Canada targets tar sands critics in new criminalization of dissent

Canada’s Harper régime has invented the new crime of being a member of an “anti-Canadian petroleum movement,” and equating such a stance with terrorism. Evidently believing it is in danger of losing the fight against pipeline projects intended to speed up Alberta tar sands production, its response is to place environmentalists under surveillance.

A secret report prepared by the Royal Canadian Mounted Police, the country’s national police agency, claims that public activism against the problems caused by oil and gas extraction is a growing and violent threat to Canada’s national security. The report goes so far as to challenge the very idea that human activity is causing global warming or that global warming is even a problem. At least 97 percent of environmental scientists agree that human activity is causing global warming. The basis on which a police force can declare otherwise is surely not clear.

The Alberta tar sands (photo by Howl Arts Collective, Montréal)

The Alberta tar sands (photo by Howl Arts Collective, Montréal)

Whether police officials truly believe they understand the global climate better than scientists who are expert in the field or are merely providing “intelligence” [sic] that the government of Prime Minister Stephen Harper wants to hear, I will leave to others more familiar than I with the Royal Canadian Mounted Police. Regardless, the RCMP report, leaked to Greenpeace, makes for amusing reading. For example:

“[T]here is an apparent growing international anti-Canadian petroleum movement. In their literature, representatives of the movement claim climate change is now the most serious global environmental threat, and that climate change is a direct consequence of elevated anthropogenic greenhouse gases which, reportedly, are directly linked to the continued use of fossil fuels.” [page 5]

And whom might the police rely on for that statement? No, not those pesky scientists who refuse to say what is demanded of them by oil and gas companies and the right-wing governments who love them. Instead, the RCMP quotes the Canadian Association of Petroleum Producers, cites a poll commissioned by a foundation connected to the oil industry, and a columnist at the Toronto Sun, a hard-right tabloid in the Murdoch mold. The Sun columnist, as quoted in the police report, said “environmental radicals” seek “to undermine the development of Canada’s oilsands — an insignificant contributor to global greenhouse gas emissions.”

Actual experts in the field would disagree. A Scientific America analysis that quotes several climate scientists reports that if all the bitumen in the Alberta tar sands were burned, 240 billion metric tons of carbon would be added to the atmosphere. The total amount of carbon that has been thrown into atmosphere by humanity in all of history is estimated at 588 billion tons.

Are going to believe the police or your lying eyes?

The Globe and Mail of Toronto quoted a Royal Canadian Mounted Police spokesman denying any intention of spying on peaceful protestors:

“There is no focus on environmental groups, but rather on the broader criminal threats to Canada’s critical infrastructure. The RCMP does not monitor any environmental protest group. Its mandate is to investigate individuals involved in criminality.”

But the newspaper’s report noted that the spokesman “would not comment on the tone” of the report, which even The Globe and Mail, a leading establishment publication, found difficult to accept as it earlier in the article noted the RCMP report’s “highly charged language.” Moreover, Canadian human rights organizations filed complaints earlier in February over spying on opponents of the proposed Northern Gateway pipeline, a project intended to move tar sands oil from Alberta to a port in northern British Columbia, passing through hundreds of miles of environmentally sensitive lands.

Environmentalists and Indigenous peoples have been subjected to spying by the RCMP and the Canadian Security Intelligence Service, according to a complaint filed by the British Columbia Civil Liberties Association. The association is also opposing a new measure, the Anti-terrorism Act 2015, or Bill C-51, intended to “dramatically expand the powers of Canada’s national security agencies.” The association reports:

“Bill C-51 makes massive changes to many aspects of Canada’s spying and security system. Any one of the changes – making it easier to lock people up without charge; criminalizing expression; vastly expanding the powers of Canada’s spies; gutting privacy protections – is significant, raises constitutional questions, and must be the subject of serious debate. Lumping them all together into one bill, and proposing to speed that bill through Parliament, virtually guarantees that democratic debate on these proposed measures will be insufficient.”

Such speed is consistent with the Harper government’s attitude toward activists. A previous environment minister, Peter Kent, called parliamentary opponents of tar sands “treacherous” and had a long history of dismantling every regulation he could. The current environment minister, Leona Aglukkaq, while less inclined to frontal attacks, nonetheless also doubts climate change.

From smoking is good for you to the weather is just fine

Global-warming denialism is well-funded, with oil and gas companies often the heaviest contributors to “think tanks” that specialize in doubting scientific evidence on behalf of their corporate benefactors. An excellent roundup of these deniers, written by physics professor John W. Farley for the May 2012 edition of Monthly Review, noted that Exxon Mobil Corporation, the Koch brothers and other special interests have spent tens of millions of dollars.

One of these corporate-funded “think tanks” is the Heartland Institute, which began life as a Big Tobacco outfit issuing reports denying links between smoking and cancer. Another global-warming denial outfit, The George C. Marshall Institute, originated as lobby group for Ronald Reagan’s crackpot Strategic Defense Initiative, more commonly known as the “Star Wars” program. Another was the now-defunct Global Climate Coalition, which included major oil companies, the U.S. Chamber of Commerce and automobile manufacturers; it actually operated from the offices of the National Association of Manufacturing.

A scientist who is often trotted out by global-warming deniers is Wei-Hock (“Willie”) Soon, who was recently revealed to have taken more than $1.2 million from the fossil-fuel industry. The New York Times reports that at least 11 papers Dr. Soon has published since 2008 omitted disclosures of this funding and at least eight violate the ethical guidelines of the journals that published him. The Times reports:

“[D]ocuments show that Dr. Soon, in correspondence with his corporate funders, described many of his scientific papers as “deliverables” that he completed in exchange for their money. He used the same term to describe testimony he prepared for Congress.”

