Posted by rogerhollander in Barack Obama, Economic Crisis, Labor.
Tags: Barack Obama, Economic Crisis, income inequality, labor, labour, minimum wage, pam ramos, poverty, roger hollander, wal-mart, working poor
Roger’s note: Barack Obama, soon to be if not already a millionaire, shows just how out of touch he is with reality by his visit to one of the most exploitative enterprises on the face of the earth.
The president’s visiting my store Friday. He won’t see how I sleep on my son’s floor and eat potato chips for lunch
Thursday, May 8, 2014 12:23 PM -0500, http://www.salon.com
When I woke up to see the news, I could hardly believe it: President Obama is planning a visit to the Mountain View Wal-Mart where I work.
But the excitement quickly passed when I found out the store would be shutting down hours in advance of his visit. I wouldn’t be able to tell the president what it’s like to work at Wal-Mart and what it’s like to struggle on low wages, without the hours I need. I am living at the center of the income inequality that he speaks about so often, and I wanted to talk to him about how to change this problem.
My situation is not unlike that of many of the 825,000 Wal-Mart associates – and many other Americans – who are working hard, but just can’t keep up. Most of us aren’t even paid $25,000 a year even though we work at the largest employer in the country and one that makes $16 billion in profits.
I wanted to tell the president what it’s like working – and living – like this.
Things have always been tight. After four years working at Wal-Mart in Mountain View, I am bringing home about $400 every two weeks (I’d like to get more hours, but I’m lucky if I work 32 hours a week). That’s not enough to pay for bills, gas and food. All I can afford to eat for lunch is a cup of coffee and a bag of potato chips. I’ve always done everything possible to stretch paychecks and scrape by. Sometimes it means not getting enough to eat.
But then I got some bad news that made stretching my budget impossible.
Two months ago, I started feeling ill. My doctor told me I needed to take a week off to have a series of medical tests. Every day for a week I went to the hospital and had to pay $30, $60 or $100 in co-pays for each appointment, test and X-ray.
With these additional expenses and without a paycheck for the week I was out, it pushed me over the edge. I didn’t have enough money to pay the rent.
Right now, I don’t have a place to call home.
I sleep on the floor of my son’s living room because I can’t afford my own place. All of my belongings are in my car. I don’t know where to send my mail.
I used to think, “At least I have my health and my family.” But my doctor thinks I may have colon cancer, and with all of the money I still owe the hospital, I’m not sure how to finish the tests and get treatment. Even though I do have insurance through Wal-Mart, the co-pays are more than I can afford with only $400 every two weeks.
I wanted to tell the president I am scared. I am scared for my health. I am scared for the future for my grandkids. And I am scared and sad about the direction that companies like Wal-Mart are taking our country.
I don’t wish the struggle I’m facing onto anyone. But sadly, my situation isn’t unique. I know that I am one of many living in the Wal-Mart economy who has no financial stability. We expect to work until our deaths because we don’t have any retirement savings and are concerned about the future in front of our children and grandchildren.
There are so many of us who have it so hard – trying to live paycheck to paycheck. While the president is here visiting my store, I want him to look inside at what is really happening at Wal-Mart.
I want the president to help us and tell Wal-Mart to pay us enough to cover the bills and take care of our families. That doesn’t seem like too much to ask from such a profitable company, a company that sets the standard for jobs in this country. And I hope it’s not too much to ask from a president who believes that income inequality is the defining challenge of our time.
Posted by rogerhollander in Brazil, Economic Crisis, Latin America, Sports, War.
Tags: 2016 olympics, Brazil, brazil olympics, brazil poverty, brazil world cup, david swanson, DAVID ZIRIN, militarism, olympic games, olympic history, olympics, roger hollander, soccer, sports, war, world cup
Roger’s note: When I was a member of Toronto’s Metropolitan City Council, I was an avid opponent of the city’s (failed) bid for the 1996 Olympics and a supporter of the citizen lead Bread Not Circuses Coalition. I can verify from my experience and research at the time, that everything you read below is true.
OpEdNews Op Eds 5/1/2014 at 14:54:47
By David Swanson (about the author)
he author of Brazil’s Dance With the Devil, Dave Zirin, must love sports, as I do, as billions of us do, or he wouldn’t keep writing about where sports have gone wrong. But, wow, have they gone wrong!
Brazil is set to host the World Cup this year and the Olympics in 2016. In preparation Brazil is evicting 200,000 people from their homes, eliminating poor neighborhoods, defunding public services, investing in a militarized police and surveillance state, using slave and prison labor to build outrageous stadiums unlikely to be filled more than once, and “improving” a famous old stadium (the world’s largest for 50 years) by removing over half the capacity in favor of luxury seats. Meanwhile, popular protests and graffiti carry the message: “We want ‘FIFA standard’ hospitals and schools!” not to mention this one:
(FIFA = Fédération Internationale de Football Association, aka Soccer Profiteers International)
Brazil is just the latest in a string of nations that have chosen the glory of hosting mega sports events like the Olympics and World Cup despite the drawbacks. And Zirin makes a case that nations’ governments don’t see the drawbacks as drawbacks at all, that in fact they are the actual motivation. “Countries don’t want these mega-events in spite of the threats to public welfare, addled construction projects, and repression they bring, but because of them.” Just as a storm or a war can be used as an excuse to strip away rights and concentrate wealth, so can the storm of sporting events that, coincidentally or not, have their origins in the preparation of nations for warmaking.
Zirin notes that the modern Olympics were launched by a group of European aristocrats and generals who favored nationalism and war — led by Pierre de Coubertin who believed sport was “an indirect preparation for war.” “In sports,” he said, “all the same qualities flourish which serve for warfare: indifference toward one’s well being, courage, readiness for the unforeseen.” The trappings of the Olympic celebration as we know it, however — the opening ceremonies, marching athletes, Olympic torch run, etc., — were created by the Nazis’ propaganda office for the 1936 games. The World Cup, on the other hand, began in 1934 in Mussolini’s Italy with a tournament rigged to guarantee an Italian win.
More worrisome than what sports prepare athletes for is what they may prepare fans for. There are great similarities between rooting for a sports team, especially a national sports team, and rooting for a national military. “As soon as the question of prestige arises,” wrote George Orwell, whom Zirin quotes, “as soon as you feel that you and some larger unit will be disgraced if you lose, the most savage combative instincts are aroused.” And there is prestige not just in “your” team winning, but in “your” nation hosting the grand event. Zirin spoke with people in Brazil who were of mixed minds, opposing the injustices the Olympics bring but still glad the Olympics was coming to Brazil. Zirin also quotes Brazilian politicians who seem to share the goal of national prestige.
