More unemployment and less security

The bad news is that the world’s number of unemployed workers and those with precarious employment is expected to rise during 2016 and 2017. The worse news is that the true number of those in these categories are probably significantly undercounted.

The International Labour Organization, a United Nations agency that just issued its “World Employment Social Outlook,” predicts that 200 million people will be unemployed in 2016, three million more than last year. This will be most acute in middle-income and poor countries, where unemployment is forecast by the ILO to increase by 2.4 million with a slight decrease in unemployment in the most developed countries. Brazil and China alone are expected to add 1.5 million to the unemployment rolls in the next two years.

(Mural by Ben Shahn)

(Mural by Ben Shahn)

Not that having employment is necessarily a marker of stability. The ILO report says that nearly half of the world’s workers — 1.5 billion people — hold “vulnerable employment.” This total includes subsistence and informal workers, and unpaid family workers. This vast cohort (the “reserve army of labor” although the ILO never uses such direct terminology) will not be getting smaller in the foreseeable future. All these factors add up to more inequality. Nor is it limited to any one part of the world, the ILO report says:

“The improvement in the labour market situation in developed economies is limited and uneven, and in some countries the middle class has been shrinking, according to various measures. Income inequality, as measured by the Gini index, has risen significantly in most advanced G20 countries. Since the start of the global crisis, top incomes have continued to increase while the poorest 40 per cent of households have tended to fall behind.” [page 4]

In one-third of the world’s countries, the “precariat” constitutes at least two-thirds of the total workforce. The percentages of those with precarious employment is much higher in developing countries than in the advanced capitalist countries, but in all parts of the world the labor force participation rate — that is, the percentage of those of working age who are employed — is slowly shrinking and is forecast by the ILO to continue to do so through the rest of the decade. Here it is the developed countries that have the lowest participation rate (60.5 percent in 2015), more than two percentage points lower than the global average.

The massive size of the precariat

A gloomy picture, indeed. A picture, however, that does not fully capture the bleakness of stagnation. The number of precarious workers is likely higher than what the ILO calculates. In their book The Endless Crisis, John Bellamy Foster and Robert W. McChesney estimate that the true size of the precariat is actually significantly larger than those with regular employment. They write:

“If we take the categories of the unemployed, the vulnerably employed, and the economically inactive population in prime working ages (25-54) and add them together, we come up with what might be called the maximum size of the global reserve army in 2011: some 2.4 billion people, compared to 1.4 billion in the active labor army. It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in the poorer countries.” [page 143]

Capitalism is unable to create sufficient employment, and thus considers such people to be “excess population.” Mass migrations from Latin America to the United States, or from Africa and the Middle East to Europe, are consequences. In the 19th century, industrializing European countries had a safety valve in massive emigration (not so good for Indigenous peoples in the target countries of course), but there are no longer large areas into which capitalism can expand. Professors Foster and McChesney put this in stark terms:

“While such mass emigration was a possibility for the early capitalist powers, which moved out to seize large parts of the planet, it is not possible for countries of the global South today. Consequently, the kind of reduction in peasant population currently pushed by the system points, if it were effected fully, to mass genocide. An unimaginable 7 percent annual rate of growth for fifty years across the entire global South, [economist Samir] Amin points out, could not absorb even a third of this vast surplus agricultural population. …

“Aside from the direct benefits of enormously high rates of exploitation, which feed the economic surplus flowing into the advanced capitalist counties, the introduction of low-cost imports from ‘feeder economies’ in Asia and other parts of the global South by multinational corporations has a deflationary effect. This protects the value of money, particularly the dollar as the hegemonic currency, and thus the financial assets of the capitalist class. The existence of an enormous global reserve army of labor thus forces income deflation on the world’s workers, beginning in the global South, but also affecting the workers of the global North, who are increasingly subject to neoliberal ‘labour market flexibility.’ ” [pages 147, 149]

These trends become more acute as high unemployment persists. The true level of unemployment is approximately double official numbers across North America, Europe and Australia. The reason for this is that all those countries do not include discouraged workers, those employed part time but not able to secure full-time work nor all persons marginally attached to the labor force (those who wish to work but have given up).

Less pay to go with less security

With all these factors working against them, wages for working people are stagnant while productivity continues to increase — the one percent is grabbing all the wealth created. This is a global phenomenon. Employees in the United States, Canada, Germany, France, Britain and Japan have seen their pay lag behind productivity gains and income inequality widen.

Thus it comes as no surprise that labor rights are under attack everywhere. How bad? In a 2014 study, the International Trade Union Confederation determined the degree to which five basic rights — fundamental civil liberties; the right to establish or join unions; trade union activities; the right to collective bargaining; and the right to strike — are upheld, and then assigned a numerical grade. Every country in the world had a ranking of below 50 percent. In other words, every country flunked when graded on respect for labor rights.

