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Saturday, March 28, 2020

War on the Working Class

“Whoever eats up, robs, and steals the nourishment of another, that man commits as great a murder… as he who starves a man or utterly undoes him. Such does a usurer, and sits the while safe on his stool, when he ought rather to be hanging on the gallows, and be eaten by as many ravens as he has stolen guilders, if only there were so much flesh on him, that so many ravens could stick their beaks in and share it. Meanwhile, we hang the small thieves.... Little thieves are put in the stocks, great thieves go flaunting in gold and silk.... Therefore is there, on this earth, no greater enemy of man (after the devil) than a gripe-money, and usurer, for he wants to be God over all men.... a usurer and money-glutton, such a one would have the whole world perish of hunger and thirst, misery and want, so far as in him lies, so that he may have all to himself, and every one may receive from him as from a God, and be his serf for ever… Usury is a great huge monster, like a werewolf, who lays waste all… And since we break on the wheel, and behead highwaymen, murderers and housebreakers, how much more ought we to break on the wheel and kill.... hunt down, curse and behead all usurers.” (Martin Luther, excerpted from a footnote in Marx’s Capital, volume I)
According to Bloomberg News (3-24-2020), the billionaire hedge-fund and private equity-fund managers who met with the President on Tuesday, March 24 “are getting impatient with the national economic shutdown caused by coronavirus…” They urged that workers be released to return to their jobs from the government lockdown. The “concerned” billionaires, along with the President, do not want “the cure to be worse than the problem.” 

Another super-rich “humanitarian,” David Neeleman, a JetBlue and WestJet founder and currently an international airline mogul, voiced similar concerns to Bloomberg News, appealing to the plight of the neglected working man and woman:  “‘There’s too much confusion -- nobody has jobs, people are losing their houses, kids are home from school,’ he said by phone. ‘What we’re doing today, we have the worst of all worlds.’” No doubt US workers, threatened by a deadly virus, believe that Neeleman is only speaking for their interests.

Bill Hurley, a general partner in Benchmark Capital, a big-time investor in cutting edge startups with upwards of $3 billion in investments, also advocates for the common man, urging a restart to business. He foresees bankruptcies and suicides. He reminds us that “risk is relative.” It sure is, when you are willing to risk the lives of workers to get investments up and running.

William Ackman, another billionaire hedge-fund manager, posturing as a voice of compromise, says that we should impose a strict shutdown for two weeks more than the President suggests, but then send everyone back to work. He tells CNN: "Do we risk sort of dragging this out and really crushing capitalism if we can't fix it now and then move on and have it behind us? Yes. So the president is right… I call it the rip-the-Band-Aid-off strategy." Some have noted that Ackman had earlier made millions on bets against the economy after he had alerted CNBC and it’s audience that “hell is coming” with the virus. Nothing like leaping on opportunities!

Then there is the former CEO of Goldman Sachs, Lloyd Blankfein, who earned his spurs profitably selling financial garbage to his clients, a strategy that navigated his company through the crisis shoals of 2007-2008. Mr. Blankfein’s deep sense of justice raises the alarm that “crushing the economy, jobs and morale is also a health issue-and beyond.” Instead, he offers this nugget of sagacity: “Within a very few weeks let those with a lower risk to the disease return to work.” Lower risk, Mr. Blankfein? Who is to decide? Not risk-free? Should workers leave their hospital beds to keep the wheels of industry spinning?

The White House economic advisor, Larry Kudlow, like his boss, a former TV personality, but with deep ties to Wall Street, offers an assurance: “We’re not abandoning the health professionals’ advice but there is a clamor to try to re-open the economy, perhaps make it less of a shut-in.” Yes, a “clamor,” a clamor from the capitalists to ignore the health professionals and restore the accumulation process immediately.  

Among the White House leadership pushing hardest for sending workers back into the teeth of the coronavirus gale are Domestic Policy Council Director, Joe Grogan, and Treasury Secretary, Steven Mnuchin. Grogan is a former lobbyist for a big pharma corporation and the point man for dismantling the already-inadequate national health care plan known as ObamaCare-- just the person you would look to in order to protect working people against an unprecedented viral plague.

And Mnunchin, a second-generation Goldman Sachs executive and hedge funder, has never demonstrated compassion for those working for a living. Not surprisingly, he is leading the charge against health professionals in the government who have relevant knowledge beyond shoveling wealth to Wall Street.

Apparently nothing is learned from the death of three autoworkers from Covid-19 while they continued to make profits for Fiat Chrysler Automobiles well after the life-or-death threat became apparent. They are among the first US martyrs to capitalist greed in this unprecedented crisis (Ford has announced plans to open now-closed plants on April 14 despite the geometrically expanding contagion).

