Has the IMF renounced neoliberalism? Well, not really.

Sound the alarms! Could the International Monetary Fund be reconsidering neoliberalism? Sadly, no, once we actually read the short document “Neoliberalism: Oversold?

The title certainly does grab our attention, and on the very first page, there is this highlighted passage: “Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.”

Ah, but disappointment quickly sets in while reading the first paragraph, which purports to hold up Pinochet-era Chile as model “widely emulated across the globe,” including a mention of Chicago School godfather Milton Friedman proclaiming Chile an “economic miracle” in 1982. The actual record is not mentioned, nor is the little matter of military dictator Augusto Pinochet’s wave of terror that killed, imprisoned, tortured and imprisoned tens of thousands mentioned. Details in the eyes of the IMF, we presume.

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

The institution of neoliberalism in Chile, 1973: La Moneda, the presidential palace, is bombed (photo by Biblioteca del Congreso Nacional de Chile)

In reality, Chile’s poverty rate skyrocketed to 40 percent under Pinochet, while real wages had declined by a third and one-third of Chileans were unemployed during the last years of the dictatorship. Unemployment figures do not include the many urban Chileans who worked as “car minders” earning small tips from waving orange rags at motorists pulling into parking spaces and taking the motorists’ coins to insert into parking meters, which Pinochet’s planning minister, a Friedman disciple, declared to be “a good living.” Lavish subsidies were given to large corporations, public spending was slashed and the social security system was privatized. The privatized social security system was so bad for Chilean working people that someone retiring in 2005 received less than half of what he or she would have received had they been in the old government system.

Let us not forget the humanity of those whose lives were crushed by Pinochet and Friedman.

Pinochet's soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Pinochet’s soldiers show what they think of literature (photo from CIA Freedom of Information Act via Wikimedia Commons)

Back to the IMF paper, which defines neoliberalism blandly as “deregulation” and “a smaller role for the state.” A far better definition of neoliberalism is provided by Henry Giroux:

“As an ideology, it construes profit-making as the essence of democracy, consuming as the only operable form of citizenship, and an irrational belief in the market to solve all problems and serve as a model for structuring all social relations.”

The authors of the IMF paper gingerly work themselves up to some mild critiques, lamenting that “The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries” and that “The costs in terms of increased inequality are prominent.” Furthermore, the odds of an economic crash are raised, among other problems:

“Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. … [I]n practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of [gross domestic product] increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality.”

Decades of stagnant wages, hollowing out of manufacturing bases and steadily increasing inequality, augmented by unsustainable stock-market bubbles and capped by eight years and counting of economic downturn and stagnation, and that is the best the IMF can do? The paper concludes with this passage: “Policymakers, and institutions like the IMF that advise them, must be guided not by faith, but by evidence of what has worked.”

The belief in neoliberalism and austerity, or supply-side economics, or Reaganism, or Thatcherism (whatever we want to call it) has always been based on faith, at least on the part of some of those who promote it. For many other financiers and industrialists, it surely is the case is they knew just what was going to happen and cheered it all the way because they were going to benefit handsomely. Economics may be the dismal science, but dismal though classical economics is, it is far more art than science, as in the art of fleecing.

Inequality and the World Economic Forum

The world’s rulers are getting together at their biggest bash of the year, the World Economic Forum. Prime ministers and other high government officials will also be in attendance.

The theme for this year’s Forum, which began on January 20 at its usual home in Davos, Switzerland, is said to be “Mastering the Fourth Industrial Revolution.” As to what that might mean, the forum’s “jobs strategy” paper asserts:

“We are today at the beginning of a Fourth Industrial Revolution. Developments in previously disjointed fields such as artificial intelligence and machine learning, robotics, nanotechnology, 3D printing and genetics and biotechnology are all building on and amplifying one another. … Concurrent to this technological revolution are a set of broader socio-economic, geopolitical and demographic developments, with nearly equivalent impact to the technological factors.”

Two paragraphs later, the paper genteelly forecasts workforces will undergo “significant churn” due to these developments, which turns out to be an expected global loss of 7.1 million jobs between 2015 and 2020.