The world is facing an environmental catastrophe as it is; increasing production from the Alberta tar sands will only hasten it. The capacity of railroads to ship oil is reaching its limit (and in itself is dangerous as a recent flurry of crashes demonstrate). Thus pipelines are critical for tar sands expansion. Not only the Keystone XL pipeline across the United States, but the Northern Gateway and other proposed pipelines that would cross Canada to eastern ports. U.S. President Barack Obama’s February 24 veto of a congressional bill designed to force Keystone construction by no means puts that issue to rest; the State Department’s inaccurate claim that the pipeline would not add to global warming and falsehoods that tens of thousands of jobs would result remain an official document.

Opposition to the Keystone XL pipelines has not slackened and strong resistance continues against the Northern Gateway, which would not only send oil through sensitive mountains and forests, but would require ocean tankers to travel more than 100 kilometers just to reach the Pacific Ocean from the pipeline terminus in northern British Columbia. From there, the oil would be shipped to Asia. First Nations peoples, who have the right to block projects from crossing their lands, are leading that fight, and vow physical resistance.

TransCanada Corporation, the same company that wants to build Keystone XL to the Gulf of Mexico, is also proposing an Energy East pipeline that would carry tar sands oil to terminals in Québec City and St. John, New Brunswick. This project, if it comes to fruition, would alone produce the same amount of carbon each year as seven million new cars on Canada’s roads, according to 350.org. Some of this project would use existing natural gas lines; these are not designed for oil, a heavier substance, elevating the risk of ruptures.

The RCMP reports asserts that “extremists pose a realistic criminal threat to Canada’s petroleum industry.” Advocating for clean air and water is a crime? The fight against one of these pipelines must be a fight against them all; increased oil profits surely won’t be compensation for drowned cities and farmlands turned to dust bowls.

Federal Reserve says your wages are too high

The Federal Reserve has declared that the reason for ongoing economic weakness is because wages have not fallen enough. Wages have been stagnant for four decades while productivity has soared, but nonetheless orthodox economists believe the collapse of 2008 has been a missed opportunity.

A paper prepared by two senior researchers with the San Francisco branch of the U.S. Federal Reserve Bank attempts to explain the lack of wage growth experienced as unemployment has fallen over the past couple of years this way:

“One explanation for this pattern is the hesitancy of employers to reduce wages and the reluctance of workers to accept wage cuts, even during recessions, a behavior known as downward nominal wage rigidity.”

The two Federal Reserve researchers, Mary Daly and Bart Hobijn, based their argument on the standard ideology of orthodox economists, writing:

“Downward rigidities prevent businesses from reducing wages as much as they would like following a negative shock to the economy. This keeps wages from falling, but it also further reduces the demand for workers, contributing to the rise in unemployment. Accordingly, the higher wages come with more unemployment than would occur if wages were flexible and could be fully reduced.”

A food line in Toronto in 1931; falling wages didn't work out during the Great Depression.

A food line in Toronto in 1931; falling wages didn’t work out during the Great Depression.

The “problem” of wages stubbornly refusing to drop as much as corporate executives and financiers would like is referred to as the “sticky wages” problem in orthodox economics. Simply put, this “problem” is one that orthodox economists, themselves not necessarily subject to the market forces they wish to impose on others, have long struggled to “solve.” You perhaps will not be surprised to hear that “government” is the problem. Consider this remarkable passage published on the web site of the Mises Institute, an advocate of the Austrian school of economics:

“Much of the alleged ‘stickiness’ of wages is due to government policies. … [T]he trouble stems from workers not being willing to take pay cuts. When the demand from employers drops, at the old wage rate there is now surplus labor — a.k.a. unemployment. Only when market wages drop to a lower level, so that demand once again matches supply, will equilibrium be restored in the labor market.”

Collapsing wages in the Great Depression didn’t help

According to this author, Robert P. Murphy, an “associated scholar” of the Mises Institute, failing to drive down wages is such a big mistake that it caused the Great Depression. He writes:

“After the 1929 crash, Herbert Hoover gathered the nation’s leading businessmen for a conference in Washington and urged them to allow profits and dividends to take the hit, but to spare workers’ paychecks. Rather than cut wages, businesses were supposed to implement spread-the-work schemes where workers would cut back their hours. The rationale for Hoover’s high-wage policy was that the worker supposedly needed to be paid ‘enough to buy back the product.’ … The idea was that wage cuts would just cause workers to cut their spending, which would in turn lead to another round of wage cuts in a vicious downward spiral.”

Herbert Hoover was not vicious enough! Although it was Hoover’s Treasury secretary, Andrew Mellon, who advocated the government “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate” so as to “purge the rottenness out of the system,” and not Hoover himself, the president did take hard-line right-wing positions. Michael Parenti, in discussing Hoover in his book History as Mystery, wrote:

“Like so many conservatives then and now, Hoover preached the virtues of self-reliance, opposed the taxation of overseas corporate earnings, sought to reduce income taxes for the highest brackets, and was against a veterans’ bonus and aid to drought sufferers. He repeatedly warned that public assistance programs were the beginning of ‘state socialism.’ Toward business, however, he suffered from no such ‘inflexibility’ and could spend generously. He supported multimillion-dollar federal subsidies to shipping interests and agribusiness, and his Reconstruction Finance Corporation doled out about $2 billion to banks and corporations.” [page 261]

Hoover’s concern for working people was demonstrated when his troops fired on veterans demanding payments owed to them and burned their camps. His laissez-faire policies led to manufacturing wages falling 34 percent and unemployment rising to about 25 percent by 1933. That collapse in wages did not bring better times; only the massive government spending to wage World War II put an end to the Depression. Such wage declines, in the real world, actually make the economy worse, argues Keynesian economist Paul Krugman:

“[Y]ou could argue that a sufficiently large fall in wages could restore full employment now — but it would have to be a very large wage decline, and the positive effects would kick in only after deflation had first driven just about every debtor in the economy into bankruptcy.”

How many formulae can be written on the head of a pin?

Although orthodox economics is often nothing more than ideology in the service of capitalist elites, its practitioners like to believe themselves scientific because they base their theories on mathematical models. Unfortunately, these formulae are divorced from the real, physical world; the economy and the human behavior that animates it are not reducible to mathematics.

