Low wages don’t come cheap

When we think of the externalization of costs by capitalist enterprises, we think of environmental damage or infrastructure. But low wages are another burden foisted onto society, costing the public more than $150 billion annually in the United States.

So widespread have low wages become that a majority of federal and state money going toward public-assistance programs are paid to people who are part of a working family. This amounts to one more subsidy for U.S. business, already the recipients of massive largesse.

When it is impossible to live on meager wages — a position tens of millions of U.S. families find themselves in — there is no alternative to turning to public-assistance programs. The scale of this was calculated by researchers at the University of California Berkeley Center for Labor Research and Education, and released this month in their paper, “The High Public Cost of Low Wages.”

(Graphic by the Economic Policy Institute)

(Graphic by the Economic Policy Institute)

The authors of the report, Ken Jacobs, Ian Perry and Jenifer MacGillvary, examined the cost to the federal government and the 50 state governments for four programs — the Medicaid and Children’s Health Insurance Program, Temporary Aid to Needy Families, the Earned Income Tax Credit and the food stamps program (known formally as the Supplemental Nutrition Assistance Program, or SNAP). Almost three-quarters of those enrolling in at least one of these programs is a member of a working family, defined as a family with at least one member who works at least 10 hours a week for at least 27 weeks in a year.

Overall, $153 billion from these four programs goes to working families, representing 56 percent of total public-assistance spending by the federal and state governments.

This massive amount of public money represents a subsidy of corporations. The less they spend on wages and benefits, the more goes to profits, which are ultimately stuffed into the bloated bank accounts of corporate executives and financiers.

Fast-food workers, child care workers and home care workers are heavily represented among those who depend on public assistance to supplement their subpar wages — about half of all the employees in these three industries. That is no surprise. What might be surprising is the increasing prevalence of this in “white-collar” fields. Twenty-five percent of adjunct college professors receive public assistance! So much for “lack of education” as the cause of stagnant or falling wages, as right-wing apologists for growing inequality like to claim.

The Berkeley Center report broke down the public-assistance money by state, which reveals some interesting statistics. The state with the highest share of public-assistance money going to members of working families is none other than Texas. A full two-thirds of federal and state public-assistance money in that state goes to working families. Something to keep in mind next time you hear former Texas Governor Rick Perry, a past and possibly future presidential candidate, drone on about Texas creating more jobs than any other state. The official web site of the current Texas governor, tea party extremist Greg Abbott, brags about the state’s alleged plentiful “good jobs for hard-working Texans,” declaring that “It’s not bragging if it’s true.”

In reality, if so many Texans rely on food stamps and other government programs to survive, not too many of those jobs pay well. The tax system there is also regressive — Texas has no state income tax, but it has high sales and property taxes structured to disproportionately place the burden of taxes on the poor and middle class. The top 1 percent of Texans pay an effective tax rate of 3.2 percent, while a middle-income Texan pays taxes at a higher rate than a middle-income Californian, according to a Washington Monthly analysis.

(Graphic by Economic Policy Institute)

(Graphic by Economic Policy Institute)

It’s not only Texas, however, even if it is done on a larger scale there. Higher-paying jobs have been disappearing in the U.S., with the most growth since 2010 in low-wage jobs paying less than $13.33 an hour. At the same time, the number of people enduring long-term unemployment because of the weak economy has sharply risen in the U.S., Canada, European Union, Australia and New Zealand.

Given the increased harshness of employment practices, more families may be needing public assistance. A particularly brutal practice, “on-time scheduling,” has become so pervasive that New York State Attorney General Eric Schneiderman has launched an investigation into 13 retailers. This is a practice in which workers are told what shift to work with less than one day’s notice, making it impossible for them to make arrangements for personal and family needs.

The scale of how far backwards we have traveled is that the Obama administration is offering U.S. minimum-wage workers two-thirds of what was demanded 50 years ago. One of the demands of the March on Washington in 1963 was a minimum wage of $2 an hour. Adjusted for inflation, $2 an hour in 1963 would be worth $15.34 today. Yet the federal minimum wage in the United States is $7.25 an hour. So the $15 an hour campaign that has rapidly grown over the past year is agitating for nothing outlandish. Nor will $15 an hour for someone who supports a family lead to a life in luxury.

Raises most certainly can be afforded. U.S. corporations were sitting on about $5 trillion of cash as of 2011, a figure that undoubtedly has since grown. The massive hoards of cash, bloated salaries and bonuses for executives and financiers, and the starvation wages endured by so many all come with a cost — a cost borne by working people. There are not only no free lunches for working people, you are paying for the lunches and dinners of the wealthy besides your own lunch.

