The financial industry is a lot bigger than a giant vampire squid

The size of the financial industry bears no relation to the economy. Self-mythological panegyrics aside, the finance industry confiscates money; it doesn’t create it. How much? Get out your calculators, and maybe you’ll have to find a way to add a couple of digits to what your screen can hold.

Perhaps the total amount of money extracted by financiers (or, more to the point, speculators) is not quite as large as Douglas Adams’ description of space in the, yes, increasingly inaccurately named Hitchhikers’ Trilogy, as “Really big. You just won’t believe how vastly hugely mind-bogglingly big it is.” But it’s close. 

OK, let’s put down a couple of numbers here. The numbers on their own are so absurd as to defy easy comprehension, so let’s try to find a way to situate them.

  • Total amount of debt outstanding: US$305 trillion (€304 trillion).
  • Total amount of financial instruments traded, on average, per day: US$9.68 trillion (€9.65 trillion).

Yep, that’s a whole lot of money. So big that the imagination struggles to grasp such numbers. One way to put those numbers in perspective is that the size of the world economy (global gross domestic product for all the world’s countries) was US$96.1 trillion (€95.8 trillion) in 2021.

Commodities futures trading (photo by Lars Plougmann)

In other words, the volume of currency trading (foreign exchange), stocks, bonds and their derivatives exceeds the size of the global economy in 10 business days. (The period is almost certainly a little less, as that US$9.68 trillion in average daily trading doesn’t include most government bonds, trading figures for which are difficult to come by.) To create another comparison, the amount of debt owed by the world’s governments, businesses and households (the $305 trillion total above) is more than three and a half times of the value of all economic activity produced in a year.

Still another way to look at this activity is that foreign exchange trading (including swaps, options, spot transactions and outright forwards) in one day is bigger than the economies of all countries other than the United States and China. Given that the U.S. dollar, the world’s reserve currency, is involved in 88 percent of foreign exchange trades, trading in the dollar by itself totals more than a year’s production of all countries other than itself and China.

A multi-headed monster that is never satiated

Rolling Stone magazine once memorably described Goldman Sachs as a “great vampire squid wrapped around the face of humanity.” That makes finance capital as a whole a multi-headed monster with the attributes of a tyrannosaurus rex, killer whale, giant squid and elephant that can swallow ships at sea whole, fly through the air at supersonic speed and never stops eating. Or something like that. Perhaps some planet-eating monster in a science fiction potboiler? Maybe we can fall back on Douglas Adams after all, and just consider the financial industry vastly hugely mind-bogglingly big. 

And getting bigger. When I last did this exercise 10 years ago, it took about 11 business days for speculators to trade financial instruments and contracts valued at all the products and services produced by the entire world in one year. Now it’s 10 days. There’s progress for you.

There is no rational economic reason for a financial industry — and “bloated” would be woefully inadequate to describe it — even a fraction of this size. Most of the action on stock exchanges is simply speculation. Greed is certainly a part of the picture, but by no means the entire picture. Because there are insufficient opportunities for investment, more money is diverted into speculation. As ever bigger piles of money are diverted into speculation, the size of the financial industry and the percentage of corporate profits claimed by the financial industry steadily grows. This capital is a function of the amount of money flowing upward to the rich becoming larger than they can use for personal luxury consumption or investment; these torrents of money are diverted into increasingly risky pure speculation.

“Greed” (Nicholas Kwok)

Too much money comes to chase too few assets, rapidly bidding up prices until there is no possible revenue stream that can sustain the price of assets bought at inflated levels. Not altogether different from those Warner Brothers cartoons in which the character walks off a cliff, takes several steps suspended in air before looking down, sees there is nothing but air below and then falls, at some point speculators look down and notice they have no support, mass panic commences and prices collapse, bringing on another economic downturn. One that working people, not speculators, will pay for. 

The very size of financial markets is a major contributing cause of economic instability. Financial companies, having extracted immense sums of bailout money after the 2008 collapse, have leveraged their power to become even bigger through consolidation, thereby enabling them to divert more capital from productive use. But even during the “boom” portion of business cycles financiers are destructive to an economy by rewarding manufacturers for mass layoffs, moving production to low-wage developing countries with few or no effective labor or environmental laws, and setting up subsidiaries overseas and using creative accounting to shift profits offshore to avoid paying taxes. Financiers provide rewards for such behavior in the form of rising stock prices, and those stock prices in turn provide top executives a rationale to give themselves stratospheric pay packages because they “enhanced shareholder value.”  

In turn, there is continual downward pressure on wages — an increasing share of corporate revenues go toward executive pay and profits as the share going toward wages declines. And much of those corporate profits are quickly funneled into dividends and stock buybacks, yet more ways for money to move upward into the ever grasping hands of super-wealthy speculators.

As I wrote back in June, the corporations of North America, Europe and Japan handed out an astounding US$2.75 trillion (€2.63 trillion at then exchange rates) to shareholders in 2021 through dividend payments and stock buybacks. By February 2022, the amount of money created by the central banks of five of the world’s biggest economies for the purpose of artificially propping up financial markets since the beginning of the Covid-19 pandemic totaled US$9.94 trillion (€8.76 trillion). That is on top of the US$9.36 trillion (€8.3 trillion at the early 2020 exchange rate) that was spent on propping up financial markets in the years following the 2008 global economic collapse. That’s US$19.3 trillion (€17.1 trillion) in the span of 14 years, and this astounding sum of subsidies and handouts represents only one program of the many used by the U.S. Federal Reserve, the European Central Bank, Bank of Japan, Bank of England and Bank of Canada.

Crash to crash, but it’s you who is supposed to fall down

How could a parasitic industry grow to such gargantuan proportions? In theory, stock markets exist to distribute investment capital to where it is needed and to enable corporations to raise money for investment or other purposes. In real life, neither is really true. A corporation with stock traded on an exchange can use that status to issue new shares, raising money without the burden of dealing with lenders and paying them interest. But large corporations can raise money in a variety of ways, for example by issuing bonds or other interest-bearing debt, or by selling shares directly to private investors. Nor do corporations necessarily wish to float new stock — doing so is disliked by investors because profits are diluted when spread among more shares. Instead, it is more common for large companies to buy back shares of their stock (at a premium to the trading price), which means less sharing of distributed profits. And thus the steady increase in buybacks, which combined with dividends, in some years exceeds the total of profits! 

And what of distributing investment capital to where it is needed? That is saying, in so many words, that stock markets make finance more efficient — that capital will be put to use in the industries or companies in which a high profit is seen as a good bet because a company is filling a need with a product but lacks sufficient capital to take full advantage, or that the company already has a history of delivering profits. At bottom, buying stock is a gamble on the future profits of the company in which stock is bought. An investor is betting that profits will not only rise, but rise at a faster rate than in the past. I at one time worked on a financial news wire service, and one day was surprised when the stock price of a well-known technology company fell despite announcing it had earned a profit of $800 million for the previous three months, a higher profit than the same quarter in the previous year. On closer examination, the company was punished by speculators because the rate of the increase of the profit did not increase — this gigantic profit was lower than what stock market “analysts” had predicted. 

What happens to rain forests when the market is allowed to decide. (Photo of Montane Rainforest in Ecuador by Gunnar Brehm)

This illustrates that trading is primarily done for speculation, not for any rational economic reason. The beginnings of the financial industry lie in the very slow rate of business in the early days of capitalism; it could take years for an investment made on the other side of the globe to pay off. Thus financiers stepped in to provide cash liquidity. But because financial speculation doesn’t have the physical limitations of the production of tangible goods, speculation would become prominent. Indeed, financial crashes long predate the crashes of 1929 and 2008. “Tulip mania” consumed the Dutch in the 1630s, speculation fueled by the first futures contracts; uncontrolled speculation in the 1710s in the English South Sea Company and the French Company of the Indies led to the collapse of stock in both, a bubble in which short selling was born; an 1830s bubble in U.S. real estate burst when banks stopped making payments; and an 1870s bubble inflated by speculation in railroads and construction in North America and Europe burst when the Vienna stock market crashed, followed by waves of bank failures, to note some of the more well-known examples.

The world’s billionaires and multi-national corporations profited enormously from the Covid-19 pandemic, enormously inflating their wealth. Not surprisingly, debt increased dramatically as well. The 2020 increase in debt was the biggest for any year since World War II, according to the International Monetary Fund. 

Half of the 2020 increase in debt was governmental, again no surprise given the trillions handed out to financial institutions that year. According to the IMF, “Debt increases are particularly striking in advanced economies, where public debt rose from around 70 percent of GDP, in 2007, to 124 percent of GDP, in 2020. Private debt, on the other hand, rose at a more moderate pace from 164 to 178 percent of GDP, in the same period. … Public debt now accounts for almost 40 percent of total global debt, the highest share since the mid-1960s.” 

Extracting money from those who work

It should always be remembered that profit comes from a capitalist paying to employees much less than the value of what they produce. In turn, the financial industry extracts money from the producers of tangible goods and services, and often from governments as well. Finance capital seeks to profit off any and all economic activity anywhere, regardless of cost to everybody else. It’s incredibly profitable — not only are investment banks among the most profitable corporations, but speculators can rake in hundreds of millions and even billions of dollars annually — and they pay less in taxes that you do! 

Not even the biggest corporations are immune from financial industry pressure. Several years ago, DuPont, the chemical multi-national that produces many products that dominate their market, had racked up about US$17.8 billion in profits over five years, handed out $4 billion to shareholders from the proceeds of selling its performance chemicals business and boasted a one-year increase in its stock price of 20 percent. Yet a powerful hedge-fund manager declared war on DuPont management, demanding DuPont be broken up into two companies, under the theory that more profit could be extracted. The speculator did not get what he wanted, but DuPont did lay off workers to appease speculators despite its massive profitability. Ultimately, DuPont merged with Dow Chemical and then the combined conglomerate split into three companies, maneuvering done mainly to throw more cash at speculators.

Even Wal-Mart is not ruthless enough for Wall Street. After five years of massive profits (US$80 billion), speculators began driving down the price of Wal-Mart stock in part because the company had raised its minimum wage to $9 an hour. 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 speculator moods. Thus 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, was deemed by financiers to be insufficiently brutal.

As always, it’s heads, Wall Street wins and tails, Wall Street wins. Those fantastic values of financial instruments traded don’t fall from the sky and aren’t because of some rare acumen of speculators. Those sums of money, which would put orbiting satellites at risk if they were stacked up, are the direct result of exploitation of those who work.

Corporate greed keeps the pandemic alive

More than two years on, it is hard to imagine there could be someone who is not sick of the pandemic. Although we can point to multiple reasons for the inability to bring Covid-19 under control, a prominent factor is corporate greed.

The elevation of the private profit of a few over the welfare of the many is, sadly, the ordinary course of events in a capitalist world. This is brightly illustrated by the failure of the world’s governments to prioritize health care over money as exemplified by the ongoing failure to make vaccines available to the Global South.

Business as usual, yes, and it would be easy enough to lament the standards of the United States and its wildly expensive health care system being exported to the rest of the world. The U.S. does play a role here, but this time the U.S. is not the biggest villain. The European Union, with its obstinate refusal to waive any intellectual property rule because of fealty to Covid-19 vaccine makers, has been the biggest roadblock.

As new variations and mutations repeatedly spread, achieving a critical mass of vaccinated people is the only way the pandemic will be brought to an end. Covid-19 may never be fully eradicated but it can be reduced to a background nuisance as are many other illnesses. Hesitancy among many in the Global North to be vaccinated has played a not insignificant role, whether by right-wingers believing the nonsense peddled by the likes of Fox “News” or by people on the Left who, not without reason, are skeptical of Big Pharma.

Nurse graffiti COVID-19 in Málaga, Spain (photo by Daniel Capilla)

Those in the latter category see nefarious motivations behind pharmaceutical companies’ promotion of Covid vaccines. But is this another instance of Big Pharma pushing unneeded or even dangerous drugs? Such things do happen; suspicion does have a basis. But let’s consider what Big Pharma wants, which is no different from any other corporation: To accumulate the biggest piles of money possible. Given the global health emergency that arose in the first months of 2020, the surest path to achieving that goal would be to become the first to develop a cure. The pandemic was that rare instance in which the interests of Big Pharma and the general population coincided, and the vaccine makers wouldn’t be, and indeed aren’t, at all shy about taking advantage of an emergency to rack up huge profits, even by their industry’s standards. And with the whole world watching, a vaccine had better work and not cause undue harm.

Thus, because of unique circumstances, creating a safe, effective product for a real problem was actually in a corporate interest. And the profits, thanks to these rare circumstances and government largesse, are gigantic, a topic to which we will return.

