Keynesianism will not save the world

Nostalgia for the supposed “golden age” of mid-20th century capitalism carries with it an assumption that we can simply go back to a Keynesian world. Yet this is not a matter of simply of switching horses for nobody decreed that we shall now have neoliberalism and nobody can decree we shall now have Keynesianism.

There are structural reasons for the neoliberal assault. It is the logical development of capitalism; “logical” in the sense that the relentless scramble to survive competition eventually closed the brief window when rising wages were tolerated and government investment encouraged. The Keynesian policies of that time was a product of a specific set of circumstances that no longer exist and can’t be replicated.

Mid-20th century Keynesianism depended on an industrial base and market expansion. A repeat of history isn’t possible because the industrial base of the advanced capitalist countries has been hollowed out, transferred to low-wage developing countries, and there is almost no place remaining to which to expand. Moreover, capitalists who are saved by Keynesian spending programs amass enough power to later impose their preferred neoliberal policies. A vicious circle arises: Persistent unemployment and depressed wages in developed countries and inadequate ability to consume on the part of underpaid workers in developing countries leads to continuing under-consumption, creating pressure for still lower wages by capitalists who can’t sell what they produce and seek to cut costs further because there is no incentive for them to invest in new production.

Counter-intuitively, the turn toward neoliberalism is a also a response to declines in profitability. The rising wages of the post-World War II era were tolerated by capitalists because profits and the potential for further expansion were both high. Pent-up demand across the global North and the massive destruction of capacity in Europe enabled U.S. manufacturers to gain an unprecedented, and unrepeatable, opportunity. Capitalists in Europe and East Asia used state investment to rebuild their economies and regain their competitiveness.

Workforce of the future?

Workforce of the future?

The Keynesian compromise was not necessarily what capitalists would have wanted; it was a pragmatic decision — profits could be maintained through expansion of markets and social peace bought. When markets could no longer be expanded at a rate sufficiently robust to maintain or increase profit margins, however, capitalists ceased tolerating paying increased wages.

Competition is now carried out on a global scale, and where in the past local monopolies tended to cohere within national or regional borders, corporate globalization has put the world well down the road of international monopolization. The same tendency toward a handful of corporations dominating a market is now being reproduced on a larger scale, a single global world system, replicating the processes that previously led to monopolizations within individual countries or regions.

This is part of the “grow or die” dynamic of capitalism. It’s not only grabbing market share, it’s a mad scramble to “innovate” to increase profitability. That can be new production techniques but it is especially cutting costs — in the first place, wage costs. Thus robotics and automation to reduce the number of workers needed, which also “deskill” work to make workers more expendable, putting downward pressure on wages. Work speedups are part of the extraction of more profits, or an attempt to stave off declines in profit rates. And when these are finally insufficient, the work begins to be moved to new locations with lower wage levels and weaker regulation. “Free trade” agreements negotiated in secret that bring corporate wish lists to life both accelerate this tendency and are a product of it.

The capitalist that cuts costs first gains an advantage, but competitors follow, eroding the advantage. So the next step, and the next step, is carried out, intensifying these processes. The personality of the capitalist does not matter; he or she is acting under the rigors of competition. There is no way to put a human face on this or to permanently reverse the logic of capitalist competition. The present era of austerity and neoliberalism is the product of capitalist development. Even if a massive movement becomes sufficiently strong to effect significant reforms, eventually they would be taken back just as the reforms of the mid-20th century have been taken back.

(Mural by Ben Shahn)

(Mural by Ben Shahn)

Not only does the scope for expansion that existed during the Keynesian era no longer exist, the environmental limits and global warming that the world did not then face can no longer be avoided. Humanity is consuming far beyond the world’s replenishment capacity and changing the climate at a faster rate than ever before known. We can’t turn back the clock (and the “golden age” of capitalism wasn’t so golden if you were a woman, a Person of Color or a working person in a developing country) nor is it environmentally sound to ramp up production and consumption on the scale that a global Keynesian initiative would require.

Alas, this is a variation on the theme of “green capitalism” — the idea that the same system that has brought the world to its present state of crisis, a system that requires infinite expansion on a finite planet, that has turned to financialization because speculation is more profitable than production, that treats pollution and waste as external costs to be ignored will somehow now save us. Tinkering with the machinery of capitalism — which is what Keynesian nostalgia amounts to — would ameliorate conditions somewhat for a while, but offer no solution.

The days when it was still possible to believe capitalism can be a progressive force are behind us; the neoliberal assault is the “new normal.” When capitalism has penetrated into every corner of the world, there is nowhere else to expand: The only route for capitalists is to reduce wages and benefits. The only route for the 99 percent is an entirely different world.

The destruction of Jamaica’s economy through austerity

A small country immiserates itself under orders of international lenders; unemployment and poverty rise, the debt burden increases and investment is starved in favor of paying interest on loans. If this sounds familiar, it is, but the country here is Jamaica.

So disastrous has austerity been for Jamaica that its per capita gross domestic product is lower than it was 20 years ago, the worst performance of any country in the Western Hemisphere. In just three years, from the end of 2011 to the end of 2014, real wages have fallen 17 percent and are expected to fall further in 2015, according to the country’s central bank, the Bank of Jamaica.

Such is the magic of austerity, or “structural adjustment programs,” to use the official euphemism of the International Monetary Fund and World Bank.

A new paper from the Center for Economic and Policy Research, “Partners in Austerity: Jamaica, the United States and the International Monetary Fund,” reports that the amount of money Jamaica will use to pay interest (not even the principal) on its debt will be more than four times what it will spend on capital expenditures in 2015 and 2016. And despite a new loan, the country actually paid more to the IMF than it received in disbursements from the IMF during 2014!