Trans-Pacific Partnership says if a corporation claims it’s true, it must be true

Corporations are elevated to the same status as national governments under “free trade” agreements, but if the Trans-Pacific Partnership is approved, corporations will be elevated above governments. New language inserted into the text of the TPP declares that, in certain circumstances, arbitrators hearing a suit by a corporation must assume the corporation’s claim is true.

We know this thanks to WikiLeaks, which has published another section of the TPP, the investment chapter that spells out the enforcement mechanism — the muscle — that will codify corporate dominance over democratic processes and governments. There is this tidbit, found within Article II.22 (“conduct of the arbitration”), which specifies what an arbitration panel is to do if a government objects that a complaint brought by a corporation does not qualify for a hearing:

“In deciding an objection under this paragraph, the tribunal shall assume to be true the claimant’s factual allegations in support of any claim in the notice of arbitration (or any amendment thereof).”

Thus, there is no basis on which a government can block the most frivolous of claims. TPP apologists might object that only a “technical” issue is being addressed in the above passage. But given the context, it is not a large step to go from a presumption that a corporation’s argument is true on its face for eligibility to be heard to presumptions in the hearing itself. The corporate lawyers who double as the arbitrators in the secret, unappealable tribunals in which cases are adjudicated under “free trade” agreements have interpreted the text of past agreements to strike down safety, health and environmental laws, and that “investors” should be guaranteed the highest possible profit. These are rulings that governments obligate themselves to carry out.

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

All the elements of agreements like the North American Free Trade Agreement and the many bilateral “free trade” agreements that mandate arbitration in secret, unappealable tribunals are in the Trans-Pacific Partnership. In fact, TPP mandates the same arbitration body, the International Centre for Settlement of Investor Disputes — an arm of the World Bank. ICSID is no friend of regulation.

No limitations on eligibility to sue for ‘lost profits’

Who will be eligible to sue under TPP? No, not the governments that wish to sign the agreement. Only “investors” are eligible to sue. There is no limitation on who or what is an “investor” — any person or entity that has “an expectation of gain or profit” in any form of participation in any enterprise, holds any financial instrument, possess any intellectual property right or has a “tangible or intangible” right in any “movable or immovable property,” even liens, is qualified to sue. Any decision, regulation or law by any level of government can be challenged, regardless of the democratic procedures used to promulgate it.

The real-world effect is that any corporate entity can move to overturn any government action, simply on the basis that its “right” to the maximum possible profit, regardless of cost to a community, has been “breached.”

Worse still, the expansive language of the TPP means that even more corporations will be eligible to sue governments, a Public Citizen analysis of the leaked investment chapter reports:

“Existing ISDS-enforced agreements of … developed TPP countries have been almost exclusively with developing countries whose firms have few investments in the developed nations. However, the enactment of the leaked chapter would dramatically expand each TPP government’s ISDS liability. The TPP would newly empower about 9,000 foreign-owned firms in the United States to launch ISDS cases against the U.S. government, while empowering more than 18,000 additional U.S.-owned firms to launch ISDS cases against other signatory governments.”

Corporations not based in a TPP country but which operate in a TPP country, even when they have no real investment in a TPP country, will be eligible to sue. (The “ISDS” in the above passage refers to “investor-state dispute settlement,” the technical term used to refer to rules that mandate the use of the secret arbitration bodies.) Additionally, previous language that purported to provide support for health, safety and environmental rules is missing from the latest text, according to Public Citizen.

That does not mean that the boilerplate language in past “free trade” deals concerning health, safety and the environment has any meaning. The most recent ruling on a complaint brought under the North American Free Trade Agreement, handed down on March 17, put Canada and the province of Nova Scotia on the hook for a minimum of C$300 million because a U.S. concrete company was denied a permit to turn an environmentally sensitive beach into a quarry.

Health and environment laws swept away

The list of decisions (which become precedents for future disputes) under NAFTA alone is infamous. Here is a sampling:

  • Ethyl Corporation sued Canada for $250 million because of a ban on a gasoline additive known as MMT, a chemical long believed to be dangerous to health. Ethyl claimed the Canadian ban was an “expropriation” of its “investment” and a violation of the principal of “equal treatment” of foreign capital even though had a Canadian producer of MMT existed, it would have been subject to the same standard. Canada settled to avoid a total defeat, paying Ethyl a smaller amount and reversing its ban.
  • A U.S. company, Metalclad, sued Mexico because a city government refused to grant it a permit for a waste dump (similarly denied to a Mexican company that previously wanted to use the site). Mexico lost, and had to grant the permit despite the environmental dangers and pay $15.6 million to Metalclad.
  • Another U.S. company, S.D. Myers, sued Canada because of a ban on the transportation of PCBs that conformed with both a Canada-United States and a multi-lateral environmental treaty. A tribunal ordered Canada to pay $5.6 million and reverse the ban, negating the two environmental treaties and ignoring the fact that PCBs are known carcinogens banned since 1979 in the U.S. The tribunal ruled that, when formulating an environmental rule, a government “is obliged to adopt the alternative that is most consistent with open trade.” So much for democracy!

