Where the fuck is the ‘revolutionary subject’ in the European crisis? (2)
Why the working class is not effectively defending itself actually is not a question posed by this crisis. Rather the question is:
“So what else did you expect?”
No matter how the working classes of Europe responded to this crisis politically, they were already effectively rendered politically defenseless before the crisis by the very structure of the euro-zone, which stripped the fascist states of Europe of their monetary sovereignty. So even before this crisis erupted into the open, the member states with their overwhelming proletarian majorities were already effectively kneecapped and rendered toothless. The very structure of the EU was nothing more than an attempt to rob the working class of any means to defend itself in a crisis. With monetary policy centralized in the European Central Bank the member states must follow procyclical policies during economic downturns. Essentially, they have no choice but to reduce their expenditures when the euro-zone experiences a depression.
Is serious left criticism of government’s share of GDP possible? (18)
Continued from here.
The economic events now unfolding before your eyes are being driven by such forces as make a backward, low-productivity country like China competitive with you: the requirements of producing, maintaining, supplying, and provisioning a military establishment capable of fighting wars as in Iraq and Afghanistan, and, simultaneously, “hedging and shaping” the global balance of power, vis a vis rising powers like China, to effect the Full Spectrum Dominance of American Capitalism over the entirety of the planet, as this goal has been stated by Defense Secretary Robert Gates.
Washington is planning 10 to 25 years ahead to assure itself the resources required to hedge and shape the behavior of China, Russia, and other possible competitors to its preeminent position in the global economy.
This planning is based on assumptions about the basic vulnerability of the United States to external forces, with a time line for when they need to be addressed.
The continuation of Full Spectrum Dominance, however, is impossible without the dollar remaining as the currency of international trade.
With it, Washington has access not only to the resources of this nation, but also of every nation engaged in international trade.
By issuing paper money, or bonds denominated in dollars, Washington can divert the resources of every nation to its program of military aggression – household products from China for the shelves of Wal-Mart, oil from Saudi Arabia for your Lincoln Navigator, or, my twin his-and-her Hummers, jalapeno peppers from Mexico for our tacos, etc.
As in the case of Argentina before devaluation, it is fairly difficult to find items on the shelves at Wal-Mart which are made in the United States rather than, for example, the People’s Republic of China.
But, this was not always true.
As the Congressional Budget Office report, cited earlier, showed, until the time the Truman administration promulgated the policies which carried NSC-68 into effect, the United States enjoyed a nearly unbroken string of trade surpluses, and was the only major world trade partner with an intact industrial infrastructure.
That relatively strong competitive position was squandered so completely by the pursuit of a Cordon Militaire around the Soviet Union, and, the numerous conflicts arising from that pursuit, so that by 1971 it began to experience persistent – and, in the long run, unsustainable – trade deficits.
As the CBO chart shows:
By 1999, this deficit was becoming a virtual black whole, descending parabolically into the dark mists of economic no-man’s land.
(Now, if we only had enough rhythm to tango gracefully, we could rename ourselves North Argentina.)
In case you were wondering, folks familiar with parabolic curves in the stock market usually refer to it as the precursor to blow off tops – or, in the case of a downside slide, a capitulation.
Minyanville.com define capitulation as:
[T]he absence of hope. A total and complete give up in the marketplace when sellers want to “get out” at any price. From a trading standpoint, very bullish–if you have the ability to take the other side of the trade…which, by definition, you won’t.
And, indeed it was – a capitulation to a long downward spiral which began almost the moment NSC-68 went into force.
In 1950, as the Cordon Militaire was inaugurated, with the incursion into Korea, the balance of payments dropped into the red.
In the mid-50s Eisenhower tried to slow the trend by imposing limitations on imports of oil and other items.
In 1963, Kennedy signed into law his now famous “supply-side” tax cuts in an effort to boost the failing trade surplus.
By now the decade-old global currency regime , the financial structure of containment itself, was faltering headlong toward collapse.
According to the Wiki:
In 1967, there was an attack on the pound and a run on gold in the “sterling area,” and on November 17, 1967, the British government was forced to devalue the pound. U.S. President Lyndon Baines Johnson was faced with a brutal choice, either institute protectionist measures, including travel taxes, export subsidies and slashing the budget-or accept the risk of a “run on gold” and the dollar. From Johnson’s perspective: “The world supply of gold is insufficient to make the present system workable-particularly as the use of the dollar as a reserve currency is essential to create the required international liquidity to sustain world trade and growth.” He believed that the priorities of the United States were correct, and, although there were internal tensions in the Western alliance, that turning away from open trade would be more costly, economically and politically, than it was worth: “Our role of world leadership in a political and military sense is the only reason for our current embarrassment in an economic sense on the one hand and on the other the correction of the economic embarrassment under present monetary systems will result in an untenable position economically for our allies.”