Holywell National Park in Jamaica (photo by Wolmadrian)

Holywell National Park in Jamaica (photo by Wolmadrian)

As a further sign of the times, the current pro-austerity government of Jamaica is led by the National People’s Party, the party of former democratic socialist Prime Minister Michael Manley. Prime Minister Manley took office in 1972 on promises to combat social inequality and injustice, and he is credited with enacting legislation intended to establish a national minimum wage, pay equality for women, maternity leave with pay, the right of workers to join trade unions, free education to the university level, and education reforms that enabled students and teachers to be represented on school boards.

He also became an international figure advocating for progressive programs to be implemented elsewhere. Naturally, this did not sit well with the United States government. When Prime Minister Manley stood with Angola against the invasion by the apartheid South African régime and supported Cuban assistance to Angola, he defied a warning from U.S. Secretary of State Henry Kissinger. The CIA presence in the Jamaican capital, Kingston, was doubled.

A Jamaica Observer commentary noted parallels between the overthrow of Salvador Allende in Chile and unrest in Jamaica later in the 1970s:

“The imperialists applied the same ‘successful’ Chile model of destabilisation in Jamaica. They applied the same strategy of ‘making the economy scream,’ creating artificial shortages of basic items, promoting violence, including the savage murder of 150 people in a home for the elderly. Violence erupted in Jamaica as was never seen before in the ‘shock and awe’ tactics mastered by the imperialists whenever they want to create fundamental change in someone else’s country. Manley and Jamaica yielded under the pressure and eventually took the IMF route.”

Replacing human development with austerity

The conservative who took office in 1980 reversed Prime Minister Manley’s programs. By the time that Prime Minister Manley returned to office in 1989, he had moved well to the right under the impact of changing world geopolitical circumstances and the dominance of neoliberal ideology. As an obituary in The Economist dryly put it, “He did as the IMF told him, liberalised foreign exchange and speeded up the privatisation of state enterprises.”

The one-size-fits-all program, a condition of IMF and World Bank loans, includes currency devaluation (making imports more expensive), mass privatization of state assets (usually done at fire-sale prices), cuts to wages and the prioritization of the profits of foreign capital over a country’s own welfare. The 2001 film Life and Debt, produced and directed by Stephanie Black, depicted a country on its knees thanks to “structural adjustment.” The film’s Web site sets up the picture then this way:

“The port of Kingston is lined with high-security factories, made available to foreign garment companies at low rent. These factories are offered with the additional incentive of the foreign companies being allowed to bring in shiploads of material there tax-free, to have them sewn and assembled and then immediately transported out to foreign markets. Over 10,000 women currently work for foreign companies under sub-standard work conditions. The Jamaican government, in order to ensure the employment offered, has agreed to the stipulation that no unionization is permitted in the Free Trade Zones. Previously, when the women have spoken out and attempted to organize to improve their wages and working conditions, they have been fired and their names included on a blacklist ensuring that they never work again.”

The film shows the destruction of Jamaica’s banana industry and the decimation of its milk-production capacity because the country is forced to open itself to unrestricted penetration by multi-national capital, while those corporations continue to receive subsidies provided them by their home governments. The Life and Debt Web site reports:

“In 1992, liberalization policies demanded that the import taxes placed on imported milk solids from Western countries be eliminated and subsidies to the local industry removed. In 1993, one year after liberalization, millions of dollars of unpasteurized local milk had to be dumped, 700 cows were slaughtered pre-maturely and several dairy farmers closed down operations. At present, the industry has sized down nearly 60% and continues to decline. It is unlikely the dairy industry will ever revitalise its growth.”

Poverty and unemployment continue to rise

Austerity continues its course today. The Center for Economic and Policy Research’s “Partners in Austerity” paper, written by Jake Johnston, notes that conditions in Jamaica are worsening — unemployment, at 14.3 percent as 2014 drew to a close, is higher than it was when the global economic crisis broke out in 2008 and the 2012 poverty rate (latest for which statistics are available) of 20 percent is double that of 2007.

Jamaica currently has a debt-to-GDP ratio of 140 percent, an unsustainable level that has risen. Yet it is required as a condition of its latest IMF loan to maintain an unprecedented budget surplus of 7.5 percent. Thus the paper declares the country is undergoing the world’s most severe austerity because this surplus, the highest dictated to any country, must be extracted from working people on top of what is extracted for interest payments.

Jamaica has re-financed its debt twice in the past three years, and its latest IMF loan, agreed to in 2013, comes two years after previous loans were cut off because the government said it would pay promised wage increases to public-sector employees. The debt exchanges lowered the interest rates and extended the payment period, a combination that does not necessarily mean less interest will ultimately be paid out. Without debt relief, there is no exit from this vicious circle. The “Partners in Austerity” paper says:

“Crippled with devastatingly high debt levels and anemic growth for years, Jamaica is certainly in need of financing. But it is also the case that, after billions of dollars of previous World Bank, [Inter-American Development Bank] and IMF loans, much of its debt is actually owed to the very same institutions that are now offering new loans.” [page 2]

Financing schemes, whatever negative consequences it might ultimately have for the debtor country, are lucrative for investment banks. For example, banks underwriting Argentine government bonds earned an estimated US$1 billion in fees between 1991 and 2001, profiting from public debt. Yet the foreign debt continued to grow. In one example during this period, a brief pause in Argentina’s payment schedule was granted in exchange for higher interest payments — Argentina’s debt increased under the deal, but the investment bank that arranged this restructuring, Credit Suisse First Boston, racked up a fee of US$100 million.