In another infamous case, the tobacco company Philip Morris moved some of its assets to Hong Kong so it could declare itself a Hong Kong company eligible to sue Australia under the Australia-Hong Kong bilateral investment treaty, which, unlike some Australian trade pacts, allows corporations to sue one or the other government. Philip Morris seeks to overturn Australia’s rules limiting tobacco advertising and packaging, enacted in the interests of public health, which were found to be legal by Australia’s supreme court, the High Court. (This case is still pending.)

That case is shocking enough in itself, but there is an extra twist — the lawyer for Philip Morris, David A.R. Williams, is one of the judges appointed by New Zealand to the arbitration body hearing the case, ICSID. That is far from an isolated case as many ICSID judges are lawyers who specialize in representing multi-national corporations in front of these arbitration bodies. In another example, a judge ruled in favor of Vivendi Universal against Argentina in a failed water-privatization scheme, and her ruling was allowed to stand even though the judge served on the board of a bank that was a major investor in Vivendi. The TPP is completely silent on conflicts of interest. The leaked TPP chapter reveals for the first time that ICSID would hear disputes brought under TPP.

You won’t be able to buy local anymore

Those corporate lawyers, and especially the multi-national capital they represent, have had their wish lists brought to life in the leaked TPP text. No capital controls of any kind are allowed, “buy local” rules would be prohibited, “investors” can sue for large damages even when their claim has been covered by insurance, and the arbitration body hearing a case should apply “customary international law.”

That last item may sound bland, but in practice it means that rulings declaring reasonable laws and regulations to be illegal impediments to corporate profits are precedents that must be followed. Consider, for example, a London Court of International Arbitration panel, ruling in July 2005 for a unit of the Occidental Petroleum Corp. in a case heard under the U.S.-Ecuador bilateral investment treaty, which declared that any change in business conditions constitutes a violation of “investor rights.” If such a ruling is accepted as precedent, any attempt at regulation is at risk of being ruled an illegal “expropriation” of future profits.

The TPP, along with the Transatlantic Trade and Investment Partnership and the Trade In Services Agreement, are not done deals. The TPP is much closer to the conclusion of negotiations than the others, but can be stopped. Grassroots opposition across the 12 countries currently engaged in TPP talks continues. Militant opposition is critical in all countries, but perhaps the single most important factor at the moment is what the U.S. Congress will do.

Reports consistently say that several governments will not commit themselves to passing TPP until the U.S. Congress passes what it is commonly called “fast-track authority.” Officially known as “trade promotion authority,” fast-track is a method of sneaking unpopular bills into law. Under fast-track, Congress has a limited time to debate a bill and can not make amendments or change so much as a comma, only vote yes or no. The Obama administration is pushing hard for Congress to re-authorize fast-track because that is the only way the TPP, which can not stand the light of day, can be passed into law.

Because of opposition from most Democrats and some tea party Republicans, fast-track passage is not assured. The introduction of fast-track into the Senate depends on a Democrat from Oregon, Ron Wyden, who is being heavily pressured by his constituents not to introduce a fast-track bill he has been negotiating with a conservative Republican from Utah, Orrin Hatch. One of several groups pressuring Senator Wyden, the Oregon Fair Trade Campaign, has rented a recreational vehicle to shadow him across the state.

Where ever you are, voicing your opposition to the TPP to your elected officials, and joining a local or national group in opposition, is critical. The U.S. government is pushing the hardest, and attempting to insert the most draconian rules, to cement the control of U.S.-based multi-national corporations over the world’s resources and markets, and the other governments are willing to throw overboard what sovereignty remains to them so that their multi-national corporations get a slice of the pie.

Allowing the TPP to pass means nothing less than an end to democracy and a world where corporate power and money becomes more dominant than ever, where corporate profits are codified in law to be above all other human concerns.

The straitjacket of austerity tightens on Syriza

The contradiction of putting an end to austerity and remaining within the eurozone has manifested itself in full force for Greece. At this early stage, it is alarmist to argue that Syriza has “sold out” nor is it realistic to proclaim that Syriza has achieved “victory” in its negotiations.

How Syriza uses the four months until the extended bailout program expires in June, and what Greece’s governing party will do once this period ends, will begin to reveal to what extent Greece can put an end to austerity and Syriza can make good on implementing the program that carried it to victory in January’s elections. That is surely the minimum amount of time necessary to begin to make any judgment on Syriza as it is tightly boxed in by circumstances not of its making.

