Thursday, October 30, 2008
The police decision to lay charges of participating in a criminal gang against fiveof the Urewera arrestees is ludicrous. Having failed to brand these activists as terrorists the police now want to try to brand them as criminals.Why lay these charges more than a year after the arrests? Rather than being serious about these charges it seems to be an attempt to shift the whole case to the High Court rather than have it heard in the District Court. It seems the police will leave no stone unturned in trying to make the case look more serious than it is and in the process to salvage some credibility from the hopeless mess they have got themselves into.
In a bare-faced abuse of the legal process the police also intend to relay charges dismissed at depositions. This is desperate stuff indeed.The police have been on a hiding to nothing since their dramatic "anti-terror" raids on October 15th last year seized of two pig hunting rifles. Their case is based on a lot of hot air and stupidconversations. Were those charged not political activists the police would have issued warnings for technical breaches of firearms laws ratherthat attempt the Keystone Cops prosecutions.For the police this is a "double or nothing" gamble.
Since their dramatic police conference telling the country how they had thwarted terrorist activity the police case has unravelled rapidly. The Solicitor General found there was insufficient evidence to lay charges under the Terrorism Suppression Act and the police case has rapidly unravelled since then.The waste of public resources is already in the millions and will be in the tens of millions before it is over.
GPJA continues to urge-
That the charges be dropped and that the so-called anti-terror legislation be abandoned
Over 1200 union members employed at McDonald’s have been taking strike action to win a national collective agreement and equal pay with other fast food restaurants. Negotiations between Unite and MCDonald’s broke down after the company failed to meet their own deadline in mid September.
McDonald’s pays only 25 cents per hour above the minimum wage to experienced crew and only $1.50 above the minimum managers. McDonald’s General Manager, Mark Hawthorne, claims that $12.00 per hour is an acceptable living wage. Over 50% of McDonald’s 7500 staff are paid the minimum wage and no waged staff have secure hours. Union members have repeatedly faced anti-union tactics from managers and owners.
Unite is asking for unionists and activists who support the struggle of these workers to submit a message of support and solidarity, which will be sent out to the members.
6a Western Springs Rd
Wednesday, October 29, 2008
Stock markets across the world plunged last week as financial institutions began to face up to the reality of a new global downturn. Revenues, profits and economic growth are all going to plunge as the recession begins to bite.
But what does this mean for the people whose work creates those profits in the first place? Many mainstream commentators have simply written off the global working class as a dying force, eclipsed by a rising “middle class” in developed nations and by casualised workers in the Global South.
But a new report from the International Labour Organisation (ILO) paints a very different picture. It shows in detail that the working class – those people who make their livelihood by working in return for wages – is still a force to be reckoned with.
There are around one billion people across the world that are classified as part of the labour force by the ILO. This figure excludes peasant farmers and other people who make a living by working on their own land.
This global workforce was once concentrated in the Western nations, but today it is becoming ever more global. The richest economies account for just over 15 percent of total employment.
This share has declined over the past decade. In contrast the regions of Asia, the Pacific, Latin America and the Caribbean now account for nearly two thirds of world employment. Asia alone accounts for more than half.
Far from being a dying force, there has been a rapid growth in the size of the global working class. Capitalism has expanded over the last 30 years, leading to an increase in the number of workers as well as in the wealth that they produce.
But there has also been a shocking redistribution of that wealth to the ruling class – the tiny minority of corporate bosses, senior politicians and the super-rich that run the world and suck up the wealth that the rest of us generate.
The people who will suffer the most in the coming recession are those who have gained the least or lost out during the previous period of growth.
Between the early 1990s and 2007 there was a 30 percent increase in global employment.
But the income gap between the rich and the poor grew ever wider. And the share of wealth created by workers that they actually receive is going down globally.
Wages as a share of GDP – the total wealth produced in any particular country – is a measure that tells us what proportion of wealth goes to those who create it.
In Latin America and the Caribbean it fell by 13 percent over the past 30 years. In Asia and the Pacific it dropped 10 percent and in the richest economies it dropped 9 percent.
Another way of looking at the same process is the relationship of workers to productivity. Workers are producing more – working harder and for longer hours – but their wages are not rising to match.
The ILO survey shows that in 24 of 32 countries surveyed between 1990 and 2006, productivity growth exceeded wage growth.
In other words, the amount of wealth that each worker created increased faster than any rise in their wages – another reason why the share of wealth owned by workers is going down globally.
Between 1990 and 2000 more than two thirds of the 85 countries for which data is available experienced an increase in inequality.
During the same period, the income gap between the top and bottom 10 percent increased significantly in 70 percent of countries.
But there are other lessons to be drawn from the report. Wherever you look in the world, workers do better if they are in a union.
Countries with a high “trade union density” – a large proportion of the workforce in unionised jobs – are those where the income distribution is less unequal.
Union density has grown in Brazil, China, India, Paraguay, Singapore and Spain, while it has stayed constant in Belgium, Finland and Pakistan.
Overall there has been a slight decline in union density, but this global figure is skewed by the rapid decline of state-backed “unions” in the former Eastern bloc countries.
Part time workers
Temporary employment is growing across the world, though not as fast as is often suggested. The importance of such jobs has increased in recent years, although with different intensity across countries.
The level of part time work in total employment since the mid-1990s has been broadly stable in the developed world, running at 16 percent in 2006.
Wherever you live, precarious jobs are less well paid than more secure jobs. In European countries, temporary jobs pay on average 20 percent less than their permanent equivalents.
In Latin America, workers with informal jobs earn on average 43 percent less than workers with formal jobs.
There are further disparities. The wages of casual workers in India constituted about 44 percent of the wages of salaried worker between 2004 and 2005 – as compared to 62 percent in 1983. Simply put, across the globe the drive to employ casual workers means that wages are driven down.
Women in work
The position of women workers since the early 1990s has varied considerably from region to region. In the richest economies, women have accounted for the bulk of employment growth – over 60 percent – but elsewhere they account for less than a third.
There has been a general shift of women progressing from precarious jobs to waged and salaried employment. But these trends have not made a substantial difference to the gender gap in the workplace.
The global employment rate of women is 49 percent, compared to 74 percent for men. In the Middle East, North Africa and Asia and the Pacific, women constitute some 80 percent or more of the non-employed.
The amount that the rich pay in tax has been cut across the world. The average corporate tax rate – in other words, the tax levied on profits – for the world as a whole decreased from 38 percent in 1993 to less than 27 percent in 2007. Not a single country has increased its corporate tax rates since 2000.
When it comes to personal tax rates, the very rich have also done well. Their average tax rate was cut from 37 per cent to 34 percent over the same period.
At the same time far higher proportion of government revenues have come from “indirect” taxes such as VAT. These hit workers harder, since workers spend a far higher proportion of their income on buying consumer goods.
Indirect taxes have increased across the world. VAT in Germany increased from 13 percent in 1980 to 19 percent in 2007. In Latin America the rate rose from 10 percent in 1980 to 15 percent in 2007.
Workers across the world are footing more of the bill for the public services – while the rich are paying less.
The pay of bosses across the world is at least 50 times higher than average wages and, in some cases, 180 times more – and that is excluding bonus payments.
The most unequal society in the developed world is the US, where the growing disparity is notably sharp between executives and the average worker.
Chief executives there earned 520 times the average worker in 2007, up from 360 times more in 2003.
In Hong Kong and South Africa executives are paid less than their US counterparts. But chief executive pay still represents 160 and 104 times the wages of the average worker respectively.
Once you factor in bonuses, the average pay of US bosses rose from $16 million per year in 2003 to $24 million in 2007. This increase – nearly 10 percent per year on average – compares to a 0.7 percent increase in wages for US workers.
And this huge global gap exists regardless of whether the company concerned is successful or not.
As the current crisis makes all too clear, capitalism is a global system – and it will take global action by the workers of the world to fight it. That is why workers in the more developed countries have a common interest with those in poorer countries.