CEO vs. worker payAs to what is the cause of ongoing economic difficulties and vanishing jobs, the corporate elites who drive the World Economic Forum agenda wish to assure you that rising inequality, runaway financialization, the mad rush to move production to places with ever lower wages, corporate greed, and the subordination of all human and environmental needs to the plundering of all parts of the planet in pursuit of ever bigger profits have nothing to do with it. The Forum offers this explanation:

“The deceleration in long-term trend growth has been caused by two supply-side limitations: the big slowdown in labour force growth (in some cases into negative territory) and a sharp falloff in productivity growth. Since 2007, demand-side constraints have also been a problem. These include: debt and deleveraging in the developed world; the rapid decline in the pace of world trade; the excess-capacity-driven struggles in China’s construction, heavy manufacturing, and mining sectors; and distress in commodity-linked emerging markets and commodity industries.”

There is a lack of growth because the world is not growing. And it’s China’s fault for not buying so much raw materials and manufacturing equipment anymore.

Why, there surely is no agenda here, is there? Oh dear reader, please try to keep a straight face when reading the World Economic Forum’s description of itself:

“It is independent, impartial and not tied to any special interests. … Our activities are shaped by a unique institutional culture founded on the stakeholder theory, which asserts that an organization is accountable to all parts of society.”

Accountable to “society” — or financiers?

Well, let’s see just how “impartial” the Forum is. Or just how “accountable” to “all parts of society” it is. The Forum is a gathering of the world’s corporate elites where deals can be made and agendas can be set. As to who corporate leaders are accountable to, we need only remember the words of Milton Friedman, who put it plainly in an interview with author Joel Bakan in the context of a former BP chief executive officer suggesting (however disingenuously) the company would make environmental concerns more important:

“Not surprisingly, Milton Friedman said ‘no’ when I asked him how far John Browne could go with his green convictions. … ‘He can do it with his own money. If he pursues those environmental interests in such a way as to run the corporation less effectively for its stockholders, then I think he’s being immoral. He’s an employee of the stockholders, however elevated his position may appear to be. As such, he has a very strong moral responsibility to them.’ ”

Not that corporate executives don’t get in the action as well — CEO pay averaged 303 times that of the average worker in 2014. Although down from the 376-to-1 ratio of the peak stock-market bubble year of 2000, the current ratio is far bigger than earlier decades. Another way of putting all this in perspective is that CEO pay has risen 1,000 percent since 1979, while typical employee pay has risen 11 percent.

But don’t shed any tears for financiers. An International Labour Organization paper found that the financial industry’s share of corporate profits doubled over the course of the 1990s and 2000s, reaching 44 percent of all corporate profits in 2002.

The financial industry acts as both a whip and a parasite in relation to productive capital (producers and merchants of tangible goods and services). It is a “whip” because its institutions bid up or drive down prices, and do so strictly according to their own interests. The financial industry is also a “parasite” because its ownership of stocks, bonds and other instruments entitles it to skim off massive amounts of money as its share of the profits. Financial speculators don’t make tangible products; they trade, buy and sell stocks, bonds, currencies and other securities, continually inventing new instruments to profit off virtually every aspect of commercial activity.

Wages decline around the world

With all this in mind, it comes as no shock that the one percent is grabbing bigger pieces of the pie. Wages as a share of gross domestic product have declined since the 1970s in Britain, the eurozone, Japan and the United States. The long-term stagnation in wages has long been decoupled from any recent flattening of productivity gains — since the 1970s, productivity has soared while wages barely rose.

Wages as share of GDPBut perhaps nothing illustrates the world’s incredible inequality as well as the just released Oxfam report, “An Economy for the 1%.” Oxfam researchers calculate that the richest 62 people have as much wealth as the bottom 50 percent of humanity — 3.6 billion people! Among other conclusions, Oxfam reports:

  • The world’s wealthiest 62 people added US$542 billion to their net worth from 2010 to 2015, an increase in their composite wealth of 44 percent.
  • The bottom half of humanity in terms of wealth lost $1 trillion from 2010 to 2015, a drop of 41 percent.
  • The share of the global wealth increase since 2000 that has gone to the top 1% is 50 percent.