Athens (photo by A. Savin)

Athens (photo by A. Savin)

It is difficult to avoid the belief that New Democracy intended to hand Syriza a poisoned chalice. Although corporate-media commentary at the time almost uniformly suggested that New Democracy, Greece’s main Right-wing party, was taking a reasonable gamble that it could successfully get its candidate elected as president by parliament, attempting this seemed more an act of suicide. The party had moved up the presidential election, and its failure to seat its candidate automatically triggered early parliamentary elections. There was no reasonable chance of its presidential candidate winning, and little chance of it retaining its parliamentary majority once fresh general elections were triggered.

Parties ordinarily don’t intentionally bring down their own government. But with a series of large debt repayments due in 2015 from February to July, the difficulty of making those payments and the rising anger of the Greek people at their immiseration, going into opposition and ducking responsibility for their own policies must have seemed tempting.

Tightening the financial screws

Syriza has no easy task, nor have Europe’s dominant institutions made it any easier. A week after Syriza took power, the European Central Bank said it would cease accepting Greek government bonds or government-guaranteed debts as collateral for loans to Greek banks. This effectively cut off the main source of financing for Greek banks. The ECB, in its supervisory capacity, also prohibited Greek banks from further loaning money to the Greek government, cutting off another source of funding.

This sudden action of the European Central Bank constitutes a “noose around Greece’s neck,” writes Ellen Brown in her Web of Debt blog:

“The ECB will not accept Greek bonds as collateral for the central bank liquidity all banks need, until the new Syriza government accepts the very stringent austerity program imposed by the troika (the [European] Commission, ECB and IMF). That means selling off public assets (including ports, airports, electric and petroleum companies), slashing salaries and pensions, drastically increasing taxes and dismantling social services, while creating special funds to save the banking system. …

Not just Greek banks but all banks are reliant on central bank liquidity, because they are all technically insolvent. They all lend money they don’t have. They rely on being able to borrow from other banks, the money market, or the central bank as needed to balance their books. The central bank (which has the power to print money) is the ultimate backstop in this sleight of hand. If that source of liquidity dries up, the banks go down.”

The result of this power play was a cash-flow problem for the government and Greek banks. It also triggered an exodus of capital out of the country, Mark Weisbrot writes:

“This move was clearly made in bad faith, since there was no bureaucratic or other reason to do this; it was more than three weeks before the deadline for the decision. Predictably, the cut off spurred a huge outflow of capital from the Greek banking system, destabilizing the economy and sending financial markets plummeting. … The European authorities appeared to be hoping that a ‘shock and awe’ assault on the Greek economy would force the new government to immediately capitulate.”

With an estimated €20 billion of bank deposits believed to have been taken out of the country from December through late February, and the impossibility of paying off debt while continuing to have enough money to run the government, Syriza’s room for maneuver rapidly shrank.

Bailouts for banks, not people

What is crucial is to understand that the “troika” bailed out large multi-national banks, in particular German and French banks, and are now asking Greek working people to pay for it.

Through 2009, Greek debt was mostly held by European banks; French and German banks alone held more than 40 percent of Greek debt. The €227 billion of loans from the European Union and International Monetary Fund that have since gone to Greece were used to pay large financial institutions elsewhere. By one estimate, only €15 billion has gone to state operations; none after 2012. The Greek government has been a pass-through, taking the loans given it and promptly sending it to financiers.

There are more payments coming soon. Greece is due to pay €450 million to the IMF on April 9 and €7 billion to the IMF and European Central Bank in July, among other deadlines. Because Syriza remains committed to retaining the euro as Greece’s currency, reflecting majority Greek opinion, it remains committed to paying off its debt, which can only be accomplished through cutting government services and spending. This is the pitiless logic of austerity.

Unlike the previous New Democracy and Pasok governments, Syriza has not completely surrendered. Last month, two bills were passed in parliament that subsidize electricity, food and housing. Prime Minister Alexis Tsipras has called the extended-bailout measures an “interim agreement” and that the government will not ask for a third bailout when the program ends in June. He also vows that making Greece’s wealthy pay taxes will be a centerpiece of reform.

Nonetheless, Syriza has made major concessions, agreeing in February to continued supervision by the troika and that it would refrain from any “unilateral action.” It also failed to get any reduction in its debt, and must pass an inspection by the troika in late April before it receives any of the money agreed in February, when the bailout extension was signed. Syriza was required to submit a list of reforms that must be approved. It did so on March 27; negotiations are continuing but the list was met with initial disapproval for not giving the troika everything it wants.

Among those reforms are a series of tax measures estimated to raise an additional €3.7 billion in revenue for the government, including cracking down on tax avoidance by the wealthy and on smuggling. But there is also another major concession, allowing the privatization of Greece’s most important port, at Piraeus, to go ahead despite promises to halt all privatizations. That is estimated to raise another €1.5 billion. A Chinese state-run shipping company seeks to buy a two-thirds stake.

