RALPH NADER
Nader.org
A society not alert to signs of its own decay, because its ideology is a continuing myth of progress, separates itself from reality and envelops illusion. One yardstick by which to measure the decay in our country’s political, economic, and cultural life, is the answer to this question: Do the forces of power, which have demonstrably failed, become stronger after their widely perceived damage is common knowledge?
Economic decay is all around. Poverty, unemployment, foreclosures, job export, consumer debt, pension attrition, and crumbling infrastructure are well documented. The self-destruction of the Wall Street financial giants, with their looting and draining of trillions of other people’s money, have been headlines for two years. During and after their gigantic taxpayer bailouts from Washington, DC, the banks, et al, are still the most powerful force in determining the nature of proposed corrective legislation.
“The banks own this place,” says Senator Richard Durbin (D-IL), evoking the opinion of many members of a supine Congress ready to pass weak consumer and investor protection legislation while leaving dominant fewer and larger banks.
Who hasn’t felt the ripoffs and one-sided fine print of the credit card industry? A reform bill finally has passed after years of delay, again weak and incomplete. Shameless over their gouges, the companies have their attorneys already at work to design around the law’s modest strictures.
The drug and health insurance industry, swarming with thousands of lobbyists, got pretty much what they wanted in the new health law. Insurers got millions of new customers subsidized by hundreds of billions of taxpayer dollars with very little regulation. The drug companies got their dream—no reimportation of cheaper identical drugs, no authority for Uncle Sam to bargain for discount prices, and a very profitable extension of monopoly patent protection for biologic drugs against cheaper, generic drug competition.
For all their gouges, for all their exclusions, their denial of claims and restrictions of benefits, for all their horrendous price increases, the two industries have come out stronger than ever politically and economically. Small wonder their stocks are rising even in a recession.
The junk food processing industry—on the defensive lately due to some excellent documentaries and exposes—are still the most influential of powers on Capitol Hill when it becomes to delaying for years a decent food safety bill, using tax dollars to pump fat, sugar and salt into the stomachs of our children, and fighting adequate inspections. Over seven thousand lives are lost due to contaminated food yearly in the US and many millions of illnesses.
The oil, gas, coal and nuclear power companies are fleecing consumers and taxpayers, depleting and imperiling the environment, yet they continue to block rational energy legislation in Congress to replace carbon and uranium with energy efficiency technology and renewables.
Still, even now after years of cost over-runs and lack of permanent storage for radioactive wastes, the nuclear industry has President Obama, and George W. Bush before him, pushing for many tens of billions of dollars in taxpayer loan guarantees for new nukes. Wall Street won’t finance such a risky technology without you, the taxpayers, guaranteeing against any accident or default.
Both Democrats and Republicans are passing on these outrageous financial and safety risks to taxpayers.
Congress, which receives the brunt of this corporate lobbying—the carrot of money and the stick of financing incumbent challengers—is more of an obstacle to change than ever. In the past after major failures of industry and commerce, there was a higher likelihood of Congressional action. Recall, the Wall Street and banking collapse in the early 1930s. Congress and Franklin Delano Roosevelt produced legislation that saved the banks, peoples’ savings and regulated the stock markets.
From the time of my book, Unsafe at Any Speed’s publication in late November 1965, it took just nine months to federally regulate the powerful auto industry for safety and fuel efficiency.
Contrast the two-year delay after the Bear Stearns collapse and still no reform legislation, and what is pending is weak.
Yet the entrenched members of Congress, responsible for this astonishing gridlock, are almost impossible to dislodge even though polls have Congress at its lowest repute ever. It is a place where the majority is terrified of the corporations and the minority can block even the most anemic legislative efforts with archaic rules, especially in the Senate.
C
ulturally, the canaries in the coal mine are the children. Childhood has been commercialized by the giant marketers reaching them hour by hour with junk food, violent programming, video games and bad medicine. The result—record obesity, child diabetes and other ailments.
While the companies undermine parental authority, they laugh all the way to the bank, using our public airwaves, among other media, for their lucre. They can be called electronic child molesters.
We published a book in 1996 called Children First!: A Parent’s Guide to Fighting Corporate Predators in the Media. This book is an understatement of the problem compared to the worsening of child manipulation today.
In a 24/7 entertained society frenetic with sound bites, Blackberries, iPods, text messages and emails, there is a deep need for reflection and introspection. We have to discuss face to face in living rooms, school auditoriums, village squares and town meetings what is happening to us and our diminishing democratic processes by the pressures and controls of the insatiable corporate state.
And what needs to be done from the home to the public arenas and marketplaces with old and new superior models, new accountabilities and new thinking.
For our history has shown that whenever the people get more engaged and more serious, they live better on all fronts.
Courtesy: Countercurrents
Showing posts with label Economic crisis. Show all posts
Showing posts with label Economic crisis. Show all posts
31 March, 2010
03 April, 2009
Castro commends US-China strategic and economic dialogue
Following is a piece written by former Cuban President Fidel Castro in his column “Reflections by Comrade Fidel” on the G-20 summit in London. It is reproduced from the official Cuban website.
Today the G-20 Summit began. The experts in economic matters have made an enormous effort -- some, with experience in important international positions; others, as learned researchers. The subject is a complex one, the language is new and demands that we be familiar with the terms, the economic facts, the international agencies and the political leaders who have the greatest weight on the international scene. Therefore, our desire to simplify and to explain intelligibly what is happening in London, just as I see it.