At some point the prestige and the profits and the corruption and the commercialism seem to take over the athletics. “[T]he Olympics aren’t about sport any more than the Iraq war was about democracy,” Zirin writes. “The Olympics are not about athletes. And they’re definitely not about bringing together the ‘community of nations.’ They are a neoliberal Trojan horse aimed at bringing in business and rolling back the most basic civil liberties.”
And yet … And yet … the damn thing still is about sports, no matter what else it’s about, no matter what alternative venues for sports are possible or imaginable. The fact remains that there are great athletes engaged in great sporting activities in the Olympics and the World Cup. The attraction of the circus is still real, even when we know it’s at the expense of bread, rather than accompanying bread. And dangerous as the circus may be for the patriotic and militarist minded — just as a sip of beer might be dangerous to an alcoholic — one has the darndest time trying to find anything wrong with one’s own appreciation for sports; at least I do.
The Olympics are also decidedly less militaristic — or at least overtly militaristic — than U.S. sports like football, baseball, and basketball, with their endless glorification of the U.S. military. “Thank you to our service men and women watching in 175 countries and keeping us safe.” The Olympics is also one of the few times that people in the U.S. see people from other countries on their televisions without wars being involved.
Zirin’s portrait of Brazil leaves me with similarly mixed sentiments. His research is impressive. He describes a rich and complex history. Despite all the corruption and cruelty, I can’t help being attracted to a nation that won its independence without a war, abolished slavery without a war, reduces poverty by giving poor people money, denounces U.S. drone murders at the U.N., joins with Turkey to propose an agreement between the United States and Iran, joins with Russia, India, and China to resist U.S. imperialism; and on the same day this year that the U.S. Federal Communications Commission proposed ending the open internet, Brazil created the world’s first internet bill of rights. For a deeply flawed place, there’s a lot to like.
It’s also hard to resist a group of people that pushes back against the outrages being imposed on it. When a bunch of houses in a poor Brazilian neighborhood were slated for demolition, an artist took photos of the residents, blew them up, and pasted them on the walls of the houses, finally shaming the government into letting the houses stand. That approach to injustice, much like the Pakistani artists’ recent placement of an enormous photo of a drone victim in a field for U.S. drone pilots to see, has huge potential.
Now, the question is how to display the Olympics’ victims to enough Olympics fans around the world so that no new nation will be able to accept this monster on the terms it has been imposing.
David Swanson is the author of “When the World Outlawed War,” “War Is A Lie” and “Daybreak: Undoing the Imperial Presidency and Forming a More Perfect Union.” He blogs at http://davidswanson.org and http://warisacrime.org and works for the online (more…)
Posted by rogerhollander in Capitalism, Economic Crisis.
Tags: financiers, journalism, kappa beta phi, kevin roose, plutocrats, roger hollander, Wall Street, Wall Street Bankers, wall street fraternity, wilbur ross, young money
Roger’s note: You know the phrase “how the other half lives,” well this is a peek at how the 1% live. These are the heartless billionaires who pilot the capitalist death ship. I guess it is only natural that in their character (or lack thereof) they would reflect the very heartless inhumanity of the system they own and operate. Enjoy.
By Kevin Roose
Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight ofJews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”
Ross’s statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.
from Kevin Roose’s book Young Money
, published today by Grand Central Publishing.
“Good evening, Exalted High Council, former Grand Swipes, Grand Swipes-in-waiting, fellow Wall Street Kappas, Kappas from the Spring Street and Montgomery Street chapters, and worthless neophytes!”
It was January 2012, and Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.
Looking up at him from an elegant dinner of rack of lamb and foie gras were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. [To see the full Kappa Beta Phi member list, click here.] All told, enough wealth and power was concentrated in the St. Regis that night that if you had dropped a bomb on the roof, global finance as we know it might have ceased to exist.
During his introductory remarks, Ross spoke for several minutes about the legend of Kappa Beta Phi – how it had been started in 1929 by “four C+ William and Mary students”; how its crest, depicting a “macho right hand in a proper Savile Row suit and a Turnbull and Asser shirtsleeve,” was superior to that of its namesake Phi Beta Kappa (Ross called Phi Beta Kappa’s ruffled-sleeve logo a “tacit confession of homosexuality”); and how the fraternity’s motto, “Dum vivamus edimus et biberimus,” was Latin for “While we live, we eat and drink.”
On cue, the financiers shouted out in a thundering bellow: “DUM VIVAMUS EDIMUS ET BIBERIMUS.”
The only person not saying the chant along with Ross was me — a journalist who had sneaked into the event, and who was hiding out at a table in the back corner in a rented tuxedo.
Several Kappas at the table next to me, presumably discussing the coming plutocracy.
I’d heard whisperings about the existence of Kappa Beta Phi, whose members included both incredibly successful financiers (New York City’s Mayor Michael Bloomberg, former Goldman Sachs chairman John Whitehead, hedge-fund billionaire Paul Tudor Jones) and incredibly unsuccessful ones (Lehman Brothers CEO Dick Fuld, Bear Stearns CEO Jimmy Cayne, former New Jersey governor and MF Global flameout Jon Corzine). It was a secret fraternity, founded at the beginning of the Great Depression, that functioned as a sort of one-percenter’s Friars Club. Each year, the group’s dinner features comedy skits, musical acts in drag, and off-color jokes, and its group’s privacy mantra is “What happens at the St. Regis stays at the St. Regis.” For eight decades, it worked. No outsider in living memory had witnessed the entire proceedings firsthand.
A Kappa neophyte (left) chats up a vet.
I wanted to break the streak for several reasons. As part of my research for my book,Young Money, I’d been investigating the lives of young Wall Street bankers – the 22-year-olds toiling at the bottom of the financial sector’s food chain. I knew what made those people tick. But in my career as a financial journalist, one question that proved stubbornly elusive was what happened to Wall Streeters as they climbed the ladder to adulthood. Whenever I’d interviewed CEOs and chairmen at big Wall Street firms, they were always too guarded, too on-message and wrapped in media-relations armor to reveal anything interesting about the psychology of the ultra-wealthy. But if I could somehow see these barons in their natural environment, with their defenses down, I might be able to understand the world my young subjects were stepping into.
So when I learned when and where Kappa Beta Phi’s annual dinner was being held, I knew I needed to try to go.