Still insisting red lines will not be crossed

Syriza continues to declare that it will prioritize working people over debt repayment. The international economic affairs minister, Euclid Tsakalotos, told The Guardian:

“Our top priority remains payment of salaries and pensions. If they demand a 30% cut in pensions, for example, they do not want a compromise.”

The austerity that has been imposed has resulted in a contraction in gross domestic product of 25 percent, unemployment above 25 percent, a fall in real wages of 30 percent and a reduction in industrial output of 35 percent. And the size of the foreign debt has risen!

There is no way out of this without renouncing at least some of the debt, and doing so means leaving the eurozone and re-adopting its old national currency, the drachma. There should be no illusions that doing so will be free of pain. Left to the tender mercies of speculators, the drachma could conceivably lose 75 to 80 percent of its value in a short period of time. Assuming that a re-instituted drachma is initially valued at one euro, this would mean that imported goods will cost the equivalent of three or four euros instead of one, a drastic inflation.

Such a drastic currency devaluation would presumably spur a big increase in local production, because Greeks would need to produce internally to make up for being able to buy far less products from outside the country. It would also give a boost to exports, because Greek goods would now be cheap. This is the “Argentina option,” so called because Argentina followed this path in the early 2000s, almost immediately improving its economy. But the Argentine government did nothing that touched capitalist relations, and of late the country has suffered from mounting difficulties.

Is leaving the eurozone necessarily the question?

Thus there are Left, even Marxist, economists who do not believe Greece should leave the eurozone but rather go ahead with nationalizations and other measures anyway. So the debate over euro versus drachma does not fall along clear-cut lines. For example, a prominent economist elected to parliament on the Syriza ticket, Costas Lapavitsas, argues that Keynesian measures are what are possible in the immediate moment but that Greece must drop the euro. Another prominent economist, Michael Roberts, argues for an immediate Marxist-inspired program but that Greece should retain the euro.

Professor Lapavitsas argues that, although getting rid of capitalism is what is needed in the long term, for now getting rid of austerity is what is necessary and that is impossible within the framework of the eurozone. He believes that a negotiated exit from the euro would be the best solution. This would include a 50 percent debt write-off and that the devaluation of the drachma be limited to 20 percent through an agreement with the E.U. to tie its value to the euro; that is, the drachma would not be traded freely as currencies customarily do.

Capital controls and immediate nationalization of banks would be necessary as part of this proposed program. Rationing would be inevitable for a time, but Professor Lapavitsas argues that rationing already exists “through the wallet” as millions of Greeks can not afford even basic necessities. Crucially, he says that all this would be carried out with workers’ control (a factor missing in Argentina); bank employee unions should have a role in running the nationalized banks. Unused productive capacity would soon kick-start the economy, he said:

“What you’ve got to appreciate, though, is this: devaluation would not work simply, or mostly, through exports. It would work through the domestic market, more than exports. At the moment, there are vast unused resources in Greece. … There are vast unused resources across the country! Small and medium enterprises will come to life immediately if there was a devaluation. There is enough small-scale capital to do that. The revival of the economy, the return of demand and production, will be very rapid, and it will take place primarily through that. … I have — and econometric studies I’ve seen confirm it — little doubt that small and medium enterprises will allow a return of Greece to a reasonable productive state within a very short period of time, a couple of years.”

Professor Roberts, on the other hand, argues that it is “extremely unlikely” that the drachma would depreciate by only 20 percent, and that a larger devaluation and rising prices would offset any gains from cheaper exports. He wrote:

“Greek capitalism is no position to turn things round with its own currency. Greek capital will be saddled with huge euro debts following devaluation and it won’t be able to export enough to stop the Greek economy dropping (further) into an abyss and taking its people with it. [A Greek exit] also means not just leaving the euro but also the EU and without any reciprocal trade arrangements that Switzerland has, for example.”

Bank nationalization and a public takeover of strategic industries should be at the center of any Greek plan to raise investment and growth, Professor Roberts argues. Although in favor of Keynesian prescriptions such as progressive taxation and labor rights, these measures should be geared toward a larger project of replacing capitalism, not to try to make capitalism work, in or out of the eurozone. But he acknowledged that should his program be adopted, Greece might be expelled from the euro anyway.

There are no guarantees. Professor Lapavitsas’ belief that a drachma devaluation can be held to 20 percent seems overly optimistic and Professor Roberts’ belief that Greek must leave the European Union (and thus have trade cut off) were it to drop the euro seems overly pessimistic. Whatever direction Greece takes, however, it can’t travel as far as it needs to on its own. An economy drastically remodeled on a democratic basis is the only solution in the long term, but such a country would face severe pressure from capitalist governments seeking to destroy it.

Greece must create links with countries attempting to move past capitalism, such as those in Latin America, and must be joined by other European countries traveling the same path. Greece can’t be a socialist island in a global sea of capitalism. There are only international solutions, not Greek solutions, to Greece’s problems. The capitalist alternative is to continue to be immiserated for the sake of private profit, the same fate as the overwhelming majority of humanity.