Nobody was surprised that Obama was the star of the London summit. He represents the most powerful and wealthiest country in the world. He is favored by special circumstances. Bush, lying, cynical, war-mongering and nasty, is not there. Neither is McCain, mediocre and ignorant, thanks precisely to Obama’s amazing victory, a black man in the country of racial discrimination, where a majority of white voters cast their ballots for McCain, but not in enough numbers to compensate for the votes of more than 90% of black and mixed race Americans, citizens of Latino origin, the poor and those affected by the crisis. He has just been elected when other G-20 leaders are at the point of concluding their mandates and Obama will be the probable president of the United States for the next eight years. It isn’t strange that news from London revolve around him.
What the world deems important is what comes out of it there, that is, if anything comes out at all. Each one of the participants has their own national and even personal objectives, as political leaders who shall be judged by history.
Obama’s objective is, in the first place, to change the image of his country, the principal responsible party for the tragedy from which the world is suffering and the party being rightly blamed for the current devastating economic crisis, in which he has absolutely no political responsibility. As Joseph Stiglitz, the former economic head of the International Monetary Fund and now MIT professor, points out: “He ought to come to say that he is guilty of nothing and that he is trying to solve it as quickly as he can.”
His main European ally, British Prime Minister Gordon Brown, is the Summit host, wildly hoping to alter the current anti-Labor Party tendency unleashed by the nonsense of his predecessor Tony Blair. Buckingham Palace honored Obama and his wife Michelle with a reception. The president gave the elderly Queen a modern digital recorder, product of sophisticated American technology, an Ipod with songs and images of the Queen’s state visit to the U.S. in 2007 and a book with musical scores signed by Richard Rogers. No words were to be exchanged with Her Highness about the mundane G-20 meeting.
Brown, on the other hand, is pulling out all stops with the crisis. He hopes to change the regulation of the banking system, promote economic growth, increase cooperation and put an end to protectionism. He recognizes that the negotiations will be difficult.
His motto: “It is better to look ahead than to look back”. Clearly if the voters were to look back, he would win very few votes.
The desire of both allies in the heart of the G-20 is to minimize the differences between France and Germany.
Sarkozy doesn’t hide his displeasure with United States policy. He is explosive. He recently threatened to walk out of the summit. Yesterday, on Europe 1 Radio, he declared that for now there is no satisfactory agreement about the Summit, but he did soften his threats to leave the table if there is no move towards greater regulation: “I will not be associated with a Summit that doesn’t end with greater regulations.” He assures that the negotiators have not reached any agreement.
The draft of the Summit’s communiqué, already making the rounds among journalists, speaks of measures to reestablish global growth, keep markets open and encourage global trade. “We must get results, there is no choice,” Sarkozy insisted yesterday.
A few days ago Obama announced that the United States proposes to introduce changes in its system of regulation and supervision, in the hope that this declaration would fulfill a part of the European demands, snatching away one of those flags.
Sarkozy rejoined that his endeavor to put an end to tax havens is serious.
Very close to Sarkozy’s positions, Angela Merkel, the German Chancellor, demands that the agreement not include either the requirement of a tax stimulus plan for the advanced countries, or that debate be opened up about the announcement of a new international currency which is the emerging countries’ demand to the G-7.
“The world is at a crossroads,” Merkel said. “We must do everything possible so that the crisis is not repeated.”
“We have to go further than what was discussed in Washington,” and she added that everything agreed to in London must come with a guarantee that it will be applied. “There must not be one single place, or one single product or one single institution without supervision and transparency.”
Merkel revealed herself to be on the side of increasing International Monetary Fund funding and stepping up aid to developing countries which are essentially suffering from the impact of the crisis.
Increasing IMF resources already appears to be a reality. The president of Mexico said when he arrived in London that he is negotiating a line of credit with the IMF for 26 billion euros. Yesterday in London John Lipsky, the number-two man in the International Monetary Fund, informed that the IMF would provide Mexico with a line of credit for 47 billion dollars in order to guarantee the availability of cash flow in case the market situation worsens because of the crisis. The figure is larger than that requested by Mexico.
As in the IMF, the United States has the majority of shares, without its support such a credit would not be possible and so this underpins Obama’s influence at the London Summit.
The news cables were announcing that Obama would be meeting with Dimitri Medvédev and Hu Jintao, the presidents of Russia and China, to talk about the tricky problems facing both countries with the United States.
In the superpower’s bilateral encounters with the two great powers, economic problems will surely be tackled, or perhaps agreements that have been patiently discussed and approved through their diplomatic representatives will be announced.
Today, April 2nd, I read a long and detailed dispatch from the Xinhua News Agency, dated the 1st, reporting that “President Hu Jintao of China and President Barack Obama of the United States agreed today that their respective countries will work together to build a positive, cooperative and full relationship in the 21st century.”
“Furthermore, the presidents decided to establish the bilateral mechanism of Strategic and Economic Dialogues.”
“The new commitment, assumed by both heads of state during their meeting in London, will outline the direction and provide a major boost to sustained, solid and stable development of relations between the two nations.”
“The relationship between China and the United States continues to be one of the most important bilateral relationships in the world in the 21st century, one in which humankind faces enormous opportunities and challenges. In the new era, the two nations have important responsibilities in regards to world peace, stability and development and they also share wide interests.”
“The two parties ought to maintain the rhythm of the times and always conduct the bilateral ties from a strategic, long-range perspective.”
“They must respect and take into consideration the fundamental interests of the other party and take advantage of opportunities, just as they must work together to face up to the challenges of the century.”
“Establishing the China-USA Strategic and Economic Dialogues Mechanism is an important step to promote the bilateral relationship to an even greater extent. Thus, the earlier strategic dialogue between the two countries has been raised to a new level.”
“At a time when the international financial crisis continues to spread, the two nations must support one another and work together to weather the storm, and this will favor the primary mutual interests of China and the United States”.