What to do about all this? The ILO offers these conclusions as part of its call for a “shift in economic and employment policies”:

“It is particularly important to strengthen labour market institutions and ensure that social protection systems are well designed, in order to prevent further increases in long-term unemployment, underemployment and working poverty. A rebalancing in reform efforts is also needed. In particular, financial reforms need to ensure that banks perform their role of channelling resources into the real economy and into investment for sustainable enterprise expansion and job creation.” [page 5]

We should be long past the time when it was possible to believe we could wag our fingers at bad policy-makers and expect they will see the light of day. The unceasing competition of capitalism, its relentless drive to enclose ever more human activity within its logic of profit at any cost, mandates the world we now live in. Drastic imbalances in power are inherent in capitalism; these can’t be legislated away. Thus the ILO’s prescriptions are meaningless. Reforms are possible with enough movement organization, but reforms are eventually taken back, as the past four decades has amply demonstrated.

Desires by industrialists and financiers to press their offensive against working people are behind “free trade” agreements that eliminate barriers to the movement of capital, encourage shifting of production to places with ever lower wages, and impose restrictions on the ability of governments to implement, or even maintain, laws safeguarding health, safety, labor rights and the environment. These are simply the expected outcomes under the logic of capitalism. No regulation can change that. Only a change of economic system can achieve that.

Fanaticism and fantasy drive purported TPP ‘benefits’

So-called “free trade” agreements are continually advertised as creators of jobs, yet jobs are lost and wages decline once they go into effect. As representatives of the 12 countries participating in the Trans-Pacific Partnership gather this week in New Zealand to begin their final push for it, the usual unsubstantiated claims are being put forth.

Why is this so? I mean beyond the obvious answer that such claims are propaganda in the service of corporate elites and financiers. Corporate-funded “think tanks” that pump out a steady barrage of papers making grandiose claims for “free trade” deals that are relied on by the political leaders who push these deals require some data, no matter how massaged. One organization prominent in this process is the Peterson Institute for International Economics, which has issued rosy reports in expectation of deals like the North America Free Trade Agreement — for example, it predicted 170,000 new jobs would be created in the U.S. alone in 1995 and that the Mexican economy would grow by four to five percent annually under NAFTA.

Protest against the Trans-Pacific Partnership, October 2015 (photo by Lorena Müller, Pirate Times)

Protest against the Trans-Pacific Partnership, October 2015 (photo by Lorena Müller, Pirate Times)

One way to look at this is that the Peterson Institute is to “free trade” agreements as the Heartland Institute is to global warming. Heartland began as a Big Tobacco outfit issuing reports denying links between smoking and cancer. As late as 1998, Heartland President Joe Bast claimed that there were  “few, if any, adverse health effects” associated with smoking and boasted to a Phillip Morris executive that “Heartland does many things that benefit Philip Morris’s bottom line, things that no other organization does.”

Heartland later began specializing in global-warming denial, receiving $676,500 from Exxon Mobil alone between 1996 and 2006; after which it stopped identifying its contributors. Mr. Bast seems to have no shame, writing that “Most scientists do not believe human activities threaten to disrupt the Earth’s climate” in an article describing global warming as a “scam.” In fact, 97 percent of climate scientists agree that human activity is behind global warming.

It is this same attitude toward the truth that pervades papers predicting wondrous results from “free trade” agreements. In contrast to the Peterson Institute’s rosy projections, the first 20 years of NAFTA proved to be a lose-lose-lose proposition for Canada, Mexico and the United States. Almost 5 million Mexican farmers have been displaced with inflation-adjusted wages in Mexico barely above the level of 1980; U.S. food prices have risen 67 percent since NAFTA took effect and two-thirds of displaced manufacturing workers in the U.S. have been forced to take work with reduced wages; and Canadians suffered drastic cuts in government benefits while their environmental laws were reversed in the wake of corporate challenges.

Rosy reports rest on ideology, not real world

The Peterson Institute is at it again, first claiming the Trans-Pacific Partnership (TPP) will result in gains of US$1.9 trillion, and in a new report once again making extravagant claims even if scaled back. In its latest report, the Institute claims there will be no net job losses, while annual income in the U.S. would increase by $131 billion. These sorts of predictions are routine, and not the product of any single corporate organization. How is it that, all actual experience to the contrary, these sorts of calculations are presented with a straight face?

The political economist Martin Hart-Landsberg, in his book Capitalist Globalization: Consequences, Resistance, and Alternatives, writes that economic models that presume wondrous benefits from “free trade” agreements assume, inter alia:

  • There are only two inputs, capital and labor, which are able to move instantaneously but never cross national borders.
  • Total aggregate expenditures in each economy will be sufficient, and automatically adjust, to ensure full use of all resources.
  • Flexible exchange rates will prevent lowered tariffs from causing changes in trade balances.