Providing low-cost banking by saving the post office

The struggle to save the United States Postal Service is emblematic of the larger struggle against corporate plundering of public resources. Reversing the intentional bankrupting of the post office requires not only a movement of allies that a new union leadership has begun to assemble, it potentially also merges with creating a public banking option.

What does banking have to do with delivering the mail? Nothing, today. But in the future? A Postal Service bank — a model that is successful in several countries around the world — would not only provide the post office with a reliable source of income, it would provide badly needed basic, inexpensive banking services for under-served populations.

Such an idea is not necessarily controversial. Despite the management of the U.S. Postal Service supporting privatization measures for many years, its office of the inspector general quietly issued a paper a year ago in which it said offering financial services could provide almost US$9 billion per year in new revenue while providing badly needed services to tens of millions of under-served people who are currently at the mercy of predatory “pay-day lenders” and other high-interest usurers.

The basis for this estimate is that “people trying to make it paycheck to paycheck” spend an estimated $89 billion per year on interest and fees on alternative financial services; the paper’s revenue estimate is based on the Postal Service, by offering low-cost services, capturing 10 percent of what is currently spent on those businesses. But the Postal Service inspector general’s office went out of its way not to upset bankers, watering down its proposal to a “partner[ship] with banks and other [mainstream] financial institutions” to “create a ‘win-win’ situation.”

Lupin field, New Zealand (photo by Michael Button)

Lupin field, New Zealand (photo by Michael Button)

If big commercial banks are winning, the rest of us will be losing. Rather than floating fantasies of swimming with ever-hungry financial sharks who are never satiated, thereby disemboweling your own idea, why not set up an independent postal bank? Doing so is precisely what the new president of the American Postal Workers Union, Mark Dimondstein, proposes. He says:

“Services such as basic, non-profit banking would be a great and real benefit to the people of this country, and a good answer to what I call ‘the Wall Street Banksters,’ who devastated the economy and with it the lives of millions of people.”

More than one-third of U.S. post offices are located in ZIP codes where no bank is located; another 20 percent are located in areas with only one bank. Providing low-cost services would help tens of millions struggling to survive financially avoid the trap of “pay-day lenders” who charge an effective annual interest rate of 391 percent, according to the inspector general paper. A typical “pay-day” loan of $395 costs the borrower an average of $520 in interest and fees on top of the principal.

Postal banking already a success

Countries as varied as Germany, Japan and New Zealand have successful postal banking services. The Japan Post Bank is the country’s largest holder of personal savings.

For more than a century, what is now known as the Japan Post Bank accepted deposits but did not lend, instead handing deposits to the Ministry of Finance, which used the funds to finance public-works projects. In 2001, the bank began direct lending instead of sending its deposits to the ministry. But this was accompanied by a privatization scheme. That scheme was halted in 2009, and has not been re-instituted despite the return of the conservative Liberal Democratic Party that originally pushed for the privatization. The bank would be a huge prize for private bankers, as it reported net income of ¥355 billion (US$3.0 billion) for its fiscal year 2014.

Germany’s Postbank is also highly profitable, reporting fiscal-year 2014 earnings of €431 million (US$473 million). The bank specializes in providing “simple, low-cost products for day-to-day needs,” and says it has 14 million clients, including more than 300,000 small and mid-sized companies.

New Zealand’s Kiwibank was founded in 2002. Big Australian banks had controlled 80 percent of New Zealand’s retail banking, and those multi-nationals were quick to close less profitable branches. To provide financial services to underserved communities, and keep capital at home for local investment, the New Zealand government established Kiwibank as a subsidiary of New Zealand Post, putting its branches in post offices. The results were swift, reports public-banking advocate Ellen Brown:

“Suddenly, New Zealanders had a choice in banking. In an early ‘move your money’ campaign, they voted with their feet. In an island nation of only 4 million people, in its first five years Kiwibank attracted 500,000 customers away from the big banks. It consistently earns the nation’s highest customer satisfaction ratings, forcing the Australia-owned banks to improve their service in order to compete.”

Kiwibank reported net income of NZ$100 million (US$76 million) for its fiscal year 2014. The bank reports it now has 860,000 customers.

The Republican assault on the U.S. post office

Although offering basic banking services would boost revenue for the U.S. Postal Service, it would currently be on stable financial foundations were it not for a Republican plan signed into law in 2006 requiring the Postal Service to pre-fund its pension costs for the next 75 years in only 10 years. No private business could or would do such a thing. The results are what would be expected: In the last four years before the pre-funding requirement (2003 to 2006), the Postal Service had a composite profit of US$9.3 billion; it has had massive losses ever since.