Intellectual property as a weapon

It should surprise no one that the vaccine makers are doing everything they can to keep windfall profits rolling in. That means clinging to intellectual property (IP) law, heavily skewed in their favor, to maintain a monopoly. Capitalist governments have rolled over for corporate interests for decades, making IP laws ever more rigid. National legislation has played a role, firmly augmented by so-called “free trade” agreements that are used as battering rams by the United States, the European Union and other advanced capitalist countries to force open less powerful countries’ economies and force the world’s governments, including themselves, to be subordinate to multinational capital. Seeking to undermine government health care systems, and especially the ability of governments to negotiate lower prices, is often a goal of “free trade” deals, most notably demonstrated in the efforts of the U.S. government to push draconian rules in the Trans-Pacific Partnership.

These developments are anathema to the interests of working people everywhere. It is unconscionable, or should be, when IP rules are used to keep life-saving vaccines away from most of the world’s people. Struggles to make Covid-19 vaccines available to the Global South kicked off quickly, and there is no sign that this issue will anytime soon be resolved. This is not only against the interests of those for whom vaccines remain out of reach, but, given that the pandemic won’t end until a substantial percentage of the world’s peoples are inoculated and thus end the risk of still more dangerous variants arising, it is against the interests of those countries whose governments continue to elevate corporate profits over human life.

What the world needs is for manufacturers anywhere in the world to be granted the unrestricted right to manufacture the vaccines.

To achieve this necessity, what is needed is something called a “TRIPS waiver.” This will require some explanation, as once again a trip into the weeds of global trade policy becomes unavoidable.

Traffic in a British village is reduced from two lanes to one so there would be sufficient space for walkers to maintain two-meter distances from one another. (Photo by Martinvl)

Under World Trade Organization (WTO) rules, IP rights are strictly enforced. As the neoliberal variant of capitalism became dominant with the decline of Keynesianism in the 1970s, economic decision-making has been separated from politics, leaving multinational corporations free to move production to the places with the lowest wages and least regulation, constantly on the prowl for locations that can be even more exploited. With components obtained from around the world, assembled in low-wage, low-regulation havens and finished products exported, barriers to trade such as tariffs were necessary and, having won those, corporate executives and financiers next sought to eliminate the ability of governments to regulate them. Thus the era of “free trade” agreements arose, and one of the institutions that was created to enforce corporate supremacy was the WTO.

One of the legs of corporate domination is IP law. How that relates to the pandemic is this: A handful of multinational corporations, interested in the biggest possible profits for their executives and shareholders, can decide who will receive vaccines and at what price. That human life is at stake — more than 6 million have died from Covid-19 — does not make for an exception. As Alain Supiot, writing on international law in the November-December 2021 issue of New Left Review, noted:

“On the one hand, the Preamble to the [World Health Organization] Constitution states that ‘The extension to all peoples of the benefits of medical, psychological and related knowledge is essential to the attainment of health.’ But on the other, since the creation of the World Trade Organization in 1994, this knowledge has become an object of private property, precisely opposed ‘to all peoples’ by virtue of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Until then, it was accepted in international law that the protection of public health interests took precedence over the interests of patent-holders. The TRIPS Agreement reversed this hierarchy and gave primacy to the protection of industrial property.

Negotiations to enact a waiver are stonewalled

A waiver of TRIPS rules, then, is what is needed. In other words, a comprehensive waiver that, even if temporary for the duration of the emergency, sets aside Big Pharma’s IP rights and allows all manufacturers of vaccines, wherever they are, to produce Covid-19 vaccines. The governments of India and South Africa proposed, in October 2020, just such a waiver to allow the production of one or more of the Covid-19 vaccines. A year and a half later, the world is still waiting, with no resolution in sight.

Sarah Lazare and Paige Oamek, writing for In These Times, recently wrote an article demonstrating the “big lie” of Big Pharma talking points as the industry, in particular Pfizer, furiously resist any weakening of their IP fortresses. They wrote:

“The lie relates to an October 2020 proposal from India and South Africa that the World Trade Organization suspend enforcement of key patent rules so that cheaper, generic versions of Covid-19 treatments and vaccines can get to more people more quickly. (The proposal is referred to as a TRIPS waiver, a reference to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.) The pharmaceutical giants Pfizer and Moderna, concerned with maximizing their present and future profits, emerged as virulent opponents of such a measure, which still has not passed more than a year later, even as just one out of 21 people in poor countries have been fully vaccinated. It is no anomaly that the industry would reject such a proposal — pharmaceutical companies had a big hand in shaping those WTO intellectual property rules in the first place, to protect pharmaceutical monopolies and their profits.”

Negotiations have centered on four-way talks among India, South Africa, the European Union and the United States. A report surfaced in March 2022 that an agreement had finally been reached, but that has been denied, most notably by the U.S. government. Text accompanying the reported agreement was widely and loudly condemned around the world as grossly insufficient, and possibly even adding additional barriers to global vaccine access. Weeks have gone by, and there is no word that any agreement has actually been reached. What the true state of the negotiations may be can not be stated with any certainty, but there is no indication that any deal is imminent. Or that any deal will resemble what is needed by the Global South.

A doctor in a hospital during the COVID-19 pandemic (photo by Pablo Jarrín)

A surprise announcement by the Biden administration in May 2021, when President Joe Biden announced support for a TRIPS waiver, in a partial reversal of U.S. policy that has consistently elevated corporate profits above all other considerations, raised hopes. But the Biden administration pronouncement is less than meets the eye, and the European Union has remained obstinately opposed to any waiver. Providing a fresh demonstration of the anti-democratic nature of the EU, that the European Parliament has three times called for a waiver to be approved and many EU countries are in support have had no apparent effect on EU negotiators.

The U.S.-based watchdog group Global Trade Watch, in its analysis, says that accepting the EU proposal would be worse than having no deal:

“The European Union has been the primary obstacle to progress on the waiver. … The EU’s position had been to basically restate existing WTO flexibilities on patents that almost every WTO member already has, while requiring additional conditionalities. … Any proposal that follows the EU position is worse than no action at all, because it could further undermine current WTO rules that already allow governments to issue compulsory licenses. The need for far greater, not less, freedom to make and use medicines in a global health crisis like the COVID-19 pandemic is precisely why more than 100 countries have supported the waiver as introduced by India and South Africa.”

The EU, however, is not the only obstacle. The U.S. negotiating position isn’t for a full waiver. The Global Trade Watch analysis states:

“The longstanding U.S. position to support a waiver for vaccines only, excluding the tests and therapeutics, is shameful, particularly as President Biden recently lauded testing and treatment as key tools in fighting the pandemic at this stage. The new proposal only covers vaccines, with tests and treatments to be considered six months after the proposal is agreed, if it is agreed. Given the already seventeen-month delay since the waiver was introduced, it is irresponsible to suggest further delay for tests and therapeutics. … The U.S. had also reportedly suggested limiting the geographic scope of the waiver, which would only further limit the ability to scale up manufacturing all over the world. This demand was apparently agreed, as the proposal now on offer would only apply to developing countries that contributed less than 10% of the world’s exports of COVID-19 vaccine doses in 2021.”

Public statements by the Office of the U.S. Trade Representative have not been encouraging. The trade representative, Katherine Tai, “assured” the U.S. Congress that her office is not “working to give away American IP.” With the usual bipartisan commitment to corporate profits, congressional Republicans and Democrats oppose a meaningful waiver, echoing industry talking points to underline their disapproval. A bloc of Republican representatives is seeking to enforce this by introducing a bill that would grant Congress more oversight over negotiations.

Most of the world’s countries back India, South Africa

As many as 120 of the WTO’s 164 countries are said to be backing India and South Africa. Yet many of these countries would be excluded even from the limited and inadequate proposals put forth by the EU and U.S. As noted above, larger Global South countries would be excluded under the U.S. proposal to limit the countries eligible, while also limiting what would be available. Médecins Sans Frontières/Doctors Without Borders, for example, calls on WTO members to “tackle the current barriers to accessing all COVID-19 medical tools, including treatments and diagnostics, and also addresses patents and non-patent barriers in an effective way.” Dimitri Eynikel, EU Policy Advisor for MSF’s Access Campaign, noting the “considerable limitations” of what is on the table, said:

“It is incredibly concerning that the leaked text currently only covers vaccines, but neither treatments nor diagnostics. Excluding treatments and diagnostics is a critical weakness, especially as access to COVID-19 treatments remains a significant problem in many low- and middle-income countries, particularly in Latin America, in part because of patent barriers and restrictive licensing deals controlled by pharmaceutical corporations. Excluding countries with significant manufacturing and supply capacity like Brazil is highly problematic as it arbitrarily blocks potential critical avenues to increase access to COVID-19 medical tools for low- and middle-income countries.”

The severe limitations the EU and U.S. are attempting to impose make it unlikely that a “deeply flawed text” can be set right, according to Professor Jane Kelsey of the University of Auckland. Noting that by the end of 2021, more boosters had been given in high-income countries than total doses in low-income ones, Dr. Kelsey wrote, “The leaked ‘solution’ agreed by the informal ‘quad’ (US, EU, India and South Africa) is insufficient, problematic and unworkable. There are too many limitations to make any significant difference and it is a far cry from the original proposal from India and South Africa that would have effectively addressed the barriers.”

Perhaps activists and medical professionals going on the offensive as part of a public-pressure effort is one way that a fair deal might be forced. Nurses from 28 countries filed a complaint in November 2021 with the United Nations alleging human rights violations by the EU and four countries for “the loss of countless lives” in the pandemic. The nurses, representing more than 2.5 million health care workers around the world, named Britain, Norway, Singapore and Switzerland in their filing — the four countries known to be standing with the EU. The nurses charge that “these countries have violated our rights and the rights of our patients — and caused the loss of countless lives” through “continued opposition to the TRIPS waiver … resulting in the violation of human rights of peoples across the world.” The complaint notes human rights obligations to which WTO member states are legally bound.

Nurses demand safe staffing (Photo via National Nurse magazine)

The organizations behind the filing are mostly from the Global South, but among the 28 are ones from Canada (Canadian Federation of Nurses Unions and Fédération interprofessionnelle de la santé du Québec), the United States (National Nurses United) and Australia (Australian Nursing and Midwifery Federation)).

Deborah Burger, president of National Nurses United, which represents more than 175,000 members in the United States, was unsparing in her assessment. She said:

“The maldistribution of vaccines in the face of more than 5 million deaths, many of them preventable, is a devastating reminder of the deplorable disparity of wealth between the rich nations of the north and the global south. To refuse to act simply to protect the profits of giant pharmaceutical corporations is unconscionable, inhumane, and must be ended.”

Upon receipt of the complaint, Dr. Tlaleng Mofokeng, the UN’s Special Rapporteur on Physical and Mental Health, said, “The nurses’ core demand is one I share.” She said:

“States have a collective responsibility to use all available means to facilitate faster access to vaccines, including by introducing a temporary waiver of relevant intellectual property rights under the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS Agreement). Nurses and health care workers have been on the front line keeping us safe and have witnessed the most painful and heart-wrenching effects of the Covid-19 pandemic. Their evident commitment to the right to physical and mental health provides them with moral authority.”

No executive or shareholder is any danger of starving

Let us now return to the profit margins of pharmaceutical companies and the massive windfall profits being racked up by Covid-19 vaccine manufacturers, which will provide some context to industry arguments. The business news agency Bloomberg reports that Pfizer’s vaccine generated $20 billion in pretax profit in 2021 while Moderna “is expected by analysts to earn $12.2 billion before taxes this year.” Pfizer’s vaccine may rack up $36 billion in revenue this year.

The pharmaceutical industry was already one of the most profitable. To provide some examples, health technology was found to be the most profitable of 19 broadly defined “major” industrial sectors in the U.S. for 2015 and 2016. A BBC report found that pharmaceuticals and banks tied for the highest average profit margin in 2013, with five pharmaceutical companies enjoying a profit margin of 20 percent or more — Pfizer among them. The most profitable pharmaceutical corporations spent far more on sales and marketing than they did on research and development. With little control exerted over pharmaceutical prices in the U.S., it is no wonder that U.S. health care costs are the world’s highest, greatly exceeding any other country.

Even by these rarified standards, the boost to profit margins from Covid-19 have been noteworthy. Pfizer reported almost $22 billion in net income for 2021, only $3 billion more than it reported for 2020 and 2019 combined. Moderna, which even self-described “capitalist tool” Forbes magazine says produced a vaccine “largely funded by taxpayer dollars,” reported $12.2 billion in profits for 2021. Moderna received a billion dollars in government subsidies for its vaccine, and has, overall, received $6 billion from the U.S. government to develop, test, manufacture and deliver its vaccine.

Johnson & Johnson reported net income of almost $21 billion for 2021, a healthy gain of 40 percent over the previous year, a much larger gain than the gain it reported in revenue. And AstraZeneca reported a 37 percent increase in its core earnings per share (a comparison apparently used to exclude special one-time costs from an acquisition).