Getting in was shockingly easy — a brisk walk past the sign-in desk, and I was inside cocktail hour. Immediately, I saw faces I recognized from the papers. I picked up an event program and saw that there were other boldface names on the Kappa Beta Phi membership roll — among them, then-Citigroup CEO Vikram Pandit, BlackRock CEO Larry Fink, Home Depot billionaire Ken Langone, Morgan Stanley bigwig Greg Fleming, and JPMorgan Chase vice chairman Jimmy Lee. Any way you count, this was one of the most powerful groups of business executives in the world. (Since I was a good 20 years younger than any other attendee, I suspect that anyone taking note of my presence assumed I was a waiter.)
I hadn’t counted on getting in to the Kappa Beta Phi dinner, and now that I had gotten past security, I wasn’t sure quite what to do. I wanted to avoid rousing suspicion, and I knew that talking to people would get me outed in short order. So I did the next best thing — slouched against a far wall of the room, and pretended to tap out emails on my phone.
The 2012 Kappa Beta Phi neophyte class.
After cocktail hour, the new inductees – all of whom were required to dress in leotards and gold-sequined skirts, with costume wigs – began their variety-show acts. Among the night’s lowlights:
• Paul Queally, a private-equity executive with Welsh, Carson, Anderson, & Stowe, told off-color jokes to Ted Virtue, another private-equity bigwig with MidOcean Partners. The jokes ranged from unfunny and sexist (Q: “What’s the biggest difference between Hillary Clinton and a catfish?” A: “One has whiskers and stinks, and the other is a fish”) to unfunny and homophobic (Q: “What’s the biggest difference between Barney Frank and a Fenway Frank?” A: “Barney Frank comes in different-size buns”).
Click here to listen: https://soundcloud.com/daily-intelligencer/queally-jokes/s-qxUq6
• Bill Mulrow, a top executive at the Blackstone Group (who was later appointed chairman of the New York State Housing Finance Agency), and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners and former assistant secretary of the Treasury, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of a liberal radical, and Henry was playing the part of a wealthy baron. They exchanged lines as if staging a debate between the 99 percent and the 1 percent. (“Bill, look at you! You’re pathetic, you liberal! You need a bath!” Henry shouted. “My God, you callow, insensitive Republican! Don’t you know what we need to do? We need to create jobs,” Mulrow shot back.)
• David Moore, Marc Lasry, and Keith Meister — respectively, a holding company CEO, a billionaire hedge-fund manager, and an activist investor — sang a few seconds of a finance-themed parody of “YMCA” before getting the hook.
• Warren Stephens, an investment banking CEO, took the stage in a Confederate flag hat and sang a song about the financial crisis, set to the tune of “Dixie.” (“In Wall Street land we’ll take our stand, said Morgan and Goldman. But first we better get some loans, so quick, get to the Fed, man.”)
Click here to listen: https://soundcloud.com/daily-intelligencer/dixie
A few more acts followed, during which the veteran Kappas continued to gorge themselves on racks of lamb, throw petits fours at the stage, and laugh uproariously. Michael Novogratz, a former Army helicopter pilot with a shaved head and a stocky build whose firm, Fortress Investment Group, had made him a billionaire, was sitting next to me, drinking liberally and annotating each performance with jokes and insults.
“Can you fuckin’ believe Lasry up there?” Novogratz asked me. I nodded. He added, “He just gave me a ride in his jet a month ago.”
The neophytes – who had changed from their drag outfits into Mormon missionary costumes — broke into their musical finale: a parody version of “I Believe,” the hit ballad from The Book of Mormon, with customized lyrics like “I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.” Amused, I pulled out my phone, and began recording the proceedings on video. Wrong move.
The grand finale, a parody of “I Believe” from The Book of Mormon
Click here to listen: https://soundcloud.com/daily-intelligencer/i-believe/s-GmzF7
“Who the hell are you?” Novogratz demanded.
I felt my pulse spike. I was tempted to make a run for it, but – due to the ethics code of the New York Times, my then-employer – I had no choice but to out myself.
“I’m a reporter,” I said.
Novogratz stood up from the table.
“You’re not allowed to be here,” he said.
I, too, stood, and tried to excuse myself, but he grabbed my arm and wouldn’t let go.
“Give me that or I’ll fucking break it!” Novogratz yelled, grabbing for my phone, which was filled with damning evidence. His eyes were bloodshot, and his neck veins were bulging. The song onstage was now over, and a number of prominent Kappas had rushed over to our table. Before the situation could escalate dangerously, a bond investor and former Grand Swipe named Alexandra Lebenthal stepped in between us. Wilbur Ross quickly followed, and the two of them led me out into the lobby, past a throng of Wall Street tycoons, some of whom seemed to be hyperventilating.
Once we made it to the lobby, Ross and Lebenthal reassured me that what I’d just seen wasn’t really a group of wealthy and powerful financiers making homophobic jokes, making light of the financial crisis, and bragging about their business conquests at Main Street’s expense. No, it was just a group of friends who came together to roast each other in a benign and self-deprecating manner. Nothing to see here.
But the extent of their worry wasn’t made clear until Ross offered himself up as a source for future stories in exchange for my cooperation.
“I’ll pick up the phone anytime, get you any help you need,” he said.
“Yeah, the people in this group could be very helpful,” Lebenthal chimed in. “If you could just keep their privacy in mind.”
I wasn’t going to be bribed off my story, but I understood their panic. Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark. (Or worse, sing about it — one of the last skits of the night was a self-congratulatory parody of ABBA’s “Dancing Queen,” called “Bailout King.”) These were activities that amounted to a gigantic middle finger to Main Street and that, if made public, could end careers and damage very public reputations.
After several more minutes spent trying to do damage control, Ross and Lebenthal escorted me out of the St. Regis.
As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.
The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.
The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.
The last thought I had, and the saddest, was that many of these self-righteous Kappa Beta Phi members had surely been first-year bankers once. And in the 20, 30, or 40 years since, something fundamental about them had changed. Their pursuit of money and power had removed them from the larger world to the sad extent that, now, in the primes of their careers, the only people with whom they could be truly themselves were a handful of other prominent financiers.
Perhaps, I realized, this social isolation is why despite extraordinary evidence to the contrary, one-percenters like Ross keep saying how badly persecuted they are. When you’re a member of the fraternity of money, it can be hard to see past the foie gras to the real world.
Copyright 2014 by Kevin Roose. Reprinted by permission of Grand Central Publishing. All rights reserved.