It is true that the volume handled by the post office has declined in recent years with the rise of the Internet. Setting up a postal banking system would offset the resulting fall in revenue. But rather than expand services to provide a sounder foundation, corporate ideology, promoted by those with a vested interest, is instead causing a push for the dismantling of the Postal Service and the privatization of its delivery services.

For example, a study by a “think tank” calling itself the National Academy of Public Administration prepared a report that called for a near total privatization of the post office. Two of the four authors had direct interests in privatization and a third has worked for a series of Right-wing extremist “think tanks” that consistently demand the privatization of everything in the public domain. The major funder of the study was Pitney Bowes Inc., which stands to directly benefit; it already earns billions of dollars from its mail-processing facilities and would be in a good position to grab much of the Postal Service’s business.

FedEx Corp. and United Parcel Service Inc., the two largest U.S. private delivery services, also stand to benefit from the destruction of the Postal Service. Both companies employ large fleets of lobbyists and are heavy donors to members of Congress.

Heavy pressure to close post offices and mail-sorting facilities is part of the privatization drive. But the limited research done on closings indicates that closings actually cost more than the savings generated. A study conducted by University of Wisconsin students examined what would happen if one of the seven post offices in a rural Wisconsin county were closed. The study found that the Postal Service would save $560,000 over seven years by closing a post office but the added costs from residents forced to drive further to access a post office would be $1.3 million over seven years. Thus, the overall cost to the community would be more than $700,000.

Another example of the costs to small communities can be found in the small community of Prairie City, South Dakota. Closing the post office there saved $19,000. The nearest hospital and pharmacy is 40 miles away, and when medicine was needed in Prairie City, the pharmacist 40 miles away would hand it to the mail carrier for same-day delivery. Now medicine deliveries take two to three days, an article in Naked Capitalism reports. What is the price of a life that might be compromised because of this delay?

Vowing a new militancy

A slate of local officials pledged to mount much more militant tactics swept into the leadership of the American Postal Workers Union last fall, winning seven of nine contested seats. Union President Dimondstein, elected with this group, said he seeks a “cultural shift” to an organizing model of unionism from a service model. In an interview with Socialist Worker, he said:

“People are disengaged not because they don’t care but because they see their union dues as a premium to an insurance company or as lawyer’s fees. We need to retool, to retrain people to see the union as themselves. We need to encourage workers to take their grievances directly to the boss, in groups, not just file paperwork and wait for union officials to service them. We need more of a movement, a sense of connection to the larger community which will give postal workers hope and confidence.”

That postal workers are in a position to negotiate is because they defied their union leadership in 1970 to engage in an illegal strike that spread across the country to more than 30 major cities — an example praised by the new American Postal Workers Union leadership. The union, one of four that represent postal workers, began talks on a new contract in February, vowing to end a disastrous three-tiered contact negotiated by previous union leaders. That contract calls for reduced pay for new hires and allows people working only 30 hours a week to be considered “full time.”

At the opening session of the contract talks, the American Postal Workers Union leadership was joined by the president of the National Association of Letter Carriers, Fredic Rolando, in a signal that the postal workers won’t be divided by job description. (The APWU represents clerks, drivers and maintenance workers.) The APWU said it would not only negotiate better pay, but “will be putting forth proposals for maintaining overnight delivery standards, halting plant closings, expanding hours of service and staffing for the customers, and providing financial services such as postal banking.”

To back their new militancy, postal unions have formed an alliance with several dozen labor and advocacy groups called A Grand Alliance to Save Our Public Postal Service. The alliance vows that “The public good must not be sacrificed for the sake of private investment and profit.”

No one group or organization can turn the tide against neoliberalism, but an organized fightback must begin somewhere by someone. If there is going to be serious follow-through on all these initiatives, a dramatic departure from the methodologies of U.S. unions of recent decades would be a welcome start — although this can’t be effective without broad popular support and activity capable of solidarity work and overturning anti-union laws such as Taft-Hartley.

Reforms, however welcome, can only achieve so much and are always temporary. Struggles for reform will be fought again and again, becoming more difficult to sustain, as long as economic systems stress private profit rather than public good.

Real unemployment is double the ‘official’ unemployment rate

How many people are really out of work? The answer is surprisingly difficult to ascertain. For reasons that are likely ideological at least in part, official unemployment figures greatly under-report the true number of people lacking necessary full-time work.

That the “reserve army of labor” is quite large goes a long way toward explaining the persistence of stagnant wages in an era of increasing productivity.

How large? Across North America, Europe and Australia, the real unemployment rate is approximately double the “official” unemployment rate.

The “official” unemployment rate in the United States, for example, was 5.5 percent for February 2015. That is the figure that is widely reported. But the U.S. Bureau of Labor Statistics keeps track of various other unemployment rates, the most pertinent being its “U-6” figure. The U-6 unemployment rate includes all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up). The actual U.S. unemployment rate for February 2015, therefore, is 11 percent.

