from We Need a Revolution..... A Labor Rights Revolution:

While it's good that the Congress has taken upon itself to extend unemployment benefits, this does little to no good when American employment law is tilted in favor of the employer.

It's time that the Congress work to pass a new employment law that recognizes that a contract is inherent in each employment relationship, and enforce the social obligations employers undertake when they choose to hire people to do work they benefit from.

Why is it that Congress is willing to spend trillions of dollars to remove risk from lives of people who are being paid to taken on uncertainty, yet have done nothing to provide certainty to the millions of Americans who work for wages? read full post

Labels: bailout, congress, layoffs, stimulus program

Labels: bail out, bush, capitalist crisis, fred goldstein, globalization, low wage capitalism, obama, stimulus program, wall street

Today's Wall Street Journal reports that President Obama has placed limits on the salaries of executives at firms that are receiving large-scale bailout funds from the Federal government:

Under the new rules, companies that receive "exceptional assistance" from taxpayers may not pay any top executive more than $500,000 a year. Any additional compensation would have to be in restricted stock that will not vest until taxpayers have been repaid. (Wall Street Journal)

No one can object to limiting the salaries of bankers; but this announcement raises many questions.

First, while penalizing some bankers, who gets the money that they would have gotten? Shouldn't this money be turned over to a fund to help the millions facing foreclosure and unemployment.

Second, if the government can use Executive power to impose its will on private businesses, why stop there? Why not order them to stop foreclosures and plant closings? RealtyTrac currently lists 1.5 million foreclosed homes being held by banks in the U.S.

Third, why not demand that banks free up bailout money and other funds, to make them available in low-interest loans to workers, students, and families in desperate need of a real bailout. The whole justification of the TARP was to free up money to 'get the economy going again,' but banks are not lending money. They've even refused to disclose what they've done with the money that they've received. In front of Congress, the new Secretary of the Treasury Timothy Geitner has defended the banks' refusal to tell what they've done with $350 billion of taxpayers' money.

One thing that is known about what they did with some of the money, is that they made loans of $25.4 billion to finance the merger between pharmaceutical giant Pfizer and Wyeth.

According to the New York Times:

Pfizer’s bid is being financed by four banks that received federal bailout money: Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America, the people involved in the deal said. Such banks have been criticized for not doing more lending since they received the government aid.

Barclays, which acquired Lehman Brothers out of bankruptcy in the fall, is also providing financing, these people said.

Fourth, while in Miami, more than 1,000 people lined up for 35 firefighting jobs, and the Los Angeles Times reports that U.S. companies announced 241,749 layoffs last month, it has come to light that U.S. financial institutions are sitting on $3.9 trillion, which is more than four times the amount of the projected stimulus package. This money is sitting in money market accounts, earning interest for wealthy investors. The Federal government should use the same authority that it used to limit executive pay to force these investors and institutions to make this money available to put people back to work and back in their homes.

Labels: bailout, Bank of America, Citigroup, executive pay, foreclosures, Goldman Sachs, JPMorgan Chase, Lehman Brothers, loans, merger, pfizer, stimulus program, tarp, wall street, wyeth

According to the Boston Globe, the "stimulus" package currently being debated in the Senate will create, at most, 3 or 4 million jobs.

As part of its hard sell, the White House this afternoon released job-creation estimates for Eastern states from the economic recovery package.

It said that of the 3 million to 4 million jobs the plan would save or create, 800,000 of them would be in 10 Eastern states.

The estimates include 83,000 jobs in Massachusetts, 44,000 in Connecticut, 17,000 in New Hampshire, 16,000 in Maine, 13,000 in Rhode Island, and 8,000 in Vermont.

Three or four million jobs will not even put a dent in the growing unemployment crisis.

The official unemployment rate, which was 7.2 percent at the end of 2008, is expected to shoot up rapidly in the coming months. However, there is a less publicized but also official figure called “total” unemployment—and it has already reached 13.4 percent. This number includes people who couldn’t get anything but part-time work when they need to work full time, plus the millions who have stopped looking altogether, termed “discouraged” workers. This means, out of a total workforce of 154 million, that 20 million workers are unemployed.

At the present rate, millions more will lose their jobs in the coming months. Last year 2.6 million lost their jobs—a huge number but still deceptively low when trying to project what will happen this year because, of the 2.6 million, 2 million lost their jobs just in the last four months of 2008.