Thanks to these starting points, Professor Hart-Landsberg writes:

“[T]his kind of modeling assumes a world in which liberalization cannot, by assumption, cause or worsen unemployment, capital flight or trade imbalances. Thanks to these assumptions, if a country drops its trade restrictions, market forces will quickly and effortlessly lead capital and labor to shift into new, more productive uses. And since trade always remains in balance, this restructuring will generate a dollar’s worth of new exports for every dollar of new imports. Given these assumptions, it is no wonder that mainstream economic studies always produce results supporting ratification of free trade agreements.”

Given the strong biases in favor of “free trade” agreements, all the more skeptical of the TPP we may be when we see the tiny gains forecast by the World Bank. Vietnam is expected to see the biggest boost among the 12 TPP countries, according to the World Bank forecast — a 10 percent gain in gross domestic product cumulative through 2030. In other words, less than one percent per year. As a TechDirt summation of this report noted:

“So according to the World Bank’s figures, the US will gain an extra 0.04% GDP per year on average, as a result of TPP; Australia an extra 0.07% annually, and Canada a boost of 0.12% per year.”

If this is the best that promoters of corporate hegemony can come up with for the TPP, its likely effect will surely be dismal.

The vanishing “gains”

Jane Kelsey, a New Zealand law professor who has long sounded the alarm on the TPP, notes that even the slightly larger gain forecast for that country would actually constitute a statistical blip that may or may not actually exist. She writes:

“[The] National [government]’s glitzy new ‘TPP fact’ page is bad wine repackaged in new bottles. Here’s a few facts they don’t tell you. The projected economic gains of 0.9 per cent of GDP by 2030 are within their own margin of error, even before costs are factored in and disregarding unrealistic modelling.”

One of several blockades in New Zealand on February 4 in protest of the TPP (photo via Real Choice NZ)

One of several blockades in New Zealand on February 4 in protest of the TPP (photo via Real Choice NZ)

A more balanced investigation conducted by Tufts University researchers Jeronim Capaldo and Alex Izurieta led to the conclusion that the TPP, if enacted, would result in the loss of three-quarters of a million jobs through 2025, including 448,000 jobs to be lost in the U.S. alone. Canada, Mexico, Japan and Australia would each suffer jobs losses in the tens of thousands. The Tufts report concludes:

“The TPP would lead to higher inequality, with a lower labor share of national income. We expect competitive pressures on labor incomes, combined with employment losses, to push labor shares of national income further down, redistributing income from labor to capital in all countries. In the USA, this would exacerbate a multi-decade trend.”

Working people in the 11 other TPP countries would get to experience the stagnant wages and declining living standards that United Statesians have been treated to during the past three decades.

More than 330,000 manufacturing jobs are expected to be lost in the U.S. alone if TPP is passed, according to a separate calculation by the United Steelworkers, and Unifor estimates that 20,000 Canadian jobs in auto manufacturing alone are at risk.

If no gain, there will be pain for you

Underlying all this further tilting of the scales already heavily weighted toward corporate money and power is the “investor-state dispute settlement” provision, whereby multi-national corporations can sue governments to overturn laws and regulations they don’t like under the excuse that measures to protect safety, health or the environment constitute a “taking” of their expected profits — not even actual profits. The secret tribunal that will hear corporate complaints (the same as the one used under NAFTA) must assume the corporation’s claim is true under some circumstances.

Canada, because it has higher standards than do the U.S. or Mexico, is most frequently sued under NAFTA, although the Canadian pipeline company TransCanada has committed the latest outrage, suing the U.S. government for $15 billion because the Obama administration declined to permit the Keystone XL pipeline. TransCanada is suing for $15 billion even though it has spent $2.4 billion on the pipeline.

Although the governments of the 12 TPP countries are “signing” the agreement this week, that is a formality: The deal must still be approved by legislatures and implementing legal changes enacted.

The TPP would enter into force 60 days after all 12 signatories ratify it or, if that doesn’t happen within two years, in April 2018 if at least six of the 12 countries accounting for 85 percent of the combined gross domestic product of the original signatories have ratified the agreement. That 85 percent can’t be reached without the U.S. or Japan, effectively giving those countries a veto and thus placing extra responsibility on opponents in both those countries. It also can’t be reached if Canada, Australia and Mexico each fail to ratify, so opponents there can also stop it.

The TPP, even more so that previous deals, has very little to do with trade and much to do with solidifying corporate control over life, arguably the most significant erosion of what is left of formal democracy yet. Regardless of where you live, the TPP can be defeated if we continue to organize. And once the TPP is sent to the trash heap, it will be time to go on the offensive to roll back existing trade pacts.

Let them eat iPhones

You say you are struggling to cover your rising expenses while your pay is stagnant? You should have become an executive at a bank. Break the economy and earn big rewards!

But don’t sweat it — you have a phone and that more than makes up for your lack of adequate wages, declining ability to access health care and lack of a pension. Just ask JPMorgan chief executive officer Jamie Dimon.

