Wall Street wallets — in return, we receive worse coverage. That is the price of capitalism.

* OCED figures. Spending per capita in U.S. dollars adjusted to create purchasing power parity.
** Steffie Woolhandler and David U. Himmelstein, “The high costs of for-profit care,” Journal of the Canadian Medical Association, June 8, 2004, pages 1814, 1815.
*** T.R. Reid, “No Country For Sick Men,” Newsweek, Sept. 21, 2009, pages 43-44.
**** “Why is health spending in the United States so high?,” OECD report, page 5.

NAFTA and European Union: Different sides of the Atlantic but same function

By Pete Dolack

The logic of the multi-national euro currency is tighter economic integration and loss of popular sovereignty. Unless the eurozone breaks up and its users return to their own national currencies, pressure will be built by the “markets” for further centralization and harmonization of rules. In plain English, tightened control by big capitalists.

The eurozone, functionally, is much the same as the North American Free Trade Agreement across the Atlantic. NAFTA makes corporate profiteering paramount by eroding the ability of the governments within it to enforce regulations; places decision-making in the hands of unaccountable and undemocratic arbitration boards convened by either the commercial arm of the United Nations or the World Bank; and elevates the interests of large corporations and financiers above all other human considerations.

(There are the occasional conspiracy-mongers who claim that NAFTA is a precursor to the dismantling of the United States in favor of some “North American republic” and that the dollar will be eliminated in favor of a regional currency, but besides the fact that these feverish Right-wing conspiracies are laughable on their face they completely ignore the fact that U.S. capitalism needs U.S. military might, that the world capitalist system needs a center with the requisite financial and military clout to act as the enforcer, that the U.S. relies on the dominance of its national currency to be able to run budget and trade deficits, and that the nationalistic U.S. public would rise up, in arms if necessary, against any such idea.)

The key NAFTA provision is Chapter 11, which codifies “equal treatment” in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit. Thus we have had the spectacle of a corporate parcel-delivery service suing Canada in attempt to have the Canadian postal system dismantled and chemical companies suing because a chemical they produce has been banned because it is poisoning water supplies.

The idea that safe drinking water is considered a trifle next to the maximization of profits, sadly, is not a mordant joke. Any company that has its shares traded on stock exchanges is legally required to maximize its profits for shareholders, to the exclusion of all else — under capitalism, safe drinking water is unimportant. (Except, of course, for the bottled-water companies that drain acquirers to supply their products.)

Although Canada, which has the most stringent regulations of the three NAFTA countries, has won five decisions before the arbitration boards, three of them were on technicalities in which the merits of the cases were not ruled upon. Only twice has the Canadian government won a clean victory in the dozens of cases brought against it. Just this week, The Globe and Mail newspaper of Toronto reported that Exxon Mobil Corp. won a Chapter 11 arbitration case against the province of Newfoundland and Labrador because Exxon and a partner company were required to conduct research before commencing projects.

A U.S. watchdog group, Public Citizen, summed up the rules of NAFTA and other trade treaties in this succinct fashion:

“This ‘investor-state’ enforcement mechanism elevates private firms and investors to the same status as sovereign governments, effectively privatizing the right to enforce public treaties’ expansive new investor rights. There is no such private enforcement for labor rights or environmental standards. … The [free-trade] pacts provide firms a way to attack other countries’ domestic public interest laws and skirt their court systems.”

If readers in Canada, the U.S. or Mexico have no recollection of voting on any of this, there is good reason.

Similarly, the financiers who dominate European Union policy are not subject to any democratic accounting, either. And under the rubric of not allowing a perfectly good crisis to go to waste, the ongoing eurozone crisis is being used as leverage to install an ever harsher régime. Doing so is completely logical within the imperial construct of the European Union, which is a supra-national institution to impose corporate domination on a reluctant population. National governments are not insulated from popular opinion, but a supra-national structure can impose dictates on those governments, which can then tell citizens that is has “no choice” but to adhere to them so that the country can remain “part of Europe.”

Concomitantly, European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent. This wish underlies the anti-democratic push to steadily tighten the E.U., including mandatory national budget benchmarks that require cutting social safety nets and policies that are designed to break down solidarity among wage earners across borders by imposing harsher competition through imposed austerity. The E.U., in its current capitalist form, is a logical step for business leaders who desire greater commercial power on a global basis: It creates a “free trade” zone complete with suppression of social accountability while giving muscle to a currency that has the potential of challenging the U.S. dollar as the world’s pre-eminent currency.

A difficulty for E.U. business elites is that nationalism tends to act as a disorganizing force within the E.U., whereas nationalism is a potent unifying force in China and the United States. But nationalism, as always, has its uses: Instead of uniting on their common interests across borders, all too many Europeans are attacking one another on a national basis. Nationalism, ordinarily an easily manipulated ethos used to provide a unifying glue within countries that are otherwise consciously atomized by capitalist pressures and individualist propaganda, becomes a divide-and-conquer tool par excellence in a supra-national context. And so we have the dispiriting spectacle of venomous attacks on “lazy Greeks,” “arrogant Germans” and the rest of the assortment of tired clichés.