Robert Kuttner, a heterodox economist, explored these shortcomings in an article originally published in Atlantic Monthly. He wrote:

“The [prevailing] method of practicing economic science creates a professional ethic of studied myopia. Apprentice economists are relieved of the need to learn much about the complexities of human motivation, the messy universe of economic institutions, or the real dynamics of technological change. Those who have real empirical curiosity and insight about the workings of banks, corporations, production technologies, trade unions, economic history or individual behavior are dismissed as casual empiricists, literary historians or sociologists, and marginalized within the profession. In their place departments are graduating a generation of idiots savants, brilliant at esoteric mathematics yet innocent of  actual economic life.”

That was written in 1985; little if anything has changed since and arguably has gotten worse. Professor Kuttner points out that the very fact of persistent unemployment contradicts the basic theses of orthodox neoclassical economics. If the belief that markets automatically reach equilibrium were true, then wages would automatically fall until everybody had a job. Rather than acknowledge the real world, orthodox economists simply declare involuntary unemployment an “illusion,” or claim “government interference” with the market is the culprit. “Business cycles were around long before trade unions or big-spending governments were,” Professor Kuttner noted.

Wages are not as flexible as orthodox ideology suggests because within an enterprise preference is ordinarily given to existing workers to fill job openings, thereby buffering wages from external market forces, writes another heterodox economist, Herbert Gintis. In an essay originally appearing in Review of Radical Political Economics, he wrote:

“In particular, there is a tendency for the number of individuals qualified for a position to exceed the number of jobs available, in which case seniority and other administrative rules are used to determine promotion. Hardly do workers compete for the job by bidding down its wage.”

In almost all cases, employees do not even know what wages their co-workers are earning. This top-down secrecy facilitates the disparity in wages, whereby, for example, women earn less than men. If everybody earned what they were worth, there would no such wage disparity. The very fact of disparities between the genders or among races and ethnicities demonstrates the ideological basis of orthodox economics, which assumes that employees who do the work of production are in their jobs due to personal choice and wages are based only on individual achievement independent of race, gender and other differences.

You produce more but don’t earn more

Back in the real world, wages have significantly lagged productivity for four decades; thus, wages, examined against this benchmark, have significantly declined for those four decades. A study by the Economic Policy Institute, written by heterodox economist Elise Gould, reports:

“Between 1979 and 2013, productivity [in the U.S.] grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation.” [page 4]

(Graphic by Economic Policy Institute)

(Graphic by Economic Policy Institute)

Middle-class U.S. households earn $18,000 less than they would had wages kept pace with productivity, Dr. Gould calculates. Nor is that unique to the U.S.: Wages in Canada, Europe and Japan have also fallen well short of productivity gains. Canadian workers, for example, are paid at least $15,000 per year less than they would be had their wages kept pace.

To circle back to the San Francisco Federal Reserve paper that began this discussion, the authors claim that wage stagnation will persist until markets “return to normal.” They assert:

“[T]he accumulated stockpile of pent-up wage cuts remains and must be worked off to put the labor market back in balance. In response, businesses hold back wage increases and wait for inflation and productivity growth to bring wages closer to their desired level.”

But as we can plainly see, and as those of us living in the real world experience, wages cuts have been the norm for a long time. The caveat at the end of the paper that it does not necessarily reflect the views of the Fed board of governors should be noted, but the paper was issued as part of a regular series by the San Francisco Fed and the authors are senior members of it, so it is not likely to be at variance with opinions there. It certainly does reflect orthodox economic ideology. Similarly, the argument by the Austrian School’s Mises Institute, stripped of its academic-sounding veneer, is a call to eliminate the minimum wage.

Stagnation, declining wages and the ability of capitalists to shift production around the globe in a search for the lowest wages and lowest safety standards — completely ignored in the orthodox hunt for economic scapegoats — are the norm. Our need to sell our labor, the resulting reduction of human beings’ labor power to a commodity, and the endless competitive pressures on capitalists to boost profits underlie the present economic difficulties.

Collective bargaining through unions and the needs of capitalists to retain their employees can be brakes against the race to the bottom — what the orthodox economists at the Fed and elsewhere are arguing is that these remaining brakes be removed and wages driven down to starvation levels. That is what global capitalism has to offer.

Sure billionaires deserve their money: Killing jobs is hard work

More is never enough. A few examples of the wrath of speculators illustrate the “whip” of finance capital as the world’s corporations announced their results in recent weeks.

Among the words that do not go together are “shareholder activist.” Whether a sign of the debasement of language, or that the corporate media’s myopia has degenerated to the point where speculators trying to extract every possible dollar out of a corporation is what constitutes “activism” to them, as if this was some sort of selfless activity, these are the words often used to describe wolf packs that grow ever hungrier. Not even one of the world’s biggest corporations, E.I. du Pont de Nemours & Company, is immune.

DuPont, a chemical multi-national that produces many products that dominate their market, has racked up about US$17.8 billion in profits over the past five years, including $3.6 billion in 2014. Its stock price increased by 20 percent last year, better than the benchmark S&P 500 Index. DuPont recently sold off its performance chemicals business, and will hand out $4 billion to shareholders from the proceeds of the sale. Surely enough you say? Nope.

A hedge-fund manager — yep, one those “shareholder activists” — has declared war on DuPont management. The hedge funder, Nelson Peltz, is demanding that DuPont be broken up into two companies, under the theory that more profit can be extracted, and he is demanding that four seats on the DuPont board be given to him. So far, at least, DuPont management is resisting the hedge funder, but did announce $1 billion in cuts in a bid to pacify Wall Street. That means that more employees will pay for heightened extraction of money with their jobs. Mr. Peltz’s hedge fund specializes in buying “undervalued stocks,” according to Bloomberg, which is code for corporate raiding. It must pay well, for he is worth $1.9 billion.