The 20 million workers already considered unemployed or underemployed—and this figure is sure to rise in the new year—will have to wait for the stimulus package to go into effect. Meanwhile, 1.5 million people enter the work force each year. This means that the "stimulus" program won't put any dent in the 20+ million people who will be out of a job.

Working people and their organizations need to organize to demand a real jobs program - one that puts people directly to work, instead of just throwing money at big corporations and government bureaucracies.

Labels: senate, stimulus program, total unemployment, unemployment

The intensifying capitalist crisis, which is bringing greater and greater suffering daily, is leaving the workers and the oppressed with no alternative but to organize a fightback. The deadly waves of unemployment, foreclosures, homelessness, hunger and repression are spreading while the ruling-class politicians and experts debate over the terms of the so-called “stimulus package.”

With 533,000 jobs lost in December, official unemployment went up to a 16-year high of 7.2 percent. The annual job loss for 2008 was over 2.59 million, the highest since World War II. The rapid rate of layoffs has brought the official number of unemployed to 11.1 million workers.

Unemployment of Black men over the age of 20, which was already officially double-digit, jumped from 12.1 percent to 13.4 percent in December. For African-American youth from 16 to 19, the figures were a staggering 32.2 percent rising to 33.7 percent in the same month. White youth unemployment also rose to 18.7 percent.

The rarely published figure of “total unemployment” grew from 12.6 percent to 13.5 percent. Total unemployment includes those workers forced to take part-time work who need full-time jobs as well as workers who are known to have become so discouraged that they have stopped looking for work.

The average number of hours worked was down to 33.3 in December, the lowest since these records were first kept in 1964.

The most important aspect of the December figures is that December is usually a month of increased hiring, even during slow times, as retailers gear up for holiday sales, manufacturers put on additional workers to fill rush orders for inventory, and the restaurant and entertainment industries have higher sales.

Instead, December saw the biggest decline in retail sales since record keeping began in 1970, despite price-slashing sales of 50 to 70 percent off and buy-one-get-one-free offers. The International Council of Shopping Centers estimated that 148,000 retail stores shut down in 2008. It projected that another 73,100 retail stores will shut down in the first six months of 2009. The closures would result in the loss of 625,000 to 800,000 retail jobs. (Washington Post, Jan. 9)

‘Stimulus program’ smaller than a band-aid

Considering the catastrophic wave of unemployment, with at least 20 million jobless or severely underemployed right now, and the prospects for a massive increase in the coming period, all the speculation about whether the “stimulus package” will add 3 million or 3.5 million jobs over the next two years seems utterly inadequate.

The government figure of 11.1 million unemployed, or 7.2 percent, is based upon a workforce of 154 million. The more realistic “total unemployment” figure cited above of 13.4 percent equals 20.6 million, according to the government.

Furthermore, the stimulus package now being projected amounts to $775 billion. Of this, 40 percent is in tax cuts, which are not necessarily going to create jobs. And, worst of all, 90 percent of the spending is to go to private capitalists. So it is largely a handout to the capitalists in the hope that they will create enough jobs.

With all the talk about studying the New Deal, this program takes an opposite approach to that of the Roosevelt administration. While the New Deal was purely a band-aid, filled with limitations and flaws and calculated to save capitalism by preventing a mass uprising of the workers, the Works Progress Administration (WPA) nevertheless provided direct jobs to 8 million workers during the decade, or one-fifth of the workforce. At any given time, anywhere from 2 million to 3 million workers were employed by the government in these programs—the equivalent of 9 million to 10 million today.

The present plans for government spending set up a situation in which some 20 million unemployed workers will have to compete for 1 million to 1.5 million jobs in the coming year—assuming that the job creation projections are anywhere near correct. Such a situation in which workers are desperately seeking scarce jobs will tend to lower wages, set worker against worker and help the bosses.

The workers should of course take advantage of any opportunity to get new jobs created to help feed themselves and their families. But they must not sit back and let the economic “experts” in Washington and Wall Street dictate the terms of the economic package. They must get organized to impose their own economic demands on the capitalist government.