One of the most important reasons for this increasing disparity is the use of tax havens. One estimate of the amount of money that is stashed in tax havens was $7.6 trillion at the end of 2014 — more than the combined gross domestic product of Britain and Germany. Another estimate is $8.9 trillion. And this not limited to the global North — Oxfam calculates that Africa’s wealthiest have stashed $500 billion in tax havens:

“Almost a third (30%) of rich Africans’ wealth … is held offshore in tax havens. It is estimated that this costs African countries $14bn a year in lost tax revenues. This is enough money to pay for healthcare that could save the lives of 4 million children and employ enough teachers to get every African child into school.”

There is no alternative” we are supposed to believe. But if the capitalism to which there is supposedly no alternative works, why do such massive amounts of money have to be shoveled into it? Governments representing the United States, the European Union, Japan and China committed US$16.3 trillion in 2008 and 2009 on bailouts of the financiers who brought down the global economy and, to a far smaller extent, for economic stimulus.

The central banks of the United States, Britain, the eurozone and Japan have so far spent US$6.57 trillion on “quantitative easing” programs supposedly needed to kickstart their economies, although little was achieved other than inflating a stock-market bubble. (And lest we are tempted to wag a finger at, say, the Federal Reserve, we should be reminded that central banks are simply institutions of capitalism. If you don’t like the Federal Reserve, what you really don’t like is the capitalist system.)

“Let no billionaire be unheard” would seem to be a far more accurate slogan for the World Economic Forum to adopt.

Not even Wal-Mart is ruthless enough for Wall Street

As ruthless as Wal-Mart is, Wall Street has decided the retailer is not ruthless enough. Incredible though it might seem, financiers have been punishing Wal-Mart in part because the company has raised its minimum wage to $9 an hour.

Plans to increase slightly abysmally low pay and invest more money on Internet operations have Wall Street in an ornery mood because profits might be hurt. Is Wal-Mart Stores Inc. about to cease being a going concern? Hardly. For the first three quarters of this year, Wal-Mart has racked up a net income of US$11.8 billion — and the holiday season isn’t here yet. For the five previous fiscal years, the retailer reported a composite net income of $80.2 billion.

Alas, this isn’t good enough for Wall Street and its “what did you do for me this quarter” mentality. Traders have driven down the price of Wal-Mart stock by more than one-third in 2015, and a public statement on October 14 by the company that its earnings might be a little lower next year prompted the biggest one-day fall in its stock in 25 years.

Wal-Mart employees are joined at a rally by Reverend Billy and the Church of Stop Shopping in Vallejo, California (photo via Brave New Films)

Wal-Mart employees are joined at a rally by Reverend Billy and the Church of Stop Shopping in Vallejo, California (photo via Brave New Films)

Wal-Mart did attempt to offset that news by also announcing a new $20 billion buyback of shares, but not even blowing that kiss to financiers served to lift their moods. (A stock buyback is when a company buys its stock from shareholders at a premium to the trading price, which gives an immediate bonus to the seller and reduces the number of shares that divvy up the profits; news of this sort ordinarily sends financiers into paroxysms of ecstasy.)

This is the company that is the most ruthless in accelerating the trend of moving manufacturing to the locations with the lowest wages, legendary for its relentless pressure on its suppliers to manufacture at such low cost that they have no choice but to move their production to China, or Bangladesh, or Vietnam, because the suppliers can’t pay more than starvation wages and remain in business.

This is a company that pays it employees so little that they skip meals and organize food drives; receives so many government subsidies that the public pays about $1 million per store in the United States; and is estimated to avoid $1 billion per year in U.S. taxes through its use of tax loopholes.

We live under an economic system that is so insane that this has now been deemed by financiers to be insufficiently brutal.

The stack of billions is never high enough

How much further down can people be pushed? And when has so much money been amassed that even the most greedy are satiated? The answer to the first question has yet to be answered, but the answer to the second question seems to be “never.”

The four heirs to the Wal-Mart fortune are collectively worth $161 billion — they are the world’s richest family, richer even than the Koch brothers. The four are each, individually, among the 12 richest people on Earth. The Walton family pocket billions every year just from dividends — their company paid nearly $6.4 billion in dividends in 2014 alone, and the Walton family owns half the shares. The company spent another $6.1 billion in 2014 on buying back its stock. That’s $12.5 billion in one year handed out to financiers and the Walton family.