Both need to unite to replace an economic system based on corporate greed with one based on production for human need.
The statistics show that in terms of numbers the global working class is as strong as ever – and has every reason to fight back. What they don’t show is the level of political and industrial struggle.
It is that struggle that will decide whether workers will be able to reverse the looting of wealth by the bosses that has taken place in the past 30 years. And it is that struggle that will decide whether capitalism’s current crisis will lead to the building of a socialist world, or with us all sinking ever further into barbarism.
The ILO report can be downloaded from » www.ilo.org/public/ english/bureau/inst/ download/world08.pdf
Thursday, October 23, 2008
PLEASE DISTRIBUTE FAR AND WIDE
Hello!This email is being sent to you as someone who has at some point expressedinterest in the idea of a climate camp in Aotearoa/New Zealand.Well, a few folks have written up a proposal document to get the ballrolling - this is intended to be a statement of the current global andnational situation followed by a proposal for holding a camp here in NZ.We have highlighted elements that will need to be discussed in order forthe camp to be a success, both as a functioning camp and also as an agent to bring about a radical grassroots movement to combat climate change.Please read the document (below and attached) and discuss it with otherswho wish to be involved - it is meant to be a starting framework forpeople in their communities to use as a basis for formulating ideas tothen feed in to a national hui to be held in November.It is proposed that a hui/meeting be held in Wellington (to make it asaccessible as possible) on Saturday and Sunday the 22/23 November. TheNewtown Community Centre has been booked for the venue.Idealy as many people as possible will be able to attend or send theirthoughts through a representative so that we can start turning the ideainto a reality!!So, please pass this on to all your contacts who might be interested andif you have any comments or if you wish to confirm your attendance at thehui reply to this email address.Its an exciting time and things are totally set for an amazing climatecamp in Aotearoa - we are gonna create something incredible!!- Claire (a climate camp participant)
A Climate Camp for Aotearoa?
For the first time in human history the North pole can be circumnavigated.Scientists are warning that the Arctic ice cap is entering a 'deathspiral'. The first evidence of millions of tonnes of methane gas beingleaked into the atmosphere from beneath the Arctic ice cap suggests thatrunaway climate change is perilously close, but despite twenty years ofcalls for action by climatologists, environmental organisations,politicians, indigenous people and many more of us we're still facing abusiness as usual situation with out of control emissions and little signsof real progress. Legitimate and reasonable climatologists are telling usthat if we don't manage to get human output of greenhouse gases to peak by2015 [at the latest] this will guarantee runaway climate change. In turnthis will lead to mass social chaos, global fresh water shortages,hundreds of millions, quite possibly billions of refugees and above allelse the extinction of MOST of the species that inhabit the planet. Thisis not just about polar bears and light bulbs anymore.New Zealand is one of the world's highest greenhouse gas emitters on theplanet per capita and per unit of GDP. NZ is clearly punching the climatewell above its weight. Despite the fact that New Zealand's greenhouse gasemissions are escalating faster than that of the United States and despiterecent scientific observations, surveys here in Aotearoa suggest thatpeople's appetite for action on climate change is waning. What to do??There are a few places in the world which stand out as places whereprogress IS being made on building real demand for action on climatechange. All of them have one thing in common, a loud, fearless andtactical grassroots movement. It sorts the industrial and political spinfrom the terrifying reality of the situation by attacking the problem atits root and therefore calling for immediate and radical transformation ofsociety. These folks understand that anything less will mean that allother previous social and environmental struggle will look like a birthdayparty compared to what is to come if we fail to address this one. The UK,the United States, Australia, Germany and Canada have all hosted 'ClimateCamps' and from within these places screams a grassroots movement with theguts and the foresight to look this situation straight in its face, gettogether and do something about it.Less than one month ago, for the first time in the history of ClimateChange activism a bunch of climate activists in the UK were acquitted oftaking direct action against a filthy new coal power plant because incourt they proved that the consequences of not doing so would meancatastrophe. Two months ago a thousand Australians took mass direct actionto block a train line feeding coal to the worlds biggest coal export portin Newcastle Australia. Coal fired power stations are regularly being shutdown in the United States and Australia.But what is happening in New Zealand? Why is it that New Zealand, with itsimpressive history of environmental activism has one of the worst climaterecords in the world, while at the same time receives awards for itssupposed action on Climate Change? What gives New Zealander's the right tocause 16 times the damage to the climate as people in Bangladesh who willsuffer in their millions as a result of this carbon and dairy feast? Somehave suggested that there is a massive hole in wafer thin Climate Changemovement here in Aotearoa and that is why the NZ government has gottenaway with introducing such weak climate policy here, with little criticalappraisal of its inadequacy to slow down New Zealand's sky rocketingemissions.If we are going to confront the most catastrophic social and environmentalcollapse humans have ever experienced we have to take the first stepstowards building a strong core of people willing to stand up and fightagainst this insanity in New Zealand as well. It is for this reason thatmany Climate Change activists are calling for a climate camp here inAotearoa aimed at taking the first steps towards fighting back against thecorporate dominance and economic suicide that is causing it.ProposalFirstly, it has been proposed that those who are interested in buildingsomething get together to plan how, why and even if we should build aClimate Camp here in Aotearoa.It has been proposed that the venue for such a hui be decided upon basedon the geographical locations of those interested in attending and drivingthis project forward between now and some time in 2009 when it has beenproposed the first Aotearoa / NZ Climate Camp be held.It has been proposed that the following issues and tasks required to getsuch a camp together should be addressed collectively at a Climate hui.It is clear from the experiences of those who have been involved in thecreation of such camps overseas and to those who have shown an interest inmaking this happen in New Zealand that the creation of this camp will notbe an easy task for those involved. It will require many months of hardwork and dedication by all to drive this forward and make it a reality.The good news is that many experienced, capable and dedicated people inNew Zealand have already expressed a strong commitment to going ahead withthis and there is a wealth of experience and learning available from theformation of the UK and Australian camps available to help us along. [notthat we necessarily want to duplicate exactly what has happened in theseplaces].Principles of previous Climate Camps• grassroots – autonomous decision making and self management structures• direct action focused• people focused: a chance for ordinary people to assert our right to afuture free from dangerous climate change• climate justice focused• aimed to be an inspiring example of a sustainable and participatorycommunity• physical setup of the camp is as sustainable as low impact as possible• people to come with their own creative ideas and plans for direct actionProposalIn order to ensure that a camp can be created by people collaborating on anational level while organising, promoting and preparing various'components' of the camp at a regional level it has been proposed that webreak the following 'components' of a camp into the following categoriesand discuss how each geographically [or otherwise defined] affinity group/ action group can work on adding to each of these 'components'.Once these important issues have been talked through, gaps filled in andcollective decisions made we should begin to understand how this thing canbecome a reality.Camp 'Components'• Food• Shelter / Tents• Fun Stuff / Interactive Games / Learning tools• Outreach - Infoshop• Workshops• Energy• Sanitation• Why a camp?• Venue• Communication & Decision Making• Politics• Camp Vision• Climate Action / Movement building vision• Media Strategy• Web Strategy• Safer Spaces• Legal issues• Finances Policy - to be discussed----------------------------------------------------------------------
Wednesday, October 22, 2008
by Charlie Hore
Events in the Chinese economy and decisions by the Chinese government will have major consequences for how the global recession develops.
As well as having become a major industrial power, China is also a leading investor in those parts of the money markets hit worst by the credit crunch.
China’s recent economic boom has left the Chinese government awash with money, much of which has been invested in US institutions.
For example, China is the largest foreign investor in Fannie Mae and Freddie Mac, the mortgage companies recently bailed out by the US government.
In fact the bailout was largely necessary to prevent the Chinese government withdrawing even more of its money, which would have led other foreign investors to pull out.
China’s wealth gives it great clout in the US market – and this scares some rightwingers who fear the US is losing power to China.