“China and the United States should not only improve the exchanges and cooperation in areas such as the economy, the fight against terrorism, proliferation, transnational crime, climate change, energy and the environment, but they must also strengthen communication and coordination in regional and world issues.”
Such an agreement cannot be discussed in a 60-minute meeting. It was already drawn up in all its details.
China, whose allies today on the Asian continent invaded and plundered it a mere seven decades ago, is now moving forward to a top position in the world economy.
It is the United States’ prime creditor and calmly discusses with the president of that powerful country the rules that will govern relations between two nations in a world fraught with risks.
Perhaps the Xinhua dispatch transmits one of the most important news related to the G-20 Summit.
Today it began and concluded as I was writing these lines! Amazing!
31 March, 2009
No need for "new capitalism", says Amartya Sen
The present economic crises do not call for a "new capitalism," but they do demand a new understanding of older ideas, such as those of Adam Smith and Arthur Pigou - many of which have been sadly neglected, argues Amartya Sen in an article published in the New York Review of Books.
Sen's article is available at Countercurrents.org
Sen's article is available at Countercurrents.org
Squatter villages arise from the ashes of the booms and busts on US west coast
Everywhere, from Fresno, California, to the struggling casino district of Reno, Nevada, and the upscale suburbs of Washington state, tent cities and shantytowns with names like Taco Flat have sprung up to house the poor and dispossessed, says Scott Bransford in a New America Media news feature, which first appeared in High Country News.
In a note, NAM Editor says: These roving, ramshackle neighborhoods were part of the American cityscape long before the stock market nosedived, and they are unlikely to disappear when prosperity returns.
FRESNO, Calif. -- Marie and Francisco Caro needed a home after they married, but like many people in California's Central Valley, they didn't have enough money to sign a lease or take out a mortgage.
They were tired of sleeping on separate beds in crowded homeless shelters, so they found a slice of land alongside the Union Pacific Railroad tracks in downtown Fresno. The soil was sandy and dry, prone to rising up into clouds when the autumn winds came. All around, farm equipment factories and warehouses loomed out of the dust, their walls coarse and sun-bleached like desert mountainsides.
Even a strong person could wither in a place like this, but if they wanted to build a home, nobody was likely to stop them. So Marie and Francisco gathered scrap wood and took their chances…
Over to NAM for the rest of the story
In a note, NAM Editor says: These roving, ramshackle neighborhoods were part of the American cityscape long before the stock market nosedived, and they are unlikely to disappear when prosperity returns.
FRESNO, Calif. -- Marie and Francisco Caro needed a home after they married, but like many people in California's Central Valley, they didn't have enough money to sign a lease or take out a mortgage.
They were tired of sleeping on separate beds in crowded homeless shelters, so they found a slice of land alongside the Union Pacific Railroad tracks in downtown Fresno. The soil was sandy and dry, prone to rising up into clouds when the autumn winds came. All around, farm equipment factories and warehouses loomed out of the dust, their walls coarse and sun-bleached like desert mountainsides.
Even a strong person could wither in a place like this, but if they wanted to build a home, nobody was likely to stop them. So Marie and Francisco gathered scrap wood and took their chances…
Over to NAM for the rest of the story
27 March, 2009
Global investors ponder implications of dollar collapse
The world bourgeoisie is beginning to consider the consequences of the huge deficit spending and money-printing operations that the Obama administration is using to fund its bailouts of Wall Street and major banks, says Alex Lantier in a World Socialist Web Site article reproduced by Countercurrents.
As these policies increasingly raise questions about the value of the US dollar, commentators are in particular pondering the desirability and implications of a diminished international role for the American currency.
Lantier’s article
As these policies increasingly raise questions about the value of the US dollar, commentators are in particular pondering the desirability and implications of a diminished international role for the American currency.
Lantier’s article
20 March, 2009
Global crisis an opportunity for change, says Muhammad Yunus
Muhammad Yunus, founder of Bangladesh’s Grameen Bank and the 2006 Nobel Peace Prize winner, says the global recession presents a historical opportunity for change.IPS Correspondent Catherine Makino caught up with Yunus, considered the guru of microfinance, while he was on a visit to Japan this week.
The report of the interview is available at the Countercurrents.org site
17 October, 2008
China’s land reform will deepen the gulf between rich and poor
by John Chan
Correspondent
World Socialist Web Site
17 October, 2008
WSWS.org
The Chinese Communist Party (CCP) launched a far-reaching new round of market reform at its Central Committee plenum on October 9-12. The meeting established the framework for peasants to freely trade their collective and state-owned land titles—a step toward large-scale industrial agriculture that will inevitably drive millions of small farmers off the land.
The meeting took place amid mounting concern over a global recession. All China’s major export markets—North America, Europe and Japan—are slowing sharply. By allowing small farmers to sell land titles, the CCP leaders hope to boost consumer spending—in the short-term at least—and maintain the country’s high rate of economic growth.
Although no concrete measures have been announced, Beijing has set the stage, through the state media and official academia, to allow peasants to sell their land-use contracts. During the decollectivisation of agriculture in the early 1980s, the CCP did not privatise the state-owned land but gave individual peasant households a guarantee to use small plots of land for 15 years. In 1993, these contracts were extended to 30 years.
According to economists and party officials, the new contracts could be extended to 70 years, allowing farmers to lease their land to corporations or use their plots as collateral for loans. In practice, millions of farmers already lease their lands, especially those working in the cities. But these transactions usually involve other small farmers, not businesses.
A plenum communiqué declared that the land reform would double rural income by 2020, and be accompanied by improvements in infrastructure, education and healthcare. The measures are also supposed to reduce official collusion with real estate developers, who have often seized lands from farmers without adequate compensation. Official corruption involving land has been a major cause of farmers’ protests and clashes with police.