Posted by rogerhollander in Barack Obama, Criminal Justice, Economic Crisis, Trade Agreements, War.
Tags: bruce a. dixon, crack cocaine defendants, Criminal Justice, doj, drug war, economic inequality, eric holder, executive powers, glen ford, h. rap brown, hunger strikes, imam jamil al-amin, leonard peltier, mass incarceration, minimum wage, Obama, obama sotu, pelican bay, police brutality, police militarization, political prisoners, prison state, prisons, roger hollander, sotu, state of the union, supermax prison, tpp, trade agreements, unemployment
Roger’s note: here are two articles from the same source, the black agenda report web site, analyses you are not likely to find in the mainstream media.
by BAR executive editor Glen Ford
Before the nation and the world, President Obama pledges to take “action” against “economic inequality,” while simultaneously holding secret negotiations on a Trans Pacific Partnership trade scheme that will quicken the pace of the global Race to the Bottom, deepening economic inequalities. “Lies of omission are even more despicable than the overt variety, because they hide.”
“When you say ‘jobs,’ he says tax cuts – just like the Republicans, only Obama first cites the pain of the unemployed, so that you know he cares.”
“Believe it,” said the current Prevaricator-in-Chief, in the conclusion to his annual litany lies. President Obama’s specialty, honed to theatrical near-perfection over five disastrous years, is in crafting the sympathetic lie, designed to suspend disbelief among those targeted for oblivion, through displays of empathy for the victims. In contrast to the aggressive insults and bluster employed by Republican political actors, whose goal is to incite racist passions against the Other, the sympathetic Democratic liar disarms those who are about to be sacrificed by pretending to feel their pain.
Barack Obama, who has presided over the sharpest increases in economic inequality in U.S. history, adopts the persona of public advocate, reciting wrongs inflicted by unseen and unknown forces that have “deepened” the gap between the rich and the rest of us and “stalled” upward mobility. Having spent half a decade stuffing tens of trillions of dollars into the accounts of an ever shrinking gaggle of financial capitalists, Obama declares this to be “a year of action” in the opposite direction. “Believe it.” And if you do believe it, then crown him the Most Effective Liar of the young century.
Lies of omission are even more despicable than the overt variety, because they hide. The potentially most devastating Obama contribution to economic inequality is being crafted in secret by hundreds of corporate lobbyists and lawyers and their revolving-door counterparts in government. The Trans Pacific Partnership (TPP) trade deal, described as “NAFTA on steroids,” would accelerate the global Race to the Bottom that has made a wasteland of American manufacturing, plunging the working class into levels of poverty and insecurity without parallel in most people’s lifetimes, and totally eviscerating the meager gains of three generations of African Americans. Yet, the closest Obama came to even an oblique allusion to his great crime-in-the-making, was to announce that “new trade partnerships with Europe and the Asia-Pacific will help [small businesses] create even more jobs. We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment and open new markets to new goods stamped ‘Made in the USA.’” Like NAFTA twenty years ago – only far bigger and more diabolically destructive – TPP will have the opposite effect, destroying millions more jobs and further deepening worker insecurity. The Trans Pacific Partnership expands the legal basis for global economic inequalities – which is why the negotiations are secret, and why the treaty’s name could not be spoken in the State of the Union address. It is a lie of omission of global proportions. Give Obama his crown.
“The Trans Pacific Partnership (TPP) trade deal, described as ‘NAFTA on steroids,’ would accelerate the global Race to the Bottom.”
The president who promised in his 2008 campaign to support a hike in the minimum wage to $9.50 by 2011, and then did nothing at all to make it happen, says this is the “year of action” when he’ll move heaven and earth to get a $10.10 minimum. He will start, Obama told the Congress and the nation, by issuing “an executive order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour because if you cook our troops’ meals or wash their dishes, you should not have to live in poverty.” Obama neglected to mention that only new hires – a small fraction, beginning with zero, of the two million federal contract workers – will get the wage boost; a huge and conscious lie of omission. The fact that the president does not even propose a gradual, mandated increase for the rest of the two million shows he has no intention of using his full powers to ameliorate taxpayer-financed poverty. We can also expect Obama to issue waivers to every firm that claims a hardship, as is always his practice.
What is Obama’s jobs program? It is the same as laid out at last year’s State of the Union, and elaborated on last summer: lower business taxes and higher business subsidies. When you say “jobs,” he says tax cuts – just like the Republicans, only Obama first cites the pain of the unemployed, so that you know he cares. “Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad. Let’s flip that equation. Let’s work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs right here at home.” Actually, Obama wants to lower tax rates for all corporations to 28 percent, from 35 percent, as part of his ongoing quest for a Grand Bargain with Republicans. For Obama, the way to bring jobs back to the U.S. is to make American taxes and wages more “competitive” in the “global marketplace” – the Race to the Bottom.
In the final analysis, the sympathetic corporate Democrat and the arrogant corporate Republican offer only small variations on the same menu: ever increasing austerity. Obama bragged about reducing the deficit, never acknowledging that this has been accomplished on the backs of the poor, contributing mightily to economic inequality and social insecurity.
Obama offers nothing of substance, because he is not authorized by his corporate masters to do so. He takes his general orders from the same people as do the Republicans. That’s why Obama only speaks of minimum wage hikes while Republicans are in power, rather than when his own party controlled both houses of Congress. Grand Bargains are preferred, because they are the result of consensus between the two corporate parties. In effect, the Grand Bargain is the distilled political will of Wall Street, which feeds the donkey and the elephant. Wall Street – the 1 percent – believes the world is theirs for the taking, and they want all of it. Given this overarching truth, Obama has no choice but to stage a festival of lies.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com
Barack Obama, the State of the Union and the Prison State
Wed, 01/29/2014 – 14:18 — Bruce A. Dixon
by BAR managing editor Bruce A. Dixon
For a generation now, predatory policing, the war on drugs and the prison state have been government’s most frequent intersection with young black Americans. The gossip before this year’s State of the Union was that the president would now do by executive order all those good things Republicans have blocked him on the last 3 years. Does that include reining in or rolling back the prison state? Should we hold our collective breath?
“…Obama campaigned in 2007 and 2008 saying he would pass legislation raising the minimum wage…”
In the days before this year’s State of the Union address, we heard a lot about how Barack Obama was finally about to unleash the mighty executive powers of his office to accomplish some of the many great things he’s always wanted to accomplish, those mostly unspecified things which evil and immoral Republicans have prevented him from doing. From long experience dating back at least to the Clinton era, the White House and Democratic party know this is an attractive picture to many, one that conveniently excuses Democrats in office from even trying to accomplish the real demands of the millions who vote them into office.