While West Germany agreed not to purchase gold from the U.S., and agreed to hold dollars instead, the pressure on both the Dollar and the Pound Sterling continued. In January 1968 Johnson imposed a series of measures designed to end gold outflow, and to increase U.S. exports. However, to no avail: on March 17, 1968, there was a run on gold, the London Gold Pool was dissolved, and a series of meetings began to rescue or reform the existing system. But, as long as the U.S. commitments to foreign deployment continued, particularly to Western Europe, there was little that could be done to maintain the gold peg.
Of course, what is left out in the above Wiki excerpt is the fact that Johnson – with John McCain’s help – was busily slaughtering the first installment of more than 7.8 million people in Vietnam.
Which, for your information, does not include the lives which would be lost throughout the rest of Southeast Asia in the following years.
Holocausts are very expensive.
The Wiki:
By the early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U.S. to cut budget and trade deficits.
In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for government expenditure on the military and social programs. In the first six months of 1971, assets for $22 billion fled the U.S. In response, on August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly “closed the gold window,” making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the “Nixon Shock”.
The surcharge was dropped in December 1971 as part of a general revaluation of major currencies, which were henceforth allowed 2.25% devaluations from the agreed exchange rate. But even the more flexible official rates could not be defended against the speculators. By March 1976, all the major currencies were floating—in other words, exchange rates were no longer the principal method used by governments to administer monetary policy.
The cost of the Cordon Militaire erected around the Soviet Union, and enforced through such adventures as Korea and Vietnam had eviscerated the American competitive position in the global market.
Hundreds of billion of man hours of potential output had been squandered on an open-ended militarization of the economy, adding such costs to the American economy it could no longer maintain its century long trade surplus – its competitively priced goods, while continuing to be exported, were being swamped by the imports from cheaper competitors.
The process of deindustrialization had set in.
Within years, the Midwest would be renamed, “The Rust Belt,” amidst the stagnant and awful economic environment of the 1970s.
The cries you heard during those woeful years was the sound of your living standard being adjusted downward to reflect the new reality.
By 1971, twenty one short years after the inauguration of NSC-68, Washington had driven the nation into a permanent, and thus far irreversible, condition of living off the subsidies of its neighbors.
Without a balance of payments surplus, the national income was no longer sufficient to maintain a balanced federal budget. Below is a chart showing the ever rapidly mounting debt accrued by the treasury to offset the declining income of the American People.
Taken from here, the red line shows the net public debt accrued by government as mounting deficits exploded from 1970 to the present.
The black line shows the real public debt, including that owed to you as future Social Security retirement payments – the iceberg we mentioned in an earlier chapter.
(You will notice the gap between the two expands rapidly after the mid-1980s, and there is an explanation for this as well which we shall offer in time.)
To be continued
Is serious left criticism of government’s share of GDP possible? (The Argentine Solution)
Continued from here.
Jared Bernstein, whose article sparked this series, is an economist and Director of the Living Standards program at the Economic Policy Institute. According to his brief bio posted on its website, Jared’s, “research include income inequality and mobility, trends in employment and earnings, low-wage labor markets and poverty, international comparisons, and the analysis of federal and state economic policies.”
Let there be no mistake, this guy is well qualified for his job, and the fact that he is considered by Barack Obama of such weight as to be drawn into Barack’s network of economic advisors, demonstrates he knows how to dot his i’s and cross his t’s in the area of economics.
So, whatever we may say of his prescriptions, we definitely do not want to leave the impression this guy is light-weight – in fact our opinion is just the opposite: to us he represents the lost opportunity of a dedicated and sincere researcher.
*****
Also with the Economic Policy Institute is Tony Avirgan, Global Policy Network Organizer, who, according to his bio, “was a communications coordinator of The Development GAP, a non-governmental organization striving to give Southern marginalized groups a voice in economic policy making.”
As a filmmaker, writer, and journalist, his rather straight image belies an obviously involved, dedicated, and committed soul, genuinely interested in the struggles of the disadvantaged the world over.
People like you.
People who are poised, unsteadily, on the icy edge of an economic precipice, above the jagged rocks of a global economy, absent-mindedly trying to get service on their Iphone2.