Far from ending rural poverty, the real consequences for China’s 800 million peasants will be a rapid increase in landlessness and a dramatic widening of the gap between rich and poor. The aim of the new policy is to force peasants to give up their plots to agricultural enterprises and create more cheap labour. The turn to large-scale agricultural production to maintain food supplies to the rapidly swelling urban population will accelerate the decay of small-scale farming.
The state media has compared the latest measures with Deng Xiaoping’s economic measures 30 years ago. On September 30, President Hu Jintao made a highly publicised visit to Xiaogang village in Anhui province, where a group of farmers first pioneered Deng’s division of collectivised lands in 1978.
Once again, Xiaogang village is being promoted as the champion of market reform. According to the Nanfang Daily on October 10, Yan Jinchang, one of the farmers involved in the 1978 decollectivisation, signed a contract two years ago, along with a dozen other farmers, to lease his lands to a Shanghai-based agribusiness in return for an annual dividend. Some work for the company as salaried workers. Yan told the newspaper that he earns much more from wages, rent and dividends than by tilling his own plot.
Around 60 percent of the land in Xiaogang village has been leased to commercial growers of mushrooms, flowers, grapes and poultries. The per capita income of the village was 6,000 yuan ($US877) last year, compared to the national average rural income of just 4,140 yuan ($605).
The new reform has been broadly welcomed in global financial circles. Huang Yiping, a Citigroup economist, declared that small-scale, subsistence farming “hinders growth of agricultural productivity and achievement of scale efficiency”. The Wall Street Journal wrote that a typical Chinese farm is about 0.6 hectares in size—compared to 173 hectares in the US and 6 hectares in Hungary and Poland. In advanced capitalist countries such as the US, Canada or Australia, mechanised farming has long established high outputs using small workforces, freeing labour for urban industry.
Undoubtedly concentration of lands allows the application of scientific methods and large-scale production. However, like the privatisation of Chinese state firms in the 1990s, including those that gave shares to workers, the latest land reform will inevitably lead to the concentration of land rights in the hands of well-off farmers and rural entrepreneurs, and landlessness among the majority of the farmers. One Chinese analyst told the Financial Times on October 8: “This reform will allow real capitalists into the agricultural sector but we cannot use the words ‘privatisation’ or ‘capitalism’ because they will just provide ammunition to hardliners to fight this reform.”
The “hardliners” refers to sections of the CCP bureaucracy who fear the reforms will lead to escalating rural unrest. They were well aware of the explosive character of peasants’ demands for land in the three Chinese revolutions in the twentieth century.
An editorial in the Financial Times on October 12 cautiously noted that the new measures “could provide a one-off opportunity for mass expropriation” of land. “Even if that can be avoided, poor peasants could come under severe economic pressure to sell,” due to the decay of publicly-funded healthcare and education. Warning of potential social unrest, the editorial commented: “Social engineering is always dangerous, even if the direction of change is toward private ownership. Beijing should proceed prudently. It is more important that reform be fair than that it be swift.”
A new peasant rebellion would have strong support among urban workers. More than 150 million rural migrants are now working in the cities, as cheap labour without basic residential rights. Chinese cities have so far avoided the sprawling slums found in many developing countries, because small plots always provided a safety net for migrant workers if they lost their jobs. In recent years, some manufacturing zones have experienced shortages of labour due to workers’ demands for higher wages. Migrants have been able to return home rather than accepting low wages. This is unacceptable to
Beijing and the global corporations.
The Economist on September 4 wrote: “What is the single most important price in the world? Popular answers are the price of oil, American interest rates or the dollar. Yet Chinese wages are, arguably, more important. China has by far the world’s biggest labour force, of around 800 million—almost twice that of America, the European Union and Japan combined. Thus recent claims that it is running short of cheap labour would, if true, have huge consequences not just for China, but also for the rest of the world.”
The Economist argued that to boost the labour force China had to restructure agriculture. “Mechanisation and the consolidation of land plots will boost productivity, meaning that fewer farmers will be needed. That will in turn release more workers for industry. In developed countries only 3 percent of workers till the land,” the magazine stated. In other words, far from enjoying a new period of prosperity, most farmers will be stripped of their land and forced to sell their labour power for a miserable wage.
The new land policy underscores the dead-end of Maoism, a form of peasant radicalism that has nothing to do with genuine socialism. Deng launched his market reform 30 years ago by appealing to widespread discontent among farmers over Mao’s disastrous “People’s Communes”. These primitive collectivised villages had no technological resources for large-scale production and the farmers were squeezed to finance a rudimentary industrialisation. Deng pushed for individual farming and small rural entrepreneurship, in order to unleash the spontaneous tendencies among the peasantry toward the market and private property.
The temporary improvement in rural living standards in the early 1980s was largely due to the removal of absurd restrictions on farmers growing fruit or raising stock in their backyards. The relief was short-lived, as the capitalist market inevitably led to deep social divisions between rich and poor and pervasive official corruption, which soon threw hundreds of millions of farmers into miserable existence. They became nothing more than a vast reserve army of cheap labour, to maintain a downward pressure on wages not only in China, but across the world.
As Karl Marx wrote so well in Volume I of the Capital, the separation of peasants from the land by the growing capitalist relations in agriculture provided labour power and a market for industrial capital. The rural poor ruined by the market, Marx wrote, are “constantly on the point of passing over into an urban or manufacturing proletariat... This source of relative surplus population is thus constantly flowing... The agricultural labourer is therefore reduced to the minimum of wages, and always stands with one foot already in the swamp of pauperism.”