So it would seem that Wal-Mart could afford to pay its employees more.

Although the company said part of the pressure on profits will come from investments in building a larger Internet presence, it largely blamed its expected dip in profits on two planned boosts in pay, first to $9 an hour this year and then to $10 an hour in 2016. Reuters reported it this way:

“Wal-Mart Chief Executive Doug McMillon said a $1.5 billion investment in wages and training, including raising the minimum store wage to $10 an hour from $9, were needed to improve customer service and would account for three-quarters of the expected 6 percent to 12 percent drop in earnings per share next year.”

One and a half billion in wages and training for an unspecified period of time. Remember, this is a company that averages $16 billion in net profit per year. And in almost half the states of the U.S., mandatory minimum-wage raises would have forced stores in those states to raise the wage anyway.

Or to put this another way, the raises to $10 per hour — assuming the stated cost to the company is real — could be fully funded by cutting what the company spends on stock buybacks by one-quarter.

But it’s never Wall Street’s turn to cut back, is it?

No toleration of employee defense

Jess Levin, communications director for Making Change At Walmart, a campaign to advocate for Wal-Mart employees backed by the United Food & Commercial Workers, noted that pay raises could easily be offset by cutting hours:

“Walmart should be ashamed for trying to blame its failures on the so-called wage increases. The truth is that hard-working Walmart employees all across the country began seeing their hours cut soon after the new wages were announced. The idea that this truly drove down Walmart’s profits is a fairytale.”

What isn’t a fairy tale is Wal-Mart’s attacks on any attempt at organizing its stores. An In These Times report noted:

“A massive array of strategies has been tested, with little success: organizing department by department (when butchers at a Texas store voted for the union, Walmart eliminated all its butchers); organizing in Quebec, where laws favor unions (Walmart closed the store); organizing in strong union towns, like Las Vegas (several campaigns failed after supervisors intimidated a majority of workers out of unionizing).”

There are real-world consequences to these developments. A 2007 study by the Economic Policy Institute found that Wal-Mart alone was responsible for the loss of 200,000 U.S. jobs to China for the years 2001 to 2006, with Wal-Mart accounting for two-thirds of all U.S. manufacturing jobs lost during that period. Wal-Mart more recently has begun shifting manufacturing to countries like Bangladesh that are low-cost alternatives to China.

The Institute for Global Labour and Human Rights reports that garment workers in Bangladesh earn between 33 and 42 cents per hour, or up to $20 for a six-day, 48-hour work week. On the backs of those super-exploited workers, and on the backs of exploited store and warehouse employees, arise the fabulous wealth of the Walton family, Wal-Mart executives and financiers. Doug McMillion, the Wal-Mart chief executive officer, was paid $25.6 million for 2014 — or 24,500 times more than a Bangladeshi sweatshop worker working for a Wal-Mart subcontractor earns.

More is never enough — Wall Street is cracking its whip, demanding no letup in this massive upward flow of money. No slack is allowed. When do we stop believing this machine can be reformed?

Class war and drinking the Kool-Aid at Dow Jones

We all remember the worst job we ever had. Mine was as a re-write person on the lead financial wire service of Dow Jones in the mid-1990s. But it did give me a chance to see the workings of finance capital up close, and learn that my ideas on how it functioned really were true.

Those two unfortunate years at Dow Jones also gave me a better perspective when Rupert Murdoch swooped in a few years later to buy the company, not so much for its wire services rather for the cachet of owning The Wall Street Journal. An episode that nicely served as a humorous reminder of just what is meant by “integrity” by the idle rich — receiving the highest price.

It was difficult not to suppress a smile as the idle rich, absentee majority owners of the Journal, the Bancroft family, publicly wrestled with their bullet-proof “integrity” in the face of barbarian Murdoch. The newspapers published by Murdoch are distinguished by their mad-dog, mouth-frothing ultra-right diatribes. Not to be confused by the editorial pages of the Journal, distinguished by their mad-dog, mouth-frothing ultra-right diatribes.