Nationalism is fine for working people, but an impediment for business elites who are increasingly bold in calling for economic policy to be directed by Brussels. In the past week, an assortment of E.U. officials, joined by national leaders elected and unelected, said the E.U. must be bound together more tightly. Arrogant and hypocritical as they may be, these officials are simply enunciating the logic of E.U. capitalism. The most prominent tangible form of these calls are for the issuance of “euro bonds” — government bonds to finance debt issued by the European Central Bank in place of bonds issued by individual national governments.

The new French government has endorsed the issuance of “euro bonds,” adding to the momentum. The proximate cause of pleas for the creating of “euro bonds” is that too many eurozone governments can’t afford to borrow at the high interests rates demanded by financiers and the rich who buy bonds (in lieu of paying taxes, which would end the need for bonds in such large amounts). The price of pooling together the risk of all E.U. governments by issuing such bonds is much closer economic integration. And what that means is financiers controlling policy to an even greater degree than they already do.

Financiers, that is, as an international interest group; not German bankers or Germany as a country. The corporate news media continues to cover the ongoing crisis and its slow-motion developments as a contest of wills between Germans (or Chancellor Angela Merkel) and the Southern rim of the E.U. with France as a buffer in between. But, as I have previously written, it is German industrialists, not German working people, who are the beneficiaries of German government policy.

Germany has become reliant on exports as German workers have absorbed a decade of wage cuts, leaving domestic demand inadequate to soak up German production or to pick up the slack when export markets soften. German exports have become more competitive on the backs of German employees, making it more difficult for other eurozone countries to remain competitive because, by not having their own currency that they can devalue, they can’t use that route to give their exports a boost. Thus, German industrialists have prospered through the widespread adoption of the euro, which has “locked in” their competitive advantages.

German, French and other bankers earned fat bonuses because the euro also made it easier for them to make loans to the Southern rim, which also enabled those countries to buy more German products. In turn, deficits mount and production is shuttered in countries such as Greece (where the shipping industry, the rich and even many private-sector middle class people don’t pay taxes), and the price for more loans is more harsh austerity.

But the money doesn’t go to the Greek budget, it goes right back to the banks. The 130 billion euro bailout of Greece is used almost exclusively to service the interest on Greece’s debt — not even to pay down the principal! The so-called “troika” — the European Central Bank, the International Monetary Fund and the European Commission — wire Greece the money, which is almost immediately sent right back. Most of the small amount that is retained by the Greek government is used to bail out Greek banks. The price for this? An unemployment rate of 22 percent and rising, pay cuts of 40 percent for those still employed and large numbers of small businesses closing.

The troika went so far as to demand that the Greek government change its constitution to ensure that banks are paid back before there is any spending on social programs. That is a taste of what will be experienced across Europe if more power is concentrated in the hands of unelected and unaccountable officials at the European level. A de facto financier dictatorship, although one to benefit big industrialists as well as financiers, because financiers are dependent on big industrialists to generate the profits that are poured into speculation (nor is there a neat separation between the two). For working people across Europe, the program can be summed up in two words: permanent austerity.

And not even German workers, who have acquiesced to their unions agreeing to a decade of wage cuts in exchange for job security, will be immune. German workers’ living standards are slowly eroding, and when German exports slow or decline because buyers in other advanced capitalist countries buy fewer of their their products because of austerity and buyers in developing countries like China buy less because they can no longer sustain the pace of investment in infrastructure and industrial capacity, austerity will hit Germans. The route to German industrialists maintaining their profits under these future conditions will be either deeper cuts to wages, an end to job security, export of production to places with much lower wages or a combination of these.

The alternative to harmonizing economy policy among the eurozone countries (harmonizing with the tightest policy among them) is for the eurozone to break up, and countries to resume using their own currencies and setting their own policies, which would at least be subject to elections, and provide space for policies other than neoliberal austerity.

It is no surprise, then, that centralizing economic policy is the preferred route for European business elites. The arguments among them are over details — Chancellor Merkel is not a stubborn holdout nor obsessed with Weimar-era inflation; she is simply reminding other national political leaders that the harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. None of the eurozone’s national leaders are in any sense reducible to “puppets,” but their perceived national interests are distorted by whatever consensus their capitalists arrive at, which in turn are determined by larger market forces. Big industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through repetition, the dominant ideas across society and the ideas adopted by the political leaders who become dependent on them.

Similarly, “markets” seek regulatory harmonization within NAFTA countries at the level of the weakest regulations. Governments must respond because capitalists can move production at will, leaving everyone else at their mercy.

Such is the logic of “markets,” which are not the disembodied forces of nature so often portrayed but are simply the interests of the most powerful capitalist elites. It is futile to expect anything different from their system.