Some Chinese economists have called for the full private ownership of land, which has been rejected so far by Beijing. Not only would such a step further exacerbate social tensions, but it could also cut across the interests of the emerging capitalist class. As Marx also explained, rent is a deduction paid to landowners from the pool of surplus value extracted from the labour of the working class. From the standpoint of industrial capital, state-owned land removes the necessity of sharing profit with parasitic landowners. Historically, bourgeois radicals such as the Chinese nationalist Sun Yat-sen called for the nationalisation of land to give the broadest possible scope to capitalist development. Mao’s land reform in 1949 was not a socialist, but a bourgeois measure aimed at eliminating the old landowning class.
Just as the state-ownership of land allowed Beijing free rein to build infrastructure and industrial zones on a large-scale to attract foreign capital, it will also enable agricultural corporations to acquire whatever land they need for production. Preventing small farmers from owning their plots of land ensures that there will be no return to small-scale agriculture. Farmers who lease their land will have little say over its use and will in the end lose their limited rights over the land.
The end result can only be a further sharpening of class tensions. On the one hand, a large “surplus” rural labour force will be driven into the cities under conditions in which a sharp global recession is already underway. On the other, class antagonisms will develop between a new rural bourgeoisie and the agricultural proletariat in an already volatile countryside. Courtesy: Countercurrents. org
Correspondent
World Socialist Web Site
17 October, 2008
WSWS.org
The Chinese Communist Party (CCP) launched a far-reaching new round of market reform at its Central Committee plenum on October 9-12. The meeting established the framework for peasants to freely trade their collective and state-owned land titles—a step toward large-scale industrial agriculture that will inevitably drive millions of small farmers off the land.
The meeting took place amid mounting concern over a global recession. All China’s major export markets—North America, Europe and Japan—are slowing sharply. By allowing small farmers to sell land titles, the CCP leaders hope to boost consumer spending—in the short-term at least—and maintain the country’s high rate of economic growth.
Although no concrete measures have been announced, Beijing has set the stage, through the state media and official academia, to allow peasants to sell their land-use contracts. During the decollectivisation of agriculture in the early 1980s, the CCP did not privatise the state-owned land but gave individual peasant households a guarantee to use small plots of land for 15 years. In 1993, these contracts were extended to 30 years.
According to economists and party officials, the new contracts could be extended to 70 years, allowing farmers to lease their land to corporations or use their plots as collateral for loans. In practice, millions of farmers already lease their lands, especially those working in the cities. But these transactions usually involve other small farmers, not businesses.
A plenum communiqué declared that the land reform would double rural income by 2020, and be accompanied by improvements in infrastructure, education and healthcare. The measures are also supposed to reduce official collusion with real estate developers, who have often seized lands from farmers without adequate compensation. Official corruption involving land has been a major cause of farmers’ protests and clashes with police.
Far from ending rural poverty, the real consequences for China’s 800 million peasants will be a rapid increase in landlessness and a dramatic widening of the gap between rich and poor. The aim of the new policy is to force peasants to give up their plots to agricultural enterprises and create more cheap labour. The turn to large-scale agricultural production to maintain food supplies to the rapidly swelling urban population will accelerate the decay of small-scale farming.
The state media has compared the latest measures with Deng Xiaoping’s economic measures 30 years ago. On September 30, President Hu Jintao made a highly publicised visit to Xiaogang village in Anhui province, where a group of farmers first pioneered Deng’s division of collectivised lands in 1978.
Once again, Xiaogang village is being promoted as the champion of market reform. According to the Nanfang Daily on October 10, Yan Jinchang, one of the farmers involved in the 1978 decollectivisation, signed a contract two years ago, along with a dozen other farmers, to lease his lands to a Shanghai-based agribusiness in return for an annual dividend. Some work for the company as salaried workers. Yan told the newspaper that he earns much more from wages, rent and dividends than by tilling his own plot.
Around 60 percent of the land in Xiaogang village has been leased to commercial growers of mushrooms, flowers, grapes and poultries. The per capita income of the village was 6,000 yuan ($US877) last year, compared to the national average rural income of just 4,140 yuan ($605).
The new reform has been broadly welcomed in global financial circles. Huang Yiping, a Citigroup economist, declared that small-scale, subsistence farming “hinders growth of agricultural productivity and achievement of scale efficiency”. The Wall Street Journal wrote that a typical Chinese farm is about 0.6 hectares in size—compared to 173 hectares in the US and 6 hectares in Hungary and Poland. In advanced capitalist countries such as the US, Canada or Australia, mechanised farming has long established high outputs using small workforces, freeing labour for urban industry.
Undoubtedly concentration of lands allows the application of scientific methods and large-scale production. However, like the privatisation of Chinese state firms in the 1990s, including those that gave shares to workers, the latest land reform will inevitably lead to the concentration of land rights in the hands of well-off farmers and rural entrepreneurs, and landlessness among the majority of the farmers. One Chinese analyst told the Financial Times on October 8: “This reform will allow real capitalists into the agricultural sector but we cannot use the words ‘privatisation’ or ‘capitalism’ because they will just provide ammunition to hardliners to fight this reform.”
The “hardliners” refers to sections of the CCP bureaucracy who fear the reforms will lead to escalating rural unrest. They were well aware of the explosive character of peasants’ demands for land in the three Chinese revolutions in the twentieth century.
An editorial in the Financial Times on October 12 cautiously noted that the new measures “could provide a one-off opportunity for mass expropriation” of land. “Even if that can be avoided, poor peasants could come under severe economic pressure to sell,” due to the decay of publicly-funded healthcare and education. Warning of potential social unrest, the editorial commented: “Social engineering is always dangerous, even if the direction of change is toward private ownership. Beijing should proceed prudently. It is more important that reform be fair than that it be swift.”