Less for public needs

As a result of the new austerity measures, Jamaican government spending on infrastructure has fallen to 2.6 percent of gross domestic product, as opposed to 4.2 percent as recently as 2009. Moreover, the government is required to siphon $4.4 billion over four years from its National Housing Trust to replenish government coffers drained to pay off the loans. The trust, a legacy of Prime Minister Manley, is mandated to provide affordable housing, and yet it is the same National People’s Party that is raiding it under IMF orders.

The country’s economic difficulties would be still more severe if it were not for aid from Venezuela and investments from China, according to “Partners in Austerity.” The paper reports:

“Venezuelan funding comes through the Petrocaribe agreement, where Jamaica receives oil from Venezuela, paying a portion up front and keeping the rest as a long-term loan. Jamaica pays a lower interest on the Petrocaribe funds than it does to its multilateral partners. According to the IMF, net disbursements through Petrocaribe totaled over $1 billion over the last three years, averaging 2.5 percent of GDP per year. … A significant portion of the Petrocaribe funds are being used to refinance domestic debt, in support of the IMF program. Additionally, a portion of funds takes the form of grants and is used for social development, bolstering support to the neediest who have been most impacted by continued austerity. … Without the Venezuelan and Chinese investments staving off recession, it’s likely the IMF program would fail due to serious public opposition.” [page 13]

It is possible to provide aid that actually assists development rather than as a cover for exploitation, as Venezuela demonstrates.

Why do disastrous “structural adjustment” programs continue to be foisted on countries around the world despite the results? Undoubtedly many who prescribe “structural adjustment” continue to believe in neoliberalism in the face of all evidence. But this ideology doesn’t fall out of the sky; it is an ideology in service of the biggest industrialists and financiers, presenting the inequality and excess of capitalism as natural as the tides. But anything made by humans can be unmade by humans.

Marching on Monsanto and its government protectors

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

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

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

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

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

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

March Against Monsanto

March Against Monsanto

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

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

What you don’t know might hurt you

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

March Against Monsanto in Marseille

March Against Monsanto in Marseille

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

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

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

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

Water down laws, then dilute some more

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

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

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

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

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

Legislators provide a backup plan

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

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

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

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

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

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

Sell first, ask questions later

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

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

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

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

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

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

Fossil fuel subsidies total trillions of dollars per year

Most of the cost of fossil fuels is hidden because environmental harms such as pollution and global warming are kept outside ordinary economic calculation. Energy companies externalize these costs (among others) — that is, they don’t pay them. The public does.

And we do, to a remarkable extent. When we think of corporate subsidies, we naturally think of taxes not paid, real estate giveaways and other ways of taking money from the public and shoveling it into corporate coffers. Then there are the environmental costs, something prominent if we are talking about fossil fuels. These, too, should be thought of as subsidies since these constitute costs paid by the public. A first attempt at seriously quantifying the magnitude of the totality of subsidies given to fossil fuels leads to a conclusion that the total for 2014 was US$5.6 trillion, a total expected to be matched in 2015.

Yes, you read that correctly: 5.6 trillion dollars. As in 5.6 million million. Or, to put it another way, more than seven percent of gross world product.

A lot of money.

These calculations are, interestingly, the product of an International Monetary Fund working paper, “How Large Are Global Energy Subsidies?” The paper, prepared by economists David Coady, Ian Parry, Louis Sears and Baoping Shang, sought to provide a fuller accounting of the costs of the environmental damages caused by fossil fuels, and found that those costs greatly exceed direct corporate subsidies and below-cost consumer pricing. The authors foresee huge benefits should all fossil-fuel subsidies be eliminated. They write:

“Eliminating post-tax subsidies in 2015 could raise government revenue by $2.9 trillion (3.6 percent of global GDP), cut global CO₂ emissions by more than 20 percent, and cut pre-mature air pollution deaths by more than half. After allowing for the higher energy costs faced by consumers, this action would raise global economic welfare by $1.8 trillion (2.2 percent of global GDP).” [page 7]

Grangemouth oil refinery at sunset (photo by Steve Garvie, Dunfermline, Fife, Scotland)

Grangemouth oil refinery at sunset (photo by Steve Garvie, Dunfermline, Fife, Scotland)

As dramatic as the preceding paragraph is, the International Monetary Fund is not suddenly questioning capitalism. The paper carries the caveat that it is “research in progress” and does not represent the views of the IMF. Nor does the paper devote so much as a single word questioning the economic system that has produced such astounding distortions, not to mention the hideous social effects of massive inequality and power imbalances. Nonetheless, it does present an implicit challenge to business as usual and helps conceptualize the massive costs of profligate energy usage. The paper lays out in plain language the environmental, fiscal, economic and social consequences of energy subsidies, stating that energy subsidies [page 5]:

  • Damage the environment, causing more premature deaths through local air pollution, exacerbating congestion and other adverse side effects of vehicle use, and increasing atmospheric greenhouse-gas concentrations.
  • Impose large fiscal costs, which need to be financed by some combination of higher public debt, higher tax burdens and crowding out potentially productive public spending (for example, on health, education and infrastructure).
  • Discourage needed investments in energy efficiency, renewables and energy infrastructure, and increase the vulnerability of countries to volatile international energy prices.
  • Are a highly inefficient way to provide support to low-income households since most of the benefits from energy subsidies are typically captured by rich households.

Paying for air pollution and global warming

The biggest subsidized cost is air pollution, which the paper’s authors estimate accounts for 46 percent of fossil fuel subsidies. Global warming is the next biggest subsidy, at 22 percent, with corporate and consumer subsidies, foregone taxes and other items accounting for smaller amounts. From this calculation, the authors argue that local benefits from ending subsidies are high enough that doing so should be done in the absence of action in other countries. They write:

“An important point, therefore, is that most (over three-fourths) of the underpricing of energy is due to domestic distortions — pre-tax subsidies and domestic externalities — rather than to global distortions (climate change). The crucial implication of this is that energy pricing reform is largely in countries’ own domestic interest and therefore is beneficial even in the absence of globally coordinated action.” [page 21]

When the costs are broken down by forms of energy, it is no surprise that coal is the most subsidized form. Coal subsidies alone total almost four percent of global GDP, according to the paper, with “no country … impos[ing] meaningful taxes on coal use from an environmental perspective.” Petroleum is also heavily subsidized.