They could start by demanding that every nickel of the more than $1 trillion already given to the banks be taken back and made available for jobs and services to the workers and the communities. The banks are so arrogant that they won’t even tell the government what they are doing with this money.

From bailout to fightback

The struggle is in its early stages and the workers are on the defensive. It is natural that at this stage popular organizations want to take advantage of the term “bailout” to expose the handouts to the banks and the bosses. But, as the struggle progresses, the concept of the capitalist government bailing out the people has to be shifted to the concept of the workers fighting back.

The funds to stem the crisis have to be put under the supervision of the workers, the unions, community organizations and other mass organizations—and not the bosses. It is the masses who are suffering from the crisis. They should be empowered to deal with it.

Only the masses will enforce a living wage, job guarantees, union rights, anti-racist practices and rights for women workers. The capitalists are skilled and experienced at manipulating government subsidies that are supposed to go for creating jobs. Instead they turn things around to maximize their profits. Relying on profiteering capitalists—and there is no other kind!—to save the working class is the worst possible course to pursue.

There must be a movement toward creating organs of popular power at the local, regional and national level to stop the layoffs and defend the workers’ right to a job; to demand a guarantee of jobs or income; an end to foreclosures and evictions; to organize the unemployed and the employed into a united movement demanding jobs for all.

As the crisis unfolds, the question must be raised, what is the cause of the crisis? Paul Krugman, a liberal economist, cites the fact that the U.S. economy could create $30 trillion worth of goods and services in the next two years. That would be sufficient to vastly reduce unemployment.

Krugman, who recently won a Nobel Prize for economics, restricted his commentary to a criticism of Barack Obama’s economic program. He brushed by the fundamental question. He did not bother to ask why, when there is the economic capacity to employ all the workers, is unemployment going through the roof?

The answer is that while the U.S. economy can produce $30 trillion worth of goods and services, it is in the form of commodities that must be sold for profit and only for profit. Human need means nothing to capitalism.

It is not as if the masses of people do not need the $30 trillion worth of goods and services. In fact, right now they are being deprived of the very means of life by an economic storm artificially created by capitalism itself.

The masses have been impoverished for more than 30 years by union busting, wage and benefit cuts, massive destruction of jobs at living wages and their replacement by low-wage jobs. At the same time the corporations have vied with each other to capture markets and sell more and more—purely to make more profit. They fostered every kind of debt—credit card debt, mortgage debt, auto loan debt and so on—to keep the profits rolling in.

Finally the entire edifice has come crashing down in a crisis of capitalist overproduction. There are too many autos to sell at a profit. There are too many houses to sell at a profit. There is too much steel to sell at a profit. And so on. It has led to the wave of layoffs, foreclosures, evictions, hunger and homelessness.

As a system of exploitation for profit, capitalism itself is at the bottom of the crisis. As the workers and the oppressed awake to demand their rights, the ultimate aim must be the destruction of capitalism and the erection of a system run for human need, not for profit. That system is socialism.

Goldstein is the author of the recently published book “Low-Wage Capitalism: Colossus with Feet of Clay.” See lowwagecapitalism.com for information about the book and how to order it.

Labels: fred goldstein, jobs, layoffs, stimulus program, unemployment, wall street

Following is an excerpt from the introduction to the forthcoming book “Low-Wage Capitalism” by Fred Goldstein to be published by World View Forum.

The Crisis within the Crisis

As the crisis mounts there will be finger pointing by politicians and pundits alike, meant to assuage the anger of the masses. Official opinion is blaming the situation on greed and on a failure of regulation. To be sure, the bankers on Wall Street are voracious and greedy. And it is obvious that the destruction of regulatory restraint on finance capital opened the door wide to an escalation of gambling and speculation—to the “casino” economy.

This deregulation began with the Reagan administration, passed a milestone in the Clinton administration with the repeal of the Depression-era Glass-Steagall Act, and continued in the current Bush administration. Alan Greenspan, former head of the Federal Reserve System, presided over much of this deregulation during his reign of 19 years, from 1987 to 2006.

But to say that deregulation is the cause of capitalist excesses is to put the cart before the horse. It is the irrepressible capitalist lust for profit itself that leads to excesses. These excesses, such as the wild speculation in stocks and land deals that led up to the market crash of 1929, led to New Deal-era regulations restricting the financiers—but only after the speculative horse was out of the barn and millions had been ruined.