But the reality is more complex. China needs to prop up the US economy because its collapse would threaten Chinese prosperity.
This is for two reasons. First, the Chinese government is sitting on a US dollar mountain, and if the dollar loses value so do they.
Second, China’s financial wealth simply cannot be deployed anywhere else. No other market has the investment opportunities.
Of course the Chinese investment companies aren’t simply going to give the US economy a blank cheque. They refused to buy the investment bank Morgan Stanley for instance, assessing it as worthless.
And the Chinese government will seek to extract political gains in return for its support. But the Chinese and US economies are too tightly entwined for China not to become involved in the rescue of the US.
Similar considerations apply to the Chinese economy. The recent manufacturing boom has been built on high levels of state investment and exports to the West. The growing global recession threatens both.
The government wants to cut economic growth to reduce inflation, but it is very unlikely that it will be able to control this process.
And even a small dent in China’s growth will have major consequences for both the world economy and for Chinese workers and peasants.
China has become a major importer of raw materials and components. Earlier this year mining company shares lost half their value simply over fears that China would slow down.
Now those fears are real. China’s steelmakers plan to cut production by 20 percent while some shipyards face closure.
Such cutbacks will have a major effect on those countries that have become increasingly dependent on exporting to China – Australia, Japan and Taiwan in particular.
But the wider knock-on effects will be felt across much of southeast Asia, Africa and Latin America.
The decline in imports of particular products could be extremely fast because of the fragile nature of much of China’s consumer export industry.
There are tens of thousands of small companies engaged in cut-throat competition for markets, and thus operating on tiny profit margins.
Even in good years hundreds of them fail. If demand from the West dries up, they could collapse very quickly.
It’s too soon to know how bad their decline will be, but there are several straws in the wind. In one town in Zhejiang province, one in five textile companies have gone bust.
Official reports suggest that half of all toymaking companies have shut in the last 12 months. And in the last year one third of all China’s shoe factories have closed.
According to one report, some 20 million workers have lost their jobs, although the government denies this.
Whatever the real figure, the impact of unemployment will be massive. Most exporting industries employ migrant workers who have no employment rights, and will get no redundancy money. They will be expected simply to go back to their villages.
Between 1998 and 2002 there were near-insurrectionary protests in state-owned industries that were shut down, not against the closures as such, but for benefits that workers had been promised.
The Chinese government will be very lucky to avoid similar outbreaks.
Tuesday, October 21, 2008
Socialist Aotearoa (NZ) stand in solidarity with the Socialist Party of Malaysia in the working class struggle against the ruling elite and the fight for justice, freedom and democracy. Comrades, kia kaha (stand strong).
Sungai Siput parliamentarian Dr D Jeyakumar’s car was partially damaged in a suspected act of arson early this morning in his constituency.
When contacted, the Parti Sosialis Malaysia (PSM) leader accused his rivals in MIC of being responsible for this.
In the March 8 general election, Jeyakumar had defeated MIC president S Samy Vellu in the parliamentary constituency in Perak, which the latter had controlled for more than three decades.
The PSM leader said he believes that the same group that had set fire to his Volkswagen Beetle was also behind the harassment of his party members in the area.
The harassment, he added, has been happening for more than eight years.
Commenting on the incident which happened around 1am, Jeyakumar said: “(Some) neighbours saw four young males breaking the window of my car, and torching it. The interior of my car is badly burnt.”
Jeyakumar explained that it all started three days ago when a female party member was alone at the party office, when a group of drunken males in their early 20s came in.
“She told me that the group had asked for money and when she refused, they threatened to whack her,” Jeyakumar said.
The PSM leader said he then lodged a police report, which was followed by the arrest of three of the group members.
“I believe it was after I had lodged the police report that others from the group were angered and set fire to my car,” Jeyakumar said, added that another police report has been lodged.
He said he would leave it to the police to investigate the matter and that PSM activists in Sungai Siput will continue to do their job and not be deterred by intended intimidation.
According to Jeyakumar, PSM has been providing social services and empowerment programmes in the Sungai Siput constituency for more then three decades.
However, PSM activists have claimed that their work has been affected by incidents of physical and psychological harassment by groups they claimed to be affiliated to MIC.
Despite lodging numerous police reports, Jeyakumar said no action has been taken against them until three days ago.
Thursday, October 16, 2008
AS CAPITALISM CRASHES< THE RESISTANCE GATHERS! Rally Against Low Pay- $15 per hour minimum wage now!
The weekend before the election, join the rally for a decent minimum wage- $15ph NOW!
For posters and leaflets, contact Joe at 021 1861450
RALLY AGAINST LOW PAY- $15 per hour minimum wage now!As Capitalism crashes, the resistance gathers...
01 November 2008
14:00 - 17:00
Auckland, New Zealand
The Gathering Storm.In recent months, low paid people have taken strike action in casinos, banks, fastfood outlets, supermarkets and on the busses. Low pay is crippling a generation of workers who are now expected to bear the brunt of a vicious global recession.
It's time the resistance gathered.
We're not going to pay for their crisis.
We're not going to endure low pay anymore.
A new generation is going to resist the Global Recession and fight the greedy rich and their corporations.
Join the Rally Against Low Pay, and if the numbers are there, join us on an anti capitalist tour of Auckland's meanest bosses and their lackeys.
It's time to fight back as a class!
Wednesday, October 15, 2008
Several hundred students and other activists brought the City of London to a standstill in a flash protest on Friday evening.
Chanting “No bail! send the bankers to jail” they stormed into the upmarket Royal Exchange Mall outside the Bank of England. A section of the the protesters was able to march through the glitzy mall before police could bar the entrance.
The demonstrators then regrouped and attempted to force their way into the Bank of England building. There followed a short sit down protest encouraged by motorists who hooted in support.
The protest, organised by the Socialist Worker Student Society, was called in response to the multi-billion pound bailout of the crisis-wracked banking system.
Students from Oxford, Sussex, Essex and Sheffield joined London colleges including Soas, Goldmiths, the LSE, Kings and UEL in a good natured, but determined, show of force.
As police desperately cleared the entrance to the bank, protesters turned up Threadneedle Street, past the Royal Bank of Scotland building and the French banking giant BNP Paribas bank, towards Bishopsgate.
Again police struggled to contain the demonstration – and despite striking out at the protesters – were shoved backwards to the main junction.
A tense stand-off ensued while the commander desperately radioed for backup. The police formed a new cordon, but protesters chanting “anti capitalista” (a slogan made famous during European mass anticaptialist struggles in the early 2000s) slipped either side of the police and poured into the main thouroughfare snarling up the rush hour traffic.
The police were so outnumbered they called on a French Gendarme, over on an official visit, help in their attempt to corral the crowd.
Riot vans and police dogs then joined the chase, finally blocking the crowd outside the 99 Bishopsgate tower.
Martin Smith of the SWP told a rally that ended the flash protest, “This is the beginning of our fightback. Today thousands of bus drivers are on strike. We are here in support of them, and to protest against a capitalist system that just isn’t working.”
Holding up a copy of the Evening Standard newspaper with its headline “Blind Panic as shares crash”, he declared: “They call this Black Friday. We say it's fightback Friday and from this day we are letting it be known that we will be calling more protests”.
Can you imagine turning up for work to do a six-hour shift only to be sent home with just an hour's pay because your computer breaks down. What about being sent home without pay when the person doing the roster has booked too many staff and there aren't enough computers for everyone. Or imagine a scramble at the start of each shift to get a pair of reasonable headphones rather than be left with broken gear through your shift.
Welcome to work in a call centre. They have sprung up all over the country and are our fastest growing area of employment. They mark the transition in New Zealand's economy from manufacturing to servicing . . . However, unlike relatively well-paid jobs associated with manufacturing, these jobs are not so flash.