If we could at a stroke eliminate all forms of fossil fuel subsidies, the gains would be significant. The authors believe that global revenue gains would be $2.9 trillion for 2015, a total less than the current cost of subsidies because it accounts for a reduction in energy usage from higher prices and an assumption that some tax money would be used for emission-control technologies. The authors also calculate a $1.8 trillion net gain in social welfare, a gain that could be increased were this gain used to invest in education, health and other public benefits.

So if so much good can come from rationalizing the fossil fuel industry, why does this sound like an impossible dream? Unfortunately, in real world of capitalism, there is very little to prevent corporations from externalizing their costs.

With increased corporate globalization, capital can pick up and move at will, inducing political office holders to hand out subsidies, waive taxes and refuse to enforce safety and environmental laws. They do this because the alternative is for corporations to move elsewhere in a never-ending search for the lowest wages and weakest regulations with an accompanying disappearance of jobs. And this globalization, fueled by “free trade” agreements that arise from relentless competition, aggravates global warming as components are shipped around the world for assembly into finished products that are shipped back, greatly adding to the environmental damage imposed by transportation.

Environment doesn’t count in orthodox economics

Not only is the environment an externality that corporations do not have to account for, thereby dumping the costs on to the public, but orthodox economics doesn’t account for the environment, other than as a source of resources to exploit. The same capitalist market that is nothing more than the aggregate interests of the largest and most powerful industrialists and financiers is supposed to “solve” environmental problems. A Monthly Review article by sociologists Richard York, Brett Clark and John Bellamy Foster, “Capitalism in Wonderland,” puts this contradiction in stark perspective:

“Mainstream economists are trained in the promotion of private profits as the singular ‘bottom line’ of society, even at the expense of larger issues of human welfare and the environment. The market rules over all, even nature. For Milton Friedman the environment was not a problem since the answer was simple and straightforward. As he put it: ‘ecological values can find their natural space in the market, like any other consumer demand.’ ” [May 2009, page 4]

From that perspective, it follows that present-day environmental damage is of minimal concern to capital and future damage of no concern. The industrialists and financiers who reap billions today won’t necessarily be around when the environmental price becomes too high to avoid. The “Capitalism in Wonderland” authors write:

“[T]he ideology embedded in orthodox neoclassical economics [is] a field which regularly presents itself as using objective, even naturalistic, methods for modeling the economy. However, past all of the equations and technical jargon, the dominant economic paradigm is built on a value system that prizes capital accumulation in the short-term, while de-valuing everything else in the present and everything altogether in the future. …

[H]uman life in effect is worth only what each person contributes to the economy as measured in monetary terms. So, if global warming increases mortality in Bangladesh, which it appears likely that it will, this is only reflected in economic models to the extent that the deaths of Bengalis hurt the economy. Since Bangladesh is very poor, [orthodox] economic models … would not estimate it to be worthwhile to prevent deaths there since these losses would show up as minuscule in the measurements. … [E]thical concerns about the intrinsic value of human life and of the lives of other creatures are completely invisible in standard economic models. Increasing human mortality and accelerating the rate of extinctions are to most economists only problems if they undermine the ‘bottom line.’ In other respects they are invisible: as is the natural world as a whole.” [pages 9-10]

Tinkering versus analyzing the structure

The International Monetary Fund paper does offer a brief discussion of social disruptions should fossil-fuel subsidies be removed, suggesting a need for “transitory” programs such as worker retraining and protection of vulnerable groups. [page 31] But their proposed program centers on environmental taxes as a way to align fossil fuels with their costs to make energy prices “efficient.” Certainly, polluters and causers of global warming should be required to absorb those costs. But given that market forces tilt overwhelmingly in favor of large polluters, the fact of massive imbalances in power, and that governments have handcuffed themselves in terms of confronting capital (a trend itself a product of market forces), it is unrealistic to believe such a program is currently politically feasible.

The disruptions to a capitalist economy with a forced large reduction in energy usage are also significant. It is not only that a capitalist economy can’t function without growing (and a growing economy uses more, not less, energy, especially because of ever more complex machinery and lengthening supply chains), but that a capitalist economy doesn’t offer millions of workers who lose their jobs new work in new industries. Every incentive under capitalism is for more energy usage; thus “the market” will object to dramatically higher energy prices, no matter how rational those higher prices.

Ultimately, the authors of the IMF paper are trapped in the same inability to imagine anything outside the present capitalist system, similar to those who claim that stopping global warming will be virtually cost-free. Their paper has done a necessary service by providing the first real quantification of the gigantic costs of fossil fuels and the massive subsidies they receive. Subsidies for renewable energy, in comparison, are minuscule. The massive subsidies for nuclear energy, which is a complete failure on any rational economic basis before we even get to the physical dangers, demonstrate that nuclear is no solution, either. These should also be eliminated.

The size of the social movement that would be necessary to eliminate all these subsidies would be enormous. Why should such a movement ask for mere reforms that fall well short of what is necessary, worthy as they would be. Energy is too important not to be put in public hands. The trillions of dollars of fossil fuel subsidies are the logical product of allowing private interests to control critical resources for private profit and leaving “the market” to dictate outcomes.

We can’t make what is unsustainable sustainable through a better tax policy. That the enormous scale of reform proposed by the IMF paper still falls far short of what is actually necessary to create a sustainable economy demonstrates the severity of the crises we are only beginning to face.