There is one difference, and that is that the Journal’s mouth-frothing is done on behalf of Corporate America and is not shy about telling corporate readers what is good for them, such as its bizarre years-long campaign to return the dollar to the gold standard. The paper’s many readers who make a fortune by trading world currencies might beg to differ, but no matter. Murdoch’s papers, however, never challenge their readers’ biases and if those readers want several pages daily of celebrity gossip mixed in with the right-wing propaganda, then that is what the people will get.

You don't want to work here. (Photo by Stefan Schulze)

You don’t want to work here. (Photo by Stefan Schulze)

The Bancroft family’s celebrated “integrity,” arrayed against this hideous assault by a vulgarian, ended resoundingly when Murdoch arranged to sweeten the pot. Selling your integrity for maximum dollar — what could be more like Corporate America? And so the Journal provides us with another sound lesson in capitalist economics. The hidden Achilles heel in all this is that Murdoch paid much more for the Journal’s parent company, Dow Jones, than anybody else would, and that is for a simple reason — Dow Jones was a company remarkable for its inept management.

I know this from my personal experiences there. Just how many wire services Dow Jones actually published was not known, as nobody actually knew when I casually attempted to find out at one point, symptomatic of the place. Two spectacular failings during my two years nicely provide illustration. One of these two was the acquisition of a financial data company, Telerate, which was seen as very well run and profitable. Part of the Dow Jones egoism is that its managers are super-geniuses, and so Dow Jones replaced Telerate’s successful management with its own managers, who ran it into the ground so quickly that Dow Jones sold it seven years later for more than $1 billion less than what was paid for it. Many workers lost their jobs as well.

More adventures in management

A concurrent episode was the short-lived Dow Jones television station in New York City. The city government owned a public television station that the then mayor, Rudolph Giuliani, decided to give away at fire-sale prices. Dow Jones won it, intending to turn it into an all-business news television station, never mind that cable television already carried more than one of these. (One of which, CNBC, was blared continually in the wire service’s workplace; the horrible theme music gave me nightmares for a long time afterward although a female anchor’s on-camera tendencies to nearly break down in tears when a company’s profits went down and almost reach orgasm when profits went up did provide comic relief.)

Dow Jones management, however, wasn’t prepared for its new toy, and so upon taking over the television station, at first aired nothing but videotapes of “classic” sports games from 10 and 20 years earlier. Dow Jones hired television personnel from around the country; new hires sold their houses and moved thousands of miles to work in the new venture. Once started, it lasted four months before Dow Jones announced it was selling the station, putting all those new hires, who had so disrupted their lives, into the street. The magic of the market at work!

Episodes like this led to one of the Bancroft heirs, a thoroughly spoiled rich kid, to complain in public that her inheritance, worth tens of millions of dollars, might decline in value because the Dow Jones stock price was stuck in mud despite the 1990s stock-market bubble that was then in progress. This development, in turn, prompted that most unusual of actions at Dow Jones — a member of upper management would deign to talk to the lowly workers! Surely this was a sign of crisis.

One afternoon, we were pulled from our usual duty toiling on the electronic sweatshop to hear a pep talk in the cafeteria from none other than Chairman and Chief Executive Peter Kann. Kann would have needed an injection of personality to qualify as an empty suit, but in his own way is a sad story. Kann, at one time, was a reporter for the Journal famous for covering a war between Pakistan and India, during which he defied an order by his editor to leave the area by falsely saying there was too much static on the line for him to understand what the editor had just told him.

For him they feel sorry?

That Peter Kann was long gone. Dow Jones was distinguished by its remarkable rigidity — only those who fit an extremely narrow mold and are willing to drink the Kool-Aid if so ordered take so much as one step on the career ladder, never mind ascend to the executive ranks. And that’s in addition to the political lock-step required to survive the place. The sweatshop floor workers assembled, Kann preceded to deliver a rambling speech full of business cliches about the glorious future, but lacking any discussion of the company’s turmoil, the very reason for this unusual pep talk, as even the right-wing yuppie zombies, Dow Jones true believers who comprised most of the wire service’s workforce, understood.