The gradually accumulating need of capital to engage in speculation inevitably results in the destruction of regulatory restraint. The system itself creates excess money capital and drives it more and more toward financial speculation and investment in paper wealth that has no relationship to underlying value.

The fact is that the bankers and the rich in general have vastly increased their fortunes in the last three decades. Income inequality in the U.S. has become notorious around the world. For example, in 1976 the top 1 percent of households received 8.9 percent of total income. In 2005 the top 1 percent received 21.8 percent—the highest percentage of total household income since 1928, the year before the stock market crashed. (Inequality.org)

From 2000 to 2007 the wealthiest 400 individuals in the U.S. got a $670-billion increase in their wealth and owned $1.5 trillion. While the top 1 percent of households earn more than the bottom 50 percent, they own more than 90 percent of the wealth. (Figures from Sen. Bernie Sanders’ speech against the bailout.) These are truly staggering numbers and have profound implications for the profit system.

The working class produces all wealth, all value in society. The class struggle is really a struggle over which class will get a larger or smaller share in the social surplus created by labor. If the bosses get more, the workers get less, and vice versa. This is what makes class antagonisms irreconcilable.

Saying that there is growing income inequality in the U.S. is really a masked way of saying that there has been a broad redivision of the social surplus in favor of the capitalist class and to the detriment of the working class. The bosses and bankers have taken a larger and larger relative share and the working class has received a correspondingly smaller share.

However, the rate at which the owners of capital have accumulated this wealth exceeds the rate at which it can be reinvested profitably in productive capital. The scientific-technological revolution has made business more and more productive. The workers turn out more goods and services in less time with each new advance in technology.

Furthermore, the anarchy of production—that is, the unplanned and competitive nature of capitalist production—sends each capitalist grouping in search of greater and greater market share in pursuit of profit, to the point that they collectively produce a glut of commodities on the market and can no longer sell them at a profit. This is a fundamental feature of capitalism and cannot be eliminated.

And after the rich spend billions on yachts, jets, mansions, servants and every form of obscene luxury, they still have hundreds of billions in money capital left over. And, as Karl Marx showed, capital cannot rest, cannot remain idle. It seeks profit, and it seeks to maximize profit.

For example, the two largest industrial corporations in the U.S.—General Electric and General Motors—both have huge financial subdivisions. GE plows billions in profits into GE Capital, which invests tens of billions in loans all over the globe. GM’s financial arm is GMAC. (In 2008, to raise capital, it sold 51 percent of GMAC to Cerberus, a private equity firm.) While GM has downsized its production and forced a large part of its workforce to take buyouts, the company has expanded its lending. The same goes for Ford, Chrysler and other industrial giants. Instead of investing surplus capital in their own companies, they use it to make loans.

The collapse of the housing boom in August 2007, followed by turmoil in the capital markets, was only the latest in a series of capitalist crises.

During the Reagan administration, a severe recession in 1982 and 1983 sent unemployment above 11 percent. The capitalist class used the opportunity to begin the technological restructuring of industry, leading to millions of workers losing high-paying jobs. Reagan then stimulated the economy with $2 trillion in military spending, using Cold War propaganda to justify this huge handout to the military-industrial complex.

The economy expanded and the stock market boomed again—until it collapsed in October 1987 with record losses. Several trillion dollars of paper wealth were wiped out. An economic collapse was prevented only when Alan Greenspan, who was appointed head of the Federal Reserve in August 1987, poured tens of billions of dollars into the financial system to support the banks and the stock market on an emergency basis. This emergency rescue of the economy lasted only until 1991, when there was another recession.

However, the collapse of the USSR, also in 1991, stimulated a decade of capitalist expansion. Capital flooded into the former Soviet Union, Eastern Europe, India and other places. The upturn in economic output accelerated in the mid-1990s with the development of the Internet and related technologies. From 1995 to 2000, venture capitalists, who are really fronts for the big banks, poured billions of dollars in speculative capital into technology companies. New companies were being created on a daily basis. The stock market boomed, creating the so-called “dot-com” bubble—until the overproduction of technology led to another collapse, beginning in March 2000. From that time until October 2002, $5 trillion in paper wealth was wiped out and an economic downturn developed simultaneously.