Speculation for its own sake pays billions

The absurdity of the tsunami of money crammed into speculators’ bank accounts is illustrated in the fact that the 25 highest-paid hedge-fund managers vacuumed up a collective $11.6 billion in 2014 — and that was considered to be a bad year for them by the business press. Stratospheric though that total is, it is barely more than half of what the top 25 took in a year earlier.

All together now: Awwww. Yes, somehow these speculators will have to get by on a paltry average of $467 million.

Institutional Investor’s Alpha magazine — one can hear their editors’ teeth gnashing at their heroes’ bitter fate — lamented that 2014 was the worst year since the 2008 stock meltdown for hedge-fund managers in announcing its “Rich List.”

City of London expanding (Photo by Will Fox)

City of London expanding (Photo by Will Fox)

Nonetheless, some observers might believe that these moguls earned somebody serious money to collect such enormous paychecks. But that wasn’t necessarily the case. For the sixth consecutive year, hedge funds fell short of the average stock-market performance, returning a composite average of three percent. Perhaps the 25 hedge-fund managers who hauled in the most money for themselves were better? Not really. Alpha reports that the hedge funds of at least 12 of the individuals on its top 25 list posted gains below the 2014 average.

The S&P 500 Index, the broadest measure of U.S. stock markets, gained 11.4 percent in 2014 and the benchmark Dow Jones Industrial Average gained 7.5 percent. So somebody throwing darts, or parking their money in a passive fund that tracks a major index, would have done as well or better in many cases. Despite their subpar performances, hedge-fund managers continue to receive an annual fee of two percent of the value of the total assets under management and 20 percent of any profits. The fee gets paid even when the fund loses money.

So it’s heads, Wall Street wins and tails, Wall Street wins. And hedge funders pay less in taxes. Much of their income is classified as capital gains under U.S. tax law, and the tax rate on capital gains are much less than on regular income.

Imposing austerity on others is a job never finished

What is that hedge-fund managers do to “earn” such enormous sums of money? Let us take a look. The top person on the 2014 list is Kenneth Griffin of Citadel Capital, who hauled in $1.3 billion for the year. Citadel makes lots of money through computerized high-speed trading — buying and selling securities in microseconds to take advantage of momentary price changes. Apparently allowing computers to do the work leaves Mr. Griffin with time to pursue his hobby of widening inequality still more.

Not content with the fact that his 2014 earnings are equal to the combined median wage of 26,000 U.S. workers, he contributed $10 million to an Illinois campaign that seeks to cut workers’-compensation benefits, make it illegal for employees to contribute to political campaigns through their union, abolish prevailing-wage laws and render union dues collections much more difficult. He’s also contributed millions to the Koch brothers’ war chest. Mr. Griffin’s firm also owns a stake in ServiceMaster, a company that profits from the privatization of public services by firing employees and rehiring them at lower wages.

A Huffington Post article, noting that Mr. Griffin is also a major donor to Chicago Mayor Rahm Emanuel, nonetheless reports that he believes Mayor 1% is too soft on public employees despite the mayor’s attacks on pensions and teachers. The article said:

“Griffin, alone, could fund all of Chicago’s pension liabilities for [2014] (estimated at $692 million) and still have $208 million [from his 2013 income] left to scrap by on. Yet Griffin is terribly worried that the mayor is being too soft on retirees. He castigated Chicago and Illinois politicians for not making ‘tough choices,’ blaming Democrats who control city, county and state government for not fixing pension, education and crime problems.”

Second on the hedge-fund list is James Simons of Renaissance Technologies. Although Alpha reported that he no longer runs his firm on a day-to-day basis and “spends a good chunk of the year on his 226-foot yacht,” Mr. Simons hauled in $1.2 billion in 2014. His firm employs physicists, others scientists and mathematicians to develop models for its computerized trading. Alas, speculation pays much more than scientific research that might benefit humanity.

Buy, strip, profit, repeat

Third on the list is Raymond Dalio of Bridgewater Associates, who took in $1.1 billion in 2014. He specializes in bond and currency speculation. Fourth on the list is William Ackman of Pershing Square Capital Management, who is what the corporate media likes to call an “activist investor.” In other words, someone who buys stock in a company and immediately demands massive cuts so he can make a large short-term profit is an “activist investor” because he does this more loudly than others.

Mr. Ackman hauled in $950 million in 2014. Forbes magazine, as consistent a cheerleader for the corporate overclass as any institution, summed him up this way last year:

“[H]edge fund billionaire William Ackman has tried to destroy a company that sells diet shakes, played a prominent role in nearly driving a 112-year-old retailer into the ground [and] helped launch a hostile takeover of a pharmaceutical company in a way that the Securities & Exchange Commission is reportedly examining for potential violations of insider trading law. Now, Ackman is suing the U.S. government.”

He is suing the U.S. government because it is taking the profits from federal housing-loan programs Fannie Mae and Freddie Mac to recoup money used to bail them out rather than handing the profits over to speculators such as himself. Never mind that the government spent hundreds of billions of dollars bailing out speculators. Among his most recent exploits, he was involved in two separate deals that would have moved a U.S. corporation’s headquarters to Canada so that it could avoid paying taxes, savings that would be earmarked for speculators’ wallets.

No summation of hedge-fund greed would be complete without a mention of Paul Singer, another entrant on the rich list. The vulture capitalist specializes in buying debt at pennies on the dollar and then demands to be paid the full face value, regardless of human cost. Among other exploits, he has seized an Argentine naval ship, demanded $400 million from the Republic of the Congo for bonds he bought for less than $10 million and compelled the government of Peru to pay him a 400 percent profit on the debt of two banks he bought four years earlier.