Mr. Dimon’s pay is more than 220 times that of the average employee at JPMorgan, reports Business Insider, but he says you underpaid employees shouldn’t complain — because you have iPhones! At least Marie Antoinette’s alleged belief in cake allowed France’s plebeians to eat, more than can be done with a phone. Here is what Mr. Dimon said in his latest attempt to show compassion, according to BloombergBusiness:

“ ‘It’s not right to say we’re worse off,’ Dimon said [last September 17] at an event in Detroit in response to a question about declining median income. ‘If you go back 20 years ago, cars were worse, health was worse, you didn’t live as long, the air was worse. People didn’t have iPhones.’ ”

Cutting the pay of chief executive officers would do nothing to solve inequality, Mr. Dimon proclaimed. Instead, “investing in ‘intelligent infrastructure’ ” is what is needed. If possessing a “smart phone” is the key to happiness, apparently “smart buildings” would make us still happier. There’s progress for you — Marie Antoinette never offered anyone a bakery. But as you apply ketchup to your iPhone, you will surely digest smoothly with the knowledge that the chief executive officers of Goldman Sachs and JPMorgan officially became billionaires during 2015.

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

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

Goldman Sachs’ chief, Lloyd Blankfein — or Lord Blankcheck, as Occupy Wall Street activists memorably dubbed him — took home US$23 million last year, while Mr. Dimon “earned” $27 million, a healthy 35 percent raise. And shed no tears for those who have yet to reach the corporate pinnacle — three Goldman Sachs executives each took home $21 million and three JPMorgan execs each were awarded more than $10 million in stock alone.

Profits of biggest banks increase again

When we last heard from Mr. Dimon, about this time last year, he complained that “Banks are under assault,” adding that “We have five or six regulators coming at us on every issue.” As the six biggest banks in the U.S., which includes JPMorgan, racked up profits totaling $75 billion for 2014, you will be excused for having doubts about just how tough regulators are.

Profits for those banks were no more endangered in 2015, totaling almost $93 billion. Here is how they fared in the just concluded year:

  • JPMorgan Chase & Company: net income of $24.4 billion on revenue of $96.6 billion. JPMorgan reported its highest-ever net income in 2015, and paid out $11 billion to shareholders through stock buybacks and dividends.
  • Bank of America Corporation: net income of $15.9 billion on revenue of $82.5 billion. Net income more than tripled from 2014, and it nearly doubled the dividend it paid shareholders — the bank said it handed out $4.5 billion through common stock buybacks and dividends.
  • Citigroup Incorporated: net income of $17.2 billion on revenue of $76.4 billion. Although revenue was down slightly, net income more than doubled because Citigroup wasn’t troubled with having to pay out billions in fines over its toxic derivatives as it was in 2014.
  • Wells Fargo & Company: net income of $23 billion on revenue of $86.1 billion. The bank reported it handed out $12.6 billion through stock buybacks and dividends, yet it relentlessly demands its tellers pressure customers to open multiple accounts and pays those tellers too little to live on.
  • The Goldman Sachs Group Incorporated: net income of $6.1 billion on revenue of $33.8 billion. Goldman Sachs’ net income was below that of 2014 due to a $3.4 billion deduction (or “charge”) from its earnings due to its reaching a settlement with government regulators over its toxic mortgage-backed securities; profits would have risen without the fine. But please don’t shed any tears for the investment bank — it proudly reported that it “advised” on corporate mergers and acquisitions worth more than $1 trillion, work that by itself netted it billions of dollars while jobs disappeared.
  • Morgan Stanley: net income of $6.1 billion on revenues of $35.2 billion. Similar to its peer banks, Morgan Stanley shelled out $2.1 billion to buy back its stock in an effort to have its profits shared among fewer stockholders. Despite that profit, the bank has said it will lay off staff as part of an effort to “cut costs” under Wall Street pressure.

The biggest get bigger

Yes, the biggest banks keep getting bigger. The four banks with the largest holdings accounted for a composite 42 percent of all U.S. banking assets in 2014, a total that has steadily increased, both before and after the 2008 crash.

Wells Fargo Plaza, HoustonAnd not even the fines levied by regulators slow them down. Earlier this month, Goldman Sachs announced that it had agreed to $5 billion in penalties to settle claims arising from the marketing and selling of dodgy mortgage securities, although nearly $2 billion of that is “consumer relief” in the form of loan forgiveness, the bank said.

Banks have paid a total of $40 billion to settle claims by financial regulators and prosecutors, yet these penalties are bumps in the road for them, no more than a business expense. In part, perhaps that is because much of these penalties come in the form of mortgage modifications, rather than cash, and often these modifications are to loans that the banks service but don’t actually own — allowing them to get credit for modifying loans belonging to another company.

Banking of course is not the only industry undergoing consolidation. Mergers in 2015 were bigger than ever, with corporate deals worth $4.7 trillion. Investment banks earn huge fees for arranging mergers and acquisitions, none more so than the biggest U.S. banks. Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America and Citigroup ranked as numbers one through five in the world in terms of the value of the deals banks “advised” on.