Just looking around some of these centres is an eye-opener. Cheap tables covered with phones and no cubicles. They are noisy workplaces and workers frequently end up with ringing ears after a few hours.
Typically people have targets to meet and the pressure is on. At several centres if you miss the target you simply don't get shifts allocated to you the next week. No shifts, no income. At another the staff have a target for each day and a monthly target. However, once the monthly target is reached the workers are sent home two or three days with no pay until the start of the following month.
The work is poorly paid, the hours uncertain and week-by- week income is unpredictable.
Employers like this casualised employment because it reduces their employment responsibilities. They like having a large pool of workers to choose from, all working on day-by-day rostered employment and earning on or just above the minimum wage of $12 per hour.
They can use the employees labour as and when they want without concern for the employees' welfare or income.
There is no doubt the flexibility of many call centres suits some workers. A few hours each day or evening for students is a welcome source of income, but for those raising families it's hopeless.
Turnover is huge. One worker told me of his call centre where from a staff of 50 most weeks will see 10 people leave and 10 new people start. We're not a charity, says the owner of one centre when staff request to go to the toilet during a shift.
It's our 21st century equivalent of Dickensian England.
Unite Union has embarked on a campaign to unionise call centres in New Zealand to support moves by Australian unions faced with threats from their bosses to take the call centre work to New Zealand where the pay and conditions are poorer. So concerned have the Australian unions been that they sent a union organiser to New Zealand for several weeks earlier his year to help kick off the campaign.
Inbound call centres, such as telephone faults or telephone banking, are increasingly being shifted to countries such as New Zealand, India, Korea or Thailand where pay rates and conditions of work are particularly poor. Outbound call centres, such as political polling, market research surveys are less likely to be outsourced because ability with the English language is more important.
Call centres compete for contracts with price as a key component. This means wages are held artificially low by market pressures and call centres effectively compete on their wage costs with the workers the losers. Competition to keep wages low is just the sort of competition New Zealand doesn't need. Hence the union is attempting to negotiate a MECA (Multi Employer Collective Agreement). If pay rates can be stabilised across the sector then companies will compete on the basis of factors other than wages. It could be a win-win situation, but the employers are either negative or hostile to the idea. Their commitment to their employees extends as far as next week's roster.
The Labour Government talks fondly of the large number of extra jobs which have been created in the economy in the last decade and proudly boasts when New Zealand appears close to the top of the list of the easiest countries in which to do business.
These low-paid call centre jobs are what the government is talking about while being near the top of this easiest-place-to- do-business-list means New Zealand has pathetic labour laws, endemic low pay and narrowly-based trade unions. With both National and Labour adopting employer-comes-first policies nothing here will change quickly.
Tuesday, October 14, 2008
South Korean socialist Kim Kwang-il spoke to Owen Miller about the country’s recent protest movement
This summer the biggest mass movement since the 1980s erupted in South Korea as hundreds of thousands came onto the streets to protest against the recently elected right wing government of Lee Myung-bak. Ostensibly the crowds were protesting against the government’s decision to resume imports of US beef which had been banned due to fears of “mad cow disease”, but their anger and slogans were directed at everything from education privatisation to Lee’s plans to construct an environmentally disastrous “grand canal” down the length of the country. The movement began online and then in May escalated into daily candlelight vigils in central Seoul. From late May people began to march, attempting to take their protests directly to the presidential residence, still carrying candles as a symbol of their defiance against the government. Since the middle of August the government has gone on the counter-attack, arresting and intimidating scores of activists.
Kim Kwang-il is a member of the steering committee of All Together, the South Korean revolutionary socialist organisation. He has also been a leading figure in this summer’s protest movement and, along with a number of other leaders, he has been barricaded in a protest camp at Seoul’s central Buddhist temple—Chogyesa—since the police issued arrest warrants for the protest organisers in June. He and six others are unable to leave the grounds of the temple, which is surrounded by riot police who search everyone leaving or entering. This interview was conducted via email on 8 September.
OM: The right wing Grand National Party has recently come back to power in South Korea with the victory of Lee Myung-bak. The Korean right characterises the past ten years as the “lost decade”. How would you describe the decade of “centre-left “ or “social-liberal” governments under Kim Dae-jung and Roh Moo-hyun?
KK: When the right wingers talk about the “lost decade” they are only half right. For them the handing over of power to liberal forces 50 years after the establishment of South Korea’s authoritarian government in 1948 was an unbearable insult. So in 2004 the Grand National Party, as the political party representing the Korean right, attempted to impeach President Roh Moo-hyun. This attempt was defeated by massive street protests.
But having said this, it is certainly not the case that the Kim Dae-jung or Roh Moo-hyun governments fundamentally challenged the values of the right. In fact, as members of the South Korean ruling class they remained faithful followers of neoliberal and pro-imperialist policies.
When Kim Dae-jung came to power in 1998 it was the period of Korea’s so-called “IMF crisis”, and he pushed ahead with restructuring and intensified worker layoffs. Kim Dae-jung may have received the Nobel Peace Prize but the repressive National Security Law (NSL) remained in place. During the Kim Dae-jung government South Korea’s International Socialists, such as myself, were punished and imprisoned under the NSL simply for selling a socialist newspaper! And Kim Dae-jung sent Korean troops to Afghanistan immediately after George Bush’s invasion.
The Roh Moo-hyun administration was exactly the same. When he came to power the first thing he did was to send troops to Iraq. Last year he sent Korean special forces troops to Lebanon as well. Because I organised demonstrations against the dispatch of troops I was convicted by his government. The Roh Moo-hyun government also pursued neoliberal policies. In order to conclude the recent free trade agreement (FTA) with the US the Roh Moo-hyun administration used repressive measures against the anti-FTA protest movement that were second only to those of the current Lee Myung-bak government.
The resumption of US beef imports that was the spark for the candlelight protest movement was actually a concession that was promised by the Roh Moo-hyun government in order to reach agreement on the trade treaty with the US. The Roh Moo-hyun government also imprisoned more workers than any other Korean government, including the military dictatorships of the 1970s and 1980s, while the proportion of casual workers in the economy rose sharply.
It is not really appropriate to call these people “centre-left” or “social-liberals”. Both their social base and their political platform are different to the traditional reformist parties. Although they have been supported by social movement leaders, including some of the mainstream NGOs and a section of the nationalist left, their principal base is among the populist liberals who form a part of the capitalist class.
It was the betrayals of the liberals and the sense of disgust and disappointment these gave rise to that opened the door for the election of a right wing government.
Lee Myung-bak—the former CEO of the construction subsidiary of conglomerate Hyundai and nicknamed the “Bulldozer”—won a convincing victory last December. How did this come about? Did it represent a significant shift to the right?
The recent huge protests show that the election of a right wing government in Korea does not mean Korean society as a whole has moved to the right, despite the pessimistic analysis offered by a considerable number of activists on the left.
First, the turnout in the presidential election was extremely low, which means that mistrust and disillusionment with mainstream politics are very high. Lee Myung-bak actually polled the lowest number of votes of any elected Korean president. Second, due to the sense of betrayal and disillusion with ten years of liberal populist governments, particularly the five years of the Roh Moo-hyun administration, voters could not bring themselves to vote for Roh Moo-hyun’s successor.
If you look at various opinion polls you can see that public support for progressive values has not diminished at all. The movement in Korea has also not suffered a decisive defeat.
However, a considerable number of social movement leaders have been gripped by a sense of defeat, fear and lack of morale. As a result, the majority of social movement forces were bewildered when the candlelight protest movement first erupted on 2 May, and just stood back and watched. So they ended up joining the movement late.
Fortunately, because All Together correctly understood that the election of a right wing government did not mean the Korean people had become more conservative, we joined the demonstrations right from day one.
In Europe too the right has been able to make gains as a result of the sense of disillusion that has accompanied the betrayals by “social-liberal” governments. But this is very unstable. We need to understand that popular consciousness is very contradictory. You can see this to a great extent with the participation in the candlelight protest movement by people who voted for Lee Myung-bak at the last election.