So it appears that no executive or shareholder of these four pharmaceutical makers is in any danger of being out on the street.

What is the problem in sharing the technology that would finally put an end to the pandemic? The real reason is that the maximum possible amount of profit wouldn’t be accrued. No big corporation is going to admit that, so other excuses are offered.

Debunking Big Pharma’s favorite talking points

The director-general of the World Health Organization, Tedros Adhanom Ghebreyesus, had a revealing conversation with Pfizer’s chief executive officer. As reported by Bloomberg, Dr. Tedros, on a conference call with pharmaceutical executives, said, “Honestly, I’m not seeing the commitment I would expect from you.” The Pfizer chief executive, Albert Bourla, whined that Dr. Tedros was speaking “emotionally.” Consistent with that exchange, Johnson & Johnson’s chief scientific officer, Paul Stoffels, declared at an industry lobbying group gathering that there was no need for any waivers because the industry’s efforts are “sufficient.”

Letting the pharmaceutical industry have its way quite clearly hasn’t been “sufficient,” given the small numbers of vaccines available to the Global South well more than a year since vaccines became available and the inability to stop the pandemic given that lack of availability. The Bloomberg report admitted that “Vaccine inequality didn’t happen by itself. It was the result of decisions by corporate executives and government officials.”

Yonge-Dundas Square in Toronto during the pandemic (photo by Sikander Iqbal)

Big Pharma talking points have revolved around claims that restrictive patents are necessary to encourage research and development, without which supposedly nothing would be invented. (Yet Jonas Salk famously declined to pursue a patent on the polio vaccine.) A new line has emerged during the pandemic: That even if a full waiver were granted, the Global South is incapable of producing vaccines because of a lack of capability or capacity, and thus granting rights would do nothing to solve the pandemic. Government officials backing the pharmaceutical industry loudly echo these claims, among them former German Chancellor Angela Merkel, French President Emmanuel Macron, and members of the U.S. Congress who are recipients of Big Pharma donations.

The In These Times article “Big Pharma’s Big Lies About Vaccine Patents,” debunks these talking points:

“It’s clever messaging, because it has an air of expert knowledge, casting companies as patiently informing activists who are well-intentioned but don’t understand how vaccine production works. It also plays to pre-existing racist assumptions that the Global South does not have pharmaceutical sectors capable of producing quality goods, but must rely on its more sophisticated former colonizers. … We don’t have definitive proof that pharmaceutical executives sat in a room somewhere and said, ‘Let’s deceive the public about the world’s vaccine manufacturing capacity.’ But there have been enough activists, scientists, and heads of state pointing out holes in Big Pharma’s narrative to make it highly likely that the industry, at the very least, was aware of challenges to the veracity of its claims. And it was in its interest to ignore them. Remarkably, the industry has shown it would rather build its own facilities from scratch — like the BioNTech facilities in Rwanda and Senegal, which won’t even start construction until mid-2022 — than give Global South countries the ability to produce vaccines themselves.”

India, for example, ranks third in the world in producing pharmaceuticals, measured by volume, and generics already constitute 70 to 80 percent of the world pharmaceutical market. The Serum Institute of India is the world’s largest producer of vaccines by number of doses produced and sold.

It’s not only vaccines that are being held back

Beyond vaccines, what about pills that are being developed? Pfizer has developed a Covid-19 oral antiviral treatment and granted a royalty-free license for the pill to the United Nations-backed Medicines Patent Pool, but the license covers only about half the world’s population. The Associated Press reported, “The deal excludes some large countries that have suffered devastating coronavirus outbreaks. For example, while a Brazilian drug company could get a license to make the pill for export to other countries, the medicine could not be made generically for use in Brazil.”

The Medicines Patent Pool said on March 18 that 35 companies around the world will produce generic versions of the pill, which has received an emergency approval by the U.S. Food and Drug Administration. The countries where the generic producers are located include Bangladesh, Brazil, China, the Dominican Republic, Jordan, India, Israel, Mexico, Pakistan, Serbia, South Korea and Vietnam.

Nonetheless, health care activists note that the license is less than adequate. Yuanqiong Hu, senior legal policy advisor for Médecins Sans Frontières/Doctors Without Borders’ Access Campaign said:

“Pfizer’s license with the Medicines Patent Pool for its potential oral antiviral treatment offers supply to 95 countries by generic companies that take up the license, covering about 53% of the world’s population, but this again shows how voluntary licenses come up short and do not harness the full capacity available globally for sufficient and sustainable production and supply of lifesaving medical tools for all. Many upper middle-income countries, such as Argentina, Brazil, China, Malaysia and Thailand, where established generic production capacity exists, are excluded from the license territory. We are disheartened to see yet another restrictive voluntary license during this pandemic while cases continue to rise in many countries around the world. The world knows by now that access to COVID-19 medical tools needs to be guaranteed for everyone, everywhere, if we really want to control this pandemic.”

What is more important: Ending the pandemic or increasing corporate profits? Life or money? The world capitalist system is making its choice. Should that choice be allowed to stand?

The “innocence” of early capitalism is another fantastical myth

It is not unusual for critics of United States foreign policy, whether or not they feel free to use the term “imperialism,” to express regret that a previously rational system has soured. Such sentiments are routine for liberals and hardly unknown among social democrats.

Such sentiments are, to anyone who cares to pursue a study of history, quite ahistorical. Violence, force and coercion — exemplified in widespread use of slave labor, imperialist conquests of peoples around the world and ruthless extraction of natural resources — pervades the entire history of capitalism. The rise of capitalism can’t be understood outside slavery, colonialism and plunder. To follow up on my previous article discussing how U.S. domination of the world is rooted in the stranglehold Washington has over the world’s financial institutions and its possession of the dominant currency, let’s conduct a further examination of the history of how capitalism functions, this time highlighting imperialism and violence.

My inspiration for this examination is my recent reading of John Perkins’ Confessions of an Economic Hit Man. Mr. Perkins, for those not familiar with his book, provides a first-hand account of how the U.S. government employs debt, financial entanglements, bribes, threats and finally violence and assassinations of national leaders who won’t place their economies and resources under the control of U.S.-based multi-national corporations. That is no surprise to anyone paying attention, but the book became an improbable best seller, meaning there must have been many eyes opened. That can only be a positive development.

The conquest of the Incas (mural by FUEJXJDK)

But even Mr. Perkins, who is unsparing in drawing conclusions and under no illusions about what he and his fellow “economic hit men” were doing and on whose behalf, shows a measure of naïveté. He repeatedly draws upon the “ideals of the U.S. founding fathers” and laments that a republic dedicated to “life, liberty, and the pursuit of happiness” has morphed into a global empire. Given the outstanding service he has provided in writing his book, and the physical danger that he put himself in to publish it (he postponed writing it multiple times fearing possible consequences), least of all do I want to imply criticism or raise any snarky accusations against Mr. Perkins. My point here is that even a strong critic of U.S. imperialism with eyes open can harbor illusions about the nature of capitalism. The all-encompassing pervasiveness of capitalist propaganda, and that the relentless dissemination of it across every conceivable media and institutional outlet, still leaves most people with a wistful idealization of some earlier, innocent capitalism not yet befouled by anti-social behavior and violence or by greed.

Such an innocent capitalism has never existed, and couldn’t.

Horrific, state-directed violence in massive doses enabled capitalism to slowly establish itself, then methodically expand from its northwestern European beginnings. It is not for nothing that Karl Marx famously wrote, “If money … ‘comes into the world with a congenital blood-stain on one cheek,’ capital comes dripping from head to foot, from every pore, with blood and dirt.”

Markets over people from the start

Although the relative weight that should be given to the two sides of the equation of how capitalism took root in feudal Europe — feudal lords pushing their peasants off the land to clear space for commodity agricultural products or the capital accumulated from trade by merchants growing large enough to create the surpluses capable of being converted into the capital necessary to start production on a scale larger than artisan production — is likely never to be definitively settled (and the two basic factors reinforced one another), force was a crucial midwife. English lords wanted to transform arable land into sheep meadows to take advantage of the demand for wool, and began razing peasant cottages to clear the land. These actions became known as the “enclosure movement.”

Forced off the land they had farmed and barred from the “commons” (cleared land on which they grazed cattle and forests in which they foraged), peasants could either become beggars, risking draconian punishment for doing so, or become laborers in the new factories at pitifully low wages and enduring inhuman conditions and working hours. The brutality of this process is glimpsed in this account by historian Michael Perelman, in his book The Invention of Capitalism:

Simple dispossession from the commons was a necessary, but not always sufficient, condition to harness rural people to the labor market. A series of cruel laws accompanied the dispossession of the peasants’ rights, including the period before capitalism had become a significant economic force.

For example, beginning with the Tudors, England created a series of stern measures to prevent peasants from drifting into vagrancy or falling back onto welfare systems. According to a 1572 statute, beggars over the age of fourteen were to be severely flogged and branded with a red-hot iron on the left ear unless someone was willing to take them into service for two years. Repeat offenders over the age of eighteen were to be executed unless someone would take them into service. Third offenses automatically resulted in execution. … Similar statutes appeared almost simultaneously in England, the Low Countries, and Zurich. … Eventually, the majority of workers, lacking any alternative, had little choice but to work for wages at something close to subsistence level.”

Additional taking of the commons occurred in the early 19th century, when British industrialists sought to eliminate the remaining portions of any commons left so there would be no alternative to selling one’s labor power to capitalists for a pittance. As industrial resistance gathered steam, the British government employed 12,000 troops to repress craft workers, artisans, factory workers and small farmers who were resisting the introduction of machinery by capitalists, seeing these machines as threats to their freedom and dignity. That represented more troops than Britain was using in its simultaneous fight against Napoleon’s armies in Spain.

Slavery critical to capitalist accumulation

Nor can the role of slavery in bootstrapping the rise of capitalism be ignored. The slave trade, until the end of the seventeenth century, was conducted by government monopolies. European economies grew on the “triangular trade” in which European manufactured goods were shipped to the coast of western Africa in exchange for slaves, who were shipped to the Americas, which in turn sent sugar and other commodities back to Europe. Britain and other European powers earned far more from the plantations of their Caribbean colonies than from North American possessions; much Caribbean produce could not be grown in Europe, while North American colonies tended to produce what Europe could already provide for itself.

Britain profited enormously from the triangular trade, both in the slave trade itself and the surpluses generated from plantation crops produced with slave labor. Proceeds from the slave trade were large enough to lift the prosperity of the British economy as a whole, provide the investment funds to build the infrastructure necessary to support industry and the scale of trade resulting from a growing industrial economy, and ease credit problems.

Sheep in a meadow (Eugène Verboeckhoven)

Spain’s slaughter of Indigenous peoples and Spanish use of the survivors as slaves to mine enormous amounts of gold and silver — the basis of money across Europe and Asia — also was a crucial contributor to the rise of European economies, both by swelling the amount of money available and enabling the importation of goods from China, which was not interested in buying European products but had a need of silver to stabilize its own economy. The Spanish priest Bartolomé de las Casas, horrified at what he witnessed, wrote in 1542, “the Spaniards, who no sooner had knowledge of these people than they became like fierce wolves and tigers and lions who have gone many days without food or nourishment. And no other thing have they done for forty years until this day, and still today see fit to do, but dismember, slay, perturb, afflict, torment, and destroy the Indians by all manner of cruelty — new and divers and most singular manners such as never before seen or read of heard of — some few of which shall be recounted below, and they do this to such a degree that on the Island of Hispaniola, of the above three millions souls that we once saw, today there be no more than two hundred of those native people remaining.”

When the Spanish were kicked out by Latin America’s early 19th century wars of liberation, that did not mean real independence. The British replaced the Spanish, using more modern financial means to exploit the region. The era of direct colonialism, beginning with Spain’s massive extraction of gold and silver, was replaced by one-sided trading relationships following the region’s formal independence in the early nineteenth century. George Canning, an imperialist “free trader” who was the British foreign secretary, wrote in 1824: “The deed is done, the nail is driven, Spanish America is free; and if we do not mismanage our affairs sadly, she is English.” 

Canning was no idle boaster. At the same time, the French foreign minister lamented, “In the hour of emancipation the Spanish colonies turned into some sort of British colonies.” And lest we think this was simply European hubris, here is what the Argentine finance minister had to say: “We are not in a position to take measures against foreign trade, particularly British, because we are bound to that nation by large debts and would expose ourselves to a rupture which would cause much harm.” What had happened? Argentina flung its ports wide open to trade under British influence, flooding itself with a deluge of European goods sufficient to strangle nascent local production; when Argentina later attempted to escape dependency by imposing trade barriers in order to build up its own industry, British and French warships forced the country open again.