Barack Obama campaigned in 2007 and 2008 saying he would pass legislation raising the minimum wage and making it easier to organize unions so people could stand up for their own rights in the workplace. The president apparently lied. Once in office with a thumping majority in both houses of Congress the president promptly froze the wages of federal workers, and made no move to protect union organizing or to raise the minimum wage. Four and five years later, with the House of Representatives safely under Republican control, the president has begun to make noises about how “America deserves a raise” and has finally declared that federal contract workers will soon have to be paid a minimum of $10.10 per hour.
Although Barack Obama’s career, and those of the entire black political class are founded on the notion that they and the Democratic party somehow “represent” the aspirations and political power of African Americans, the policy concerns of black America were nowhere to be found in last night’s state of the union. The speech contained no mention of the persistent gap between black and white unemployment, or the widening gaps between black and white wealth, and reaffirmed his commitment to “Race To The Top” an initiative to privatize public education in poorer communities across the country.
” Obama could halt the construction and opening of the new federal supermax prison…”
And of course, no cluster of issues impact black America more savagely and disproportionately than police practices, the drug war and the prison state. African Americans are one eighth the US population, but more than 40% of its prisons and jails. Together with Latinos, who are another eighth and make up nearly 30% of US prisoners, people of color are a quarter of the US population and more than 70% of the locked down. No cluster of issues would benefit more from a few presidential initiatives and well placed strokes of the pen than police practices, the drug war and the prison state.
Here are just a handful of things President Obama and his party could and would do, things that Republicans are powerless to prevent, which would make a large and lasting impact upon the communities they purportedly represent.
With the stroke of a presidential pen, Barack Obama could halt the construction and opening of the new federal supermax prison at ADX Thomson in Illinois, also called “Gitmo North.” Citizen activists in the president’s home state last year managed to close down the state’s brutal supermax prison at Tammsbecause they know that supermax prisons do not rehabilitate, they are instruments of torture pure and simple. Ordinary citizens know that torture should not be a career, or a business governments engage in. Even Obama’s own Bureau of Prisons is on record as wanting to examine whether the regimes in supermax prisons across the country constitute torture. It’s time to look for that presidential pen.
The president could take public notice of the alarming militarization of police forces across the country and the wave of police shootings of civilians. Far more persons die in the US of police gunfire than of terrorist incidents and school shootings. The feds play an enormous role in the funding, training and arming of thousands of local police departments across the country, through its grants to the state-level training and certification agencies, and its authorization of the sale of military equipment to police departments. The result is that every county and town in the US now has a SWAT team, employing shoot-first-question-later tactics, and although African Americans are far from the only victims of unchecked police violence, a black person is killed by police, security officers or vigilantes once every 28 hours. Again, this is a case for a presidential statement, a few orders to underlings and that mighty executive pen.
The president could order his Justice Department to reconsider its objections to the retroactive reduction of unfair and disproportionate sentences to crack cocaine defendants. When the president signed the so-called Fair Sentencing Act reducing the crack to powder cocaine penalty ratio from 100 to 1 to 18 to 1 thousands of defendants should have been eligible for immediate release. But Obama’s and Eric Holder’s Justice Departments have gone to court repeatedly to keep them behind bars. Our civil rights establishment from the Mark Morials and Al Sharptons down, seem more invested in the prestige of the president than doing justice to prisoners, and so have politely refused to call Obama and Holder on this glaring disconnect between their public pronouncements and their actual policies. The mighty presidential pen in the hands of Barack Obama could have made a big difference here any time in the last several years, and still can, if only he will.
The president could use his mighty executive powers to release some long-time political prisoners. There’s Iman Jamil Al-Amin, the former H. Rap Brown who distinguished himself laying the foundations for what passes for black political empowerment, risking his life registering voters and conducting Freedom Schools in rural Alabama with the Student Nonviolent Coordinating Committee in the mid and early 1960s. After repeated attempts by Georgia officials in the 1990s to frame Al-Amin for shootings, one of these stuck long enough to get a shaky conviction in 1999. As pressure for a retrial from local community activists built up and even in the face of protests from establishment figures like former Atlanta mayor, congressman and ambassador Andy Young, Georgia officials transferred Al-Amin into federal custody in the dead of night, and the feds spirited him away to the hellhole at ADX Florence in Colorado where he has been for more than a decade. With a stroke of that might executive pen, President Obama could send Al-Amin back to Georgiawhere his family and attorneys could visit him, and pressure would mount on Georgia authorities to give him a new trial, in which he might well prove his innocence.
The president could pardon or grant clemency to Leonard Peltier, a Native American leader who has served a decade longer in prison than Nelson Mandela did for an offense that nobody at his trial even alleged he actually committed. Peltier is recognized around the world as a political prisoner. His continued imprisonment shows that many wounds from the 60s and 70s were never healed, and his release would demonstrate that this president acknowledges the need for this healing. After almost 40 years, Leonard Peltier surely deserves to come home.
President Obama could acknowledge the wave of hunger strikes and protests in prisons across the country, and name a commission to investigate how we can reverse the expansion of prisons, guarantee the re-absorption of former prisoners into society, and reverse the culture and law which discriminate against and punish former prisoners and their families for the rest of their lives. Right now a number of prisoners at Menard Penitentiary in the president’s home state of Illinois are waging a hunger strike, with demands that differ little from those raised by prisoners in California’s Pelican Bay last year, and those in Virginia, Georgia, Ohio and elsewhere.
We must not imagine that rolling back the carceral state is something no government on earth has ever done. Right now in Venezuela, that nation is confronting a crisis of crime, the practical limits of prison expansion, and of what kind of society they want to build. They’re taking a different path than so-called “progressives” here, who seem upset only about prisoners who are factually “innocent” and only about prisons if they’re privatized. Venezuela is frankly committed to shrinking its prison population and exploring models of restorative rather than punitive justice. There really are other ways to go, if we have the will and the vision our Democrats and Republicans lack.
Obama’s Attorney General has learned how to let the words “mass incarceration” roll off his lips fluently, after his recent discovery that such a thing actually exists. The president opined that Trayvon Martin could have been his own son, minus the status, the privilege, the neighborhood and a few other things. But that mighty presidential pen that can call commissions, impose directives, re-set priorities and make all manner of changes by executive order, changes that no evil and immoral Republicans can block or reverse, at least until they re-take the oval office, is still in that desk drawer, or wherever Barack Obama keeps it. He hasn’t found it the last five years in office. Maybe he will discover it in these last three.