The $2.1 trillion “Emergency Aid Bill” concocted by the US Congress bears the stamp of the majority millionaires and multi-millionaires constituting the elected US government and other top executive and judicial functionaries. With less than a third of the aid earmarked for unemployment insurance, direct payments to households, hospitals, veterans’ care, and public transit and the rest for government and corporations, it is crystal clear where their priorities lie. 

As economist Jack Rasmus notes, adding the Federal Reserve’s bailout program to the Congressional plan:

...the Federal Reserve US central bank has quickly allocated no less than $6.2 Trillion so far to bail out the banks and investors, even before they fail this time. And promises to do more if needed and for as long as necessary. It is writing a blank check for the bankers and investors.

Meanwhile Congress provides one-fourth that, and only one third of that one fourth, for the Main St., workers, and middle class families.

The unending hunger for accumulation driving capitalism reveals its ugly face most readily in a deep crisis. Whether it’s the mindless carnage of an imperialist war like World War I or the invisible threat to life of a new virus like today, the inhumane, anti-social, selfish soul of capitalism surfaces for all to see. Like the brutal, rigid generals of World War I who relentlessly sent their soldiers into the killing fields for the sake of their vanity, today’s money moguls and their servants are willing to add workers onto the growing list of victims of a killer virus for the sake of their stock portfolios.

Where Martin Luther wrote-- cited above-- of “a usurer and money-glutton, such a one would have the whole world perish of hunger and thirst, misery and want, so far as in him lies, so that he may have all to himself,” he surely could not conceive of the unbounded greed of our bankers and corporate leaders. They go well beyond flaunting “gold and silk” by capturing an obscene share of society’s wealth. If Luther, writing in the 16th century, thought that  we should “hunt down, curse and behead all usurers,” what would he have in store for today’s bankers and hedge-fund managers?

Greg Godels

Tuesday, March 24, 2020

Inhumanity Unbound: the Case for Socialism

Nothing exposes the hypocrisy, arrogance, and selfishness of capitalism and its backers like a major threat or catastrophe. 

Three hundred Chinese doctors began arriving in Italy on Wednesday, March 18 to help the local effort against the coronavirus  (Fifty-two health professionals also arrived from socialist Cuba last week). In addition, PRChina (PRC) is sending testing kits and protective clothing. PRC has sent kits and gear to Spain, Greece, and Poland as well.

While The Wall Street Journal (3-19-2020) grudgingly reports this international solidarity, it is also compelled to admit that “many people feel let down by the European Union… No other EU countries responded to an Italian plea for masks earlier in March, and German authorities temporarily impeded deliveries of medical supplies to Italy.” The head of a European think tank remarked: “This is a shocking failure of European solidarity. The impression in Italy, Spain, and Serbia and so on is that the weaker links will be left alone.” 

The Italian and Chinese governments announced that PRC will supply needed ventilators and face masks. Balkan countries unable to acquire supplies from the EU are also getting assistance from the PRC, according to the WSJ. Serbian President Aleksandar Vucic bitterly commented: “European solidarity does not exist. It was a fairytale.”

Contrast this commentary on European indifference with the arrogant self-righteousness of the policy of “open-borders” as formerly proclaimed by EU leaders. When workers expressed their reservations about unlimited immigration eroding wages and benefits in the EU, the Euro-leadership indignantly charged “xenophobia.” Waving the banner of human rights, the EU chiefs welcomed immigrants-- mostly the victims of imperialist aggression-- desperately looking for jobs at any cost, while appearing to take the moral high ground.

Once the “reserve army” overflowed to create stress on the EU safety net, the welcome mat was quietly removed. 

European workers understood the simple fact that in a capitalist economy the labor of workers is a commodity like any other element in the productive process and that capitalists seek to purchase that commodity as cheaply as possible. They anticipated that humanitarian sentiments were too often a cover for cheapening the cost of labor.

The formerly putative human rights crusaders of an EU without borders are now panicked in a mad dash of self-preservation, hoarding resources and closing borders. Today’s pandemic crisis exposes their hypocrisy.

But neither neglect nor arrogance is a monopoly of the capitalist European Union. It is now widely acknowledged that the austerity imposed upon the US public sector since the crash of 2007-2009 bears a responsibility for the lack of funding for the agencies, like the Center for Disease Control (CDC), that needed to address the threat from the coronavirus.

In addition, the CDC displayed an unforgivable hubris, ignoring the international efforts to contain the virus and the lessons learned. In accounts from as diverse sources as National Public Radio and The Wall Street Journal, we learn that the CDC chose to develop its own testing kits for the virus, ignoring the existing technologies of the World Health Organization and the PRC.

When their own kits went into production, they proved faulty, setting the program back. Rather than turning to existing internationally used designs, the CDC sought to make its own corrections, further delaying production. The CDC vastly underestimated the virus’s deadliness and its contagion. The spread of the virus is rapidly outstripping the availability of testing kits, attesting to the conceit of Make America Great Again.