A new peasant rebellion would have strong support among urban workers. More than 150 million rural migrants are now working in the cities, as cheap labour without basic residential rights. Chinese cities have so far avoided the sprawling slums found in many developing countries, because small plots always provided a safety net for migrant workers if they lost their jobs. In recent years, some manufacturing zones have experienced shortages of labour due to workers’ demands for higher wages. Migrants have been able to return home rather than accepting low wages. This is unacceptable to
Beijing and the global corporations.
The Economist on September 4 wrote: “What is the single most important price in the world? Popular answers are the price of oil, American interest rates or the dollar. Yet Chinese wages are, arguably, more important. China has by far the world’s biggest labour force, of around 800 million—almost twice that of America, the European Union and Japan combined. Thus recent claims that it is running short of cheap labour would, if true, have huge consequences not just for China, but also for the rest of the world.”
The Economist argued that to boost the labour force China had to restructure agriculture. “Mechanisation and the consolidation of land plots will boost productivity, meaning that fewer farmers will be needed. That will in turn release more workers for industry. In developed countries only 3 percent of workers till the land,” the magazine stated. In other words, far from enjoying a new period of prosperity, most farmers will be stripped of their land and forced to sell their labour power for a miserable wage.
The new land policy underscores the dead-end of Maoism, a form of peasant radicalism that has nothing to do with genuine socialism. Deng launched his market reform 30 years ago by appealing to widespread discontent among farmers over Mao’s disastrous “People’s Communes”. These primitive collectivised villages had no technological resources for large-scale production and the farmers were squeezed to finance a rudimentary industrialisation. Deng pushed for individual farming and small rural entrepreneurship, in order to unleash the spontaneous tendencies among the peasantry toward the market and private property.
The temporary improvement in rural living standards in the early 1980s was largely due to the removal of absurd restrictions on farmers growing fruit or raising stock in their backyards. The relief was short-lived, as the capitalist market inevitably led to deep social divisions between rich and poor and pervasive official corruption, which soon threw hundreds of millions of farmers into miserable existence. They became nothing more than a vast reserve army of cheap labour, to maintain a downward pressure on wages not only in China, but across the world.
As Karl Marx wrote so well in Volume I of the Capital, the separation of peasants from the land by the growing capitalist relations in agriculture provided labour power and a market for industrial capital. The rural poor ruined by the market, Marx wrote, are “constantly on the point of passing over into an urban or manufacturing proletariat... This source of relative surplus population is thus constantly flowing... The agricultural labourer is therefore reduced to the minimum of wages, and always stands with one foot already in the swamp of pauperism.”
Some Chinese economists have called for the full private ownership of land, which has been rejected so far by Beijing. Not only would such a step further exacerbate social tensions, but it could also cut across the interests of the emerging capitalist class. As Marx also explained, rent is a deduction paid to landowners from the pool of surplus value extracted from the labour of the working class. From the standpoint of industrial capital, state-owned land removes the necessity of sharing profit with parasitic landowners. Historically, bourgeois radicals such as the Chinese nationalist Sun Yat-sen called for the nationalisation of land to give the broadest possible scope to capitalist development. Mao’s land reform in 1949 was not a socialist, but a bourgeois measure aimed at eliminating the old landowning class.
Just as the state-ownership of land allowed Beijing free rein to build infrastructure and industrial zones on a large-scale to attract foreign capital, it will also enable agricultural corporations to acquire whatever land they need for production. Preventing small farmers from owning their plots of land ensures that there will be no return to small-scale agriculture. Farmers who lease their land will have little say over its use and will in the end lose their limited rights over the land.
The end result can only be a further sharpening of class tensions. On the one hand, a large “surplus” rural labour force will be driven into the cities under conditions in which a sharp global recession is already underway. On the other, class antagonisms will develop between a new rural bourgeoisie and the agricultural proletariat in an already volatile countryside. Courtesy: Countercurrents. org
10 October, 2008
Experts say Arabs may pull their economies away from US
Oil-rich Arab countries, which until recently were smug about being insulated from the financial debacle on Wall Street, are starting to worry.
Analysts are predicting that they are sure to increase regulations and start pulling their economies away from the United States.
See New America Media report "Middle East Hit by U.S. Financial Crisis" by Shane Bauer, a journalist and photographer based in the Middle East.
Analysts are predicting that they are sure to increase regulations and start pulling their economies away from the United States.
See New America Media report "Middle East Hit by U.S. Financial Crisis" by Shane Bauer, a journalist and photographer based in the Middle East.
09 October, 2008
An opportunity for China in the US distress
The Wall Street fire-sale has prompted China economic pundits to call on Beijing to avail of the opportunity to acquire stakes in United States financial institutions and further its influence on global financial power, Inter Press Service (IPS) correspondent Antoaneta Bezlova reports from Beijing.
From Mexico to South Africa, investors and strategists are calling on Beijing mandarins to step into the limelight and help determine the new set of financial rules to emerge after the 2008 Wall Street crisis.
"China cannot easily afford to pass up such an opportunity," says Chen Jie, professor of economics at Shanghai Fudan University. "We have been anxiously trying to find investment opportunities for our financial capital but before the crisis there existed a myriad of visible and invisible barriers for Chinese investment overseas, particularly in the United States.’’
The full report can be seen at the Countercurrents.org site
From Mexico to South Africa, investors and strategists are calling on Beijing mandarins to step into the limelight and help determine the new set of financial rules to emerge after the 2008 Wall Street crisis.
"China cannot easily afford to pass up such an opportunity," says Chen Jie, professor of economics at Shanghai Fudan University. "We have been anxiously trying to find investment opportunities for our financial capital but before the crisis there existed a myriad of visible and invisible barriers for Chinese investment overseas, particularly in the United States.’’