None had the courage to ask a question on the topic, as I expected. It was up to me to say something — I was the shop steward for the union, disliked by management, and already trying to escape the place by becoming a freelance editor, so I had nothing to lose. Besides, I knew that most of my co-workers would be quietly counting on me to say something — virtually all conformed to the Dow Jones corporate culture of snapping your heels and running, not walking, to carry out your assignment, never allowing the slightest doubt to enter your innermost thoughts.

When Kann’s assistant asked for questions, I asked Kann what the company’s plan for stability was in light of the recent problems it had been having. I didn’t explicitly detail the serious gaffes Dow Jones had committed, but he and everyone in the room knew to what I was referring. To my genuine amazement, Kann, after a long pause, proceed to give a disjointed answer that touched on none of the issues; he was obviously seriously rattled, unable to speak coherently. After perhaps a minute of this, Kann’s assistant gently interrupted, deftly took the microphone and thanked all of us for attending, ending the meeting.

The odd coda to this was that some of the Dow Jones true believers then felt sorry for Kann, because there was pressure by shareholders to push him out of his posts due to the mismanagement. “Aw, he’ll be out soon, anyway,” one told me, genuinely feeling sorry for the dear leader. The joke was on the workforce, however, as Kann lasted another decade as head of Dow Jones, leaving it to Murdoch to satisfy his ego by overpaying for the company. The idle rich had already prospered because tens of millions of dollars per year had been funneled to them via family-only dividends and now they would cash out, by still doing nothing. Many jobs will be lost to pay for those payoffs.

A wonderful lesson in capitalist economics, and, see, there is nothing to fear from Murdoch when it comes to capitalist ethics. See you on the yacht, darling.

Marching on Monsanto and its government protectors

Controlling and knowing what we eat should be a fundamental human right beyond questioning. That it is not sent hundreds of thousands into the streets of cities around the world on May 23, the third annual March on Monsanto.

People on every continent save Antarctica participated in a March on Monsanto — demonstrations took place in 452 cites in 48 countries in opposition to Monsanto Company’s attempt to gain control over the world’s food. More than 200 U.S. cities, 47 Canadian cities, 22 French cities and 13 Argentine cities were among the places hosting organized marches.

One of the earliest rallies was in Sydney, where an organizer told the RT television network:

“This company has repeatedly committed, I would say, crimes against the Earth and what we are trying to show is accountability for corporations. Also we want to promote clean food. Food that’s free of pesticides, which our grandparents just called food.”

RT, in an online roundup of events around the world, also noted that protestors in Berlin, one of 10 German demonstrations, made connections among health concerns even though there is no commercial cultivation of food containing genetically engineered organisms in the country, and GMO bans exist in nine of Germany’s 16 states and in hundreds of municipalities. RT reported:

“Germany’s capital Berlin saw a big turnout even though Germany does not use Monsanto’s seeds. However, activists say local farmers still use Monsanto’s pesticides and herbicides, which end up leaving traces in breast milk of feeding mothers, the water supply and even urine of people who have not eaten GMO products.”

March Against Monsanto

March Against Monsanto

The struggle against dangerous pesticides received a boost earlier in the month in Germany when the country’s state consumer protection ministers called for a ban on glyphosate throughout the European Union. According to the online news publication EurActiv, E.U. approval of glyphosate expires at the end of 2015 and the E.U. bureaucratic arm, the European Commission, is conducting a safety review. Glyphosate is the active ingredient in Monsanto’s Roundup herbicide, a business worth an estimated $10 billion to Monsanto. The company not only sells lots of the herbicide but also agricultural products (soybeans, corn, sugar beets and other crops) that are genetically engineered to be resistant to Monsanto’s Roundup herbicide.

Farmers growing these crops with Monsanto seeds can thus spray more herbicides on their crops. Unfortunately, as more pesticides are sprayed, weeds and insects become more resistant, inducing farmers to spray still more and thereby introduce more poisons into the environment. The use of  glyphosate on U.S. farms increased from 11 million pounds in 1987 to almost 300 million pounds in 2013.