The outsized renumeration of financiers is due to the disproportionate size of the financial industry. A rough calculation estimates that in 11 business days speculators trade instruments and contracts with a value greater than all the products and services produced by the entire world in one year. In other words, a year’s worth of gross world product is traded in about two weeks on the world’s stock, bond, derivative, futures and foreign-exchange markets.

Such frenzied trading, often involving high-speed computers and ever more exotic betting, has little to do with actual economic needs and much to do with extracting money by ever more imaginative needs. Such is a system that values financial engineering more than human life.

Renewable energy isn’t a shortcut to reversing global warming

Denmark has distinguished itself as the country moving the fastest toward the eventual replacement of fossil fuels. Its goal of 100 percent renewable energy by 2050 is laudable, but the assumption that this path will reverse global warming while otherwise continuing business as usual, is unrealistic.

At first glance, Denmark has made remarkable strides. The country’s intention to totally eliminate fossil fuels by the midpoint of the 21st century appears to be realistic. Already, Denmark is the world leader in wind energy and it intends to also exclude all use of nuclear power. At the start of 2015, the country’s energy agency, Energistyrelsen, said renewable energy sources account for 25 percent of Denmark’s total energy consumption, and more than 40 percent of its electricity comes from renewable sources.

Danish countryside (photo by "Old Dane")

Danish countryside (photo by “Old Dane”)

The Danish government acknowledges that continuing consumption patterns based on “cheap and easy access to coal, oil and natural gas” is a “road [that] is not an option.” True enough. But the switch to renewable energy is promoted as cost-free. The Danish government says:

“Business … stands a great chance to move into the heavy league of successful super green companies. For instance, the energy efficiency measures a company makes are often paid back within [a] few years. Onwards, the savings on the energy bill can be unleashed to strengthen the core business of the company. Likewise, there is an enormous global market for green technology, services and systems. This market is only going to grow once more governments follow in the carbon-light footsteps of Denmark.

But of course such a strategy would come at a great cost to Danish society? The answer is a resounding no. … [T]he transition is relatively cheap, and business competitiveness not harmed. The government’s estimates are a price tag of approximately 10 euro pr. household pr. month at the highest (2020), a price tag that will only slowly increase to this level. In the opinion of the Danish government this is a reasonable insurance policy against unexpected increases in fossil fuel costs and a solid investment in Denmark’s future energy security.”

Enthusiasm for renewable commitment

An expected rising efficiency of renewable energy sources will ultimately lead to lower costs, more than offsetting the investments in renewable-energy infrastructure and reversing the present-day higher costs, the government says. So no change in consumption patterns after all. This enthusiasm is shared by environmental institutions that have become large nongovernmental organizations. Greenpeace, for example, issued a brief paper in October 2014 that reads like a press release. In this paper, “Denmark’s commitment to 100% renewable energy,” Greenpeace agreed that no changes in consumption will be required. It wrote:

“Denmark’s emissions reductions have not affected the economy negatively. The decoupling of economic growth from energy consumption is partially due to Danish companies being subsidised for using renewable energy and increasing energy efficiency, which in turn increases their creativity and prompts energy savings. Job creation is an explicit objective of the Danish Climate Plan, and because Denmark has invested heavily in research and promotion of renewable energy, energy-efficient technologies and renewable heat supply systems, the climate and energy system has already created thousands of jobs. The full transition to 100 per cent renewable energy is expected to generate at least 30[,000] to 40,000 new jobs in a country of 5.5 million people.”

Moreover, this will come easy, Greenpeace says:

“Although Denmark’s roadmap to fossil fuel independence and 100 per cent renewable energy is specific to the Danish context, many of the recommendations are relevant and applicable to other nations around the world. One finding may be of particular interest: The costs of phasing out fossil fuels are expected to be almost equivalent to or only marginally more expensive than a ‘business as usual’ scenario.”

Too good to be true? Unfortunately, yes. That global warming and the accelerating damage to the global environment can be reversed without cost — and without any alteration to the high-impact consumerism of the global North’s advanced capitalist countries — echoes the unrealistic conclusions of the Intergovernmental Panel on Climate Change report issued last year. The IPCC concluded the annual reduction in “consumption growth” on a global basis would be only 0.06 percent during the course of the 21st century. Nothing more than a statistical blip!

In actuality, the IPCC assertion that we can remain on the path of endless growth is a fantasy argument that we can have our cake and not only eat it but make more cakes and eat them, too.

Bioenergy not necessarily a savings on greenhouse gases

When we look past the cheerleading for a bright renewable future, two problems immediately pop up: Renewable energy is not necessarily clean nor without contributions to global warming, and the limits that living on a finite planet with finite resources presents are all the more acute in an economic system that requires endless growth.

Denmark’s phaseout of oil, gas and coal is dependent on wind power and biomass, and to a lesser degree on solar energy. But just because energy from biomass is classified as renewable, that doesn’t make it sustainable or environmentally friendly. Denmark is the biggest per capita user of bioenergy, with Germany and Britain significant users as well. But the primary source of bioenergy is wood, and much of this wood must be imported. British plans for expanding bioenergy, if brought to fruition, could consume nine times more wood than can be supplied internally. Denmark is already a heavy importer of wood pellets.

Increased logging is surely not a route to reducing global warming. A paper by the British watchdog group Biofuelwatch reports:

“Increased demand for bioenergy is already resulting in the more intensive logging including very destructive whole tree harvesting or brash removal and replacement of forest and other ecosystems with monocultures. Expansion of industrial tree plantations for bioenergy is expected to lead to further land grabbing and land conflicts. At the same time, communities affected by biomass power stations are exposed to increased air pollution (particulates, nitrogen dioxide, sulphur dioxide, dioxins etc.) and thus public health risks. Meanwhile, a growing number of scientific studies show that burning wood for energy commonly results in a carbon debt of decades or even centuries compared with fossil fuels that might otherwise have been burnt.”