DuPont chemical plant on Houston Ship Channel (photo by Blair Pittman for the U.S. Environmental Protection Agency)

DuPont chemical plant on Houston Ship Channel (photo by Blair Pittman for the U.S. Environmental Protection Agency)

One company that has given into speculators by selling off its best asset is Yahoo Inc. Although widely attacked in the business press for having no coherent plan for growth, Yahoo did report net income of $1.3 billion on revenue of $4.7 billion for 2013, a hefty profit margin, and remained profitable in 2014. Nonetheless, Yahoo said it will spin off into a separate company its most valuable asset, its stake in the Chinese online merchant Alibaba. This is being done so that more of the profits can distributed to speculators.

If Yahoo were to simply sell its stake, it would have to pay taxes. By spinning off its holding into a separate company, there will be no taxes paid, and thus more money will be stuffed into financiers’ pockets. “The decision,” The New York Times reported, “cheered shareholders because they will directly reap all the remaining profit from Yahoo’s prescient investment.” Yahoo will also lose its most valuable asset, making the company weaker (and presumably more likely to get rid of some of its workforce), but speculators will make a windfall. That is all that matters in these calculations.

Even an Internet darling, Google Inc., is losing its Wall Street halo. Grumbling was heard when Google’s revenue for the fourth quarter of 2014 was “only” 10 percent higher than the fourth quarter of a year earlier, a slower rate of growth than in the past. For the full year 2014, Google reported net income of $14.4 billion on revenue of $66 billion. Based on these results, it looks as if Google will remain a going concern. Nonetheless, Google stock is down 12 percent since September, a sign of financiers’ displeasure.

But perhaps happier days are on their way. The Associated Press reports that a “pep talk” by the company’s chief financial officer “left open the possibility that the company might funnel some of its $64 billion in cash back to shareholders, especially if a law is passed to allow money stashed in overseas accounts to be brought to the U.S. at lower tax rates.”

Ah, yes, all would be well if only multi-national corporations did not have to pay taxes. But despite the ceaseless demands by the world’s financiers for more governmental austerity, more cuts to jobs, wages and benefits, more punishment, the world can afford a raise. An Al Jazeera report by David Cay Johnston concludes that U.S.-based corporations held almost $7.9 trillion of liquid assets worldwide. That is more than double the yearly budget of the U.S. government.

The results are those familiar to all who are paying attention: Rising inequality and persistent economic stagnation as working people can no longer spend what they don’t have. Almost all of the gains in income are going to the top: From 2009 to 2012, 95 percent of all gains in income went to the top one percent. The “efficiency” that financiers demand is that ever larger cascades of money flow upward. How long will we allow this to go on?

Earth is crossing multiple points of no return

The world is certainly at a point where action, rather than more studies telling us what we should already know, is necessary. But if you do need another warning of looming environmental collapse, a new research paper concludes that four of nine “planetary boundaries” have already been crossed.

Crossing any one of these nine boundaries risks driving the Earth “into a much less hospitable state,” according to the paper’s lead author, Will Steffen of the Australian National University in Canberra. Crossing four of these boundaries — specifically, climate change, loss of biosphere integrity, land-system change and altered biochemical cycles — is all the more alarming.

Eighteen scientists, representing universities in Australia, Canada, Denmark, Germany, India, Kenya, the Netherlands, South Africa, Sweden and the United States, prepared the report, “Planetary Boundaries: Guiding human development on a changing planet” under the auspices of the Stockholm Resilience Center in Sweden. The goal of the paper, and the center itself, is to signal that a tipping point is approaching so that humanity has some time to change course. These warning points are determined in this way:

“[T]he proposed planetary boundary is not placed at the position of the biophysical threshold but rather up-stream of it, i.e., well before reaching the threshold. This buffer between the boundary (the end of the safe operating space—the green zone in [the graphic below]) and the threshold accounts not only for uncertainty in the precise position of the threshold … but also allows society time to react to early warning signs that it may be approaching a threshold and consequent abrupt or risky change.”

The nine planetary boundaries (Stockholm Resilience Centre)

The nine planetary boundaries (Stockholm Resilience Centre)

Of the four boundaries that have already been crossed, two of them (climate change and biosphere integrity) have the potential on their own “to drive the Earth System into a new state should they be substantially and persistently transgressed.” The paper sets the “zone of uncertainty” for atmospheric carbon dioxide content at 350 to 450 parts per million (we are currently at the midpoint of that zone) and calculates that the “energy imbalance” — the “forcing” of atmospheric change through continued introduction of global-warming chemicals — is approximately double the safe limit. In other words, carbon dioxide is being pumped into the atmosphere much faster than it is removed.

To calculate “biosphere integrity,” the paper’s authors use the rate of species extinction and the populations of species, using pre-industrial rates as benchmarks. Although these are calculated imprecisely and with inadequate knowledge of what rate of extinctions can be tolerated, the current rate of extinctions is estimated to be at least 10 times higher than the proposed range of acceptability, although that proposed range in turn is far greater the authors’ “aspirational goal” of holding extinctions to the rate of “well-studied organisms over the past several million years.”

Thus this scientific paper is actually conservative in its benchmarks and nonetheless finds the Earth is in a whole lot of trouble.

Telling business titans to stop doing what benefits them

Many of you reading this may be thinking, “We already know we’re in trouble! We don’t need another paper telling us what we already know, and those in denial won’t be swayed by science and fact.” Quite so, but can there be a tipping point in research that finally sparks some real action? Perhaps the Stockholm Resilience Center believes there can be, releasing the paper just in time to present it to the World Economic Forum.

At least for public consumption, World Economic Forum attendees say they are taking the paper’s sober analysis seriously. Those attendees, the world’s titans of industry and finance, and the political office holders who are beholden to them, in their actual practice have shown little inclination to change course, to put it mildly.