_What was the immediate background to the massive wave of protests against the
Lee Myung-bak government that began in May_?
The start of the demonstrations back in May was the combined result of a whole series of issues that had been thrown up since Lee Myung-bak was elected. From the moment he was elected Lee began announcing a whole host of blatantly right wing neoliberal, anti-democratic and pro-imperialist policies. It was like a policy tsunami—so much so that you became irritated every time you looked at a newspaper or news bulletin. Every day you got up in the morning to find that another right wing policy initiative had been announced in the media.
The gradually worsening economic situation was also behind the sudden explosion of demonstrations. Lee Myung-bak’s core promise in the presidential election was that he would “revive the economy”. This was his so-called “747 pledge” in which he promised to achieve economic growth of 7 percent, average per capita income of 40,000 US dollars, and raise South Korea to the world’s seventh largest economy. Of course this was nothing more than rhetoric that completely ignored the world economic crisis. After Lee took power the economic indicators became gradually worse while the suffering of the exploited grew.
Popular anger gradually built and then on 19 April, when Lee travelled to the US and made an agreement with Bush to allow imports of American beef, this anger exploded. This agreement drastically eased the regulations dealing with the risk of beef infected with BSE. At first the protests against this agreement centred around internet communities. An online petition set up by a high school student attracted more than a million signatures in no time.
In the early stages of the candlelight protests the active participation of young people was particularly noticeable and this reflected their anger against Lee Myung-bak’s education privatisation plans. Middle and high school education in Korea is extremely oppressive and there is intense competition to do well in university entrance exams. However, the Lee government’s plans to destroy public eduction would clearly drive young people into even more oppressive conditions. One of the slogans that the young people brought to the demonstrations was “Let’s eat a little, let’s sleep a little”. It’s a slogan that shows clearly the sort of position they are in where they have to go to school before dawn and then study at cram schools until late in the evening.
This anger and sense of crisis exploded into the open in the candlelight demonstrations. On the first day the sight of 20,000 people filling the streets was a real shock. On that day everyone was surprised at the scale and the confidence of the demonstration: the internet-based group that had called the demo, the participants themselves and the police.
The demonstrations were not simply limited to opposition to the resumption of US beef imports. From the very first day opposition was directed towards the government’s plans to destroy public education, its proposed “Grand Canal” plan aimed at providing profits for the construction sector, as well as plans for the privatisation of health insurance. As time went on the dynamic between these various demands became clearer.
To put it another way, the candlelight demonstrations shared the values of the international anti-neoliberal movement, as embodied in the slogan “People before profit”. So this struggle stands shoulder to shoulder with the struggles against neoliberalism all over the world, from Latin America to Europe.
When I joined the protests in May there was already an amazing feeling of power among the protesters but also a sense that no one knew exactly what was happening or where it was going—neither the organised left nor the police nor the government, nor even the crowds themselves. Why do you think these protests surprised and disorientated everyone in this way?
The new movement was overtaken by a sense of euphoria when the protests exploded without any warning and then demonstrated their staying power. People felt confident that the movement could be victorious without any major ordeals or complications. During this phase it was natural that a sort of “spontaneism” would gain strength. It was also the case that the protests had not started with calls from the organised social movement forces. The social movement forces entered the new protest movement late and in a rather timid fashion, and they also compromised with the spontaneism of the movement.
The candlelight rallies that started at Chonggye Square in central Seoul on 2 May gradually grew in size and from 24 May began to take to the streets. This was the turning point that really broadened the movement. The protesters no longer stayed in the square but wanted to charge out into the streets.
At this time the reformist majority in the People’s Countermeasure Committee on Mad Cow Disease hesitated either to take the responsibility for organising street protests or to bring up the question of the direction of the movement. They felt a heavy burden of responsibility. In this situation it was All Together, alongside a number of other groups, that began to lead the demonstrations and this gave rise to some criticism within the candlelight protest movement. People claimed that the left should not intervene in the demonstrations because this would damage their spontaneity. Some of the spontaneists attempted to seize megaphones from those leading the marches and even tried to crowd around the speaker cars that were at the front of the demonstrations to prevent them from moving. They habitually obstructed discussions about the form that the marches should take, so there were repeated situations in which it was difficult to make any decision about where the march would go and where we would hold a closing rally.
However, the situation changed again. On 31 May the established social movement forces found their confidence again, readied their ranks and participated in the demonstration in large numbers. As they led that demonstration the atmosphere was reversed. You could see how the realisation of the need for the organisation and experience of the social movement forces spread among the protesters when they came within spitting distance of the Blue House [the presidential residence] and were faced with repression in the form of massive police violence and widespread arrests.
What is the mood among Korean workers at the moment and how has it been affected by this summer’s protests?
The biggest weakness of the candlelight protests has been precisely the inadequate participation of the organised working class, though it is true that the transportation union actively resisted the transportation and distribution of US beef and the Korea Confederation of Democratic Unions [KCTU, the left union federation] organised a strike for a few hours.
The reasons for the labour movement’s lacklustre response to this new movement were similar to the causes of the South Korean social movements’ unenthusiastic participation in the early stages of the protests. The victory of the Lee Myung-bak government lowered morale in the union movement and created a sense of insecurity. In fact the leadership of the KCTU thought that it would require a year of preparation to take on the Lee government head to head.
As a result, the sudden eruption of the candlelight protests was a shock to both the leadership of the unions and the rank and file union members. As the demonstrations expanded a section of the more advanced activists made efforts to organise the movement, but they were unable to counter the majority tendency in the unions.
Another cause lies in the “workerism” of the Korean unions. The unions have never been enthusiastic about political protests that go beyond economic disputes.
As one leading All Together member, Choi Il-bung, has recently noted, “When their expectations in Kim Dae-jung, Roh Moo-hyun and the other populist politicians came to nothing, KCTU members reacted with a tendency towards workerism that was expressed in their lack of positive participation in the candlelight rallies.”
For example, at the height of the candlelight protest movement the trade unionists organised rallies and marches at which they pushed their own economic demands and on occasion these demonstrations ended without getting to the place where the candlelight rally was being held so only some of the participants actually joined the candlelight protesters.
The Lee Myung-bak government also tried to force a separation of politics and economics by announcing that it would take a hard line against political strikes by workers.
The majority reformist leadership of the candlelight protest movement also failed to positively call for the mobilisation and participation of the organised working class.
However, the candlelight protests that have shaken Korea this summer have left the organised working class with the confidence that it is possible to confront and fight the Lee Myung-bak government. And they have also highlighted the importance of political protest movements that go beyond labour disputes. The candlelight protests have provided some important lessons for organised workers about the battles that are likely to lie ahead in the developing economic crisis. But it is only when those lessons have been learnt and absorbed that they can actually become weapons in the struggle.
There seems to be a lull in the movement at the moment. Has the government been successful in suppressing the movement? Do you think this is the end of the current phase of resistance to the right wing government?
The movement began on 2 May and continued for more than three months until 15 August. That date saw the hundredth demonstration. The protests continued every single day and there were a number of occasions on which the numbers of demonstrators ran into hundreds of thousands. On 10 June at least one million people came onto the streets nationwide and on 5 July too there were 400,000 to 500,000 people on the streets in Seoul alone. These were the first demonstrations on such a scale in 20 years.
It is true that there is a lull in the movement at the moment, though small protests are continuing. The biggest reason for this is the repression. Because even legal rallies have become impossible these days, people are unable to gather. So far a total of 1,530 people have been arrested by the police and 49 people are being detained. There are a further 29 of us currently on the police’s wanted list, including myself and the others at the Chogyesa Temple protest camp. The police are now investigating internet community sites and are serving summonses to people simply for having written anti-government comments online.