Can you hear me now?
During the week of June 7, 2006, Tony published an economic snapshot for the EPI website, and, fortunately enough, touched on the subject of this series, indirectly, by focusing on the prolonged economic crisis in Argentina, which ran from about 1999 to 2005.
In it, he stated his belief that Argentina’s experience in its economic crisis had something of significance to offer you, as you search for solutions to the Damocles Sword of economic catastrophe hanging over your head.
Wrote Tony:
Four years ago, in an effort to recover from an economic crisis, Argentina lowered the value for its currency, the peso. At the time, it was difficult to find anything “made in Argentina” in its stores. Most goods were imported from low-wage countries such as China.
Does that description sound familiar?
Does it ring a bell?
Excuse me?
Oh, you did not know there was an economic crisis in Argentina in during that period.
Well, neither did we.
Which is why we were so surprised to be dropped in the middle of it, while visiting family in 2002.
Actually, family was working with the Peace Corps in Paraguay at the time, but we met in Buenos Aires, and had the unexpected chance to experience the crisis first-hand.
We captured the images and sounds to video during our trip, but since home movies videos are so boring, we won’t share them with you.
According to the Wiki, the crisis actually reached back to the mid-70s, and the domestic “dirty war,” as well as the war for the Falklands against Britain.
To stem the economic crisis created by this, and the heavy debt owed to international banks and American-backed agencies, the government introduced one new currency after another, each of which almost immediately began to collapse; again and again punishing the Argentines economically; slashing their income and wiping out their savings.
The economy began to decline as industry and businesses closed up shop and business owners sent their capital overseas.
Beset by massive government corruption, heavy debt to international banks and lending institutions, unemployment, and, recession due to the dollar peg, talk began to circulate that the government intended to devalue the official currency yet again.
Argentines, naturally, began converting their pesos into dollars and sending the money overseas to avoid this obvious strategy by the government to cure its economic problems by impoverishing them – triggering a run on banks.
About this time, we decided to visit family in Paraguay, beginning with a trip to Argentina.
The Wiki continues:
The government then enacted a set of measures (informally known as the corralito) that effectively froze all bank accounts for twelve months, allowing for only minor sums of cash to be withdrawn.
Because of this allowance limit and the serious problems it caused in certain cases, many Argentines became enraged and took to the streets of important cities, especially Buenos Aires. They engaged in a form of popular protest that became known as cacerolazo (banging pots and pans). These protests occurred especially during the period of 2001 to 2002. At first the cacerolazos were simply noisy demonstrations, but soon they included property destruction, often directed at banks, foreign privatized companies, and especially big American companies. Many businesses installed metal barriers because windows and glass facades were being broken, and even fires being ignited at their doors. Billboards of such companies as Coca Cola and others were brought down by the masses of demonstrators.
The political crisis was prolonged and intense, ultimately resulting in Argentina defaulting on its international debt; the government converted all dollar accounts in banks to pesos, and ended the peg to the dollar – effectively wiping out a large portion of domestic savings in one fell swoop, and reducing income and wages accordingly as inflation skyrocketed.
By the time we arrived, the exchange rate between the peso and the dollar collapsed from 1-to-1, down to 4-to-1; which is to say, Argentines receiving their income and holding their savings in pesos lost three quarters of their living standards.
The Wiki states:
The peso suffered a huge depreciation, which in turn prompted inflation (since Argentina depended heavily on imports, and had no means to replace them locally at the time).
The economic situation became steadily worse with regards to inflation and unemployment during 2002. By that time the original 1-to-1 rate had skyrocketed to nearly 4 pesos per dollar, while the accumulated inflation since the devaluation was about 80%. (It should be noted that these figures were considerably lower than those foretold by most orthodox economists at the time.) The quality of life of the average Argentinian was lowered proportionally; many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis.
It continues:
Most barter networks, viable as devices to ameliorate the shortage of cash during the recession, collapsed as large numbers of people turned to them, desperate to save as many pesos as they could for exchange for hard currency as a palliative for uncertainty.
Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. The 2003 estimation of 30,000 to 40,000 people scavenged the streets for cardboard to eke out a living by selling it to recycling plants. This method accounts for only one of many ways of coping in a country that at the time suffered from an unemployment rate soaring at nearly 25%.
Agriculture was also affected: Argentine products were rejected in some international markets, in fear that they might come damaged because of the poor conditions in which they grew, and the USDA put restrictions on Argentine food and drugs arriving at the United States.