Bruce A. Dixon is managing editor at Black Agenda Report and serves on the state committee of the Georgia Green Party. He lives and works in Marietta GA and can be contacted via this site’s contact page, or at bruce.dixon(at)blackagendareport.com.e pointed out repeatedly the last five years, there are boatloads of things a president anxious to serve the will of the people could do with the stroke of a pen
Posted by rogerhollander in Art, Literature and Culture, Economic Crisis, Housing/Homelessness, New York.
Tags: abby zimet, andres serrano, homeless, homelessness, new york city, poverty, roger hollander, veterans
Roger’s note: the (rotten) fruits of our inhumane capitalist world.
12.19.13 – 12:50 PM
In the Bay Area, the homeless are suffering more than usual from a cold snap that has killed at least seven people. In New York, the homeless are suffering about as much as they always have, and they are everywhere. Seeking to tell their stories, artist Andres Serrano embarked on “Sign of the Times,” a project to buy 200 signs from homeless people at 20 bucks a shot to offer video testimony of their hard lives. When he asked, they always said yes, sometimes with a hug.
“I see every sign as a story. There are many stories out here that deserve to be heard.”
Posted by rogerhollander in Christmas, Economic Crisis, Republicans.
Tags: christmas, congress, government, mic, oil subsidies, republicans, roger hollander, scrooge, tax cuts, the rich
Roger’s note: The Republicans make Scrooge look like a Philanthropist, and the enabling Democrats are not far behind. Which reminds me to advise you to watch your behinds when it comes to your Social Security and Medicare amongst other things such as food stamps, unemployment benefits, reproduction rights, health care, education grants, etc.. It is fun to mock the Republicans, which is why I pass this on to you, but of course the real villains are the Military Industrial Prison Security Bankster Complex who pull the strings for the puppets who operate our dysfunctional undemocratic so-called government (I only use the word puppets rather than whores to describe the president, congressman and judges so as not to insult those who work in the sex trade industry).
Posted by rogerhollander in Barack Obama, Criminal Justice, Economic Crisis.
Tags: bank of america, banksters, derivitives, Economic Crisis, eric holder, glen ford, godman sachs, housing bubble, J.P. Morgan, jamie dimon, jp morgan fine, jp morgan settlement, Morgan Stanley, obama administration, roger hollander, too big to fail, Wall Street, Wells Fargo
Roger’s note: Black Agenda Report’s Glen Ford is one of the most incisive journalists on the Internet. Unlike the legions of mind/ethics challenged Obamabots, who for reasons of race or party loyalty are willfully blind to the Obama Administrations Wall Street/Military-Industrial Complex agenda, Black Agenda Report does not hesitate to speak the truth about the first Afro-American Emperor’s mythical new clothes.
Going on five years into the Obama regime, it is clear that Wall Street is immune from prosecution, no matter the savagery of the economic crime. Attorney General Eric Holder “has ruthlessly maneuvered every case against the oligarchs into his own jurisdictional arena, in order to protect the banksters from aggressive prosecution.” JP Morgan’s Jamie Dimon is a far bigger bandit than Lucky Luciano.
Obama and Holder Let Gangsters Pay Fine, Continue Business As Usual
by BAR executive editor Glen Ford
“The Obama administration has assessed a total of $28 billion in penalties against the Dimon mob, with no discernible effect.”
Imagine if Charles “Lucky” Luciano and his “Commission” representing the five reigning New York Mafia families plus the Chicago mob had been immune from law enforcement meddling in their activities, from the establishment of the “Syndicate” in 1931 to the present day. By now, Luciano’s gangster heirs would be the unchallenged rulers of economic and political life in the United States and, by imperial extension, the entire capitalist world.
JP Morgan chief executive Jamie Dimon is the man Lucky Luciano dreamed of becoming. A friend and golfing partner of President Obama, Dimon sits at the top of the ruling financial pyramid whose “commissioners” include the heads of Bank of America, CitiGroup, Wells Fargo, Goldman Sachs and Morgan Stanley. Their syndicate owns the cops, prosecutors, judges and major political parties and is, therefore, immune from criminal prosecution: the true “Untouchables,” too big to jail. So big, it will require a revolution to dislodge them from hegemonic power.
The latest Obama administration “settlement” of JP Morgan’s ongoing criminal enterprise amounts to a $13 billion fine, a mere speed bump in the unbroken spree of lawlessness that “helped create a financial storm that devastated millions of Americans,” in the words of Associate Attorney General Tony West. Although it is “the largest penalty in history,” Dimon and his fellow banksters are also the richest criminals in history – the most powerful cartel of all time – who can easily afford the levy. The bursting of their housing securities bubble may have wrecked much of the global economy in 2008, but Dimon and his boys made out like pure bandits in the aftermath, consolidating their positions at the center of a dying system. JP Morgan emerged as the biggest U.S. bank in terms of assets, a gleaming tower standing amid the ruins it created. Such is the logic of late stage finance capitalism: catastrophe becomes “creative destruction,” which begets greater economic monopoly, resulting in unchallengeable political supremacy, which makes Dimon too big to jail, whether he’s actually a friend of Obama, or not.
“Dimon and his fellow banksters can easily afford the levy.”
There is no reason whatsoever to believe that the $13 billion fine will have any measurable impact on JP Morgan’s business plan. So far, the Obama administration has assessed a total of $28 billion in penalties against the Dimon mob, with no discernible effect. This time around, however, Obama’s prosecutors have imposed the equivalent of mandatory community service on the corporate malefactor, as an alternative to actual justice. Part of the $4 billion set aside to help struggling homeowners will go towards knocking down abandoned or foreclosed homes in the urban neighborhoods laid waste by JP Morgan and its cohorts in the racially-targeted subprime mortgage frenzy. That’s like compelling the Mafia to do upkeep on the cemeteries where its victims are buried, in lieu of prison terms or execution.
Yet, Justice Department mouthpiece Tony West claims the eyesore clearance penalty will “rectify” some of the harm done to “areas hardest hit by the financial crisis.” But, of course, it doesn’t even come close. Whole communities have been wounded beyond repair. Black wealth took its deepest dive in history, with reverberations that will impact future generations. Many thousands of people have died from the social trauma inflicted by Jamie Dimon and his syndicate – and that’s just in the United States. Globally, millions have perished due to the actions for which the settlement is supposed to atone.