The movement also has strategic problems. It reached its climax on 10 June. This day was chosen with the intention of reviving the memory of the great struggle of 10 June 1987 and, although it was a weekday, the demonstration brought some 700,000 people onto the streets in Seoul alone. This was the moment when the leadership of the movement needed to give some clear direction. But the majority of the reformists in the leadership evaded the question of an anti-government struggle—ie a political struggle—and gradually tried to limit the movement to opposition to the import of US beef.
Although there is currently something of a lull in the movement this does not mean to say that the Lee Myung-bak government has been successful. His approval rating barely scrapes 20 percent—and this after only 200 days in office!
Two recent episodes have illustrated the continued instability of the government. In an attempt to further curtail the movement the government recently detained seven activists from a radical left group called the Socialist Workers League of Korea under the repressive National Security Law, but the warrants for their arrests were thrown out of court because the outcry was so great.
[In another case] Lee Myung-bak came up against opposition to his plans to privatise water services from the Grand National Party, his own party, because they were afraid that this plan might give rise to another round of candlelight protests.
When it seemed that the candlelight protests were burning themselves out the Lee Myung-bak government had to hold back its urge to push forward with its neoliberal policies. But in reality it is just refuelling for the struggle ahead. The Korean people have behind them the experience of a massive struggle and will not simply stand aside and watch. As the economic crisis gets worse the stakes of the struggle are also getting higher.
Monday, October 13, 2008
1. The extraordinary waves of panic that have swept through global financial markets in the past few weeks have filled ordinary working people around the world with a mixture of anger, bewilderment, and fear. It has become evident to everyone that the existing capitalist economic system isn’t working, and that we face a major historical turning point. What isn’t clear is what the consequences will be and what can be done.
2. The financial crash of September-October 2008 has confirmed that the world is facing a major economic crisis. The development of this crisis has been channelled through the neoliberal economic policy regime that was set in place in the late 1970s and the early 1980s, in particular with the deregulation of financial markets and their greater power to engage in large-scale speculation across state borders. Nevertheless, the real causes of the credit crunch lie in the long-term crisis of profitability with which global capitalism has been struggling since the end of the 1960s. The recovery in the rate of profit during the late 1980s and early 1990s thanks to capital restructuring and a sharp increase in the rate of exploitation was only partial. Since the late 1990s, the US Federal Reserve Board has sought to prevent a major economic crisis by flooding the American and world economy with cheap credit. Workers whose real wages have stagnated or shrunk in most of the major economies have been encouraged to borrow in order to maintain demand for goods and services. It was the explosion of the resulting speculative bubble, centred on the housing market, that detonated the onset of the credit crunch in August 2007.
3. Unlike the earlier financial crashes of the neoliberal era – Mexico 1994, East and Southeast Asia 1997, Russia 1998, Argentina 2001 – the present one originated in the very heart of the capitalist system, in the United States. It is spreading to affect the entire world economy. European banks were major customers for the mortgages repackaged as complex financial derivatives that have now gone toxic. The big exporting economies – Germany, Japan, China – are being sucked into the crisis as the markets for their goods shrink. A world recession on the scale of those in the mid-1970s and early 1980s is now in prospect.
4. The crisis is being exacerbated by a sharp increase in the rate of inflation, especially for energy and basic consumer goods. This is a consequence of the boom in the world economy, driven by the credit bubble, in the mid-2000s, reinforced by the activities of speculative investors in the oil and other commodity markets. Higher inflation is forcing down living standards globally, and, in the global South, threatening the very survival of many poor people.
5. The response of the leading capitalist states – and in particular of the US – has been to seek to shore up the financial system with large-scale state intervention, including the nationalization or government-organized rescues of major banks and other financial institutions. These policies have blown an enormous hole in the neoliberal ideology of the free market. But the aim of these interventions has not been to protect the jobs, living standards, and homes of ordinary working people. They are intended to preserve the capitalist system and to protect the chiefs of the big banks that survive the process of mergers and reorganization from the consequences of their speculative gambles. Socialists, trade unionists, and anti-globalization activists should demand instead the nationalization without compensation of the banks in order to turn them into instruments for meeting the needs of working people and the poor.
6. Our rulers plainly intend instead to force the burden of the crisis onto the backs of working people and the poor. This is clear from the warnings of the European Central Bank and the Bank of England against the ‘secondary effects’ of inflation. They are telling trade unionists not to seek wage increases that compensate them for the rise in the cost of living. This is reinforced by other policies – for example, in Britain, by a two per cent limit on public sector pay. Yet no one claims that wage increases have been responsible for the surge in inflation – indeed in many countries pay was squeezed well before price rises speeded up. Partly thanks to the downward pressure on wages, corporations enjoyed sharply increased profits in the mid-2000s. These profits can now be used to pay for the wage increases needed to protect living standards. If the bosses react by pushing up prices, the answer lies in placing the economy under public and democratic control. The workers’ movement needs also to challenge institutions such as, in Europe, the Single European Act, the European Central Bank, and the Growth and Stability Pact. Their function is to hard-wire into the European Union the very neoliberal policies that have been rejected in successive referendums in France, the Netherlands, and the Republic of Ireland and that are barriers to defending jobs, living standards, and homes in the current economic crisis.
7. Another dimension to the economic crisis is the effect that it is having in exacerbating the conflicts among the world’s ruling classes. This is evident internally, in the political chaos in Washington and in the disagreements within the European Union on how to deal with the crisis. But it also operates at the global level as well. In August 2008 the Russian-Georgian war highlighted how the attempt by the US to entrench its global hegemony by expanding NATO deep into Eurasia threatened to rekindle the kind of inter-imperialist rivalries that dominated world politics in the 20th century. Even if the efforts of the American state to rescue the banking system are successful, the result will be hugely to increase US government debt. This will make American capitalism even more dependent than it already is on the readiness of the rulers of the high-exporting economies of East Asia and of the Gulf oil sheikhdoms to continue lending them money. As the experience of the 20th century showed, greater economic interdependence – today above all between the US and China – can, rather than reduce geopolitical tensions, actually feed them. The US war drive that began after 11 September 2001 is likely to continue whoever wins the presidential election, and hence it remains imperative to continue to build a global movement against it.
8. The relationship between economic crisis and the class struggle is complex and mediated by the political context in which they interact. Moreover, the precise combination of job losses and higher prices in a given country is likely to have a major impact on whether workers are likely to respond with aggressive resistance or demoralized acquiescence. But we can be sure that the coming period will see big social and political movements all over the world provoked by the crisis and its consequences. The duty of revolutionary socialists is, as ever, to throw themselves into these movements, and to help make them as united, militant, and powerful as possible. But, whatever the circumstances, we have to insist on the fact that what we are confronting is not simply the crisis of neoliberalism as an ideology and as a policy regime, but of the capitalist mode of production itself. The huge suffering and instability that the present crisis will generate are consequence of the logic of capital. We need to put in its place a different social logic, a socialist logic, based on democratic and collective control of the economy and on genuine planning, in which workers and consumers participate in directing production to meet their needs. This means that revolutionary socialists need to put their efforts into building their own organizations, and also into developing a broader radical left that can begin to present a credible and principled alternative to capitalism.
The Coordination of the International Socialist Tendency 13 October 2008
Friday, October 10, 2008
Braving the wind and the rain on a chilly Friday morning, McDonalds McCafe workers struck against low pay and a bullying management, and also demanded fair trade coffee to be sold on premises. They were joined on the picket line by members of Socialist Aotearoa, the Workers Party, and teachers who are union members of the Queens Academic Unite branch next door!
Wednesday, October 08, 2008
Kia ora Comrades,
Throughout the month of October the Unite Union, which represents a 1000 low-paid McDonald's employees will be campaigning for living wages for workers and for REAL fair trade coffee to be sold in McCafes. This is part of our ongoing organising effort to ensure that workers for some of the world's largest corporations receive living wages and that these corporations reduce their environmental impact and help build sustainable and fair relationships with producers in developing nations.