The “right” to force opium on China to maintain profits

Imperialism was not confined to any single continent. Consider Britain’s treatment of China in the latter half of the 19th century. (We are concentrating on Britain for the moment because it was the leading capitalist power at this time.) British warships were sent to China to force the Chinese to import opium, a drug that was illegal back home. This was done under the rubric of Britain’s alleged “right to trade.” Under this doctrine, underdeveloped countries had no choice but to buy products from more powerful capitalist countries, even products that caused widespread injury to the country’s people. This could also be considered a “right” to force opium on China. Where else but under capitalism could such a preposterous “right” be conjured? U.S. smugglers also made enormous fortunes selling opium to Chinese as well.

A 2015 Medium article detailing the background and results of the two opium wars, noted the huge amounts of money that were made:

“Opium was big business for the British, one of the critical economic engines of the era. Britain controlled India and oversaw one million Indian opium farmers. By 1850, the drug accounted for a staggering 15 to 20 percent of the British Empire’s revenue, and the India-to-China opium business became, in the words of Frederic Wakeman, a leading historian of the period, the ‘world’s most valuable single commodity trade of the nineteenth century.’ Notes Carl Trocki, author of Opium, Empire and the Global Economy, ‘The entire commercial infrastructure of European trade in Asia was built around opium. … [A] procession of American sea merchants made their fortunes smuggling opium. They were aware of its poisonous effects on the Chinese people, but few of them ever mentioned the drug in the thousands of pages of letters and documents they sent back to America.’ ”

Eventually, Chinese authorities ordered foreigners, mainly British and U.S., to hand over all opium. After a refusal, Chinese authorities destroyed all the opium they could find. In response, British warships were sent to bombard coastal cities until China agreed to the one-sided Treaty of Nanking, in which it was forced to pay Britain an indemnity of millions, to cede Hong Kong and to open five ports to trade, where foreigners were not subject to Chinese law or authorities.

When further demands were refused, the British, French and U.S. navies launched the second opium war, attacking coastal and interior cities. They invaded Beijing, “chased the emperor out of town, and, in an orgy of fine-art and jewelry looting, destroyed the Versailles of China, the old Summer Palace.” A new treaty, more unequal than the first, was imposed, forcing open the entire country. A British lawyer enlisted to provide justification for this behavior wrote, as the first opium war was developing, “Our men of war are now, it is to be hoped, far on their way towards China, which shall be ‘our oyster, which [we] with sword will open.’ Then may we extract from the Emperor an acknowledgement of the heinous offence — or series of offences — which he has committed against the law of nature and of nations, and read him a lesson, even from a barbarian book, which will benefit him and all his successors.” 

Fantastic profits for European capital; death for Africans

Nor was Africa spared exploitation. Far from it. The exact number of Africans kidnapped and forcibly transported across the Atlantic will never be known, but scholars’ estimates tend to range from about ten million to twelve million. The human toll, however, is still higher because, simultaneous with those who were successfully kidnapped, millions more were killed or maimed, and thus not shipped across the Atlantic. This level of inhumanity cannot be accomplished without an accompanying ideology. 

Walter Rodney, in his outstanding contribution to understanding lagging development in the South, How Europe Underdeveloped Africa, pointed out that although racism and other hatreds, including anti-Semitism, long existed across Europe, racism was an integral part of capitalism because it was necessary to rationalize the exploitation of African labor that was crucial to their accumulations of wealth.  “Occasionally, it is mistakenly held that Europeans enslaved Africans for racist reasons,” Dr. Rodney wrote. “European planters and miners enslaved Africans for economic reasons, so that their labor power could be exploited. Indeed, it would have been impossible to open up the New World and to use it as a constant generator of wealth, had it not been for African labor. There were no other alternatives: the American (Indian) population was virtually wiped out and Europe’s population was too small for settlement overseas at that time.”

The triangular trade (Graphic by Sémhur)

Exploitation did not end with the end of slavery in the 19th century, Dr. Rodney pointed out. Colonial powers confiscated huge areas of arable land in Africa, then sold it at nominal prices to the well-connected. In Kenya, for example, the British declared the fertile highlands “crown lands” and sold blocks of land as large as 550 square miles (1,400 square kilometers). These massive land confiscations not only enabled the creation of massively profitable plantations, but created the conditions that forced newly landless Africans to become low-wage agricultural workers and to pay taxes to the colonial power. Laws were passed forbidding Africans from growing cash crops in plantation regions, a system of compulsion summed up by a British colonel who became a settler in Kenya: “We have stolen his land. Now we must steal his limbs. Compulsory labor is the corollary of our occupation of the country.” In other parts of colonial Africa, where land remained in African hands, colonial governments slapped money taxes on cattle, land, houses and the people themselves; subsistence farmers don’t have money to pay money taxes so farmers were forced to grow cash crops, for which they were paid very little.

The alternative to farming was to go to work in the mines, where wages were set at starvation levels. European and North American mining and trading companies made fantastic profits (sometimes as high as 90 percent) and raw materials could be exploited at similar levels. (A U.S. rubber company, from 1940 to 1965, took 160 million dollars worth of rubber out of Liberia while the Liberian government received eight million dollars.) Another method of extracting wealth was through forced labor — French, British, Belgian and Portuguese colonial governments required Africans to perform unpaid labor on railroads and other infrastructure projects. The French were particularly vicious in their use of forced labor (each year throughout the 1920s, 10,000 new people were put to work on a single railroad and at least 25 percent of the railroad’s forced laborers died from starvation or disease). These railroads did not benefit Africans when independence came in the mid-20th century because they were laid down to bring raw materials to a port and had no relationship to the trading or geographical patterns of the new countries or their neighbors.

The entire territory that today constitutes the Democratic Republic of Congo was, in the late 19th and early 20th century, the personal possession of Belgium’s king, Leopold II. At least 10 million Congolese lost their lives at the hands of Belgian authorities eager to extract rubber and other resources at any cost. This genocidal plunder — the loss of life halved the local population — rested on a system of terror and slave labor. This system included forced labor requiring work in mines day and night, the chopping off of hands as punishment and “the burning of countless villages and cities where every individual who was found was killed.”

As the U.S. grew to prominence, becoming a leading capitalist power itself as the 20th century began, overthrowing governments to ensure undisputed “profitable investment” became routine. The U.S., incidentally, was the first country to recognize King Leopold’s claim to Congo.

If it’s your “backyard” you do what you want to do

The U.S. has long considered Latin America its “backyard.” Cuba’s economy was based on slave-produced sugar cane under Spanish rule, and when a series of rebellions finally succeeded in freeing the country from Spanish colonial rule, Cuban independence was formal only as the United States quickly became a colonial master in all but name. U.S. forces left Cuba in 1902 after a four-year occupation but not before dictating that Cubans agree to the Platt Amendment. The amendment, inserted into the Cuban constitution as the price for U.S. withdrawal, gave the U.S. control over Cuban foreign and economic policies and the right to intervene with military force to protect U.S. corporate interests. By 1905, U.S. interests owned 60 percent of Cuba’s land and controlled most of its industry. Just four months after the 1959 revolution took power, the U.S. government was already viewing the potential success of the revolution as a “bad example” for the rest of Latin America. The U.S. State Department defined U.S. goals in Cuba as “receptivity to U.S. and free world capital and increasing trade” and “access by the United States to essential Cuban resources.” Those goals have not changed to this day.

That follows naturally from what the pre-revolution U.S. ambassador to Cuba, Earl T. Smith, had said of the island country: “I ran Cuba from the sixth floor of the US embassy. The Cubans’ job was to grow sugar and shut up.”

When a strike broke out against the United Fruit Company in Colombia in 1929, the action was put down through a massacre of the workers. The U.S. embassy in Bogotá cabled the State Department in Washington this triumphant message: “I have the honor to report that the Bogotá representative of the United Fruit Company told me yesterday that the total number of strikers killed by the Colombian military exceeded one thousand.” Honor. Think about that.

For much of the 20th century, the effective ruler of Guatemala and Honduras was the United Fruit Company. The company owned vast plantations in eight countries, and toppled governments in Guatemala and Honduras. For many years, United Fruit had an especially sweet deal in Guatemala. The company paid no taxes, imported equipment without paying duties and was guaranteed low wages. The company also possessed a monopoly on Guatemalan railroads, ocean ports and the telegraph. When a president, Jacobo Arbenz, moved to end this exploitation and orient Guatemala’s economy toward benefiting Guatemalans through mild reforms, the CIA overthrew him. U.S. intelligence agencies declared Arbenz’s program had to be reversed because loosening the United Fruit Company’s domination of the country was against U.S. interests. The U.S. instituted what would become a 40-year nightmare of state-organized mass murder. A series of military leaders, each more brutal than the last and fortified with U.S. aid, unleashed a reign of terror that ultimately cost 200,000 lives, 93 percent of whom were murdered by the state through its army and its death squads.

Viñales Valley, Pinar del Rio province, Cuba (photo by Adam Jones adamjones.freeservers.com)

But not outside ordinary policy. The United States has militarily invaded Latin American and Caribbean countries 96 times, including 48 times in the 20th century. That total constitutes only direct interventions and doesn’t include coups fomented by the U.S., such as Guatemala in 1954 and Chile in 1973. Most of these invasions were for reasons along the lines articulated by former U.S. president William Howard Taft: to ensure profits for one or more U.S. corporations or to overthrow governments that did not prioritize the maximization of those profits. 

But not outside ordinary policy. The United States has militarily invaded Latin American and Caribbean countries 96 times, including 48 times in the 20th century. That total constitutes only direct interventions and doesn’t include coups fomented by the U.S., such as Guatemala in 1954 and Chile in 1973. Most of these invasions were for reasons along the lines articulated by former U.S. president William Howard Taft: to ensure profits for one or more U.S. corporations or to overthrow governments that did not prioritize the maximization of those profits. 

The U.S. invaded and occupied Nicaragua multiple times. One of these occasions, in 1909, came as a result of a Nicaraguan president accepting a loan from British bankers instead of U.S. bankers, then opening negotiations with Germany and Japan to build a new canal to rival the Panama Canal. The U.S. installed a dictatorship, and President Taft placed Nicaragua’s customs collections under U.S. control. The disapproved British loan was refinanced through two U.S. banks, which were given control of Nicaragua’s national bank and railroad as a reward. These developments were not an accident, for President Taft had already declared that his foreign policy was “to include active intervention to secure our merchandise and our capitalists opportunity for profitable investment” abroad.

All these atrocities — and countless others — all happened before the assassinations in Ecuador, Iran and Panama of heads of state who refused to do as they were ordered to by U.S. government operatives (and, in the case of Omar Torrijos, refusing the bribes that were the first tactic to get local leaders on side) recounted by Mr. Perkins in Confessions. No, those atrocities — and the author leaves us in no doubt that those were not “accidents” but were assassinations carried out by the U.S. government — do not represent an unprecedented turn to the dark side. Those acts, as are the present-day sanctions that kill in the hundreds of thousands, are business as usual for the U.S. government and the capitalism it imposes around the world. Imperialism, brutality and violence are nothing new; they are essential tools long wielded in abundance.

Far more examples could be cited; the above represents a minuscule fraction of atrocities that could be told. Such a long history of systematic violence and brutality speaks for itself as to the “morality” of capitalism.

Private sector is “efficient” only at extracting money from public

There is nothing that capitalists won’t grab if they see a possibility to score a profit. Not even the most basic needs for human life, such as water, are exempt.

A favorite tactic for grabbing what had once been in the public domain and converting it into private profit is the “public-private partnership.” A tactic sadly abetted by the world’s governments, as the name implies.

Public-private partnerships (PPPs), a decades-long string of disasters for the public but often a bonanza for the private, have left behind a long trail of one-sided results in water systems, electricity distribution, sewers, highways, hospitals and other infrastructure. The latest report testifying to the damage wrought by PPPs comes to us courtesy of the European Federation of Public Service Unions (EPSU), a federation of 8 million public service workers from over 250 trade unions across Europe, and the European Network on Debt and Development (Eurodad), a network of 49 civil society organizations from 20 European countries “working for transformative yet specific changes to global and European policies, institutions, rules and structures.”

The Palace of Westminster (photo by Andrew Dunn)

The EPSU/Eurodad report, “Why public-private partnerships (PPPs) are still not delivering,” paints a damning picture. The report declares:

“PPP advocates claim they bring financing, efficiency and innovation. But real-life experience reveals a different picture. The following points outline eight reasons why PPPs are not working: 1. PPPs do not bring new money – they create hidden debt 2. Private finance costs more than government borrowing 3. Public authorities still bear the ultimate risk of project failure 4. PPPs don’t guarantee better value for money 5. Efficiency gains and design innovation can result in corner-cutting 6. PPPs do not guarantee projects being on time or on budget 7. PPP deals are opaque and can contribute to corruption 8. PPPs distort public policy priorities and force publicly run services to cut costs.”