The scene was rather otherworldly when we arrived: children picking through the rubbish looking for materials to recycle; housewives standing at the entrance to banks banging on pots and pans for hours a day, trying to access their accounts; employees occupying businesses abandoned their owners, as police looked on or marched threateningly toward them; sudden eruptions of demonstrations, seemingly out of nowhere, late into the night; retirees waving banners and signs outside the national government demanding payments of their pensions.
By 2002, nearly 60 percent of the population lived in poverty – SIXTY Percent!
Extreme poverty, defined as not having enough money to eat properly, reached 30 percent of country.
This ugly and chilling assault on the living standards of an entire country at once worked: By 2005, industry and exports were growing, the international debt to the American-backed International Monetary Fund, and American- and European-owned global investment banks was being paid off, economic expansion restarted.
In that economic snapshot, Tony Avirgan speaks glowingly of the success devaluation brought to the economy.
Completely ignoring all of the crude facts of systematic economic violence – economic warfare – perpetrated by Washington and the global banks against the Argentine people for several decades, which we mentioned above.
The devaluation not only brought an export boom, it also triggered an increase in domestic investment and production that displaced imports. Because domestic businesses benefited so much from the currency devaluation, the Argentinean government was able to enact a 30% tax on exports and used the revenue for infrastructure construction and improvements, such as roads and public works projects.
All of these factors combined to stimulate total gross domestic product growth to 38.26 % over a four-year period (2002-05) and caused unemployment to plummet.
In medicine, this might be called killing the patient in order to save the disease.
But, instead, Tony titled his snapshot, Argentina Devaluation Holds Lessons for U.S.
As we have observed earlier: What Left?
We do hope you were listening.
To be continued
Is serious left criticism of government’s share of GDP possible? (19)
Continued from here:
In the aftermath of the Vietnam war, when an exhausted and defeated nation might have considered both the logic and necessity of expending itself on efforts to police the planet, the rest of our species likely gasped in horror to behold the return to the public debate of the very who assholes who had, in two short decades, brought the United States from unrivaled industrial, financial, military and diplomatic power to just another embarrassed wannabe colonial power smacked down by a bunch of guys in black pajamas.
Even the British, who believed it to be their destiny to civilize the darker races, had long since conceded their impotence in India.
But, not Paul Nitze and Leon Keyserling – and, of course, the American voter, who continued blithely stumbling through history with his head up his ass.
That latter would be you.
Nitze fired up his old coalition of cold warriors, Committee on the Present Danger (CPD II):
The Wiki adds, “CPD II broadened its base considerably from the original group by including in its ranks top labor officials, Jewish liberals and neo-conservative intellectuals. It managed this feat by including in its ideology not only a strong anti-Soviet policy, but also one which promoted growth and expansion.”
Which, of course, brings us to Leon Keyserling, also a member of the CPD II, who began to campaign for an updated version of the Full Employment Act of 1946, which would serve as the economic linchpin of a reinvigorated containment policy.
Working with a coalition of labor unions, including the Amalgamated Clothing and Textile Workers, and, the United Auto Workers, Coretta Scott King, the Congressional Black Caucus, and assorted others, Leon Keyserling drafted the new Full Employment and Balanced Growth Act of 1978.
It was signed by President Jimmy Carter, on October 27, 1978.
At the signing ceremony, President Carter thanked Mrs. King, and to the Congressional Black Caucus for their efforts to make the bill law.
Then, Mrs. King addressed the assembled – thanking Leon Keyserling, and the coalition of labor, civil rights and religious leaders who helped make it possible.
She called the bill signing, “a great historical occasion, perhaps as significant as the signing of the Civil Rights Act of 1964 and the Voting Rights Act of 1965. Perhaps in the future, history will record that it may be even more significant, Mr. President, because I think it deals with an issue on a basic human right that’s the most basic of all human rights, the right to a job. And that is a central priority now of our economic policy with the signing of this act into law today.”
Then, she turned to a brief anecdote:
Finally, she closed with a moving tribute to her husband:
It was, no doubt, a moment heavy with irony for Keyserling, since Mrs. King’s husband, Dr. Martin Luther King Jr., had broken with him and the other Cold Warriors responsible for that bill more than a decade earlier – condemning the Vietnam War, and, drawing their opprobrium.
His words, sealing his break with the authors of NSC-68, were “prophetic” as well:
Mrs. King had collaborated with the very men Dr. King opposed, to renew the very economic philosophy which led to that awful war.
To be continued.