A Partnership for Policy Integrity study published in April 2014 found that biomass electricity generation, which relies primarily on the burning of wood, is “more polluting and worse for the climate than coal, according to a new analysis of 88 pollution permits for biomass power plants in 25 [U.S.] states.” The partnership’s director, Mary Booth, wrote:

“The biomass power industry portrays their facilities as ‘clean.’ But we found that even the newest biomass plants are allowed to pollute more than modern coal- and gas-fired plants, and that pollution from bioenergy is increasingly unregulated.”

Even the wind (energy) has toxicity

Wind energy has its environmental issues as well. The turbines used to produce electricity from wind increasingly are built with the “rare earth” element neodymium, which requires a highly toxic process to produce. Turbine magnets using neodymium are more expensive than those using ceramic, but are also more efficient. The U.S. Geological Survey estimates that an additional 380 metric tons of neodymium would be necessary if the United States is to generate 20 percent of its electricity from wind by 2030. That’s just one country.

Most rare earths are mined in China because the mines are so environmentally destructive they had been shut down elsewhere. Production has been re-started in other countries, lessening demand on Chinese exports, but increasing rare earth mining means more pollution and toxic waste. Renee Cho, a blogger for Columbia University’s Earth Institute, provides a sobering picture of this:

“All rare earth metals contain radioactive elements such as uranium and thorium, which can contaminate air, water, soil and groundwater. Metals such as arsenic, barium, copper, aluminum, lead and beryllium may be released during mining into the air or water, and can be toxic to human health. Moreover, the refinement process for rare earth metals uses toxic acids and results in polluted wastewater that must be properly disposed of. The Chinese Society of Rare Earths estimated that the refinement of one ton of rare earth metals results in 75 cubic meters of acidic wastewater and one ton of radioactive residue.”

Just because it’s renewable, doesn’t mean its environmentally friendly. As Almuth Ernsting, a founder of Biofuelwatch, summarized in a Truthout article:

“Defining methane-spewing mega-dams, biofuels, which are accelerating deforestation and other ecosystem destruction, or logging forests for bioenergy as ‘renewable’ helps policy makers boost renewables statistics, while helping to further destabilize planetary support systems. As long as energy sources that are as carbon-intensive and destructive as fossil fuels are classed as ‘renewable,’ boosting renewable energy around the world risks doing more harm than good.”

Increased efficiency in energy usage hasn’t resulted in decreases in greenhouse-gas emissions. A study by 10 scientists led by Josep G. Canadell found that the growth rate of atmospheric carbon dioxide is increasing. The growth rate in anthropogenic carbon dioxide was higher in the 2000s than in the 1990s. Not only has economic growth contributed to this rate increase, but the carbon intensity of gross world product began to increase during the decade of the 2000s. Adding to this sobering picture, the efficiency of natural carbon sinks (such as forests and oceans that remove carbon dioxide from the atmosphere) is declining.

The study said a growing global economy, an increase in the carbon emissions required to produce each unit of economic activity, and a decreasing efficiency of carbon sinks on land and in oceans have combined to produce unprecedented increases in atmospheric carbon dioxide.

Beyond renewables, fundamental change is necessary

The conclusion necessary to be drawn isn’t that we shouldn’t switch from fossil fuels to renewable energy sources as quickly as reasonably possible. Of course that should be done. But it is a delusion to believe that doing so in itself is a magic wand to wish away the growing crises of global warming, environmental degradation and resource depletion. There is no alternative to drastically reducing consumption of energy and material goods, an impossibility under capitalism, and bringing into existence a sustainable economic system.

All incentives in capitalism are for endless growth; it can’t function without it. Because of this expansionary imperative, that production is for private profit rather than human need and that enterprises are able to externalize environmental costs, decreases in energy prices are an incentive to increase energy usage, which is what has been happening. An economy that must expand will do so — introducing efficiencies can slow down the increase in energy consumption and resource depletion, but an ever expanding economy will ultimately use more energy, more resources.

A former White House Council of Economic Advisers chair, Christina Romer, says that economic growth of 2.5 percent is necessary to maintain the unemployment rate where it is and “substantially stronger growth than that” is necessary for a rapid decrease. In addition, energy usage due to transportation is increased from the movement of production to countries around the globe. Raw materials and component parts are shipped from all over the world to an assembly point, then the finished products are transported back.

This enormous contribution to global warming is another product of capitalism, specifically the dynamic of relentless competition that induces corporations to move production to the places with the lowest wages and weakest regulation, and to stretch supply lines around the world. These competitive “innovations” must be copied by competitors, thus increasing this tendency. (And are a catalyst for “free trade” agreements that incentivize the expansion of trans-national rootlessness.) As the depletion of natural resources accelerates, an inevitable byproduct of competitive pressures and the never-ending scramble for bigger profits, more energy and capital will be required to extract resources more difficult to exploit.

Carrying on with business as usual, with changes to the mix of energy production, is an illusion that “green capitalism” will save the world. Liberals and social democrats, in their own way, can be as unrealistic as conservatives. Conservatives correctly see that measures to combat global warming will come with a cost, so they screech that global warming doesn’t exist, despite the enormity of the evidence all around us. Liberals and social democrats readily acknowledge the real danger of global warming but, no more willing to tamper with the machinery of capitalism than conservatives, promise that the changes will be cost-free.

The changes won’t be. But the cost of doing nothing, of letting a runaway global warming take hold — the very path humanity is treading — will be much higher. The limits of the planet, of nature, will assert themselves. Yielding to natural limits now will come with much disruption, but having limits imposed on us in the future will surely be much worse.