The EPSU/Eurodad report defines PPPs as “long-term contractual arrangements where the private sector provides infrastructure assets and services that have traditionally been directly funded by government, such as hospitals, schools, prisons, roads, bridges, tunnels, railways, and water and sanitation plants, and where there is also some form of risk sharing between the public and the private sector.” There may be risk sharing on paper, but in reality even this definition is a little too generous toward PPPs — in almost all cases, contractual clauses put the risk squarely on the public, and when the private company that has taken over a previously public good proves unable to manage or goes out of business, it is the public that pays.

The paper drew on examples across Europe, with some of the worst examples coming in Britain. Privatizing public services leads to higher costs, reductions in the quality of service and lengthier periods in completing construction. All of these results, of course, are directly opposite of what incessant capitalist propaganda continually blares. Although the EPSU/Eurodad report didn’t speculate as to why these results occur, it takes little imagination to see the reasons: Corporations exist to make the biggest profit regardless of social cost while governments need only provide a reliable service without having to generate seven- and eight-figure salaries for executives and windfalls for stockholders and other speculators.

It’s not profits above all else, it’s nothing but profits

Consider the words of Milton Friedman, godfather of the Chicago School of economics whose words are widely followed in corporate boardrooms and in financial publications. He 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.’ ”

That is the standard of the corporate world: Profits for speculators, period. No other considerations, no matter how flowery their public relations concoctions may be. There are no exceptions because a service or product is necessary for human life.

To return to the EPSU/Eurodad report, a much higher cost of financing was one cause of higher costs for the public to access previously public goods. Noting the hidden debt in these deals, the paper said, “In a PPP, instead of the public authority taking a loan to pay for a project, the private sector arranges the financing and builds the infrastructure, then the public sector pays a set fee over the lifetime of the PPP contract. In some cases, users also pay part or all of the fee directly to the private sector company (e.g. toll roads).” The United Kingdom National Audit Office “found that the effective interest rate of all private finance deals (7%-8%) was double that of all government borrowing (3%-4%).”

The Grand Palais in Paris (photo by Thesupermat)

An even larger differential was found in France: “A particularly vivid example was the Paris Courthouse PPP, signed in 2012, which featured an investment of €725.5 million and no less than €642.8 million in financing costs. The French Court of Auditors found that the interest rate for borrowing for the PPP was 6.4 per cent, while in 2012 the weighted average rate for government bond financing in the medium-long term was 1.86 per cent,” the report said, adding that operating costs were also higher. 

Another example is a Stockholm hospital that cost €2.4 billion instead of the projected €1.4 billion. The hospital was not only completed four years later than scheduled, but a “design competition” resulted in “operating theatres not being adapted for operations; the risk of medicines being destroyed because of medicine rooms being too warm; and physicians having to carry administrative material in backpacks because of the lack of space for administrative tasks.” One conclusion from this poor result is that “the high level of complexity, together with the private partner’s interest in cost-cutting as much as possible, can easily result in undesirable corner-cutting.”

The report concludes that “What decades of experience has shown is that PPPs come at a high cost and are not delivering the expected benefits.” 

If you can sell it, they will buy it

PPPs are particularly common in Britain, an unfortunate development that is not the cause of any one party. Britain’s version of public-private partnerships are called “private finance initiatives.” A scheme concocted by the Conservative Party and enthusiastically adopted by the New Labour of Tony Blair and Gordon Brown, the results are disastrous. A 2015 report in The Independent revealed that the British government owed more than £222 billion to banks and businesses as a result of private finance initiatives. Jonathan Owen reported:

“The startling figure – described by experts as a ‘financial disaster’ – has been calculated as part of an Independent on Sunday analysis of Treasury data on more than 720 PFIs. The analysis has been verified by the National Audit Office. The headline debt is based on ‘unitary charges’ which start this month and will continue for 35 years. They include fees for services rendered, such as maintenance and cleaning, as well as the repayment of loans underwritten by banks and investment companies. Responding to the findings, [British Trades Union Congress] General Secretary Frances O’Grady said: ‘Crippling PFI debts are exacerbating the funding crisis across our public services, most obviously in our National Health Service.’ ”

The Independent article reported that private firms can even flip their contracts for a faster payday. Four companies given 25-year contracts to build and maintain schools doubled their money by selling their shares in the schemes less than five years into the deals for a composite profit of £300 million. Clearly, these contracts were given at well below reasonable cost. Nor is health care exempt: A 2019 report by the Progressive Policy Think Tank found that there are English hospitals forced to divert one-sixth of their income to paying back private finance initiatives, with National Health Service trusts paying more than £2 billion on such repayments per year, “taking money away from vital patient services.” For just £13 billion of private investment, the NHS must pay back £80 billion! Quite a windfall for banks.

Naturally, such financial legerdemain is not limited to any particular country. Here is just a small sampling of outcomes:

  • During the course of a 25-year contract with Suez and Veolia, water rates in the city of Paris doubled after accounting for inflation. Thanks to a secret clause, the two companies received automatic price rises every three months. When the contract finished, Paris re-municipalized its water system. Despite the short-term expenses of doing so, the city saved about €35 million in the first year and was able to reduce rates by eight percent.
  • A privatization of the Buenos Aires water and sewer systems resulted in chronic failures to meet contractual obligations, repeated demands that the contract be renegotiated (granted by the neoliberal governments of the 1990s), failure to meet water-safety standards, worsening pollution of underground water sources, and price increases over the first decade of the contract 12 times that of inflation. The Argentine government then had to spend years raising legal challenges to take back the system even though the private company was in obvious default of its contractual obligations.
  • The German city of Bergkamen (population about 50,000) reversed its privatization of energy, water and other services. As a result of returning those to the public sector, the city began earning €3 million a year from the municipal companies set up to provide services, while reducing costs by as much as 30 percent.
  • A report by Food & Water Watch found that investor-owned utilities in the United States typically charge 59 percent more for water and 63 percent more for sewer service than local-government utilities. After privatization, water rates increase at about three times the rate of inflation, nearly tripling on average after 11 years of private control. Corporate profits, dividends and income taxes can add 20 to 30 percent to operation and maintenance costs.
  • A study by University of Toronto researchers of 28 Ontario public-private partnerships found they cost an average of 16 percent more than conventional contracts. Elsewhere in Canada, the Sea-to-Sky Highway in British Columbia will cost taxpayers C$220 million more than if it had been financed and operated publicly, and the cost of a project at the Université de Québec à Montréal was doubled to C$400 million.

Water as a commodity rather than a human right

That even water is a commodity is no surprise when corporate leaders consider it just another product that should have a price, most notoriously enunciated in 2014 when the chairman of Nestlé S.A., Peter Brabeck-Letmathe, issued a video in which he denounced as “extreme” the very idea of water being considered a human right. And not only water — various schemes exist to destroy the U.S. Postal Service in the interest of corporate profit.

There are even corporate executives who want to privatize the weather. No, that’s not in the realm of science fiction. The head of a private weather forecaster, AccuWeather, has repeatedly lobbied to prohibit the U.S. government’s National Weather Service from issuing forecasts! Under this scenario, the Weather Service would hand all of its data to private companies, who would then issue forecasts, while of course letting taxpayers foot the bill for the data. One of the U.S. Senate’s dimmest bulbs, fundamentalist Rick Santorum (thankfully no longer in office), once promoted a bill to do just that. And, incidentally, the National Weather Service issues forecasts more reliable than those of AccuWeather.

Photo by Marlon Felippe

Public-private partnerships are one of the surest ways of shoveling money into the gaping maws of corporate wallets. The result has been disastrous — public services and infrastructure maintenance is consistently more expensive after privatization. Cuts to wages for workers who remain on the job and increased use of low-wage subcontractors are additional features of these privatizations. Less services and fewer employees means more profit for the contractor, and because the contractor is a private enterprise there’s no longer public accountability.

The rationale for these partnerships is, similar to other neoliberal prescriptions, ideological — the private sector is supposedly always more efficient than government. A private company’s profit incentive will supposedly see to it that costs are kept under control, thereby saving money for taxpayers and transferring risk to the contractor. In the real world, however, this works much differently. A government signs a long-term contract with a private enterprise to build and/or maintain infrastructure, under which the costs are borne by the contractor but the revenue goes to the contractor as well.

Public-private partnerships are nothing more than a variation on straightforward schemes to sell off public assets below cost, with working people having to pay more for reduced quality of service. Capitalism in action.

The political economy of Covid-19

Governments around the world are attempting to prop up a failing capitalist system by — surprise! — throwing money at wealthy individuals and corporations, especially in the financial industry. In other words, in this time of unprecedented crisis and economic difficulty, it’s business as usual.

We were here not much more than a decade ago, although the rise in unemployment has been more dramatic than during the economic collapse of 2008. That global economic crisis was a long time coming but was inevitable for anyone willing to pay attention. During the 1990s stock-market bubble, traders repeatedly said the dramatic price rises could not last, but as long as the consensus view was that the long bull market would continue they were not going to step off the ride. When the bubble did burst, new forms of speculation kept the financial industry’s party going for several more years. Credit was the lubricant for the later round, both inflating a real estate bubble and enabling consumer spending to continue in the face of declining wages, until the speculation became unsustainable.

No more bubbles to inflate, governments representing the world’s four largest economies alone 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. Those commitments included $11 trillion for the U.S. (where money thrown at capitalists far exceeded the $700 billion in the Troubled Assets Relief Program), $4 trillion for the European Union, $750 billion for Japan and $600 billion for China. Smaller economies did that too. The Reserve Bank of Australia shoveled A$1.8 billion (US$1.5 billion at the then exchange rate) at financiers to shore up its banking system. The Reserve Bank of India did the same, handing out 60 billion rupees (US$1.3 billion).

Cherry blossoms in Washington (photo by Sarah H. from USA)

All that was simply to deal with the immediate crisis of 2008. As stagnation continued, many of the world’s most prominent central banks decided to throw new gigantic sums of money at the financial industry. Specifically, through programs known by the technical name of “quantitative easing.” What that is are central banks buying in massive amounts bonds issued by their own governments, corporate bonds and/or mortgage-backed securities. For all the talk of the world’s governments taking “unprecedented” measures to deal with the dramatic economic crash triggered by the Covid-19 pandemic, most of the money being committed is in the form of new quantitative easing.

An economic song and dance

The supposed purpose of quantitative-easing programs is to stimulate the economy by encouraging investment. Under this theory, a reduction in long-term interest 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 of the resulting distortion in 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.

By any standard, we are indeed talking about massive amounts of money. Just on “quantitative easing” alone, the Federal Reserve, European Central Bank, Bank of England and Bank of Japan spent approximately US$9.36 trillion, or, if you prefer, €8.3 trillion, in the years following the 2008 collapse. Here’s a breakdown:

  • The Federal Reserve spent $4.1 trillion in three QE programs that ended in November 2014.
  • The European Central Bank spent €2.6 trillion on its QE programs, which only concluded at the end of 2018.
  • The Bank of England spent £375 billion on its QE program.
  • The Bank of Japan has spent north of ¥200 trillion; precise figures are not available. Japan’s QE has been so large and long-lasting that the Bank of Japan now owns assets valued at more than the entire country’s economy.

Think of all the social needs that could have been fixed for such sums. For example, the British think tank Policy Exchange estimated in 2015 that Britain’s needs for investment in transportation, communication and water infrastructure to be a minimum of £170 billion. That is less than half of what the Bank of England spent on its quantitative-easing scheme. The U.S. could have wiped out all student debt, fixed all the schools, rebuilt aging water and sewer systems, cleaned up contaminated industrial sites and repaired dams — all for $700 billion less than what was spent on quantitative easing.

Given this recent history — by no means an aberration in the history of these capitalist governments — it is no surprise that relief for the economic crash caused by Covid-19 has been largely directed at corporate boardrooms and the bank accounts of the wealthy.

Stimulus packages to deal with pandemic, but who gets stimulated?

The Federal Reserve, like most central banks, is “independent” of the rest of government. The reason given is to avoid “political interference,” but in reality so the elites of financial institutions can continue to do whatever they want without consequence. But as is customary, the Federal Reserve doesn’t act in a vacuum; Congress and the White House are also doing what they can to shovel gigantic sums of money at financiers and industrialists.

So far, Congress has passed two stimulus packages that were signed into law, one in late March and the second in April. A third has been passed by the House of Representatives, but the Senate has shown no inclination to take it up and there is reason to doubt House Democrats are actually serious about this last effort.

The first stimulus is the CARES (Coronavirus Aid, Relief, and Economic Security) Act, worth $2 trillion, which was signed into law on March 27. This is the act that resulted in United Statesians receiving one-time $1,200 checks from the federal government. Considering that the average monthly rent in most cities of the United States is more than that, those checks are tokens that serve to obscure where most of the money went. It wasn’t to households left without work.