The full report can be seen at the Countercurrents.org site
08 October, 2008
China Will Look to Rescue Itself, Not the U.S.
by Ying Zhao
News Analysis
New America Media
Editor's Note: Now that the United States has passed the biggest rescue plan in history to bail out its struggling financial industry, U.S. Treasury Secretary Henry Paulson is set to visit China to ask the Chinese government to open their coffers. But this time, getting money from the Chinese will not be as easy. Ying Zhao worked in China as a business reporter before she came to the United States in 2006. She covered Silicon Valley for the China Business News, a Shanghai-based newspaper. She is now studying business journalism at the Graduate School of Journalism at the City University of New York.
As the U.S. financial industry suffered the biggest turmoil since the 1930s, rumors spread that the Chinese government, which holds about $1 trillion of U.S. debts, had ordered state-owned banks to stop buying American bonds. Although the Chinese government immediately dismissed the rumors, and reaffirmed its confidence in the United States, the rumors are sending out a clear signal: this time, China won’t be a willing rescuer of the United States.
The Bush administration predicted that the federal government’s deficit of the next fiscal year, starting in October, will stand at a historic high of nearly $500 billion. And adding the new $700 billion bailout plan, the United States’ public debt ceiling will be raised to $11.3 trillion from $10.6 trillion. With its vault empty, the administration has to hit up such countries as China and Japan. China, holding the world’s largest foreign reserves of $1.8 trillion, might be the first country Treasury Secretary Henry Paulson will visit for money.
In fact, the Wall Street Journal has reported that pressure from China played a role in the U.S. government’s bailout of Freddie Mac and Fannie Mae, the two giant government sponsored enterprises. The two mortgage companies owe China more than $200 billion. By bailing them out, the United States is showing China that the U.S. government is standing ready to guarantee its debt.
Overall, the U.S. debt held by China is the world’s second largest after Japan, according to data from the Treasury. About 45 percent of foreign bonds held by China is related to the United States, according to Jiang Jianqing, chairman of China’s biggest bank, Industrial and Commercial Bank of China (ICBC). But will China trust the United States as much as it did before the financial crisis? The answer is clearly no.
“We aim to be a strategic investor,” said Jiang. “The ICBC will take good care of its purse, and has no interest in fire sale [of U.S. bonds].” And, he added, “Both China and the world’s financial markets have focused too much on the U.S.”
Meanwhile, China has its own trouble at home: a tumbling stock market, rising inflation and a slowing economy. Instead of gobbling up U.S. bonds, China may use its massive foreign reserves to boost its own economy. Instead of holding U.S. dollars as the dominant foreign asset, the country is very likely to replace them with the Euro, Japanese assets and gold.
What action China will take this time could be determined by China’s policies during Asia’s financial crisis a decade ago. In 1998, the then Chinese Premier Zhu Rongji vowed not to devalue China’s currency, the yuan, to attain an 8 percent growth rate in gross domestic product (growth was 9.3 percent in 1997), and to contain inflation to below 3 percent. By boosting government investment, and at the same time holding a modest monetary policy, Zhu delivered what he promised. Facing similar external challenges this time, it is more than likely that China will take the same course.
China’s two-digit economic growth speed has slowed to around 9 percent in the second quarter of this year. Just two weeks ago, the benchmark Shanghai stock exchange index slumped to below 2,000 points. Meanwhile, inflation rates stay above policy-makers’ comfort level.
Because of declining consumer spending in the United States, one of China’s major export destinations, many Chinese exporters are suffering from shrinking revenue. In provinces such as Guangdong and Zhejiang, some manufacturers have had to declare bankruptcy.
Facing mounting economic challenges, China is making all efforts to stabilize the Chinese economy. Wen Jiabao, China’s incumbent premier, said recently in the World Economic Forum that “the biggest contribution we can make to the world economy under the current circumstances is to maintain China’s strong, stable and relatively fast growth, and avoid big fluctuations.”
China has unveiled a number of initiatives to shore up its stock market and bolster investor confidence. The government used its foreign reserves to purchase shares in three of its largest banks. State-owned enterprises will also be encouraged to buy back their own shares.
To boost the economy, China’s central bank unexpectedly cut its base lending rate on Sept. 15 and lowered the ratio of funds that banks must set aside as reserves. Ting Lu, an economist at Merrill Lynch, said the Chinese government could cut tax and spend more money on infrastructure and housing. That means China will use more money in its domestic development, instead of buying low-yield U.S. bonds.
Also prohibiting China from investing in the United States is China’s inexperience in foreign investment. By putting $3 billion of China’s hard-earned savings into the initial public offering of Blackstone, a U.S. private-equity firm, China suffered the biggest holdings loss, about $1 billion in six months, as Blackstone’s share prices tumbled.
The Chinese government is learning the hard way. It recently abstained from buying a big chunk of shares in Morgan Stanley, a large U.S. investment bank, which allowed a Japanese bank to step in as Morgan Stanley’s rescuer. Going forward, China will become more cautious on its U.S. investments.
However, dumping U.S. assets is also unlikely, as it will only further upset their value and make China lose more money. China, then, is likely to maintain a more neutral position. It will become more scrupulous. But it could also implicitly promise not to dump U.S. assets.
The debate in China over foreign investment isn’t focused on whether it should invest in overseas markets, but on how to invest. China may use its reserves to buy foreclosed real estate in the United States, or make loans to the U.S. government. Or it could buy shares in companies with stable profits. The key is maximizing the revenue, not cleaning up the mess for the United States.