As part of this campaign we are asking for organisations and individuals to support our campaign in McDonald's for fairness from coffee bean to coffee cup. You can support this campaign by encouraging members of your organisation to come along to the rally for living wages and fair trade on Friday (10/10) morning at 8.30am or sending us a message of support we can use in our promotional material.
Your support will mean a lot in this historic campaign to act locally and act globally for restaurants that treat workers and farmers fairly. Fair trade will be just the beginning!
Unite for living wages and fair trade!
Rally and protest,
Where: Meet outside McDonald's Queen Street.
When: 8.30am, Friday October 10th.
Yours in solidarity,
McDonald's campaign coordinator.
6a Western Springs Rd
Tuesday, October 07, 2008
The world economic situation worsened dramatically over the last week and each day seems to greet a new crisis. Many looked to the $700 billion bailout in the US to save the system.
The bailout has been accompanied by governments propping up banks across Europe. None of this has solved the crisis. Socialist Aotearoa explains what the bailouts mean, what other solutions our rulers have and asks whether any of them can work.
What happened over the last week?
Across the world governments have been throwing cash at the money markets – global financial markets for short term borrowing and lending – in an attempt to encourage the banks to lend to each other again. The “credit crunch” that began over a year ago saw the daily lending between financial institutions dry up. The US government has provided $700 billion to bail out the US bankers. This follows a series of other bailouts in recent weeks – amounting to another $400 billion. Over the last week, five banks have been taken over or rescued with government money in Europe. In the UK, New Labour chancellor Alistair Darling is set to throw more money at the banks this week. The Bank of England put a massive £280 billion into the money markets last week. Governments are intervening in a desperate attempt to hold things together.
What effect do the bailouts have?
Some of the bailouts involve lending the banks money – putting liquidity in the market as they put it – to try and encourage them to lend to each other. Others involve buying up all the bad debt so that the public, instead of the bankers, are responsible for them. Not surprisingly the banks are keen on this type of bailout.
The 10,000 US citizens who face repossession each day will watch as the banks – whose actions lie behind the crisis – are saved. To put the figures into perspective, simply compare how this money could be used to solve world hunger. Each night 850 million people go to bed hungry. If the $700 billion had gone to them rather than the finance houses, this dire level of hunger would be wiped out. If the combined package of more than $1 trillion had been used, a billion people who live in chronic poverty worldwide could be lifted out of it.
Don’t the deals protect people’s savings?
Many headlines on the bailouts have focused on the idea that they guarantee people’s savings. So in Britain there is a flurry of stories complaining about the supposed “lack of protection” for depositors in British banks compared to Ireland or Germany. In response, Gordon Brown agreed to increase the amount of savings the government would guarantee to £50,000.
But under the spin something more fundamental, and dodgy, is going on. Almost 50 percent of households in Britain have either no savings at all or savings of less than £1,500. And in many cases governments are guaranteeing “assets” – which include mortgages, or debt. In Ireland the government has guaranteed the banks without knowing the full scale of their debts.
Guaranteeing banks is yet another way of transferring public money to the rich.
The idea of “protecting” depositors is a red herring – of course every bank wants as much money going into their coffers rather than their rivals. In a climate of panic, rich individuals will put their spare cash into the best accounts. But this will be nowhere near enough to cover the toxic debts at the heart of the system.
Bailing out the banks causes as many problems as it solves, while at the same time transferring money from the public to the bankers.
Where has all the debt come from?
In the last decade debt has been used like elastic – it has been stretched to cover the decline in real wages and to stimulate economies. In the US, household debt now stands at $12 trillion. The average person spends 14 percent of their income just on servicing their debts. Debt is one logical outcome of a neoliberal offensive that has reduced the share of wealth going to workers.
Government and corporate debt has also expanded dramatically. The US current account deficit runs at around $2 billion per day and its total debt has risen from 1.5 times its gross domestic product (GDP) in the mid 1970s to 3.5 times its GDP today.
All these bailouts, not to mention the effect of the financial crisis on the wider economy, will push up both public borrowing and government debt. Even before the crisis, the US and Britain faced a burgeoning budget deficit. And governments can only have so much debt. Increased debt will mean cuts in public spending and increasing privatisation. The advantage of privatisation for the government is that the resulting debt from PFI projects does not appear on its balance sheet. This is not inconsiderable – the British government already has a £200 billion liability from PFI.
Individual national economies cannot escape the world crisis in isolation.
Injections of state money may help stave off the worst effects of a slump in the short term. But they cannot control the investment flows of currency across the globe.
There is only one real remedy to get out of crisis for our rulers – the restoration of profits. To do this they will try and restore the competitiveness of national capital, and demand that workers accept greater sacrifices. But the classic way of dealing with this, cutting wages, can only make the crisis worse. It reduces the demand for consumer goods as well as capital goods, such as machinery or factories, and so spreads the problem to a greater range of industries.
One standard remedy to try to stimulate capitalists to invest is by cutting interest rates and playing around with the money supply. But it runs the risks of rising inflation and may not work – interest rates were cut in Japan in the 1990s but the country remained in recession. Such is the insanity of capitalism that, even when profits are very low, some capitalists might decide to gamble on a new round of investment, which could lift the economy from the depths of recession. But we are a long way from that situation.
The fact is that mainstream economists and capitalist politicians have no sure way of dealing with the crisis. Economic chaos is built into the very system they are fighting to defend.
Will government bailouts stave off global recession?
It is unlikely that government intervention can halt the crisis. For one thing the sheer scale of the funds controlled by corporations means that any government would find it difficult to control them. Lehman Brothers, for example, made a loss of around $80 billion. To get that in proportion, the GDP of Kenya is less than $41 billion. More wealth was wrapped up in one secretive speculative company than was possessed by the 40 million people of an African country. To cover British banks would cost an astonishing £9 trillion. The bosses engage in a game of economic blackmail because they hold the vast majority of the resources of society in their hands. Far from states controlling corporations, it could appear that corporations control states and make them act in their interests.
Speculation has always been a part of capitalism and every panic over speculation never leads to change but rather a new speculative bubble. What’s more, the underlying world economy is in trouble. One indicator is the slightly obscure “Baltic Dry” index of world shipping costs – which acts as a kind of proxy for world demand or trade flows.
That has fallen from nearly 12,000 in June to less than 3,000 now. A typical freight vessel in the summer would have cost $240,000 to hire and ship stuff around the world. Now the same charter can be had for $40,000. The crisis has proved how hollow the arguments of those who portray the market as a rational way of organising production are. Our rulers’ “solutions” will undermine their legitimacy even more. The reality is that every bailout encourages the continued speculation that sparked crisis in the first place.
The recent measures will not somehow bring a magic end to the spread of crisis. Much more likely are deepening splits within ruling classes and their governments as they thrash about in desperation trying to solve the problem without any idea of how to do so.
Monday, October 06, 2008
Why the panic won't stop
American socialist Lee Sustar explains why the $700 billion Wall Street "rescue" plan hasn't stabilized the financial system.
SO MUCH for that $700 billion bailout that was supposed to save world capitalism.
Following two major bank failures in Europe, world stock markets greeted Congress' passage of the so-called Troubled Assets Relief Program (TARP) with an international meltdown October 6.
It began in Asia, swept through Europe and sent Wall Street's main stock indexes into a freefall, though a late bounce-back limited the losses. Even so, the Dow Jones Industrial Average dropped below the 10,000 mark that it first crossed in 1999, finishing at 9,665. Overall, the decline erased $2.5 trillion in stock market value worldwide, according to Bloomberg News.
Bad as the stock markets losses are, the really ominous financial news is about the credit markets--or rather, the lack of them. Banks, unwilling to trust their rivals' balance sheets and shaken by losses in their own holdings, are hoarding cash and refusing to lend to one another. As a result, central banks like the Federal Reserve have become what the Financial Times called "lenders of only resort."