The Federal Reserve (photo by Stefan Fussan)

A second stimulus bill was passed and signed into law on April 24 and is worth another $500 billion. Most of the money in this second stimulus bill was earmarked for the Paycheck Protection Program (PPP), a loan program in the CARES Act intended for small businesses that may be forgiven if firms use them to keep workers on payroll; the PPP had run out of money in two weeks. Democrats said they wanted money in this round to go to state governments struggling with suddenly shrinking tax revenue but, as is their custom, immediately capitulated when Republicans said no.

The CARES Act included $250 billion to bolster unemployment insurance, $500 billion in aid for industry and state governments, other monies going directly to specific industries and $350 billion for the PPP. Sounds nice, yes? Appearances and reality, however, diverge.

Before the second, supplemental stimulus package was passed, it had already become apparent that much of the stimulus money was going to Big Business. And that was not all, as yet more tax cuts for large corporations were included in the CARES Act. According to Democracy Now, “A congressional committee reports tax provisions in the coronavirus stimulus passed by Congress last month will overwhelmingly benefit the wealthiest Americans. Four out of five tax filers benefiting from the $70 billion temporary tax loophole are millionaires or billionaires. They’ll receive an average windfall of $1.6 million — dwarfing the $1,200 payments for working Americans.”

Manipulation of Paycheck Protection Program

Meanwhile, much of the PPP money didn’t go to mom-and-pop businesses forced to close due to the Covid-19 pandemic. At least 75 publicly traded companies received funds from the PPP, which is supposed to help small businesses. The Associated Press reports:

“The Paycheck Protection Program was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time. But at least 75 companies that received the aid were publicly traded, the AP found, and some had market values well over $100 million. And 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question. By combing through thousands of regulatory filings, the AP identified the 75 companies as recipients of a combined $300 million in low-interest, taxpayer-backed loans. Eight companies, or their subsidiaries, received the maximum $10 million possible, including a California software company that settled a Securities and Exchange Commission investigation late last year into accounting errors that overstated its revenue.”

Even the Big Business cheerleaders at the CNBC business news cable channel reported that “Hundreds of millions of dollars of Paycheck Protection Program emergency funding have been claimed by large, publicly traded companies, new research published by Morgan Stanley shows.” This report estimated that at least $243.4 million of the total $349 billion handed out in the PPP as of April 21 — by which time the PPP had already run out of money — went to publicly traded companies.

The above figures might be an underestimate; a later Washington Post report said “hundreds” of publicly traded companies have received a composite of more than $1 billion in PPP funding, although some of that money has been returned under public pressure. Eighty percent of applicants were left with nothing after funding ran out.

Published reports differ in determining the number of inappropriate recipients of PPP money because there is little accountability. One reason for that, beyond the usual wanting to shield favored donors from public scrutiny, might be that several members of Congress have themselves received PPP money. The Trump administration is refusing to provide information; it would not be a surprise to find there is something to hide there as well. Politico reports that “at least four members of Congress have reaped benefits,” and the actual total might be higher. “It’s a bipartisan group of lawmakers who have acknowledged close ties to companies that have received loans from the program — businesses that are either run by their families or employ their spouse as a senior executive,” Politico reports, naming two Democrats (Susie Lee of Nevada and Debbie Mucarsel Powell of Florida) and two Republicans (Roger Williams of Texas and Vicky Hartzler of Missouri).

Tax breaks for the one percent slipped into stimulus

One tax break inserted into the second stimulus bill only applies to companies with revenue of $25 million and another provision lets people in households earning at least $500,000 a year deduct even more of their business losses from stock market profits, The New York Times reports. These deductions will enable the recipients to reduce what they owe in capital gains taxes. Victor Fleischer, a tax law professor at the University of California, Irvine, told the Times, “Many of the tax benefits in the stimulus are ‘just shoveling money to rich people.’ ”

And given the grifters who occupy the White House, it will come as no surprise that there are special benefits for the owners of real estate. One of the goodies stuffed into the stimulus packages will allow people who own their businesses through partnerships or other similar structures to use all of the losses they claim on paper to offset taxes they might otherwise owe from other income, such as stock market profits, eliminating a cap on how much of those losses could be used. These partnerships can be very profitable, but as long as they show a loss on paper the owners can offset taxes. Jesse Drucker of The New York Times, in an interview on National Public Radio’s Fresh Air program, estimates this tax break for the wealthy will cost the government $135 billion — essentially all of which will go to the top one percent.

The Rideau Canal in Ottawa (photo by John Talbot)

This massive tax break is not specifically written for the real estate industry, but that is the industry that is likely to benefit the most as corporate real estate operations are often structured in these ways. Mr. Drucker said:

“In real estate, you can actually have, in the real world, what is quite a profitable business that generates losses on tax returns because real estate developers get to write down the value of their buildings. That turns into a deduction. And the result is that people like Jared Kushner and Donald Trump — to the degree that we have had some insight into their taxes over the last few years, we have seen that they have reported big losses on their tax returns. In many cases, it’s almost certainly the result of some of these favorable provisions that let them write down the value of their buildings. So the point is that any tax law change you make that gives people the ability to make maximum use of their losses is something that could very easily benefit real estate investors because they have so many losses. And in the case of Jared Kushner and Donald Trump, we don’t have to speculate on that. We know that in previous years, they have reported big losses, which would put them in a position to benefit from this.”

Not even the most elementary provisions to put some limits on where the money is going were inserted into these stimulus bills. For example, although there is a clause prohibiting the use of the money for stock buybacks and extra executive pay, it’s followed by another clause allowing Treasury Secretary Steve Mnuchin (the foreclosure king) to waive the prohibition. Nor are there measures to demand that corporate recipients even pay tax. Reuters reports that the PPP has given “millions of dollars in American taxpayer money to a number of firms that have avoided paying U.S. tax.” Twelve companies provided with $104 million in loans use offshore havens to cut their tax bills, seven of which paid no taxes.

Federal Reserve offers trillions of dollars

The Federal Reserve’s contribution to the wealthy goes far beyond the two stimulus bills. By the end of March, the Fed had already committed more than $3 trillion in loans and asset purchases in the wake of a rapidly collapsing economy. This included fresh commitments to a recently announced new quantitative-easing program in which the Fed had pledged to spend $700 billion to buy Treasury and mortgage-backed bonds in addition to multiple loan programs. Although most of this will come from printing money, $450 billion of this came from the $2 trillion CARES Act stimulus passed by Congress.

Following its March 23 announcement, the Fed announced another round of measures on April 9, this time committing $2.3 trillion in new loans and credits for business and local governments. The centerpiece of this round is the “Main Street Lending Program,” which makes it sound like these loans will be earmarked for small businesses, but loans will be offered to corporations with as many as 10,000 workers and revenues of up to $2.5 billion. Not exactly what we have in mind when we think of “Main Street.” The set of measures could inject $6 trillion into the financial system, but that money, if actually spent, seems mostly destined for the pockets of speculators.

With state and local governments dangerously short on revenue due to the economic crisis, and thus putting social programs in jeopardy, what does the White House want to do? The only “solution” demanded by Donald Trump is to cut the payroll tax, the source of money for Social Security. The president claims he wants a “temporary” payroll tax cut, but that has to be seen not only in light of his complete inability to say anything truthful but his and his administration’s stated desire to cut Social Security. Cutting the funding for the retirement program is a good way to undercut it, which has long been the wish of Wall Street. Even if there weren’t nefarious reasons at work, would a temporary payroll tax cut provide a jolt to the economy? Definitely no, says the Center on Budget and Policy Priorities in a May 12 commentary.

“President Trump has said he will not support any additional relief or stimulus measures in response to the human and economic crisis caused by the Covid-19 pandemic unless they include a temporary payroll tax cut,” the Center said. Stimulus packages are only effective “if they quickly deliver resources to people and businesses that most need it and so are most likely to spend rather than save any extra dollars they receive.” But the Trump plan would fail to help either. The Center said:

“Cutting the employee share of payroll taxes gives the most help (in dollar terms) to higher earners, who are less likely to need the help or to spend most or all of the extra money. Compounding the weaknesses of this approach, it does less for those with lower earnings and nothing at all for people who have lost jobs. And cutting employer payroll taxes is an ineffective way to shore up business hiring and investment. Business’ main problem now is lack of customers for their products — both because of social distancing measures and because many customers’ incomes have fallen dramatically as unemployment has risen. Businesses will not hire (or retain) more workers or invest in more equipment than they need to produce the goods and services they can actually sell.”

Already there are signs that the windfall large businesses have received from the Trump administration have been slipped into bank accounts, not into investment. Economist Jack Rasmus has calculated that the loss of income for the tens of millions of United Statesians plunged into unemployment has cost them a composite $1.3 billion in lost wages. Ridiculing the orthodox economic “theory” that the problem with recessions are “sticky wages” — in other words, wages don’t fall fast enough or far enough during downturns — Professor Rasmus notes that businesses are not investing in the wake of the wage reductions. He writes:

“They’re hoarding the $1.74 trillion in Congressional loans and grants bailouts. And hoarding the $650 billion in business tax cuts also in the bailout legislation thus far (which one hears very little about in the media, I might add). … [T]he short term cash deposits by business in just institutional money funds (only one source) has risen from $2.3 trillion before March 1, 2020 to $3.3T today. That’s a $1T rise in cash deposits by businesses, just in institutional money funds. More is being deposited in commercial banks. The long run average of business deposits in commercial banks has been around 5% (6% under Obama and 4.6% under Trump 2016-19) to 15.8% since March 1. Businesses and investors are hoarding their cash and stuffing it in their short term accounts in banks, funds, and who knows where else, on and offshore.”

Much of that hoard of cash is likely destined for stock buybacks, dividends, speculation, buying companies and boosting lobbying efforts down the road. U.S. corporations spent more than $1.1 trillion on buying back stock in 2018 and although the pace slacked a bit in 2019, more than $700 billion went toward buybacks. Stock buybacks are completely unproductive spending — they are simply corporations buying their own stock, giving those who sell a premium to the trading price and boosting profits for remaining shareholders because the profits will be shared among fewer people. Speculators love them.

Britain, EU and Canada: Lots for financiers, crumbs for working people

Capitalism is a global system, and thus using a crisis to benefit the wealthy and powerful is hardly limited to the United States, even if it is the center of the global capitalist system and thus at the forefront of propping up its winners. Tax Watch UK, which describes itself as an “investigative think tank,” discovered that among the recipients of loans under the Bank of England’s Covid Corporate Financing Facility are 13 companies with links to tax havens or that “have seen controversy regarding their financial affairs.” Those 13 companies received £4.8 billion, or almost 30 percent of the total. Tax Watch UK reports that among these is Baker Hughes, a subsidiary of General Electric, “which is embroiled in a £1 billion tax dispute over unpaid taxes going back to 2004.”

The British government, headed by the mendacious Boris Johnson, hasn’t been shy about handing out money to business. The Bank of England has committed £200 billion to quantitative easing (bond buying), £330 billion in loan guarantees for business and an unspecified amount for “short-term liquidity” for the government, among other measures. Separately, Whitehall has committed tens of billions of pounds to three separate loan programs, property tax holidays, direct grants for small firms, grants for “innovation” and other items. For working people? A total of £14.7 billion of additional funding to the National Health Service and £7 billion for increased payments under the Universal Credit scheme and other benefits. Overall, quite one-sided toward capital.

City of London expanding (Photo by Will Fox)

Similar to the United States and United Kingdom, the bulk of money committed by the European Union to shore up the economy during the Covid-19 pandemic is for quantitative easing. The EU has committed to pouring €1.35 trillion into buying private- and public-sector securities by June 2021 under its Pandemic Emergency Purchase Program.

The EU will also offer a €540 billion addition to its European Stability Mechanism, an International Monetary Fund-style loan program under which money is loaned to governments under condition that recipients implement severe austerity. (This is the program under which the EU paid off the Greek government’s debt to European banks, meaning that Greece instead owed its debts to EU institutions rather than the banks, doing nothing to lower the debt level but forcing Athens to administer punishing austerity that left Greeks destitute.) And on top of the above, the EU has thrown in another €200 billion for businesses. For working people, nothing more than relative crumbs: €37 billion “to support public investment for hospitals, [small businesses], labor markets, and stressed regions” and €100 billion to protect workers and jobs. Once again, quite one-sided in favor of capital.

Back across the Atlantic, Canada has announced multiple programs, including quantitative easing. The Bank of Canada has implemented several QE programs for buying corporate bonds, federal and provincial government bonds, mortgage bonds and commercial paper (short-term debt issued by corporations), as well as programs to provide credit and “support the stability of the Canadian financial system.” The Bank of Canada is not forthcoming about the total cost of these programs; it has committed to spending C$5.5 billion per week, with no cutoff date, on just two programs, the purchases of federal government bonds and mortgage bonds. A measure of what has been spent so far is indicated in the central bank’s balance sheet, which reveals that total assets held by it increased from $120 billion on March 11 to $498 billion on June 11. So that’s $378 billion with more to come.