One of the paper’s co-authors, Johan Rockström, posted an article on the Forum’s web site saying that, even if carbon dioxide concentration is held to the range of 350 to 450 parts per million, that is still an unacceptable risk. Drawing a vivid analogy, he wrote:

“But it is important to recognise that 450 ppm also holds a less likely, but significant 1.6% probability … of resulting in 6ºC warming, which is beyond any doubt a catastrophic outcome for humanity. … Is this an acceptable risk level? The answer is clearly no. It is the equivalent of accepting that 1,500 aircrafts crash, each day. … This is a risk level we simply would never accept for other sectors in society.”

The probability of runaway global warming at 450 parts per million would be set at much higher than 1.6 percent by many environmental scientists and activists, but Professor Rockström’s analogy is scary enough. Nonetheless, “business as usual” appears to be the outcome. A commentary in the Singaporean newspaper Straits Times lamented that “leaders are failing to lead but are giving in to populist pressures,” in the wake of continuing economic weakness. A rather ideological formulation, considering that the world’s governments continue to impose brutal austerity on their populations on behalf of their society’s wealthiest while ignoring popular discontent.

The same Straits Times commentary claimed that “Business leaders at the forum voiced a willingness to take steps to address this issue,” and quoted the head of a financial-services company as saying, “What I am taking from this meeting is a huge sense of urgency, especially from the business community.”

Moreover, the climate program director at World Resources Institute, Jennifer Morgan, wrote:

“First of all, there was no climate denial to be heard in Davos. … Second, there are a tremendous number of companies—whether bankers, soft drink manufacturers, sporting companies, or furniture makers—that are already taking action to make their businesses more climate-resilient and competitive in a low-carbon economy. These businesses and others are becoming leaders in climate action.”

Huh? Business leaders have profited enormously by moving production to all corners of the world, wherever the cheapest labor, harshest working conditions and fewest regulations are to be found, necessitating the shipping of components, raw materials and finished products around the world, adding significantly to global warming through all the transportation necessary to make that work. Making these long supply chains “more efficient,” as Ms. Morgan exalts, hardly is the road to climate stability.

That something so oblivious could be said becomes less of a mystery when we see that the World Resources Institute is a non-governmental organization with a board full of corporate executives. We have no more cause for optimism from the Planetary Boundaries paper itself, which offers no guidance on what to do. Critiquing the global economic system is outside the scope of such a paper, and reasonably so, but it is fair game to note the weak-tea ideas it does offer: A “stronger focus on green chemistry” and “learning from earlier mistakes.”

Infinite expansion on a finite planet

So here we are again: The chimera of “green capitalism.” The same world economic system that requires endless expansion on a finite planet, in which all incentives are for ever more frenzied extraction of natural resources and corporate externalization of the costs of pollution and global warming, which remorselessly and ceaselessly elevates private profit above all other human considerations, is magically going to save us.

The maximization of profit and environmentalism are broadly in conflict because the managers of corporations are answerable to private owners and shareholders, not to society. Moreover, putting an immediate halt to polluting industries would cause economic disruption and throw huge numbers of people out of work in a system that will not have new jobs waiting for them, a factor that is leveraged to buttress global-warming denialism.

Even reducing consumption is difficult because between 60 and 70 percent of the economies of the world’s advanced capitalist countries are accounted for by household buying; a capitalist economy that is not growing causes pain as capitalists scramble to maintain their profits by any means necessary.

“Green” consumption is still consumption, and not environmentally healthy, either. All the more is that so for the capitalist system as a whole. Fred Magdoff and John Bellamy Foster, in their book What Every Environmentalist Needs to Know About Capitalism, puts this in sobering perspective:

“ ‘Green capitalism,’ even if products are produced using the utmost environmental care and designed for easy reuse, offers no way out of a system that must expand exponentially and thus continue to ratchet up its use of natural resources, its chemical pollution, its contaminated sewage sludge, its garbage, and its many other toxic substances. Some of these ‘fixes’ will probably slow down the rate of environmental destruction, but the magnitude of the needed changes dwarfs these approaches.” [page 120]

If we are to be serious about reversing global warming and repairing the environment, we have to create an economic system based on human need, that is stable as a steady-state system and under democratic control, rather than our present authoritarian system that is designed to maximize private profit. The scientists who prepared the Planetary Boundaries paper no doubt have the highest sincerity, but they have much company in being unable to imagine a world without capitalism. Until we do live in such a world, we will continue to hurtle toward catastrophe regardless of good intentions and well-designed research reports.

We have no money so central banks give more money to banks

It’s unanimous! The European Central Bank confirms that the only possible solution to falling wages and depressed spending is to throw more money at the banks and inflate another stock-market bubble.

The ECB thus joins the world’s other most important central banks in the hope that “quantitative easing” — a form of “trickle-down” economics — will somehow work despite having never achieved anything other than the inflation of asset bubbles, a benefit primarily to the one percent. Then again, perhaps that might explain it.

Mario Draghi, the president of the ECB, last week committed €1.1 trillion to buying eurozone government bonds and, to a lesser degree, asset-backed securities and pools of mortgage loans known as “covered bonds.” Starting in March, the ECB will buy €60 billion of assets a month, with a commitment to continue this program until September 2016. The ECB’s stated goal is to boost inflation and prevent deflation, while also driving down the value of the euro.

The European Central Bank joins the Federal Reserve, the Bank of England and the Bank of Japan in flooding the financial system with money, and joins all those central banks and the Swiss National Bank in attempting to drive down the value of its currency. One problem is that all currencies can’t decline against one another, any more than all countries can simultaneously produce trade surpluses. At the moment, it is the euro that is declining in value, which theoretically will give a boost to exports from eurozone countries, but as eurozone countries conduct most of their trade with one another, the boost from a weakened euro will not necessary be significant.

Blockupy 2013: Securing the European Central Bank (photo by Blogotron)

Blockupy 2013: Securing the European Central Bank (photo by Blogotron)

But with declining wages, fewer people have enough to spend, and the super-wealthy already have more money than they can possibly use for productive investment. Nonetheless, the “market” has decreed that more austerity for working people and more speculation by the one percent is the magic elixir that will finally fix the economy.