What you don’t know might hurt you

There is plenty of reason for concern. Earlier this year, the World Health Organization released a study, published in The Lancet, that found glyphosate to be a “probable” carcinogen. Other studies, including a 2013 paper in Food and Chemical Toxicology, have also reported health concerns. Further, a 2011 Earth Open Source paper, titled “Roundup and birth defects: Is the public being kept in the dark?” says that the European Union and the German Federal Office for Consumer Protection and Food Safety cites “unpublished industry studies to back its claim that glyphosate was safe,” while ignoring or dismissing independent studies that indicate glyphosate causes endocrine disruption, damage to DNA, reproductive and developmental toxicity, cancer and birth defects.

March Against Monsanto in Marseille

March Against Monsanto in Marseille

Then there are the dangers of GMO foods, an area unfortunately quite under-studied. GMO labeling is required by 64 countries, including Australia, Japan and all 28 E.U. countries. Such laws are fiercely opposed by Monsanto and other multi-national agribusinesses, and they thus far have succeeded in keeping labeling laws from being enacted in the U.S. These corporate efforts to undermine food safety are part of the agenda behind the secret Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).

Marchers against Monsanto took to calling the TPP and TTIP the “Global Monsanto Protection Acts.” One of the goals of those two so-called “free trade” deals is to eliminate the ability of governments to ban or even effectively regulate GMOs, and to ban any labeling of them. Monsanto and other agribusinesses repeatedly claim that GMOs are safe and healthy, but if that is so, why do they put so much effort into hiding them? Biotechnology companies spent $27 million lobbying for GMOs in the U.S. in just the first six months of 2014.

Should the TPP and TTIP come into force, nobody in the 40 countries that encompass these two agreements will be able to know what is in the food they eat or to have effective protection against food that may not be safe to eat.

Already we being used as laboratory experiments, and this will accelerate if Monsanto gets its way.

Water down laws, then dilute some more

“Free trade” agreements have very little to do with trade, and much to do with eliminating regulations, lowering standards and eliminating health, safety and environmental laws in favor of maximizing corporate profits. The “harmonization” that is promoted in these agreements has meant reducing standards to the lowest possible level. Thus, European regulations on GMOs and food labeling will be targeted as “barriers” to trade under the TTIP because those standards are higher than U.S. rules.

Pesticide Action Network Europe notes that the process of European harmonization has already watered down regulations. In its position paper on the TTIP negotiations, PAN Europe says:

“Health standards already now do not sufficiently protect people and the environment and costs are already externalised massively to society in terms of health care (pesticide residues in food/water, contamination of rural citizens), soil deterioration (fertilizers), biodiversity decline (monocultures, pesticides), climate change (fertilizers and deforestation for soy/palm cultivation) and subsidies (taxpayers’ money). … Let’s take the example of pesticide residue food standards. They were harmonised at European level already in 2009 and indeed the least strictest food standards anywhere in Europe were chosen for harmonisation. Soon it was shown that this was a wrong approach. … Cumulative effects of residues are not calculated and the unscientific single-exposure approach maintained.”

Already, an E.U. paper that could have led to the banning of as many as 31 pesticides was not acted on because of heavy pressure from chemical companies on both sides of the Atlantic. A delegation of U.S. chemical-industry lobbyists and U.S. trade officials insisted that the E.U. drop proposals to ban the use of the pesticides despite health concerns.

Just as it is asked why Monsanto and other agribusinesses don’t want you to know what is in your food, we must ask why they don’t want us to know what is in the “free trade” agreements being negotiated on their behalf.

Legislators provide a backup plan

Perhaps as a backup in case the mounting public opposition to the TPP and TTIP succeeds in scuttling them, a Kansas Republican, Mike Pompeo, has cooked up a bill with the Orwellian name of “Safe and Accurate Food Labeling Act of 2015” (Bill H.R. 1599) in the House of Representatives. H.R. 1599 was introduced on March 25 and is a re-introduction of the previous Congress’ H.R. 4432, which failed to become law. The bill’s stated purpose is: “To amend the Federal Food, Drug, and Cosmetic Act with respect to food produced from, containing, or consisting of a bioengineered organism, the labeling of natural foods, and for other purposes.” Well, yes, but in what way?