What is Canada spending on working people? $116 billion for “direct aid to households and firms” and $4 billion for the health system. So a lot less, and even some of this much smaller amount will be going to businesses.

Although more direct aid for working people is being included this time around — given the crisis of neoliberalism and that the massive subsidies to the same financiers responsible for the crash of the economy in 2008 haven’t been forgotten, political leaders had no choice but to sweeten the pot a little — the overwhelming majority of the money dispensed is going to the financial industry and to large corporations. Again it must be asked: How much more useful would it have been to use this money for practical needs and direct payments to people instead of propping up a bloated and wasteful financial system? More directly, how long can the peoples of the world continue to believe that a system in crisis so frequently and requires such massive bailouts works?

The corporate origins of the anti-science “reopen” demonstrations

Many of the same extreme right operatives who created the “Tea Party” are behind the anti-science and anti-intellectual spectacles opposing measures designed to combat the Covid-19 pandemic. And with much the same agenda.

By now, that is not much of a secret, but it is nonetheless necessary to expose these roots, and to debunk the anti-science conspiracy theories they help spread. This is an astroturf operation underwritten by Betsy DeVos, her ultra-reactionary family and veteran operatives linked to them, with FreedomWorks, primary organizer of the early Tea Party protests, and the Club For Growth, a libertarian outfit dedicated to eliminating Social Security, lurking in the background.

Perhaps the most virulent outbreak was in Lansing, where armed militia members were given free reign to roam Michigan’s state capitol building, causing a legislative session to be called off. A truly dangerous precedent — will these characters be allowed to take over the capitol next time? And that these White protestors were left untouched, even allowed to hijack the functioning of government for a day, makes for a sharp contrast with the Black Lives Matter protestors being arrested and brutalized by police around the country.

A doctor in a hospital during the COVID-19 pandemic (photo by Pablo Jarrín0

To make another comparison, recall that similar armed White militia members were allowed to take over a federal sanctuary and desecrate Native American artifacts in rural Oregon in 2016. Can anybody imagine Black protestors taking over a government facility with an intention of sparking a rebellion lasting even a day without every police agency that could mobilize mowing them down in a fusillade of bullets and bombs, much less being allowed to spend weeks and allowed to come and go as they pleased?

Let’s examine the evidence. There is plenty of it, should we wish to look.

The wealthy extremists behind the astroturf campaign

Edwin Rios, writing in Mother Jones on April 17, 2020, provided this report on the Lansing demonstrations:

“The protest, known as ‘Operation Gridlock,’ featured a fair share of MAGA hats, Trump flags, at least one Confederate flag, chants of ‘Lock her up!’ in reference to [Governor Gretchen] Whitmer, and far-right groups from the Proud Boys to the Michigan Liberty Militia. They clogged up the streets outside the state Capitol and defied Whitmer’s ban on public gatherings. The whole charade was facilitated by the Michigan Conservative Coalition, a conservative political group that doubles as a front for Michigan Trump Republicans, and promoted by the Michigan Freedom Fund, a conservative group with ties to Education Secretary Betsy DeVos, a Michigan billionaire philanthropist power broker before she joined the Trump administration.”

A detailed Snopes report put together by Alex Kasprak and Bethania Palma found plenty of DeVos family money:

[T]his anti-lockdown movement was originally pushed by a small circle of fervent activists who have been protesting almost constantly since well before the onset of the pandemic. Furthermore, they have benefited from a political action infrastructure originally created to support the DeVos-funded, anti-union ‘right-to-work’ movement. These methods have apparently created the perception of widespread discontent with public health measures largely supported by the American populace and are part of a campaign playbook self-evidently resulting in an increasingly radicalized base of Trump supporters as the 2020 general election approaches.”

The article reports that the DeVos family made $14 million in political contributions to the Michigan Republican Party and other Republican groups, and also donated substantial amounts of money to the Michigan Freedom Network. The Network is in turn tightly linked to the Michigan Conservative Coalition, a group that the Snopes report characterizes as “a collection of former Tea Party-aligned groups and pro-Trump organizations whose purpose is to recruit and train an ‘army of conservative activists,’ most notably the groups Michigan Trump Republicans, Women for Trump, and the Lakes Area Tea Party. The people who run the coalition have deep ties to the Michigan GOP and to Trump campaign surrogates,” with strong links with Michigan Republican officials.

Not mentioned in these articles but nonetheless relevant is that Betsy DeVos’ brother is Erik Prince, founder of the notorious Blackwater mercenary army.

“Reopening” the economy in the corporate interest

To round out this survey, CNN reporters located two more sources of support:

“One prominent voice supporting the protests is Stephen Moore, the founder of the Club for Growth and an unofficial economic adviser to President Trump. … Moore told CNN he has been working on this organization with FreedomWorks, a conservative advocacy group that gained prominence during the Tea Party era.”

The Club For Growth is an ultra-reactionary outfit with connections to the Koch Brothers dedicated to eliminating government-run social benefits. Club for Growth founder Stephen Moore is on record with this statement: “Social Security is the soft underbelly of the welfare state. If you can jab your spear through that, you can undermine the whole welfare state.” In other words, it’s work until you drop, if he gets his way.

FreedomWorks is a group of corporate lobbyists formerly run by Dick Armey (a hard-line Republican Party operative who once was majority leader in the U.S. House of Representatives) that was the primary organizer of the early Tea Party protests. FreedomWorks’ predecessor organization was the Citizens for a Sound Economy, which was founded and funded by David and Charles Koch (although the surviving brother, Charles, does not currently back FreedomWorks). Sharing similar roots is Americans for Prosperity, a lavishly funded and tightly controlled pressure group founded by the Koch Brothers dedicated to promoting the family business interests and extremist political philosophies, and also heavily involved in organizing the Tea Party. Organizers of the Tea Party sought to deflect anger from corporate elites consumed by greed and arrogance who bend the country’s institutions to their benefit, and instead pin the blame on “the government,” on minorities, on immigrants and any other handy scapegoat. Sound familiar?

Yonge-Dundas Square in Toronto during the pandemic (photo by Sikander Iqbal)

It will come as no surprise those readers who pay attention that the Trump administration has a hand in these events. For several weeks, the White House has been agitating to “reopen” the country regardless of health consequences — an unusually open reminder that working people are seen as nothing more than disposable peons in the eyes of Wall Street and corporate boardrooms.

The Associated Press, as cautious a news agency as exists in the U.S., has provided further details:

“Republican political operatives are recruiting ‘extremely pro-Trump’ doctors to go on television to prescribe reviving the U.S. economy as quickly as possible, without waiting to meet safety benchmarks proposed by the federal Centers for Disease Control and Prevention to slow the spread of the new coronavirus. The plan was discussed in a May 11 conference call with a senior staffer for the Trump reelection campaign organized by CNP Action, an affiliate of the GOP-aligned Council for National Policy. A leaked recording of the hourlong call was provided to The Associated Press by the Center for Media and Democracy, a progressive watchdog group.

CNP Action is part of the Save Our Country Coalition, an alliance of conservative think tanks and political committees formed in late April to end state lockdowns implemented in response to the pandemic. Other members of the coalition include the FreedomWorks Foundation, the American Legislative Exchange Council and Tea Party Patriots.”

As always, we should member that the “freedom” promoted by these representatives of big capital means freedom for capital, not people. “Freedom” is equated with individualism — but as a specific form of individualism that is shorn of responsibility. Imposing harsher working conditions is another aspect of this individualistic “freedom,” but freedom for who? “Freedom” for industrialists and financiers is freedom to rule over, control and exploit others; “justice” is the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Working people are “free” to compete in a race to the bottom set up by capitalists.

To this, we can now add the “freedom” to spread a deadly virus without regard to the danger imposed on others.

Debunking that Covid-19 was created in a laboratory

The complement of exposing the funders and organizers of the movement to ignore measures to provide for public health during a pandemic — how dare Governor Whitmer and other state governors seek to keep people alive! — is exposing the disinformation spread by their followers.

Contrary to conspiracy theories peddling the idea that Covid-19 is an artificial creation, possibly intentionally created for political purposes, multiple teams of scientists have determined that Covid-19 is a virus that originated in nature, and can not have been created in a laboratory. It does not help that U.S. President Donald Trump and his almost as ignorant secretary of State, Mike Pompeo, have repeatedly implied such — in the minds of Trump followers, how could scientists who have spent a lifetime studying diseases and epidemics possibly know as much as the all-knowing, all-seeing Dear Leader?

Downtown Portland, Oregon, during the pandemic (photo by Mattsjc)

Kristian Andersen, an infectious disease researcher at the Scripps Research Institute who led a team of evolutionary biologists and virologists from several countries, said Covid-19 has components that differ from those of previously known viruses and therefore had to come from an unknown virus or viruses in nature. A human-created virus would need to work with already known viruses and engineer them to have desired properties, according to Andersen.

Writing in the peer-reviewed journal Nature Medicine, Andersen and his colleagues wrote, “Genetic data irrefutably show that SARS-CoV-2 [the virus that causes Covid-19] is not derived from any previously used virus backbone” and conclude, “we do not believe that any type of laboratory-based scenario is plausible.”

A molecular epidemiologist in Switzerland, Emma Hodcroft, who is not connected to the study led by Andersen, agreed. Hodcroft, who is part of a team studying changes in coronaviruses to track how they spread, said, “We see absolutely no evidence that the virus has been engineered or purposely released.” Andersen said there were several clues that clinched the case that the virus is natural, including adaptations protecting it from an immune-system attack that doesn’t occur in viruses being worked on in laboratories.

This ongoing work has also debunked the erroneous idea that Covid-19 contains bits of HIV. There was one paper that made the HIV assertion that was not peer-reviewed and was quickly retracted after numerous scientists pointed out serious flaws in it. There are no fragments of the genetic code of HIV in the virus, European Scientist reports in an article that then debunks this conspiracy theory from other angles.

Debunking that deaths from Covid-19 are overstated

Researchers on the Our World In Data web site provide a good explanation for why Covid-19 deaths are likely under-reported, not over-reported. To summarize, the reasons that deaths are being under-reported include that many countries only report Covid-19 deaths that occur in hospitals, meaning that people who die from the disease at home may not be recorded; some countries only report deaths for which a Covid-19 test has confirmed that a patient was infected with the virus; and that the pandemic may result in increased deaths from other causes due to weakened health care systems, fewer people seeking treatment for other health risks and less available funding and treatment for other diseases.

According to the U.S. Centers for Disease Control and Prevention (CDC), the official death toll attributed to Covid-19 counts only laboratory-confirmed Covid-19-associated deaths, and 5,048 probable Covid-19-associated deaths. Not counted are deaths among infected persons who did not access diagnostic testing, tested falsely negative, or became infected after testing negative, died outside of a health care setting or for whom Covid-19 was not suspected by a health care provider as a cause of death. Official Covid-19 deaths also do not include deaths that are not directly associated with Covid-19 infection.

A study of New York City deaths from March 11 to May 2 by the CDC found there were 24,172 excess deaths. The official total of deaths associated with Covid-19, however, is 18,879 deaths. Therefore, the CDC study determined, there were 5,293 deaths that were not identified as either laboratory-confirmed or probable Covid-19-associated deaths. That is an undercounting of Covid-19 deaths as high as 22 percent.

The CDC report said, “Covid-19-associated mortality is higher in persons with underlying chronic health conditions such as heart disease and diabetes, and deaths in persons with these chronic health conditions might not be recognized as being directly attributable to Covid-19. In addition, social distancing practices, the demand on hospitals and health care providers, and public fear related to Covid-19 might lead to delays in seeking or obtaining lifesaving care.”

A separate study conducted by a team of scientists on the death rates in New York State, England, Wales, Scotland, the Netherlands and Italy found that the number of deaths attributed to Covid-19 through May 6 range from one-half to three-quarters of the total number of excess deaths. The scientists, led by Kieran Docherty of the University of Glasgow, concluded that the additional deaths “may represent unrecognized deaths due to Covid-19.”

Debunking that Covid-19 is no more fatal than the flu

The World Health Organization found that Covid-19 data to date suggests that 80% of infections are mild or asymptomatic, 15% are severe infections requiring oxygen and 5% are critical infections requiring ventilation. These fractions of severe and critical infections are higher than what is observed for influenza infection. A WHO report states:

“While the true mortality of COVID-19 will take some time to fully understand, the data we have so far indicate that the crude mortality ratio (the number of reported deaths divided by the reported cases) is between 3-4%, the infection mortality rate (the number of reported deaths divided by the number of infections) will be lower. For seasonal influenza, mortality is usually well below 0.1%. However, mortality is to a large extent determined by access to and quality of health care.”