Compounding this credit crisis is a virtual halt in the market for "commercial paper"--the term for short-term loans taken out by major corporations to finance everyday needs like paying for supplies and making payroll.
This latest severe phase of the ongoing credit squeeze is the result of the September 14 bankruptcy of the Wall Street investment bank Lehman Brothers, which has tied up hundreds of millions of dollars claimed by hedge funds and led to a legal battle over an estimated $1 trillion in transactions of derivatives--complex financial investments that are based on, or "derived" from, an underlying bond or other security.
Lehman's central role in international credit markets meant that its bankruptcy had wide knock-on effects, including the near-seizure of money-market mutual funds until the Federal Reserve Bank stepped in to guarantee them.
This credit crisis won't be alleviated by Treasury Secretary Henry Paulson's TARP--or "cash for trash," as its critics rightly call it.
Under TARP, Paulson will have virtually total control over $700 billion in taxpayer money to buy up mortgage-backed securities and other devalued (or worthless) paper from banks and other financial institutions. Paulson claims that this massive and unprecedented theft of workers' wealth will shore up the banks' balance sheets, which will enable them to resume normal lending...eventually.
But while Paulson spends the next few weeks hiring Wall Street pros to carry out the program--yes, the very same people who created this catastrophe--the credit markets are imploding right now, and threatening to set off a far bigger crisis than we've seen so far.
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THE LATEST panic led to frantic efforts by the Federal Reserve Bank to expand its ability to lend to banks. Fed Chair Ben Bernanke recently doubled the so-called Term Auction Facility lending program for banks to a staggering $900 billion, which is about the same as the Fed's entire balance sheet. And the Fed will also begin paying interest rates on deposits from other banks to further inject liquidity into the system.
Yet no matter how much and how cheaply the banks can borrow from the Fed, they're still refusing to lend to each other for fear of getting hit with huge losses in the event of another bank failure. And the non-bank financial institutions that comprise an unregulated shadow banking system aren't even eligible to borrow from the Fed.
Consequently, short-term interest rates on so-called interbank loans have shot up in both the U.S. and Europe, and the commercial paper market for corporate loans is barely functioning. New York University economist Nouriel Roubini summed up the crisis this way:
This is indeed a cardiac arrest for the shadow and non-shadow banking system, and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down, the risk of an economic collapse similar to the Great Depression becomes highly likely.
In this context, Paulson's $700 billion bailout scheme appears, as the New York Times put it, "like a pebble tossed into a churning sea."
The Fed and the European Central Bank (ECB) will try to alleviate the crisis through various means--perhaps with a coordinated cut in interest rates to further stimulate lending.
Such measures won't do the trick, however. The problem is that the financial dominos keep falling beyond the reach of the central banks and other government institutions. And in the case of Europe, the crisis is exacerbated by the fact that while the European Union has a common currency and integrated economy, there is no central regulatory authority, let alone federal government, to make a coherent intervention.
Instead, the European countries are behaving the way Karl Marx characterized rival capitalists--a band of hostile brothers.
Consider Fortis, the trans-European bank created with a record $101 billion buyout of ABN Amro a year ago. In the current crisis, Fortis, with 85,000 employees and operations in 50 countries, couldn't handle the debt it took on from that merger, and looked to European governments for a bailout.
But the Dutch government, nervous about a collapse of the bank, refused to wait for a deal and nationalized the Dutch portions of the company. The remainder was bought up by the Belgian and Luxembourg governments, which sold off what was left to the French bank BNP on October 6.
At the same time, the German government had to step in with a $67 billion bailout for Hypo Real Estate after private lenders abandoned an earlier $48.2 billion dollar plan to prop up the company after trouble at one of its subsidiaries.
To try to stem fears of more bank failures, European governments acted to reassure depositors. The Irish government announced that it would guarantee all deposits in the country's biggest banks--and did so without consulting the European Union.
The head of states in the four major EU countries criticized Ireland for taking unilateral actions at an October 4 meeting near Paris. Yet Greece soon followed Ireland's example. Moreover, the government of Germany, the economic heavyweight of Europe, refused a French proposal for a coordinated European solution to the crisis, and instead promised guarantee all German bank deposits. Earlier, Britain had raised the insurance on deposits from $62,000 to $88,500, lest nervous depositors move their money to Irish banks.
If these deposit guarantees were intended to reassure financial markets, they had the opposite effect. The rush by European governments to back up deposits led investors to conclude that the banks were even worse off than anyone thought. The result was the worldwide stock market selloff October 6.
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LURKING BEHIND the international banking crisis, of course, is the continued impact of mortgage-backed securities, which have already caused hundreds of billions of dollars to be wiped off the balance sheets of banks worldwide.
In the U.S., Paulson's TARP program will try to alleviate these losses by allowing banks to sell those securities for far more than they are worth. To pull this off, the bailout legislation passed by Congress allows the elimination of the so-called "mark-to-market" accounting rule that requires banks to value their assets far above the price they would get in the open market.
Since there's virtually no market for mortgage-backed securities now, the banks balance sheets must reflect huge losses under mark-to-market rules. Soon, however, the government will wave a magic wand to allow banks to peg those assets at much higher prices, and Paulson will pay that inflated amount with your tax dollars.
For their part, European banks don't have to operate under mark-to-market rules. Thus, their books are even more suspect than their U.S. counterparts. As a result, the Financial Times noted, "few are now willing to lend to European banks, not least other European banks."
So just as the credit crisis forces European banks to acknowledge the extent of their problems and seek government intervention, the U.S. government stands ready to help American banks cover up their losses by blessing dishonest accounting and buying up the worst junk on their balance sheets.
This approach isn't likely to restore confidence in the banking system anytime soon, let alone revive the credit markets. A more direct and effective solution, wrote economist Willem Buiter in the Financial Times, would be to "nationalize the banks. When they have a common majority owner (the state), the state can simply instruct the banks to lend to each other. Problem solved."
Such measures, however, aren't likely without much greater political pressure from below--and a wider challenge to the system that created this disaster.
Sunday, October 05, 2008
By Laura Hardin
As with any presidential election, the American pubic will once again be asked to head to the polls to test which campaign slogans proved more effective. We can either vote for the fairy tale of “hope and change” or we can cast our vote for the “Maverick’s from Main Street.”
The McCain/Palin ticket has just recently been trying to lure the middle class with their new Main Street myth, an attempt to portray themselves as sympathizers who understand how this economic crisis is affecting the majority of America. In the Vice Presidential debate last Thursday Palin said that credit markets is where "mainstreeters like me" would feel the effects of the meltdown. And earlier last week, presidential nominee John McCain said of the bailout, “The first thing I’d do is say, ‘Let’s not call it a bailout. Let’s call it a rescue,’ Because it is a rescue. It’s a rescue of Main Street America.”
You know what you’ll find on most Main Streets in most American towns? You’ll find strip malls. You’ll find McDonalds, Burger King, and Starbucks. You’ll find banks and gas stations. Americans don’t live on Main Street, they don’t live on Wall Street either. Corporations live here. So in that regard McCain and Palin are true in their claims to be “mainstreeters” They are wealthy, greedy, corporate mongers. This bailout is as far from “financial socialism” as my house is from Main Street. I don’t consider giving my hard earned (earned in New Zealand) dollars to bankers and financiers a progressive redistribution of wealth. Robin Hood didn’t steal from the poor to give to the rich.
William Greider of The Nation wrote "If Wall Street gets away with this, it will represent an historic swindle of the American public -- all sugar for the villains, lasting pain and damage for the victims." The plan currently has no clauses to monitor the effective reduction of foreclosures, bankruptcies and job losses. It’s a big check, and essentially a blank one, as there appear to be no rules or regulations. Happy Birthday Wall Street! Don’t spend it all in one place! Socialism this is not, this is yet another $700 billion spent to bailout capitalism.
“The only thing we ever truly pay for in this world is a lack of generosity.”