Share of wages, 1950-2014Canada makes it much more difficult to know its real unemployment rate. The official Canadian unemployment rate for February was 6.8 percent, a slight increase from January that Statistics Canada attributes to “more people search[ing] for work.” The official measurement in Canada, as in the U.S., European Union and Australia, mirrors the official standard for measuring employment defined by the International Labour Organization — those not working at all and who are “actively looking for work.” (The ILO is an agency of the United Nations.)

Statistics Canada’s closest measure toward counting full unemployment is its R8 statistic, but the R8 counts people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed by hundreds of thousands, according to an analysis by The Globe and Mail. There are further hundreds of thousands not counted because they do not meet the criteria for “looking for work.” Thus The Globe and Mail analysis estimates Canada’s real unemployment rate for 2012 was 14.2 percent rather than the official 7.2 percent. Thus Canada’s true current unemployment rate today is likely about 14 percent.

Everywhere you look, more are out of work

The gap is nearly as large in Europe as in North America. The official European Union unemployment rate was 9.8 percent in January 2015. The European Union’s Eurostat service requires some digging to find out the actual unemployment rate, requiring adding up different parameters. Under-employed workers and discouraged workers comprise four percent of the E.U. workforce each, and if we add the one percent of those seeking work but not immediately available, that pushes the actual unemployment rate to about 19 percent.

The same pattern holds for Australia. The Australia Bureau of Statistics revealed that its measure of “extended labour force under-utilisation” — this includes “discouraged” jobseekers, the “underemployed” and those who want to start work within a month, but cannot begin immediately — was 13.1 percent in August 2012 (the latest for which I can find), in contrast to the “official,” and far more widely reported, unemployment rate of five percent at the time.

Concomitant with these sobering statistics is the length of time people are out of work. In the European Union, for example, the long-term unemployment rate — defined as the number of people out of work for at least 12 months — doubled from 2008 to 2013. The number of U.S. workers unemployed for six months or longer more than tripled from 2007 to 2013.

Thanks to the specter of chronic high unemployment, and capitalists’ ability to transfer jobs overseas as “free trade” rules become more draconian, it comes as little surprise that the share of gross domestic income going to wages has declined steadily. In the U.S., the share has declined from 51.5 percent in 1970 to about 42 percent. But even that decline likely understates the amount of compensation going to working people because almost all gains in recent decades has gone to the top one percent.

Around the world, worker productivity has risen over the past four decades while wages have been nearly flat. Simply put, we’d all be making much more money if wages had merely kept pace with increased productivity.

Insecure work is the global norm

The increased ability of capital to move at will around the world has done much to exacerbate these trends. The desire of capitalists to depress wages to buoy profitability is a driving force behind their push for governments to adopt “free trade” deals that accelerate the movement of production to low-wage, regulation-free countries. On a global basis, those with steady employment are actually a minority of the world’s workers.

Using International Labour Organization figures as a starting point, professors John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion — far less! Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

“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 poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

The earliest countries that adopted capitalism could “export” their “excess” population though mass emigration. From 1820 to 1915, Professors Foster and McChesney write, more than 50 million people left Europe for the “new world.” But there are no longer such places for developing countries to send the people for whom capitalism at home can not supply employment. Not even a seven percent growth rate for 50 years across the entire global South could absorb more than a third of the peasantry leaving the countryside for cities, they write. Such a sustained growth rate is extremely unlikely.

As with the growing environmental crisis, these mounting economic problems are functions of the need for ceaseless growth. Once again, infinite growth is not possible on a finite planet, especially one that is approaching its limits. Worse, to keep the system functioning at all, the planned obsolescence of consumer products necessary to continually stimulate household spending accelerates the exploitation of natural resources at unsustainable rates and all this unnecessary consumption produces pollution increasingly stressing the environment.

Humanity is currently consuming the equivalent of one and a half earths, according to the non-profit group Global Footprint Network. A separate report by WWF–World Wide Fund For Nature in collaboration with the Zoological Society of London and Global Footprint Network, calculates that the Middle East/Central Asia, Asia-Pacific, North America and European Union regions are each consuming about double their regional biocapacity.

We have only one Earth. And that one Earth is in the grips of a system that takes at a pace that, unless reversed, will leave it a wrecked hulk while throwing ever more people into poverty and immiseration. That this can go on indefinitely is the biggest fantasy.

Federal Reserve says your wages are too high

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

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

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

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

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

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

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

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

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

Collapsing wages in the Great Depression didn’t help

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You produce more but don’t earn more

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

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

(Graphic by Economic Policy Institute)

(Graphic by Economic Policy Institute)

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

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

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

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

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

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

Sure billionaires deserve their money: Killing jobs is hard work

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

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

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

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

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

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

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

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

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

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

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

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