In the 110 years since the Spanish-American war of conquest, imperialist capitalism has brought an endless cycle of wars, recessions, depressions and more wars. After each economic downturn, the system has had to resort to military expansion and financial manipulation to revive itself.

During the depression of the 1930s, Franklin D. Roosevelt tried to get the economy going with the Works Project Administration and by allowing workers’ wages to rise. But by 1937-1938, after a brief uptick, there was a second depression. Only preparations for World War II and conquest in the Pacific and Europe revived the U.S. economy.

Throughout the entire Cold War period, U.S. capitalism was dependent on military spending to keep its economy going. The growth of the military-industrial complex, with its web of prime contractors and tens of thousands of subcontractors thriving on Pentagon appropriations for war and for arms exports, was the principal means of keeping the capitalist economy from sinking into stagnation and depression.

This history illustrates that since the turn of the twentieth century, capitalism, in order to sustain itself, has had to resort to artificial measures that bring disaster in their wake, in the form of war, depression or both.

Oct. 3, 2008

Labels: bailout, capitalism, fred goldstein, racismo, stimulus program, wall street, war

Sept. 30—The political and financial establishment of U.S. capitalism has been stunned by the failure of its initial attempt to get Congress to pass a $700-billion handout to the banks.

Against a background of bank failures in the U.S. and Europe and appeals from the White House and the Treasury secretary, the House of Representatives on Sept. 29 defeated the bailout bill, 228 to 205. Following the vote, all three U.S. stock markets had historic drops, global stock markets initially plunged, and credit markets tightened up as fear struck Wall Street.

The vote was a defeat for a triple alliance: the bankers, represented by Secretary of the Treasury Henry Paulson and Federal Reserve Chair Ben Bernanke; the Bush administration; and the Democratic Party leadership. They all had labored mightily to sell the bailout.

It is highly likely that another round of political pressure from above will lead to the banks getting their way in the long run. Already the new line coming from the corporate media is to threaten workers that there will be no paychecks unless some version of the bill is passed. But with e-mails and phone calls to politicians running against the bill by 100 and 200 to 1 before the vote, the political pressure from below has for the moment overcome Paulson, Bernanke and company.

Bailout of capitalism

In truth, the bailout of the banks is really a bailout of capitalism. The banks are the heart and soul of capitalism. They have engaged in an orgy of speculation for a decade. They inflated values in the stock market and flooded the world markets with worthless mortgage-backed securities. They created a mountain of fictitious capital that far outstripped the underlying real value, all of which must be created by workers working. Now that false value is beginning to collapse.

This is not capitalism “gone wrong.”

It is the fullest expression of what capitalism really is. Panics and crashes have happened throughout the history of capitalism, but now, in the age of globalization and high technology, they have reached new heights.

This system is based on profit. Profit is the be-all and end-all of capitalism. The engine of the entire system is production for profit. Getting the most profits is the aim of every capitalist, from the sweatshop owner to the largest transnational corporation.

Speculation and gambling for instant profits grows naturally out of the system. It is not an aberration or an abnormality.

The bankers who swindled the workers with subprime, deceptive, lying mortgages and then sold these mortgages off to other capitalists, gaining fees and high profits along the way, were doing what the ruling class does all the time, at every opportunity.

The starting point of capitalist exploitation and profit is money. Without money, no capitalist can hire workers or buy raw materials or inventory to set the process of exploitation and profit making into motion.

The bankers are in control of all the money in society. They sit on the boards of the corporations. They advise them and finance their loans. They sell corporate stocks and bonds on the market. The owners of productive capital and the parasitic financiers are completely intertwined with one another.

Human need is not part of their calculation. The fact that people need housing, food, jobs, education and health care means nothing to them if they cannot profit from it.

The bankers who are throwing people out of their homes are interlinked with the corporations that are laying workers off. They are tied to the utilities that are shutting people’s heat off in the winter, to the supermarket chains and agribusiness corporations that are raising food prices, and to the oil companies behind the invasion of Iraq and the high cost of gasoline.

Behind the problem of bankers’ bailouts, foreclosures and layoffs is the capitalist profit system itself.

Labels: bernanke, bush, capitalism, democrats, Federal Reserve System, foreclosures, Goldman Sachs, jobs, layoffs, Paulson, socialism, stimulus program