Competitive pressure accounts for some corporate mergers — the capitalist imperative to grow or die does not abate even for the biggest corporations — but pressure to “enhance shareholder value” plays a significant role. “Enhancing shareholder value” is finance-speak for acceding to speculators’ demands for more short-term boosts to profits and higher stock prices, no matter the cost to others or the long-term damage to the company itself. Hedge-fund billionaires are among the fiercest in pressing these demands, continually demanding cuts to jobs that serve only to fatten their swollen wallets. The big banks, as major Wall Street players themselves, both apply this “market” pressure for the same reasons and further profit from acting as “advisers.”

Reforming such insanity is a hopelessly sisyphean task. What if instead banks became a public utility with an end to speculation? Proposals are being floated in the U.S. to create state banks, perhaps on the model of the successful Bank of North Dakota, and the Left Party of Germany has a detailed plan to bring banks under democratic control. Capitalist propaganda aside, there is no need for banking to exist as an uncontrollable behemoth extracting wealth from all other human activities. Why shouldn’t it be a utility under public control that exists to serve the productive economy? We can’t survive on iPhones alone.

Inequality and the World Economic Forum

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

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

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

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

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

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

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

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

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

Accountable to “society” — or financiers?

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

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

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

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

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

Wages decline around the world

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

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

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

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

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

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

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

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

They make millions per employee and cry they don’t make enough

The amount of profits piled up by corporations dwarfs all reason, but the amount of money executives and speculators haul in at our expenses comes into stronger focus when we examine a different metric: Revenue per employee.

The 10 corporations that have the highest revenue per employee averaged US$5.8 million per employee. Each of these top 10, incidentally, is either a pharmaceutical or an oil and gas company. Topping the list is Phillips 66, which managed to haul in $11.5 million per employee. One suspects that the average employee sees no more than a minuscule fraction of that figure.

Examining the 100 largest corporations in the world by revenue, Expert Market, a business consultancy, ranked them by revenue per employee to see which were the most “efficient.” (It is quite possible that other, smaller corporations extract more revenue per employee.) The other oil and gas companies among the top 10 were PTT, Valero Energy, Exxon Mobil, Royal Dutch Shell, BP and Statoil.

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

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

Interestingly, two of these companies are government enterprises: PTT is majority-owned by the government of Thailand and Statoil is two-thirds owned by the government of Norway. So much for the idea that governments should never own enterprises; at least the profits from these companies can be used for public good. The public ought to own all energy companies considering the gigantic subsidies they receive — an estimated US$5.6 trillion per year, when environmental and health costs are added to the subsidies, foregone taxes and other expensive goodies handed out by governments.

The pharmaceutical companies among the top 10 are Amerisourcebergen Corp., Express Scrips Holding Co. and McKesson Corp. Amerisourcebergen and McKesson both distribute pharmaceuticals, and Express Scrips administers prescription drug benefits for tens of millions of health plan members. Each of these primarily operates in the United States, the only advanced-capitalist country without universal health coverage, and two also operate in Canada, where corporate pressure on the public health system is strong, in part due to its proximity to the U.S.

The pharmaceutical industry is immensely profitable in the U.S., and the industry’s layer of distribution and administration adds to the overall cost. Health care in the U.S. is designed to deliver corporate profits rather than health care, and these kinds of huge profits explain why health care costs in the U.S. are vastly higher than any other country while delivering mediocre results.

Technology companies squeeze somewhat less out of their employees. Apple ranks as the technology company with the most revenue per employee, at about $1.9 million. Google ranks second at $1.2 million. But how much profit does a company need to make? Apple’s products are produced through sweatshop labor outside the U.S., mostly in China, through an army of subcontractors that dwarf the size of Apple’s direct employees.

U.S. President Barack Obama once asked Apple’s chief executive officer, Steve Jobs, what it would take to bring those jobs back to the U.S., and Jobs replied, “They aren’t coming back.” Apple claims it can’t afford to pay higher wages. Yet Apple is sitting on an immense pile of money — $206 billion according to its own quarterly financial report.

Research by the Centre for Research on Socio-Cultural Change in Manchester, in 2012, found that the cost of manufacturing a 4G iPhone in China is $178 while the phone sells for $640 — a profit margin of 72 percent. The Centre calculated that if it were made in the U.S. by employees making $21 an hour, the production cost would be $337, a still robust profit margin of 46 percent.

At the end of the day, corporate executives and financiers expect those revenues to be converted into profits, and the higher the revenue that can squeezed out of each employees, the higher the profit is likely to be. From 1995 to 2005, profits per employee at the 30 largest companies by market capitalization (that is, the highest valuations set by stock markets) more than doubled, according to the business consultant McKinney & Company.

A more recent list, prepared by Bloomberg, shows 25 corporations with profits per employee higher than $400,000. Oil and gas companies are well represented here, with 10 making the list, including Exxon Mobil. Four biotechnology companies made the list, as did Apple with $573,000 net income per employee.