Back in the Spring, the Huffington Post noted that Attorney General Eric Holder was attempting to retract his famous admission that banks like JP Morgan are too big to jail. Holder’s original statement, in March, was:
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.”
Two months later, in May, Holder amended his remarks, to say:
“Let me make something real clear right away. I made a statement I guess in a Senate hearing that I think has been misconstrued. I said it was difficult at times to bring cases against large financial institutions because [of] the potential consequences that they would have on the financial system. But let me make it very clear that there is no bank, there’s no institution, there’s no individual who cannot be investigated and prosecuted by the United States Department of Justice…. Let me be very, very, very clear. Banks are not too big to jail. If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”
Clearly, Holder was lying, second time around. If there were ever a serial financial gangster, it’s Dimon. There are no better candidates for racketeering prosecution on the face of the Earth than the Big Six banks and their executives: the pinnacle of the ruling class.
“Globally, millions have perished due to the actions for which the settlement is supposed to atone.”
However, it is wrong to deride Holder and Obama as merely timid in the face of Wall Street’s awesomely destructive power. Rather, they are instruments of finance capital’s hegemony. Holder has ruthlessly maneuvered every case against the oligarchs into his own jurisdictional arena, in order to protect the banksters from aggressive prosecution by wayward state officials. Holder’s “settlements” are designed to insulate the banks from the rule of law, since, at this stage of systemic decay, the Lords of Capital can no longer function within existing legal constraints. The public sphere must be privatized; the urban centers, like Detroit, must be disenfranchised; the financial cartel must be allowed to absorb an ever greater proportion of the real economy into its derivatives casino; wealth must flow from the bottom to the top, without pause; and a planetary corporate code must be established through “free trade” treaties that supersede the sovereign laws of nations. All of the Obama administration’s marching orders flow from these imperatives.
Obama and Holder are guardians of the emerging new order, which does not yet have a legal code – and may well prefer to forgo such niceties, entirely. In the meantime, corporate Democrats and Republicans will give lip service to the law while the Mafia of Money runs the show.
And, you can take that to the bank.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.
Posted by rogerhollander in Economic Crisis, Labor.
Tags: Black Friday, Business News, capitalism, food banks, LA Walmart Strike, labor, labour, minimum wage, Our Walmart, poverty, poverty wages, retail workers, roger hollander, wage slavery, wal-mart, Walmart Arrests, Walmart Chinatown, Walmart Civil Disobedience, Walmart LA Protest, Walmart Los Angeles, Walmart Protest, Walmart Protesters Arrested, Walmart Protests, walmart strike, Walmart Wages, workers rights
Roger’s note: welcome to wage slavery in capitalist America, the land of freedom. Freedom to vote. Freedom to watch your children starve.
Surrounded by about 100 police officers in riot gear and a helicopter circling above, more than 50 Walmart workers and supporters were arrested in downtown Los Angeles Thursday night as they sat in the street protesting what they called the retailer’s “poverty wages.”
Organizers said it was the largest single act of civil disobedience in Walmart’s 50-year history. The 54 arrestees, with about 500 protesting Walmart workers, clergy and supporters, demonstrated outside LA’s Chinatown Walmart. Those who refused police orders to clear the street after their permit expired were arrested without incident. Those who fail to post $5,000 bail would be jailed overnight, Detective Gus Villanueva, a Los Angeles Police Department spokesman, told The Huffington Post.
Their primary demand to Walmart: pay every full-time worker at least $25,000 a year.
One of the protesting Walmart workers, Anthony Goytia, a 31-year-old father of two, said he believes he will make about $12,000 this year. It’s a daily struggle, he said, “to make sure my family doesn’t go hungry.”
“The power went out at my house yesterday because I couldn’t afford the bill,” Goytia told HuffPost. “I had to run around and get two payday loans to pay for my rent from the first” of the month. “Yesterday we went to a food bank.”
To make ends meet, Goytia said he sometimes participates in clinical trials and sells his blood plasma. He has been asking his managers for full-time employment for a year and a half. Instead, he said, they hire temporary workers, who can be fired at any time.
Goytia was one of several dozen Walmart workers in Southern California who went on strike Wednesday and Thursday, calling for an end to low wages, unpredictable part-time hours and retaliation for speaking out. They were joined by other employees on their days off and dozens more who rode buses from Northern California.
The strike, protest and arrests are the latest in a series of worker actions across the country coordinated by OUR Walmart, an advocacy organization with ties to the United Food and Commercial Workers Union. The strike and protest in Los Angeles this week are the first in what organizers said would be a series of protests leading into the holiday shopping season.
The protesters said Walmart can afford to pay every worker at least $25,000 a year — pointing to Walmart’s $17 billion profit from the latest year and the founding Walton family’s fortune, which equals the wealth of the bottom 42 percent of American families.
Walmart CEO Bill Simon disclosed in a presentation recently that 475,000 Walmart workers are paid more than $25,000 a year. That leaves 525,000 to 825,000 Walmart workers earning less than $25,000. House Democrats seeking to boost the federal minimum wage from $7.25 to $10.10 per hour have criticized Walmart for its low wages.
Walmart invited HuffPost to speak to a couple associates working in the Chinatown store during the protest Thursday. In the presence of a consultant working for Walmart, two employees — Do Nguyen, 29, and Aldo Hernandez, 55 — said that they are treated well at Walmart. Nguyen, who has worked for Walmart for almost a year, said that asking for a minimum of $25,000 is “a national issue, not a Walmart issue.”
Hernandez, who has worked for Walmart for almost five years, said he gets good health benefits through Walmart and doesn’t struggle to support himself and his son. Both Nguyen and Hernandez declined to say how much they make.
Kory Lundberg, a spokesman for Walmart, said that the company has hundreds of thousands of associates who earn $25,000 or more and that others have the opportunity to do so.
“There are unparalleled opportunities at Walmart,” Lundberg said. “We’re going to be promoting 160,000 associates this year. That’s larger than the total workforce of most companies out there.”
“Folks can come in as entry level or whatever level they’re at and can work up as far as they’re willing to go,” Lundberg said. “That’s one of the things we’re proudest of.”
After working full time at Walmart in Paramount, Calif., for 10 years, Martha Sellers, 55, makes $25,400 a year. In the last few years, she said, her managers have been cutting her weekly hours, sometimes to as few as 12 hours a week.