Fix it for whom? Let’s start to answer that question by noting the supposed purpose of quantitative-easing programs: to stimulate the economy by encouraging investment. Under this theory, a reduction in long-term interests rates would encourage working people to buy or refinance homes; encourage businesses to invest because they could borrow cheaply; and push down the value of the currency, thereby boosting exports by making locally made products more competitive.

In actuality, quantitative-easing programs cause the interest rates on bonds to fall because a central bank buying bonds in bulk significantly increases demand for them, enabling bond sellers to offer lower interest rates. Seeking assets with a better potential payoff, speculators buy stock instead, driving up stock prices and inflating a stock-market bubble. Money not used in speculation ends up parked in bank coffers, boosting bank profits, or is borrowed by businesses to buy back more of their stock, another method of driving up stock prices without making any investments.

Trillions for asset buying sprees

We are not talking about small change here. In three rounds of quantitative easing, the Federal Reserve spent about $4.1 trillion. The Bank of England has spent £375 billion. The Bank of Japan, after boosting its QE program last October, will now spend ¥80 trillion (about US$680 billion) per year. This after 18 months of quantitative easing failed to revive the economy, as with an earlier QE program that ran from 2001 to 2006. In just the past 18 months, the Bank of Japan’s QE spending was ¥75 trillion ($640 billion).

Imagine what could have been done with these enormous sums of money had they been used for directly creating jobs, or simply by giving it directly to working people, who would have gone out and spent it. Or by putting the money to productive use, such as rebuilding crumbling infrastructure.

Instead, what is planned is more austerity — that is, more punishment. The other component of the European Central Bank’s January 22 announcement is that favorite term, “structural adjustment.” A euphemism used by the World Bank and International Monetary Fund when ordering an end to job security and social safety nets as a condition for granting loans to developing countries, this is now being applied to the global North. Near the end of his remarks announcing the quantitative easing, ECB President Draghi said:

“[I]n order to increase investment activity, boost job creation and raise productivity growth, other policy areas need to contribute decisively. In particular, the determined implementation of product and labour market reforms as well as actions to improve the business environment for firms needs to gain momentum in several countries. It is crucial that structural reforms be implemented swiftly, credibly and effectively as this will not only increase the future sustainable growth of the euro area, but will also raise expectations of higher incomes and encourage firms to increase investment today and bring forward the economic recovery.”

Labor “reforms” are necessary to “improve the business environment.” In plain language, that means more austerity in an effort to boost corporate profits. In the question-and-answer session after the announcement, President Draghi gave revealing answers to two different questions: “For investment you need confidence, and for confidence you need structural reforms” and “it would be a big mistake if countries were to consider that the presence of this programme might be an incentive to fiscal expansion. … This programme should increase the lending capacity of the banks.”

Firing workers and pushing wages lower will make capitalists feel better? Perhaps, but if there isn’t demand for their products, they still aren’t going to invest.

If consumers have no money, they aren’t buying

The ECB wishes to believe that further reducing job security and social safety nets will provide capitalists with the magic “confidence” that will prompt them to invest. But there is already plenty of industrial capacity sitting idle — E.U. manufacturing capacity utilization is only 80 percent while the E.U.-wide unemployment rate is 10 percent. The youth unemployment rate is 21.9 percent. More austerity isn’t going to reverse these effects of austerity.

The Bank of Japan boosted its quantitative easing program in October 2014 because it had not pulled the Japanese economy out of stagnation. Gross domestic product contracted in the second and third quarters of 2014. (zgourth-quarter statistics have yet to be reported.) Japanese wages have declined in the past year while profits have increased. Household spending in Japan had fallen for six consecutive months at the time of the Bank of Japan’s announcement, in part due to an increase in sales tax pushed through by Prime Minister Shinzo Abe.

The Federal Reserve’s quantitative easing has served to prop up a stock market that continues to rise despite ongoing stagnation. The standard measure of stock market valuation, the price/earnings ratio, remains high by historical standards. (This ratio is a company’s market value per share divided by earnings per share, or to put it another way, how many dollars a buyer pays for one dollar of profit.) The composite P/E ratio for the broadest measure of U.S. stocks, the S&P 500 Index, is 19.7. The rare times in history that ratio has risen above 20 has been followed by a crash.

Japan’s stock market has also risen during its quantitative easing; its benchmark Nikkei 225 Index has doubled since November 2012.

Trillions of dollars has been poured into programs that do little more than produce stock-market bubbles; more trillions have been poured directly into banks and other financial institutions for bailouts. The European Central Bank says more of the same, and European workers will continue to pay for it. The markets demand this, it is said. Capitalist markets, however, are nothing more than the aggregate interests of the largest industrialists and financiers — when we let “markets” make social decisions, that really means a dictatorship of big business and big banks. And supporting those banks is very expensive.

Bigger rewards for holding the economy hostage

They are bigger and badder than ever. The heightened offensive against regulations launched by the financial industry carried forward by the new Republican Party majority in the United States Congress is one demonstration, but just in case you wish more evidence, bank profits got bigger in 2014.

The multibillion-dollar fines U.S. government agencies have assessed banks has merely dented profits, and only in some cases. Four of the six biggest banks in the U.S. — which together hold about two-thirds of all assets in the U.S. financial system — reported higher profits for 2014 than in 2013, and in the cases of the other two, it appears that an increase in fines paid was responsible for their decline in profits.

Overall, these six banks — JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — racked up a composite net income of US$75 billion on revenue of $413 billion.

The most comical comment during the banks’ announcements last week of their financial results was that of JPMorgan Chairman and Chief Executive Officer Jamie Dimon, who whined on a conference call with reporters that “Banks are under assault,” adding that “We have five or six regulators coming at us on every issue.”