So if more is squeezed out of us, then there is less we are able to buy. Thus the “recovery” often blathered about in the corporate media is a recovery for the one percent. Of the eight recessions since 1960, consumer spending has increased less from the bottom of the recession than in any of the previous ones after the same period of time. If you don’t have it, you aren’t buying it, especially since so many people are trying to reduce their debt.

The flip side of this is that the massive profits corporations are raking in by not paying their employees, and squeezing more out of those who do have a job, is that record amounts are spent on buying back their stock, paying out higher dividends, on mergers-and-acquisitions or on bloated executive salaries. The corporations comprising the Standard & Poor’s 500 Index are on course to spend nearly $1 trillion on stock buybacks and dividends in 2015, or nearly equal to their total operating earnings for the year.

Cut back, cut back is the mantra. But have you noticed its always working peoples’ turn to cut back?

Now that we can see the TPP text, we know why it’s been secret

The text of the Trans-Pacific Partnership can now be viewed by the public, thanks to the New Zealand government, and it is every bit as bad as activists have been warning.

The TPP, if enacted, promises a race to the bottom: An acceleration of jobs to the countries with the lowest wages, the right of multi-national corporations to veto any law or regulation their executives do not like, the end of your right to know what is in your food, higher prices for medicines, and the subordination of Internet privacy to corporate interests. There is a reason it has been negotiated in secret, with only corporate executives and industry lobbyists consulted and allowed to see the text as it took shape.

The threat from the TPP extends beyond the 12 negotiating countries, however — the TPP is intended to be a “docking” agreement whereby other countries can join at any time, provided they accept the text as it has been previously negotiated. Moreover, the TPP is a model for two other deals: the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, and the Trade In Services Agreement (TISA), an even more secret “free trade” deal being negotiated among 50 countries that would eliminate any controls on the financial industry.

Activists celebrate after the New York City Council declares the city a "TPP-free zone."

Activists celebrate after the New York City Council declares the city a “TPP-free zone.”

The elimination of protections is precisely what U.S. multi-national corporations intend for Europe by replicating the terms of the TPP in the TTIP, a process made easier by the anti-democratic nature of the European Commission, which is negotiating for European governments. Already, higher Canadian standards in health, the environment and consumer protections are under sustained assault under the North American Free Trade Agreement. The TPP is an unprecedented corporate giveaway, going well beyond even NAFTA, which has hurt working people and farmers in Canada, the U.S. and Mexico.

More than 300,000 manufacturing jobs in the U.S. alone may be eliminated by the passage of the TPP. The Wall Street Journal, in an article celebrating victory for multi-national capital, nonetheless estimates that losses in manufacturing and automobiles would add an estimated US$56 billion to the national trade deficit. The international president of United Steelworkers, Leo Gerard, using a U.S. Department of Commerce estimate that 6,000 jobs are lost for every $1 billion of added trade deficit, calculates that would lead to the loss of 330,000 manufacturing jobs.*

Bad news on both sides of the Pacific

The Canadian union Unifor estimates that 20,000 Canadian jobs in auto manufacturing alone are at risk from TPP. Canada will also be forced to open its dairy and poultry industries. There is fear that Canadian dairy farming may collapse and the outgoing Harper régime promised $4.3 billion to compensate farmers from expected losses.

The Australian Fair Trade and Investment Network, while acknowledging that community pressure forced governments to resist some of the most extreme measures, worries that the U.S. concession to Australia that the extension of monopolies on biological medications will be five years rather than eight will prove ephemeral. The group reports that the text “refers to eight years and to ‘other measures’ which would ‘deliver a comparable market outcome,’ and to a future review. It is not clear how this will be applied in Australia.” The U.S. will retain its 12-year exclusivity period, while other countries can choose five or eight years, so there will likely be continued pressure from pharmaceutical companies for all to adopt a longer period.

A product would not have to be produced locally to qualify as a locally made product. As much as two-thirds of an automobile’s components could be manufactured in China, for example, and it would still qualify for preferential treatment if one-third is made in any TPP signatory country. But “buy local” rules would become illegal, including for government procurement.

There are no enforceable provisions for environmental, health, safety or labor protection. Public Citizen, in its analysis of the TPP text, reports:

“The language touted as an ‘exception’ to defend countries’ health, environmental and other public-interest safeguards from TPP challenges is nothing more than a carbon copy of past U.S. free trade language that ‘reads in’ to the TPP several World Trade Organization (WTO) provisions that have already been proven ineffective in more than 97 percent of its attempted uses in the past 20 years to defend policies challenged at the WTO. In two decades of WTO rulings, [the articles purporting to protect laws necessary to protect human, animal or plant life or health] have only been successfully employed to actually defend a challenged measure in one of 44 attempts.”