With that income, she said, she has to pay her rent in pieces. “If I pay all my rent at one time, then I have $12 to live on and put gas in my car until I get paid again,” Sellers, who attended Thursday’s protest, said.
“I have a very nice neighbor who lends me money. But then the next month, I’m short again,” Sellers said. “I never get caught up.”
LA’s Chinatown Walmart, about one-fifth the size of the company’s regular stores, opened in September despite thousands of Angelenos protesting it during the summer. It is the retailer’s first store in central LA.
In October 2012, for the first time in Walmart’s history, some workers went on a one-day strike, even though Walmart jobs have never been protected by a labor union. More than 70 LA Walmart workers from nine stores walked off the job, followed by over 80 Walmart workers walking off the job in a dozen other U.S. cities.
Last year, through online organizing, OUR Walmart coordinated strikes on Thanksgiving and Black Friday in 46 states and 100 stores. The actions put a spotlight on the world’s largest retailer during one of the biggest shopping periods of the year. Walmart had its best Black Friday ever, according to the company.
Regarding associates being required to work earlier on Thanksgiving, Lundberg said, “Folks understand that when they come to work for Walmart, that we’re a 24-hour store, and Thanksgiving is one of those days that we serve our customers.”
Sellers went on strike on Black Friday last year and said she plans to do so again this year. “Walmart claims to be a family-oriented company,” she said. “But where’s the family time? They took away Easter too.
“Where is the American economy going if we’re all working poverty wages?,” Sellers said. “There will be no working class. We’ll all be in a poverty class.”
Posted by rogerhollander in Economic Crisis, Latin America, Venezuela.
Tags: Economic Crisis, Latin America, mark weisbrot, poverty, roger hollander, Venezuela, venezuela economy, venezuela inflation, venezuela poverty
Roger’s note: As a fact checking exercise I went to the web site of the World Bank cited at the end of this article. On its page for Venezuela I was unable to find data to confirm the statement that poverty has dropped by 20% in the past year. What I did find was a chart that showed that poverty as a percentage of population dropped to 25.4% in 2012 from 31.6% in 2011, which does mean a drop of 6.2%, which indeed is approximately a 20% drop for the previous year. This is the World Bank, folks, you can’t go wrong.
Women queue to buy toilet paper at a supermarket in Caracas as a result of the shortage of basic goods. (Photograph: Reuters/Jorge Silva)
For more than a decade people opposed to the government of Venezuela have argued that its economy would implode. Like communists in the 1930s rooting for the final crisis of capitalism, they saw economic collapse just around the corner. How frustrating it has been for them to witness only two recessions: one directly caused by the opposition’s oil strike (December 2002-May 2003) and one brought on by the world recession (2009 and the first half of 2010). However, the government got control of the national oil company in 2003, and the whole decade’s economic performance turned out quite well, with average annual growth of real income per person of 2.7% and poverty reduced by over half, and large gains for the majority in employment, access to health care, pensions and education.
Now Venezuela is facing economic problems that are warming the cockles of the haters’ hearts. We see the bad news every day: consumer prices up 49% over the last year; a black market where the dollar fetches seven times the official rate; shortages of consumer goods from milk to toilet paper; the economy slowing; central bank reserves falling. Will those who cried wolf for so long finally see their dreams come true?
Not likely. In the opposition’s analysis Venezuela is caught in an inflation-devaluation spiral, where rising prices domestically undermine confidence in the economy and currency, causing capital flight and driving up the black market price of the dollar. This adds to inflation, as does – in their theory – money creation by the government. And its price controls, nationalisations and other interventions have caused more structural problems. Hyperinflation, rising foreign debt and a balance-of-payments crisis will mark the end of this economic experiment.
But how can a government with more than $90bn in oil revenue end up with a balance-of-payments crisis? Well, the answer is: it can’t, and won’t. In 2012 Venezuela had $93.6bn in oil revenues, and total imports in the economy were $59.3bn. The current account was in surplus to the tune of $11bn, or 2.9% of GDP. Interest payments on the public foreign debt, the most important measure of public indebtedness, were just $3.7bn. This government is not going to run out of dollars. The Bank of America’s analysis of Venezuela last month recognised this, and decided as a result that Venezuelan government bonds were a good buy.
The central bank currently holds $21.7bn in reserves, and opposition economists estimate that there is another $15bn held by other government agencies, for a total of $36.7bn. Normally, reserves that can cover three months of imports are considered sufficient; Venezuela has enough to cover at least eight months, and possibly more. And it has the capacity to borrow more internationally.
One problem is that most of the central bank’s reserves are in gold. But gold can be sold, even if it is much less liquid than assets such as US treasury securities. It seems far-fetched that the government would suffer through a balance-of-payments crisis rather than sell its gold.
Hyperinflation is also a very remote possibility. For the first two years of the economic recovery that began in June 2010, inflation was falling even as economic growth accelerated to 5.7% for 2012. In the first quarter of 2012, it reached a monthly low of just 2.9%. This shows that the Venezuelan economy – despite its problems – is very capable of providing healthy growth even while bringing down inflation.
What really drove inflation up, beginning a year ago, was a cut in the supply of dollars to the foreign exchange market. These were reduced by half in October of 2012 and practically eliminated in February. This meant more importers had to purchase increasingly expensive dollars on the black market. This is where the burst of inflation came from.
Inflation peaked at a monthly rate of 6.2% in May, then fell steadily to 3% in August as the government began to provide more dollars to the market. It jumped to 4.4% monthly in September, but the government has since increased its auctions of dollars and announced a planned increase of food and other imports, which is likely to put some downward pressure on prices.
Of course Venezuela is facing serious economic problems. But they are not the kind suffered by Greece or Spain, trapped in an arrangement in which macroeconomic policy is determined by people who have objectives that conflict with the country’s economic recovery. Venezuela has sufficient reserves and foreign exchange earnings to do whatever it wants, including driving down the black market value of the dollar and eliminating most shortages. These are problems that can be resolved relatively quickly with policy changes. Venezuela – like most economies in the world – also has long-term structural problems such as overdependence on oil, inadequate infrastructure, and limited administrative capacity. But these are not the cause of its current predicament.
Meanwhile, the poverty rate dropped by 20% in Venezuela last year – almost certainly the largest decline in poverty in the Americas for 2012, and one of the largest – if not the largest – in the world. The numbers are available on the website of the World Bank, but almost no journalists have made the arduous journey through cyberspace to find and report them. Ask them why they missed it.
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