News Analysis
New America Media
Editor's Note: Now that the United States has passed the biggest rescue plan in history to bail out its struggling financial industry, U.S. Treasury Secretary Henry Paulson is set to visit China to ask the Chinese government to open their coffers. But this time, getting money from the Chinese will not be as easy. Ying Zhao worked in China as a business reporter before she came to the United States in 2006. She covered Silicon Valley for the China Business News, a Shanghai-based newspaper. She is now studying business journalism at the Graduate School of Journalism at the City University of New York.
As the U.S. financial industry suffered the biggest turmoil since the 1930s, rumors spread that the Chinese government, which holds about $1 trillion of U.S. debts, had ordered state-owned banks to stop buying American bonds. Although the Chinese government immediately dismissed the rumors, and reaffirmed its confidence in the United States, the rumors are sending out a clear signal: this time, China won’t be a willing rescuer of the United States.
The Bush administration predicted that the federal government’s deficit of the next fiscal year, starting in October, will stand at a historic high of nearly $500 billion. And adding the new $700 billion bailout plan, the United States’ public debt ceiling will be raised to $11.3 trillion from $10.6 trillion. With its vault empty, the administration has to hit up such countries as China and Japan. China, holding the world’s largest foreign reserves of $1.8 trillion, might be the first country Treasury Secretary Henry Paulson will visit for money.
In fact, the Wall Street Journal has reported that pressure from China played a role in the U.S. government’s bailout of Freddie Mac and Fannie Mae, the two giant government sponsored enterprises. The two mortgage companies owe China more than $200 billion. By bailing them out, the United States is showing China that the U.S. government is standing ready to guarantee its debt.
Overall, the U.S. debt held by China is the world’s second largest after Japan, according to data from the Treasury. About 45 percent of foreign bonds held by China is related to the United States, according to Jiang Jianqing, chairman of China’s biggest bank, Industrial and Commercial Bank of China (ICBC). But will China trust the United States as much as it did before the financial crisis? The answer is clearly no.
“We aim to be a strategic investor,” said Jiang. “The ICBC will take good care of its purse, and has no interest in fire sale [of U.S. bonds].” And, he added, “Both China and the world’s financial markets have focused too much on the U.S.”
Meanwhile, China has its own trouble at home: a tumbling stock market, rising inflation and a slowing economy. Instead of gobbling up U.S. bonds, China may use its massive foreign reserves to boost its own economy. Instead of holding U.S. dollars as the dominant foreign asset, the country is very likely to replace them with the Euro, Japanese assets and gold.
What action China will take this time could be determined by China’s policies during Asia’s financial crisis a decade ago. In 1998, the then Chinese Premier Zhu Rongji vowed not to devalue China’s currency, the yuan, to attain an 8 percent growth rate in gross domestic product (growth was 9.3 percent in 1997), and to contain inflation to below 3 percent. By boosting government investment, and at the same time holding a modest monetary policy, Zhu delivered what he promised. Facing similar external challenges this time, it is more than likely that China will take the same course.
China’s two-digit economic growth speed has slowed to around 9 percent in the second quarter of this year. Just two weeks ago, the benchmark Shanghai stock exchange index slumped to below 2,000 points. Meanwhile, inflation rates stay above policy-makers’ comfort level.
Because of declining consumer spending in the United States, one of China’s major export destinations, many Chinese exporters are suffering from shrinking revenue. In provinces such as Guangdong and Zhejiang, some manufacturers have had to declare bankruptcy.
Facing mounting economic challenges, China is making all efforts to stabilize the Chinese economy. Wen Jiabao, China’s incumbent premier, said recently in the World Economic Forum that “the biggest contribution we can make to the world economy under the current circumstances is to maintain China’s strong, stable and relatively fast growth, and avoid big fluctuations.”
China has unveiled a number of initiatives to shore up its stock market and bolster investor confidence. The government used its foreign reserves to purchase shares in three of its largest banks. State-owned enterprises will also be encouraged to buy back their own shares.
To boost the economy, China’s central bank unexpectedly cut its base lending rate on Sept. 15 and lowered the ratio of funds that banks must set aside as reserves. Ting Lu, an economist at Merrill Lynch, said the Chinese government could cut tax and spend more money on infrastructure and housing. That means China will use more money in its domestic development, instead of buying low-yield U.S. bonds.
Also prohibiting China from investing in the United States is China’s inexperience in foreign investment. By putting $3 billion of China’s hard-earned savings into the initial public offering of Blackstone, a U.S. private-equity firm, China suffered the biggest holdings loss, about $1 billion in six months, as Blackstone’s share prices tumbled.
The Chinese government is learning the hard way. It recently abstained from buying a big chunk of shares in Morgan Stanley, a large U.S. investment bank, which allowed a Japanese bank to step in as Morgan Stanley’s rescuer. Going forward, China will become more cautious on its U.S. investments.
However, dumping U.S. assets is also unlikely, as it will only further upset their value and make China lose more money. China, then, is likely to maintain a more neutral position. It will become more scrupulous. But it could also implicitly promise not to dump U.S. assets.
The debate in China over foreign investment isn’t focused on whether it should invest in overseas markets, but on how to invest. China may use its reserves to buy foreclosed real estate in the United States, or make loans to the U.S. government. Or it could buy shares in companies with stable profits. The key is maximizing the revenue, not cleaning up the mess for the United States.
25 September, 2008
Trading Places - China and US in the economic crisis
In times of hardship, China and the United States seem to have traded places, says Jun Wang, New America Media commentator.
In a news analysis, distributed by NAM, Jun Wang says: “The United States seems to be moving closer to a Communist economy in the wake of the financial implosion, while officially Communist China is hurtling towards capitalism.”
The article can be accessed here.
In a news analysis, distributed by NAM, Jun Wang says: “The United States seems to be moving closer to a Communist economy in the wake of the financial implosion, while officially Communist China is hurtling towards capitalism.”
The article can be accessed here.
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