The ratio under TPP is likely to be even lower as the TPP promises the most extreme rules in favor of corporations of any “free trade” deal. Even the extremely weak “exception” does not apply to the entire investment chapter of the TPP. Precedent here is bad — as the secret tribunals that decide cases brought by corporations against governments hand down their one-sided agreements, these decisions become a floor for the next decision, pushing the interpretation further in favor of corporate domination.

Democracy canceled by corporate power

Under the TPP, corporations are elevated to the level of national governments and, in practice, could be said to be elevated above governments. The TPP text mandates that “customary international law” be applied for the benefit of an “investor” — that law is not found in any statutes, but rather has been established by previous decisions of secret tribunals interpreting NAFTA and other “free trade” deals. Worse, the TPP places essentially no limits on who qualifies as an “investor” eligible to be compensated for potential profits that may not materialize due to a regulation or safety rule.

Although the rules codifying benefits for multi-national capital are written in firm language, there is no such language for protections. The Sierra Club reports that the TPP mandates that only one of the seven environmental agreements found in previous “free trade” deals be fulfilled, an alarming development as previous environmental requirements have been routinely ignored. Among the many deficiencies in the TPP, the Sierra Club said:

“Rather than prohibiting trade in illegally taken timber and wildlife — major issues in TPP countries like Peru and Vietnam — the TPP only asks countries ‘to combat’ such trade. To comply, the text only requires weak measures, such as ‘exchanging information and experiences,’ while stronger measures like sanctions are listed as options. … Rather than obligating countries to abide by [rules to] prevent illegally caught fish from entering international trade, the TPP merely calls on countries to ‘endeavor not to undermine’ [fisheries-management protocols] — a non-binding provision.”

The TPP fails to even mention the words “climate change”! More than 9,000 corporations would be newly empowered to sue governments because a law or regulation hurt their profits. Worse, the TPP would mandate that the U.S. Department of Energy automatically approve all exports of liquified natural gas to all TPP countries. This would guarantee more fracking; already under NAFTA the province of Québec has been sued in an effort to overturn its fracking moratorium. That may only be the beginning, according to

“The agreement would give fossil fuel companies the extraordinary ability to sue local governments that try and keep fossil fuels in the ground. If a province puts a moratorium on fracking, corporations can sue; if a community tries to stop a coal mine, corporations can overrule them. In short, these rules undermine countries’ ability to do what scientists say is the single most important thing we can do to combat the climate crisis: keep fossil fuels in the ground.”

You’ll have no right know what you eat

Food safety would fare no better. The TPP’s race to the bottom would require that the lowest inspection standards of any country be applied, forcing a lowering of other countries’ standards, and end protections against untested genetically modified organisms (GMOs) in your food. Food & Water Watch reports:

“The TPP includes a new provision designed to second-guess the government inspectors who monitor food imports. … The food and agribusiness industry demanded — and received — stronger [rules] that make it harder to defend domestic food safety standards from international trade disputes. … Agribusiness and biotech seed companies can now more easily use trade rules to challenge countries that ban GMO imports, test for GMO contamination, do not promptly approve new GMO crops or even require GMO labeling. The TPP gives the food industry a powerful new weapon to wield against the nationwide movement to label GMO foods. The language in the TPP is more powerful and expansive than other trade deals that have already been used to weaken or eliminate dolphin safe tuna and country of origin labels.”

Health care will also come under direct assault, forcing other countries more toward the U.S. system, under which health care is a privilege for those who can afford it rather than a human right. Government programs to hold down the cost of medications are targeted for elimination in the TPP. Doctors Without Borders/Médecins Sans Frontières, which has been sounding the alarm for years, said:

“TPP countries have agreed to United States government and multinational drug company demands that will raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition. … [T]he TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies. For example, the additional monopoly protection provided for biologic drugs will be a new regime for all TPP developing countries. These countries will pay a heavy price in the decades to come that will be measured in the impact it has on patients.”

The text of the TPP is subject to approval by legislative bodies in various countries, and while time is limited and the approval process is streamlined to facilitate approval in several of them, the Trans-Pacific Partnership can be defeated. This is not a national issue. Working people will be hurt everywhere, with jobs disappearing in developed countries and sweatshop misery for other countries — this is why multi-national capital, where ever it is based, is pushing for the TPP. If it is to be stopped, it will be through the combined activity of activists on both sides of the Pacific. We have no time to lose.

* This paragraph has been revised to better reflect the source of the job-loss estimate.

Work harder to be born into the right family

If we were to believe the fairy tales of capitalism, we would have to believe that 500 multi-billionaires work harder than the entire population of Japan. OK, I know that sounds crazy, but that is nothing more than following capitalist ideology to its intended conclusion: The wealthy are wealthy because their worked harder than you.

The 500 richest people on Earth are worth a collective US$4.7 trillion, Forbes magazine breathlessly informs us, and that total is a little more than the gross domestic product of Japan, the world’s third-largest economy.