The United States has by far the most number of cases and the most deaths from the virus, something caused in large part by the for-profit health care system of the U.S., which is designed to deliver corporate profits rather than health care, and thus produces among the worst results of any advanced capitalist country while costing by far the most. A country with a health care system with incentives so inhumane that early deaths are considered to be a “silver lining” for corporations.

Some of the claims that Covid-19 is no worse than the flu rest on a single discredited report. The discredited report, concerning two studies in Los Angeles and Santa Clara counties that purported to claim that Covid-19 death rates are similar to seasonal flus, were quickly and widely debunked. An Ars Technica article said the two studies used flawed statistical models to put the number of people with the virus at 50 to 85 times higher than was actually the case at the time, thus drastically lowering the studies’ reported death rate. The methodologies used to recruit people to this study was also flawed, including using Facebook and e-mail to ask for participants and thus far from random. Finally, the antibody test used in the two studies has a low rate of accuracy.

Need more? The Federation of American Scientists notes that between 2010 and 2019, the flu killed between 12,000 and 61,000 United Statesians during each eight-month long season (October to May). In just over four months, or about half of a flu season, Covid-19 killed over 100,000 people (as of May 28), or 785 people each day, in the U.S. alone.

Finally, Northwell Health reports that each infected person spreads Covid-19 to an average of 2.2 other people. By comparison, those with the seasonal flu infect approximately 1.3. So, yes, it is more easily transmitted than the flu.

As a final thought, it has not escaped my attention that the right-wing anti-science protestors largely did not wear face masks while demonstrating, nor did they observe social distancing. By contrast, the Black Lives Matters protests that erupted after the police murder of George Floyd overwhelmingly wear face masks. (Nor did they carry weapons.) I’ve participated in three Black Lives Matters marches at the time of writing this article, and not only can I confirm that almost everyone wears masks, but there are always a couple of people handing out masks to people who need one. That’s the difference between people who think others should die so they can get a haircut and those with a strong social conscience.

No thinking please, we’re red-baiting

The red-baiting of Bernie Sanders is in full swing. From Democrats. Yes, the silly season is upon us as Senator Sanders was roundly condemned because he believes literacy campaigns are good things.

I know the United States is a uniquely anti-intellectual country, but, still, you’d think teaching reading and writing might be thought of as positive goals. The Republican responses to Senator Sanders’ 60 Minutes interview in which he condemned the late Cuban leader Fidel Castro’s authoritarianism but also acknowledged Cuba’s social achievements, such as drastically improving literacy rates, was predictable. It was only to be expected that there would be pushback by Florida Democrats, who continue to believe they have to roll in the dust at the feet of right-wing Cuban émigrés.

Nonetheless, Democrats outdid themselves. Let’s first pause to quote the words of Senator Sanders that sent them into paroxysm of indignation: “We’re very opposed to the authoritarian nature of Cuba but you know, it’s unfair to simply say everything is bad. You know? When Fidel Castro came into office, you know what he did? He had a massive literacy program. Is that a bad thing? Even though Fidel Castro did it?”

Evidently it is. Particularly humorous was the response of Representative Stephanie Murphy, a Florida Democrat, who said of President Castro on Twitter: “His ‘literacy program’ wasn’t altruistic; it was a cynical effort to spread his dangerous philosophy & consolidate power.”

Teaching people who previously had been left in miserable poverty and without adequate education how to read and write? Run, run for your life!

Viñales Valley, Pinar del Rio province, Cuba (photo by Adam Jones adamjones.freeservers.com)

And demonstrating yet again his complete ignorance, Senator Marco Rubio offered this “history” lesson: “Democratic socialism sounds benign, but at the core of Democratic socialism is Marxism, and at the core of Marxism is this fake offer that if you turn over more of your individual freedom, we’re going to provide you security. We’re going to provide you free healthcare. We’re going to provide you free education. But the problem is that when they can’t deliver on it or you’re not happy with it, you don’t get your freedoms back.”

Where does one begin with such nonsense? Before we get to what socialism actually is, allow me to inform Senator Rubio and other bloviators that virtually every country on Earth, and every advanced capitalist country other than the U.S., has universal health care — and gets better results than the U.S. for a lot less money. Arranging for everybody to have access to health care really isn’t a spectacular achievement. It is not even necessary to be a socialist country to achieve it.

It ought to be possible to hold more than one thought in one’s head at a time, that there could be positive and negative attributes at the same time. Nor should it be forgotten that although demonologists like Florida politicians reflect those who don’t like Cuba, we never hear from those inside Cuba who support their revolution.

Can reading be a conspiratorial act?

A short-hand definition of socialism would be this: Popular control of production so that enterprises are oriented toward meeting the needs of everyone in a democratic system instead of for the profit of an individual owner or for speculators. A system in which working people make the decisions in their enterprises and their communities and that such decision-making is done in a broader social context so that decisions with social repercussions are made with the peoples and communities affected. In other words, when people have real control over the conditions of their lives — the rule of people instead of the rule of capital.

Incidentally, Senator Sanders isn’t offering anything like that. He’s also been in favor of some U.S. overseas offensives, such as the bombing of Yugoslavia; echoes the right-wing lies about Venezuela even if he opposes an invasion; and refers to Hugo Chávez as a “dead communist dictator” even though President Chávez and his Bolivarian movement won 16 out of 17 elections in an electoral system the Carter Center called “the best in the world.” So the red-baiting of Senator Sanders is not based on reality but on an inability to distinguish between New Deal liberalism, designed to save capitalism, and socialism.

Miami skyline (photo by Wyn Van Devanter)

As I am writing these lines, I happen to be reading the autobiography of Dorothy Healey, the long-time Communist Party organizer who rose to be the chair of the party’s Los Angeles branch, then the second biggest in the U.S. In her book, she gave a detailed account of the political trial she and several other party leaders underwent in the 1950s on trumped up, political charges. Without minimizing the seriousness of the many years of jail they faced, this story also makes useful parallels with today. The prosecution used a strategy of guilt by association, and by distorting the party’s ideas, whether intentionally or out of ignorance of what those were. Healey wrote:

“As in the Foley Square case [a previous political trial of Communist leaders], it was a trial of books. The prosecutor would have witnesses read big chunks of violent-sounding passages from Marx, Engels, and Lenin. This kind of trial could not have been conducted in any other advanced capitalist country — France or England or Italy — because the basic concepts of Marxism were so well known, studied in every university, and familiar to every active trade unionist, that people would have laughed at the outrageous simplifications offered up so solemnly at our trial. That was a peculiarly American phenomenon.”

The mere act of reading and self-education was considered part of the “evidence” against Healey and her co-defendants! She wrote:

“The assistant prosecuting attorney, Norman Neukom, was a vulgar, ignorant man. He was so astonished when one of the defendants was quoted on the need for Communists to engage in continual study. ‘Imagine,’ he told the jury, ‘grown-up people feeling the need to continue to study history and economics and philosophy after they’ve left school.’ For him, somehow, this was further evidence of the evil nature of our conspiracy, grown-ups discussing books they had read. In his cross-examination he wasn’t interested in or capable of refuting any of the substantive points Oleta [O’Connor Yates] made about Party theory and activities.”

Times certainly haven’t changed.

Cubans under Batista had good reasons to join a revolution

None of the above is to suggest that Cuba is above criticism, or that the constrictions on political expression in Cuba is something to ignore. Cuba needs more democracy as it continues to convert the services sections of its economy from state-owned enterprises to cooperatives, as agriculture has long been. We might, however, reflect on the crushing burden of 60 years of attempts to strangle the country by its giant neighbor to the North.

The United States not only threatens to use its overwhelming power in military might but abuses its desirability as a huge market for exports by making its embargo extra-territorial and fully leverages its position as the controller of the global financial system. U.S. embassy personnel have reportedly threatened firms in countries such as Switzerland, France, Mexico and the Dominican Republic with commercial reprisals unless they canceled sales of goods to Cuba such as soap and milk. Amazingly, a American Journal of Public Health report quoted a July 1995 written communication by the U.S. Department of Commerce in which the department said those types of sales contribute to “medical terrorism” on the part of Cubans! Well, many of us when we were, say, 5 years old, might have regarded soap with terror, but presumably have long gotten over that.

Conditions in pre-revolutionary Cuba were ripe for a revolution. The country’s hundreds of thousands of agricultural wage earners averaged only 123 days of work per year. Nearly half of the rural population was illiterate, 60 percent lived in huts with earth floors and thatched roofs and two-thirds lived without running water. Not surprisingly, poor health was rampant with health care generally unavailable and unaffordable to the poor who made up the huge majority of Cuba’s population. Plenty of force was used to maintain that level of inequality. In Santiago de Cuba, the country’s second-largest city, Batista’s police would torture people to death, with mutilated bodies strung from trees in city parks or dumped in gutters; victims could be as young as 14.

Those conditions and the use of state terror tactics to keep those conditions in place were swiftly reversed after the revolution, never to return. But let us not have any fear of acknowledging that authoritarianism is not unknown in post-revolutionary Cuba and although there are fully free elections at the municipal level, higher-level government positions are not subject to popular vote. One-party states are not conducive to democratic decision-making, regardless of where on the political spectrum the one-party state sits and even in a case like Cuba where citizens are widely consulted and policies adjusted based on popular feedback. Consultation isn’t the same as the power to make decisions.

There is terrorism, but it comes from Washington

But is the United States in any position to point fingers at another country? Let’s look at the record of U.S.-Cuba relations.

The mere fact of the revolution, and its insistence on developing Cuban resources to benefit Cubans rather than immiserating them to enhance U.S. corporate profits, was sufficient to ensure steady hostility from Washington. Aviva Chomsky, in her book A History of the Cuban Revolution, reports the Central Intelligence Agency’s Miami station alone was given $50 million per year to coordinate the sabotage and overthrow of the Castro government following the Cuban rout of the Bay of Pigs invaders. Not content with the CIA’s efforts, President John Kennedy established a separate effort to sabotage Cuba, called “Operation Mongoose,” tolerated terrorist activities by Cuban exile groups based in Miami, and oversaw a series of sabotage operations against Cuban infrastructure, one of which led to the death of 400 workers at an industrial plant. A steady stream of raids intended to sabotage infrastructure and industry continued after the missile crisis, including a CIA-organized operation in which Cuban exiles mined a harbor, which led to the destruction of boats and the deaths of several people.

Cartoon by Carlos Latuff

Later in the 1960s and thereafter, CIA tactics switched to encouraging exile groups to conduct those types of terrorist operations rather than directly conducting them itself. Instead, the CIA concentrated on biological attacks that resulted in a variety of crop, animal and human outbreaks of diseases. The CIA goal (carrying out U.S. government policy) remained fixed, as an agency operative would later admit: “We wanted to keep bread out of the stores so people would go hungry. We wanted to keep rationing in effect and keep leather out, so people got only one pair of shoes every 18 months.”

In a report published on April 20, 2000, in the Miami New Times, Jim Mullen compiled a list of terroristic acts committed by Cuban exiles in the Miami area, a list Mr. Mullen said is “incomplete, especially in Miami’s trademark category of bomb threats.” Mr. Mullen listed 71 acts of violence from 1968 (all but two from 1974) through April 2000. The list includes seven people, six of whom were exile figures, murdered in a three-year span of the 1970s; a radio reporter whose legs were blown off by a bomb after the reporter condemned exile violence; dozens of actual bombings; several beatings of demonstrators, including a nun; and bombings of cultural events.

Who gets to point fingers?

There is no bigger hypocrisy than U.S. government officials condemning other governments. Martin Luther King was correct when he called the U.S. the biggest pervader of violence in the world, and that is no less true today. The list of countries that the U.S. has invaded, overthrown governments or interfered in elections is too long to fully recount. In Latin America and the Caribbean alone, the U.S. has invaded 96 times. That total represents only the direct invasions; it doesn’t include coups fomented by the U.S., including Guatemala in 1954 and Chile in 1973.

Chile under Salvador Allende was similarly denounced as a dangerous dictatorship even though the Allende government kept strictly within legal bounds while the right-wing opposition used extralegal means to oppose it and when that didn’t work called in the military to bomb, arrest, force into exile, “disappear,” torture and kill hundreds of thousands. What “crimes” did President Allende commit? These three statistics concisely summarize the story:

• In 1970, on the eve of Allende’s electoral victory, 50 percent of Chile’s children were undernourished, stunting their development; there were 600,000 considered developmentally disabled because of lack of protein and other problems of malnutrition.

• In 1972, the Allende administration arranged for 550,000 breakfasts and 700,000 lunches to be served daily to students.

• By the early 1980s, under Pinochet, more than half the population of greater Santiago was unable to develop normally either physically or mentally as a result of lack of proper nourishment.

It takes a breathtaking level of ignorance to see providing health care, seeing to it that children receive proper food and raising literary and cultural levels is a form of terrorism while believing such basics should be provided only to those who can afford them. Unfortunately, such ignorance is bipartisan.