Despite the lack of testing kits in the US, many have noticed that celebrities, sports figures, politicians and others of our “betters” have cut the line and acquired tests before the most needy-- the ugliest side of the inequality of class society. 

Also, reliable accounts have surfaced that some US elected officials have used their privileged information to enable them to liquidate their equity portfolios before the great March stock market collapse.

Workers employed in low-wage, service-sector jobs are the most vulnerable to intensive and persisting human contact and potential infection and are the least able to sustain the economic consequences of the pandemic.

It is not true that we are all in this together. Some are in it for themselves.

For any thinking observer, the coronavirus pandemic is fast becoming an argument for socialism. Even a bitter enemy of public ownership, planning, and economic equality like The Wall Street Journal caustically acknowledges that the PRC’s remarkable defeat of the coronavirus epidemic was achieved with the quickly mobilized, effective state-owned-enterprises (SOEs). In a tellingly titled article (China Steps Back From Market Economy, 3-19-2020), Lingling Wei cites the 20,000 SOE construction workers and supportive public enterprises that built two hospitals with 2,600 beds within two weeks, an achievement impossible in the capitalist West. Lingling cites an official: “It’s like in a battlefield, and state-owned enterprises are the ones who can act fast and decisively.”

The coordination of SOEs was formidable, with petrochemical enterprises working to produce materials for masks and pharmaceuticals. State-owned housing ordered reduced rents by “tens of millions of dollars.” Despite the reduced production necessitated by social isolation, the central government pressed SOEs to maintain employment, even “hire more, especially college graduates.”

The WSJ concedes that “Many private manufacturers are struggling to restore production, yet more than 95% of some 20,000 industrial companies controlled by the central government are churning out masks, medicines, steel, heavy machinery and other products-- keeping workers on the job.”

Western commentators bemoan the success of the SOEs, interpreting it as a setback for the hope of privatization (so-called “market reforms”) in PRC. One former WSJ writer complained: “If and when the outbreak fades, the conclusion is inevitably going to be that the overwhelming exercise of state power saved China.”

In exemplary acts of solidarity fully consistent with its long history of internationalism, tiny socialist Cuba, suffering a criminal US blockade and brutal sanctions, is offering doctors and drugs to several stricken countries.

When the US refused to allow the British cruise ship, MS Braemer, to dock, Cuba met its humanitarian duty and allowed its passengers to disembark and travel home by air. 

The contrast with Western, capitalist efforts is striking. The PRC (and DRVietnam) have largely arrested the virus. As of March 21, the total cases per million of population is lower in the PRC than in the US and the UK, countries only at the beginning of their infection cycle. Italy had 6,557 new cases compared to only 41 in the PRC (4,759 in the US). 

Chinese health workers celebrate by removing their masks for the first time in months as the last of the temporary Covid-19 treatment centres closes in Wuhan, China.

In the US, there are far too few test kits, masks, and ventilators. New York City hospitals are overwhelmed. State administrations and the Federal government are in dispute over responsibilities while disaster looms. 

And tragically, the political and economic elites are more determined to rescue markets and corporations than humans. Trillions have been earmarked to bail capitalism. 

The idiocies, irrationalities, and unnecessary injuries of twenty-first-century capitalism are coming into full, tragic view. 

Greg Godels

Saturday, March 14, 2020

A Reckoning?

To understand the global economic chaos endured over the last few weeks, it is essential to separate the proximate from the ultimate cause. 

The immediate or proximate cause is the often fatal, expanding contagion of the coronavirus (Covid-19). The collapse of worldwide equity markets has been an immediate and widely noted effect of this proximate cause. The virus’s carnage in PRChina triggered a rapid and effective response, but one that dampened economic activity in a country already dealing with a slowing economy battered by economic sanctions and tariffs. Institutional investors, hedge fund managers, and their ilk took note of the carnage and contagion and, anticipating its effects on global activity, withdrew their assets from equities and moved them to safer havens, like US Treasury bonds. The panic initially shook the bond markets, lowering yields dramatically.

The rapid spread of the virus brought even greater economic disruption in its wake.

However, the ultimate cause of the current worldwide economic turbulence is the fragility and vulnerability of the global capitalist system. That statement is neither trivial nor self-evident. Since the severe crisis of 2007-2009, capitalism has been limping along, thanks to extraordinary central bank measures, tax cuts, military spending, and expansive credit-driven consumer demand. The casualties of the previous crisis survive on low-paying, casual service jobs while the rich engorge themselves on stocks inflated by mergers and acquisitions and stock buybacks. Every tentative growth spurt falters, returning the capitalist economy into stagnation. The increasing irrelevance of centrist political parties is one manifestation of the mass dissatisfaction with the growing inequality and impoverishment suffered by many. The question was not whether this course is sustainable, but when it would fail.