The devil is indeed in the details here. Activists at Food Democracy Now sound the alarm this way:

“This plan is so devious that it radically speeds up the approval process for new GMO crops, limits the [U.S. Food and Drug Administration] and [Department of Agriculture]’s ability to extend premarket safety reviews, declares GMO foods ‘safe’ and redefines genetically engineered foods as ‘bioengineered’ in order to sanitize this deeply flawed technology to the American public.”

A Daily Kos analysis notes that the bill would create a federal law banning any state or locality from enacting a GMO labeling law. The bill would also prohibit organic natural foods from being marketed as safer or better than GMO counterparts. It would also make it nearly impossible for a farmer to achieve organic certification:

“But most sinister is what I will call the bill’s virtual protection racket. It works like this. As a small organic farmer, if I want to market my product as GMO-free, I must ensure that the entire path to market — from seed to harvest to processing to transportation to distribution — is certifiably GMO-free. If my product shares any infrastructure with known GMO foods, I cannot claim being a GMO-free. … The burden of proof therefore is prohibitively expensive for a typical small farmer, which is what Monsanto, Dow et al are counting on.”

Taking on Monsanto is already difficult. The Organic Seed Growers & Trade Association filed a suit against Monsanto, challenging the company’s patents on genetically engineered seeds, a suit that eventually represented 300,000 individuals and 4,500 farms. The organic plaintiffs sought a pre-emptive judgment against potentially being accused of patent infringement should their fields become contaminated by Monsanto’s genetically modified seed. Such suits are not unknown. Nonetheless, the courts ruled for Monsanto at the trial and appellate levels.

Sell first, ask questions later

A part of the problem is that, under the U.S. regulatory system — what it wishes to impose on Europe and elsewhere — new products are routinely put on the market with minimal testing (or the product’s manufacturer providing the only “research” and declaring it safe), and can’t be removed from sale until independent testing determines the product is unsafe. That can occur years after it began to be sold. But, charges Steven Druker in a new book, Altered Genes, Twisted Truth, not even scientific concerns necessarily stop approval in the U.S.:

“[T]he [U.S. Food and Drug Administration] had ushered these controversial products onto the market by evading standards of science, deliberately breaking the law, and seriously misrepresenting the facts — and that the American people were being regularly (and unknowingly) subjected to novel foods that were abnormally risky in the eyes of the agency’s own scientists.

This fraud has been the pivotal event in the commercialization of genetically engineered foods. Not only did it enable their marketing and acceptance in the United States, it set the stage for their sale in numerous other nations as well. If the FDA had not evaded the food safety laws, every GE food would have been required to undergo rigorous long-term testing; and if it had not covered up the concerns of its scientists and falsely reported the facts, the public would have been alerted to the risks. Consequently, the introduction of GE foods would at minimum have been delayed many years — and most likely would not have happened.”

Mr. Druker is a public-interest attorney who successfully sued to gain access to FDA files. So confident is he in his findings that he has publicly challenged Monsanto to refute anything in his book and said he will change anything that is proven to be incorrect. Speaking at the New York March on Monsanto, he reported that he had not received a response.

Monsanto is perhaps the corporation most determined to control the world’s food. The vast majority of U.S. soybean, cotton, corn and canola are now genetically engineered. Seeds containing genes patented by Monsanto, the world’s largest seed company, account for more than 90 percent of soybeans grown in the U.S. and 80 percent of U.S.-grown corn, according to Food & Watch Watch. Standard contracts with seed companies forbid farmers from saving seeds, requiring them to buy new genetically engineered seeds from the company every year and the herbicide to which the seed has been engineered to be resistant. Farmers have become hired hands on their own farms under the control of Monsanto.

We live under an economic system that reduces human interactions to nothing more than transactions, where an ever larger sphere of social decisions are made by “the market” and the quest for profits is promoted as the highest ideal. “The market” is not some neutral entity sitting high in the clouds, as pervasive propaganda would have us believe, but rather nothing more than the aggregate interests of the most powerful industrialists and financiers. A monopoly is the goal of capitalists, and the logical outcome of the relentless competition of capitalism. Just because food is among the most basic human necessities does not mean it is exempt. Don’t starve, organize!

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?