Those regulators seemed to have taken it easy on JPMorgan last year. The company’s total legal costs for 2014 were $2.9 billion, compared to $11.1 billion in 2013, according to a report carried by financial news network CNBC. Nonetheless, JPMorgan’s $21 billion in profits for 2014 was considered a disappointment by Wall Street, because the fourth-quarter profit dipped slightly from the previous year’s fourth quarter. Thus, the company wasted no time in announcing that “Senior executives at JPMorgan Chase & Company are pressuring managers across the bank to cut costs,” according to Reuters.

Wall Street traders have already punished the company by sending its stock down in three of the first four trading days following its “disappointing” results. Not even Wall Street banks are immune from their own role as enforcers. Some low-level employees are about to pay for that with their jobs.

U.S. Treasury Department under new management (photo by takomabibelot)

U.S. Treasury Department under new management (photo by takomabibelot)

Never mind that the U.S. Treasury Department handed out $700 billion to Wall Street (among other measures), bailing out the very banks whose bottomless greed and reckless gambling brought on a global economic downturn now in its seventh year. A downturn paid for not by the banks, nor their executives, but through the endless austerity imposed on working people throughout the world. Not one Wall Street executive has been prosecuted.

JPMorgan has been assessed fines for a variety of crimes, among them mortgage fraud and currency-market manipulation. A compliance lawyer for JPMorgan tried to alert authorities to systematic irregularities in mortgage securities before the crash, but was ignored. Jamie Dimon, heroically holding up against the assault on his bank, earned $20 million for 2013. One suspects he will not be homeless once his 2014 compensation is totaled.

That his company will need to come up with billions of dollars by 2019 to meet Federal Reserve capital requirements, which will slow down its ability to speculate with money it doesn’t have in reserve, might just have something to do with his whining.

It pays to be a banker

The year 2014 was a very good one for banks. Here are the full-year results for the six largest banks, as reported by themselves.

• JPMorgan Chase & Company: net income of $21 billion on revenue of $97.9 billion. This was three billions dollars more than the year before, but still not good enough in the eyes of speculators.
• Bank of America Corporation: net income of $4.8 billion on revenue of $85.1 billion. The net income is down from 2013, but that appears to be due to “litigation expenses” of $16.4 billion, more than double the 2013 litigation expenses of $6.1 billion. Almost all of those extra expenses occurred in its consumer real estate division; the bank agreed in August to pay nearly $17 billion to settle charges that it sold toxic mortgages.
• Citigroup Incorporated: net income of $11.5 billion on revenue of $77.2 billion. Citigroup’s profits were lower than the year before, but the culprit is familiar — it reported legal costs of $4.8 billion in 2014, more than ten times the $430 million of 2013. Citigroup agreed in November to pay $1 billion for rigging foreign-exchange markets and agreed in July to pay $7 billion for selling bad mortgages.
• Wells Fargo & Company: net income of $23.1 billion on revenue of $84.3 billion. With profits up from 2013, Wells Fargo said it handed out $12.5 billion to shareholders through dividends and net share repurchases, five billion dollars more than a year earlier. This at the same time that many of its branch tellers can’t move out of their parents’ house because of low pay.
• The Goldman Sachs Group Inc.: net income of $8.5 billion on revenue of $34.5 billion. Those were higher than a year earlier. The average pay for Goldman Sachs employees for 2014 was $373,265, but as that includes secretaries and clerks, those involved in speculation make far more.
• Morgan Stanley: net income from continuing operations of $6.2 billion on revenue of $33.6 billion. This profit is more than double what the company made the year before, but nonetheless is not good enough. The company moved quickly to appease speculators, announcing it would cut the percentage of its revenue going to wages, pay higher dividends and buy back more stock.

What would they do if they weren’t under “assault”?

Subject to the same remorseless laws of capitalism as any other industry, the industry rapidly consolidated. The percentage of total industry assets owned by the five biggest U.S. commercial banks has increased more than four-fold since 1990. Nor is that something peculiar to U.S. banking — the five largest banks in the European Union hold 47 percent of their industry’s total assets.

The “assault on banks” must have been conducted with a wet noodle. Although by any ordinary human logic, these colossal sums of money should satiate the most asocial speculator, the remorseless logic of capitalism dictates that more is never enough, that profits have to increase steadily. Even the rate of the increase can be expected to increase.

While working at a financial news wire during the stock-market bubble years of the 1990s, I vividly recall one day when a major computer company reported a profit of more than $800 million for its latest three-month period, more than the year-earlier quarter, only for its stock price to be driven down. Curious, I discovered that “analysts” had forecast a profit even bigger, and the rate of the increase had been lower than the rate of the increase a year earlier. That was enough for speculators to lash out.

The financial industry acts as both a whip and a parasite in relation to productive capital (producers and merchants of tangible goods and services). The financial industry is a “parasite” because its ownership of stocks, bonds and other securities entitles it to skim off massive amounts of money as its share of the profits. It is also a “whip” because its institutions — stock, bond and currency-exchange markets and the firms that trade these and other securities on those markets — bid up or drive down prices, and do so strictly according to their own interests.

A management that fails to maximize profits in the short term and deliver higher stock prices in the longer term is in danger of being pushed out, not because diffuse shareholders possess that leverage individually, but because the financial industry as a whole, through the markets it controls, can sell off enough stock to make the price nosedive, leaving the company vulnerable to an unfriendly takeover by a speculator seeking to profit from the reduced value of the company. Executives who do what the “market” dictates, on the other hand, are showered with riches.

Moreover, companies with stock traded on exchanges are legally required to maximize profits for shareholders, above all other considerations. A company that fails to make a deal, or decides against selling itself to another company, is subject to being sued in courts because angry speculators will sell their stock, causing the price to decline and then complain that the company’s management failed to maximize “shareholder value.”

Governments representing the world’s four largest economies — the U.S., the E.U., China and Japan — committed US$16.3 trillion in 2008 and 2009 alone on bailouts of the financiers who brought down the global economy and, to a far smaller extent, for economic stimulus. These are the governments that are “assaulting” banks. Such is the looking-glass logic of capitalism.