War crimes and forgetting

Forty years after the long Vietnamese struggle for independence concluded with the capture of Saigon, the mythologies surrounding the war on the other side of the Pacific Ocean have not loosened their grip. The “debate” surrounding the war is a textbook example of corporate media obfuscation.

A strong debate played out in the corporate media outlets of the United States concerning the Vietnam War at the end of the 1990s, and that same debate, with the same parameters, continues today. This debate, however, is only between two “acceptable” viewpoints — an honorable effort that tragically failed or a well-intentioned but flawed effort that should not have been undertaken if the U.S. was not going to be “serious” about fighting.

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.

Left out are the widely held views that the war should never have been fought because it was a war to extend U.S. hegemony or that the U.S. simply had no business fighting in another country’s civil war. Further, the first “acceptable” viewpoint implies, and the second explicitly states, that the U.S. didn’t really fight hard to win the war, ignoring the actual intensive level of the U.S. war effort in which most of North Vietnam’s larger cities were reduced to rubble, much of the farming lands were destroyed and three million Vietnamese were killed.

Thus there was all the appearance of a free and open media at the same time that the media obscured.

Elections only when you do as we say

What were some of the messy things going on in Southeast Asia at the time? (Most of the following is taken from Manufacturing Consent by Noam Chomsky and Edward S. Herman, Pantheon Books, 1988.) The U.S. sabotaged the scheduled 1956 all-Vietnam election that was a cornerstone of the 1954 agreement that ended the French intervention; an election that was not allowed to occur precisely because Ho Chi Minh would have won. The U.S. set up South Vietnam as an artificial puppet state, overthrew and killed South Vietnam’s “leaders” and installed new “leaders,” who were invariably military thugs.

The U.S. invented the Gulf of Tonkin attack, a deliberate lie to create a cover for increasing the U.S. military role. By the time of the U.S. land intervention in 1965, American aerial bombing, napalming and gassing had already killed 15,000 Vietnamese. The U.S. carried out a policy of rural and urban terror. The military forced peasants in wide parts of the country off their land and into “strategic hamlets” — in reality, rural concentration camps — and killed peasants who refused to leave their homes. Tens of thousands were swept from their homes and sent to camps in single ground operations.

A writer in Foreign Affairs wrote that destroying the countryside and forcing rural residents into cities was necessary because the Viet Cong were “a powerful force which cannot be dislodged from its constituency so long as the constituency continues to exist.” The U.S. systematically destroyed by force any South Vietnamese grouping opposed to the installed military dictators, even non-Communist groups such as organized Buddhists.

The U.S. leveled major cities — 77% of the buildings in Hue, one of Vietnam’s biggest cities, were completely destroyed. Dams were blasted away, allowing salt water from the South China Sea to flood farmland, making the growing of food impossible. When North Vietnam agreed to the Paris Peace Agreements in 1972, Henry Kissinger decided not to accept the pact, began demanding major changes to an agreed-upon document, then launched the Christmas bombings of Hanoi and Haiphong when the North Vietnamese government insisted the agreement be signed.

In South Vietnam, 9,000 of 15,000 hamlets were damaged or destroyed, as were 25 million acres (100,000 square kilometers) of farmland and 12 million acres of forest. Killed were 1.5 million cattle. One million widows and 800,000 orphans were left behind.

In North Vietnam, 34 of the largest 36 cities suffered significant damage, with 15 completely razed, while 4,000 of about 5,800 communes were damaged. More than one million acres of farmland and 400,000 cattle were destroyed in the North. The Central Intelligence Agency admitted that at least 30,000 North Vietnamese were killed per year by 1967 by U.S. bombing, with these deaths primarily civilian. The total tonnage of bombs dropped by the U.S. in Vietnam exceeded that of all bombing by all countries during World War II. Reports of the countryside at the end of the war spoke of entire regions as “bare, gray and lifeless.”

No mercy in neighboring countries

Next door, in Laos, following a 1958 election in which a two-party Left coalition won 13 of 21 legislative seats, the U.S. swiftly overthrew the government, with the new government seated by the U.S. vowing to disband the Pathet Lao, which had won the most seats. Two years later, that new government was overthrown by the U.S., which installed a CIA-backed extreme Right-wing general.

In rural Laos, entire districts were wiped out by bombing. A series of articles in Le Monde reported on a district capital that had been deserted for three years because of repeated bombings. This capital was a portion of a 20-mile area stretching into the countryside in which not a single building was left standing and in which were found the remnants of American fragmentation bombs, which are dropped to maximize civilian casualties.

There were areas of Laos where villagers hid in nearby mountains, in caves or in ditches during daytime because of the ceaseless bombardment and who could conduct life only at night. Craters so saturated some areas that it was impossible to distinguish them, and all vegetation was destroyed. More than 350,000 Laotians — more than 10% of the country’s population — were killed and a similar number left homeless.

In Cambodia, bombing by the U.S. during the period 1969 to April 1975 resulted in 600,000 deaths and two million refugees, according to the same Finnish Inquiry Commission that concluded one million people died during the subsequent Khmer Rouge régime. As the bombing was ending in 1975, the U.S. government estimated that deaths from starvation in the Cambodian capital, Phnom Penh, were near 100,000 per year.

This horrific bombing is believed to have played a role in the rise of the Khmer Rouge, which the U.S. covertly sided with during its murderous four-year reign. A U.S. government report in 1975 said 75 percent of Cambodia’s draft animals had died and that it would likely be three years before the country could regain rice self-sufficiency.

The carnage inflicted on Vietnam reverberates still. An estimated 19 million tons of toxic herbicides were applied that has resulted in more than half a century of damage to health and birth defects.

Such is the price of empire, paid by those on the receiving end. If these are not war crimes, then what would be?