The 20 richest people alone are worth a collective $900 billion! There are only 16 countries on Earth that have a larger gross domestic product than that. Quite a feat — 20 people possess slightly more assets than what is produced in an entire year by the 250 million people of Indonesia or the 17 million people of the Netherlands, one of the most highly productive peoples among the world’s advanced capitalist countries.

So these billionaires must work awfully hard to accumulate such riches, right? Let us see.

Wells Fargo Plaza, HoustonAmong the 20 riches people on Earth we find six technology moguls who took advantage of the Internet and world wide web created by governments using public money; seven people who inherited their wealth; a monopolist who was handed his country’s telecommunications system by a president to whom he made a large donation; one who made a fortune from the fashion industry; another who made a fortune in luxury goods; and a casino magnate. Two of those who inherited a fortune and their fathers’ business, Charles and David Koch, spend fortunes (not for them, but it would be a fortune to almost anybody else) to counter all efforts to reverse the global warming and environmental devastation that their business interests requires. Four others, members of the Walton family, receive billions of dollars a year just for being born into the right family.

To zoom out to a bit to more of the tip of the pyramid, Credit Suisse’s Global Wealth Report 2015 reports that the richest one percent of the world’s population owns 50 percent of the world’s wealth, a higher percentage than the one percent owned at the start of the global economic downturn in 2008. The bottom 70 percent of humanity owns three percent. That the richest have so much more means that the rest of us have less. The global median wealth per adult has fallen from US$4,200 in 2007 to $3,200 in 2015. In a very rare concession in a report that otherwise dispassionately reports trends in wealth as if they are as part of the natural world as ocean tides, the Credit Suisse report said:

“Part of the decline is due to adverse exchange rate movement movements, but rising inequality is the principal reason why the global trend in median wealth has not followed the path of mean wealth per adult.” [page 20]

Exchange rates are referenced because the Credit Suisse report converts wealth holdings elsewhere into U.S. dollars for the sake of comparison, and most currencies of the world have lost value against a strong U.S. dollar, thereby rendering those holdings artificially lower than they actually are. But the main point here is average wealth increases but median wealth has been declining. The reason is this: Average measures the difference between the highest and lowest, while median is the point where half are higher and half are lower. As the joke goes, if Bill Gates walks into a bar, everybody there has become, on average, a millionaire.

Unfavorable exchange rates or not, it is no surprise that the U.S. in particular, and the global North in general, are home to a huge majority of the world’s millionaires. Centuries of one-sided extraction of natural resources, control of land and financial plunder have increased global inequality. This is hinted at in a 2009 paper written by Branko Milanović, then a World Bank researcher, who calculated that the standard measure of inequality, a statistic known as the gini coefficient, has increased greatly since the early 19th century. But, he wrote, most of the inequality of the early 19th century was due to differences among individuals within countries and less by difference in wealth between countries. In the early 21st century, by contrast, the author estimates that about 90 percent of global inequality is due to differences between countries and only a small percentage due to differences among individuals within countries. He concludes:

“[I]nequality between individuals is much higher today than 200 years ago, but—more dramatically—its composition has totally reversed: from being predominantly driven by within-national inequalities (that is, by what could be called ‘class’ inequality), it is today overwhelmingly determined by the differences in mean country incomes (what could be called ‘location’ or citizenship-based inequality).”

We wouldn’t expect issued by a World Bank economist, even a working paper that is “unofficial,” to acknowledge class differences. The implication that class differences have ceased to be relevant can easily be corrected every time we walk into our place of employment, both by the relations there and by who pockets the value created by the workforce. Not to mention the drastic and growing inequality within countries. Nonetheless, Dr. Milanović’s reference to differences between countries is of course true, and although the World Bank certainly wouldn’t use the term, we can call that international inequality by its name: Imperialism.

As they have needed to expand under the pressures of competition, the capitalists of the global North moved in to newer locations, from which they could ship massive profits back home while leaving the local populations destitute and forced to work for starvation wages. This process of primitive accumulation, not much different from the sort of primitive accumulation that occurred in England and elsewhere at the dawn of capitalism, kept local elites happy but, more so, fattened the wallets of the corporate elites who set up operations. This transnational profiteering, a process known as imperialism, primarily filled bulging corporate coffers, but inevitably some tiny amount of it filtered down for some working people in the North. Jobs for administrators, sales representatives, warehouse workers and others related to supporting exports as new markets are forced open would be a direct manifestation, and manufacturing jobs tied to the expansion of production destined for export are created.

But competitive pressures inevitably force production to be moved to countries with much lower wages — thus the age of buoying living standards through export of locally made products comes to an end, supplanted by corporate globalization that moves jobs overseas and drives down wages. The shipping of production to locations with ever lower wages and regulations, accelerated by multi-national corporations pressing governments to adopt ever more one-sided “free trade” agreements, although a new form of imperialism, is one that drives down wages in the global North and increases inequality.

Thus, the era of corporate globalization promises more inequality. In your next life, work harder to be born into the right family.