The ominous threat of the Coronavirus to international economic activity-- work, leisure, travel, all forms of social life-- has triggered a market meltdown based on a fear that the capitalist system may spiral out of control. Investors know that the system’s weaknesses, the lack of adequate preparations, the political stasis, and ineffective governing foretell a frightening outcome. 

Unlike the rapid and thorough Chinese response which has largely arrested the virus’s spread, complacency in the Western capitalist countries is shocking. Today, seven times more people per millions of population  have been infected by the virus in Italy than in PRChina, where the illness first broke. New cases in Italy are 3,497 against only 11 in PRC on March 14. Chinese deaths fell to 13 on March 14, while 175 Italians, 97 Iranians, and 60 Spaniards died from the virus. All the Western media hand wringing about Chinese “authoritarianism” will not deflect the incredible failures of public health preparedness in the Western capitalist countries.

The lack of a universal, equitable, and comprehensive healthcare system (like Medicare for All!) and a robust public health sector put the US especially at risk. Couple the unevenness and unfairness of healthcare with the historical obsession with personal autonomy, and disaster is on the horizon.

An exogenous trigger of economic turmoil is not unprecedented in recent times. The attack by al Qaeda on US civilians on September 11, 2001 produced a 7+% drop in the stock market, deepened the dotcom downturn, and fueled a stock market retreat and growing unemployment for the next year or so. As with the Coronavirus in 2020, an unexpected, non-economic factor jolted a shaky economy in 2001, then also plagued by overvalued “assets.” This instance promises to be far worse.

Much of the economic history of the twenty-first century has been a battle by policy makers against deflation, a battle to prop up artificially inflated, often virtual, assets. From the turn of the new century and the dotcom bubble until today, toxic assets have infected the productive economy. Ironically, a seemingly random “toxic” virus is now threatening the weakened global economic organism, destroying “value” by the trillions.  

Of course the danger still lies ahead. Markets are only anticipating the lost work-hours, the layoffs, the healthcare costs, the business closures, the slowed production, the inverse “wealth” effect, the reluctant consumer, the slackening investment, and a host of other economic shocks that could feed a deflationary spiral. The financial sector is stunned by this as well because asset values are collapsing in a 
low-interest environment. 

Though some are calling this a financial crisis, it is not spurred by financial factors; nor is it confined to the financial sector. Nor is it a crisis of overproduction, under-consumption, or profitability, though it is quickly morphing into all of the above and, inevitably, where all economic crises arrive, a crisis of accumulation. The global economy was rocking on a precipice; the Coronavirus pushed it over.

The virus couldn’t have come at a worse time. The war between the economic globalists and nationalists, waged with tariffs and sanctions, was taking a heavy toll on many countries and remains unsettled. Despite equity market euphoria (disconnected from all reality), commodity markets were slack or declining. International trade had slipped below historic growth levels.

Saddled with the unspoken duty to stabilize the US economy for an incumbent in a Presidential election cycle, the Federal Reserve shot its monetary wad prematurely, lowering interest rates in anticipation of limited economic slippage from the “Chinese problem.” They are now left with only radical measures to meet the crisis (a program injecting a trillion and a half in liquidity into the banking sector and expanding deflation-fighting asset purchases was announced on March 12).

The Russians exacerbated the crisis by shunning the Saudi plan to bolster oil markets. On Friday, March 6, they refused to join the Saudis in curtailing oil production to stabilize prices. Irresponsibly, the Saudi leadership-- under severe political pressure from budgetary shortfalls and a disappointing IPO-- announced a price war (and arrested oppositional members of the Royal family).

As oil prices collapsed, the Russian ruble collapsed as well, forcing the Russian central bank to halt foreign purchases temporarily.

According to Russian insiders, the withdrawal from price maintenance was aimed at US frackers who cannot produce profitably when prices are low. Alexander Dynkin is quoted as saying: "The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2." [my emphasis] The Russians surely knew that the US fracking industry was already on the verge of collapse because of massive, unmanageable debt (over $120 billion maturing over the next 2 years!). Thus, Russia risked a profound oil-price deflation in revenge for US subversion of its European gas pipeline project-- a capitalist tit-or-tat. 

I have written about energy imperialism frequently over the last two years (especially, the US’s extortionate use of war-mongering, sanctions, and threats in order to garner market share) . Given the ugly effects of a price-war race to the bottom on vulnerable oil production-dependent countries like Venezuela, those who see Russia as something more than another capitalist country pressing its own interests may find a reason to reconsider.

A nasty virus, incompetent and delayed responses, ill-conceived economic policies, an irresponsible price war, all contribute to a fear-driven market collapse as the opening act of a possible drama featuring an unprecedented deflationary spiral. 

Does anyone believe that the leaders of the capitalist world can manage this challenge?

Greg Godels