Higher taxes lead to more jobs

Make it harder for people to retain a job, and fewer people will. Adequate pay that makes a job worthwhile is one factor, but frequently overlooked are support structures that facilitate employment.

Contrary to orthodox economic ideology, punishing people does not increase employment.

Countries that provide more subsidies toward services that are complementary to work — such as child care, elder care and transportation — have higher workforce participation rates. This shouldn’t be surprising as we don’t leave the rest of our lives behind when we go to our jobs, however much bosses insist we should. Such a finding can only be controversial in a world dominated by ideologies that insist that conditions be made as harsh as possible to “force” people to work.

Alas, such a world is the one most of us live in, particularly in the English-speaking advanced capitalist countries. I have often noticed that the thinking of middle-class conservatives often boils down to “I had to suffer, so everybody else should have to suffer.” I’ve heard words to this effect from many conservatives. Although people who have enunciated that to me often are people who did indeed work hard to rise from modest circumstances, the reductionist hyper-individualism it reflects is blind to the social solidarity necessary for society to function.

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

More subsidies lead to a higher percentage of working-age people holding regular employment, and these subsidies are possible through higher taxation. Contrary to orthodox economics, higher rates of taxation lead to more employment. This is the conclusion of a study by Henrik Jacobsen Kleven, “How Can Scandinavians Tax So Much?” Professor Kleven, a professor at the London School of Economics, compared Denmark, Norway and Sweden with other OECD (Organisation for Economic Co-operation and Development) countries (a club of the world’s advanced capitalist and some of the largest developing countries) and found strong correlations between taxation rates and workforce participation.

More social services, more employment

Plotted on a graph, there is a steady progression of countries with higher “participation tax rates” having greater percentages of their population employed. This pattern, not surprisingly, is even stronger for women than men. The author defines a country’s “participation tax rate” as the average effective tax rate when including all income and consumption taxes, and public benefits. This rate is far higher in Denmark, Norway and Sweden than it is in, inter alia, the United States, Japan or Britain. Professor Kleven writes:

“[T]he Scandinavian countries spend relatively large amounts on means-tested transfer programs that create implicit taxes on working and therefore reinforce the distortions coming from the tax system. On the other hand, these countries also spend relatively large amounts on the public provision and subsidization of goods that are complementary to working, including child care, elderly care, and transportation. Such policies represent subsidies to the costs of market work, which encourage labor supply and make taxes less distortionary. Furthermore, Scandinavian countries spend heavily on education, which is complementary to long-run labor supply.” [page 7, citations omitted]

Denmark, Norway and Sweden also have unusually low rates of tax avoidance. Professor Kleven writes that systematic third-party reporting is “crucial” to minimizing tax avoidance. (If your income is reported, it is very difficult to avoid paying taxes on it.) The three countries also have a broad tax base and Denmark in particular allows very few deductions and exceptions.

The United States, in contrast, has a complicated tax system riddled with loopholes. U.S. tax policy for low-income workers centers on the Earned Income Tax Credit (EITC), yet the Scandinavian countries have higher rates of workplace participation without such tax deductions. Because child care subsidies act as a subsidy to labor participation, Professor Kleven argues, those countries have no need for a U.S.-style income tax credit.

Although the author recoils somewhat from his own conclusions at the end of his paper, he does earlier write:

“[E]empirical and theoretical arguments above suggest that public spending on work complements such as child care, preschool, and elder care allows for a more efficient provision of low-income support and at the same time weakens the argument for low participation tax rates at the bottom of the distribution through an EITC. In this sense, it is conceivable that Scandinavian countries (with their large subsidies to work complements and no EITC) got it right, while the US (with its small subsidies to work complements and a large EITC) got it wrong.”

More health care earlier, better jobs later

Perhaps imposing ever harsher conditions on working people makes for a weaker economy? It would seem that several years of punishing austerity has not exactly brought prosperity to the world. Another study daring to offer heterodox economic ideas, just released by the National Bureau of Economic Research, calculates that spending by the U.S. government on child health care through the Medicaid insurance program likely will pay for itself by the end of a recipient’s adult working career.

Providing health care ought to be a human right; it is something that should be provided as a matter of basic humanity to enable better lives. In the U.S., of course, such is not the case; health care there is a privilege reserved for those with full-time employment that provides benefits or for those who can afford it. But, in raw economic terms, Medicaid for children may be cost-free over the long term.

This study, “Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?,” prepared by Amanda E. Kowalski of Yale University and two economists with the U.S. Treasury Department, David W. Brown and Ithai Z. Lurie, found that children who were Medicaid recipients as adults earn more money on average and thus pay more in taxes than those who did not receive that benefit. These cohorts were followed until age 28, but, projecting the results over a full working career, the authors estimate that the extra taxes accruing to the federal government will amount to 56 cents for every Medicaid dollar. That is virtually identical to the 57 cents that the federal government pays out of every Medicaid dollar.

Professor Kowalski, in summarizing the study, said:

“Although it will take years to know the long-term impact of current expansions of Medicaid undertaken as part of the Affordable Care Act, this study shows that the investments that the government made in Medicaid in the 1980s and 1990s are paying off in the form of higher tax payments now.”

The study did not take into account the extra tax money paid to state and local governments, nor benefits from decreases in mortality and increases in college attendance. If all factors could be calculated over a lifetime, it is conceivable that Medicaid for children will actually be a direct financial benefit. Such a crass calculation shouldn’t be necessary, but the U.S. health care system exists to provide corporate profits rather than provide health care, which is why U.S. spends much more on health care than other countries while achieving inferior results.

A society that provides the infrastructure for a productive, balanced life, as opposed to one that imposes grim struggles to survive, is a healthy society. We are, after all, a social species, something that the ever more propagandized individualist ideology of capitalism seeks to erase.