Friday, June 29, 2012

Rigging markets par for the course

The way Barclays and several other banks colluded to fix inter-bank interest rates is a blatant example of what is actually par for the course in big business. Price fixing, secret agreements to divide markets, cartels and other nefarious goings on are as old as capitalism itself.

How could it be otherwise within a system where the benchmark is the maximisation of profit by any means, fair or foul? Dividend payments to shareholders are based on total profits, which, if they don’t rise year on year, indicate failure. Share prices tend to fall as a result.

So if so-called retail banking doesn’t create enough profits, then use depositors’ money to speculate in a rigged market. Irresistible for Barclays, RBS and the other banks caught in the spotlight.

This kind of underhand activity is not the exception but the rule. Only today, the UK Office of Fair Trading alleged that Mercedes-Benz and five UK dealers of its trucks and vans were involved in price fixing and the sharing of commercially sensitive information between 2007 and 2010.

In April, British Airways agreed to pay a reduced £58.5m fine for colluding with rival Virgin Atlantic on fuel surcharges. BA admitted in 2007 that it had colluded with Virgin over price fixing on long-haul flights between August 2004 and January 2006. OFT’s criminal case
against a number of former BA executives collapsed. Virgin, which blew the whistle on its agreement with BA, was not fined.

Last month, the Department of Justice in the United States accused Apple of e-book price fixing. Also in the frame are publishers Penguin and Macmillan. Naturally, the three corporations deny the allegations. Three other publishers immediately settled the action, while admitting no wrongdoing. Observers suspect that fear of Amazon’s ruthless pricing strategy drove rivals to collude to keep prices up.

In late 2007, British consumers discovered that supermarkets and milk suppliers had been illegally rigging the prices of dairy products since 2002. They had colluded to raise the prices of dairy products, and their milk distributors, namely Dairy Crest and Robert Wiseman Dairies, had been the go-betweens for the ostensibly secret pricing decisions. Total cost to consumers was estimated at £270 million. Those involved were fined a total of £116.

In 2007, the European Commission undermined a price-fixing scheme among the makers of flat glass, the variety that is used to make windows, doors and mirrors. In 2004 and 2005, four major makers of flat glass — Asahi, Guardian, Pilkington, and Saint-Gobain — secretly met to discuss artificially raising their prices. The industry’s profits soared as a result and the €487 million fine was undoubtedly worth it for the companies which colluded.

Other examples you may have missed include £185 million in fines imposed on Dutch brewers, including Heineken and Grolsch, for price fixing. EU competition commissioner Neelie Kroes commented: “It is unacceptable that the major beer suppliers colluded to hike up prices and carve up the market between themselves. The highest management of these companies knew very well that their behaviour was illegal, but they went ahead anyway and tried to cover their tracks”.

Previous examples of price fixing include Manchester United and several leading sportswear firms who were found guilty of price fixing on replica football shirts in 2005 and Samsung Electronics who agreed to pay $90m to settle legal action over microchip price-fixing allegations in the US. Three executives went to prison.

So when Labour leader Ed Miliband and others tell us that there can be such a thing as an ethical, “responsible” capitalism they are having a laugh at our expense because it’s an impossible quest. It's a myth, just like the notion of a "free market". The system is endemically corrupt. It would actually be easier to replace capitalism with a not-for-profit alternative than clean it up.

Paul Feldman
Communications editor

Thursday, June 28, 2012

Nature's final frontiers fall to the corporations

The Rio+20 final document is so shocking and the risks it poses so great that it bears revisiting. "Ecosystem services", and other so-called “green economics” initiatives set out at Rio represent capitalism's final assault on wilderness, untamed habitat and the plants and animals (including humans) who live inter-connectedly in these spaces.

If, as the UK's Stern Report explained, climate change is the biggest-ever market failure, then how can bringing the planet's remaining wild spaces into this failed framework protect them? These areas of forest, ice-cap and permafrost are our last protection against runaway climate change and this fresh attack on them could prove disastrous for humanity.

Two examples of why it cannot work are carbon credits and the REDD treaty on deforestation.

First carbon credits, a new form of currency that came into being with the Kyoto Protocol. Google the phrase and you'll get myriad financial advice sites explaining how to profit from them. It's a market, which has run along the same rails as all capitalist markets  – sometimes profitable, sometimes less so. But it has brought absolutely no reduction in greenhouse gas emissions.

REDD is the new international treaty on deforestation. It rewards countries that achieve cuts in deforestation with credits from big polluting countries. This creates the perverse incentive to start cutting down forest that has been untouched up until now so you can claim credits for stopping. It's putting a gun to the head of the forest, and saying "pay up or we shoot".

Pablo Solon, Bolivia’s former UN ambassador and now head of Focus on the Global South, has written that it is the transnational corporations that are promoting green economy:

"According to them, the mistake of capitalism that led us to this current multiple crises is that the free market had not gone far enough. And so with the ‘green economy’, capitalism is going to fully incorporate nature as part of its capital. They are identifying the specific functions of ecosystems and biodiversity that can be priced and then brought into a global market as ‘Natural Capital’."

Natural capital is defined as the “five pillars of life” – water, oceans, land and ecosystems, energy and raw materials. Think privatisation of electricity, gas, railways and health and the fraudulent claims made for that process, and you get an idea of what they are planning.

Capitalism is a system that renews itself continuously by developing new markets and new commodities. Current commodity production is in crisis, with a contraction of up to 90% of productive capacity needed, and already well underway.

With Rio+20 we are seeing capitalism's last great grab from the planet - the commodification of every part of nature that will run alongside the current shift of capital into the market in land.

The GM and chemical food speculators such as Monsanto and Cargill will move in for rapacious copyrighting of plants and natural processes. And alongside these fat new profits, indeed fuelled by it, the destruction of eco-systems will continue.

The lesson of the Barclay's rate-fixing scandal is that there is no free market, and this new commodity market too will be subject to corruption, lies and profit-grabbing speculators. Why not, after all? If you can profit from it, you must profit from it – that's the essence of capitalism.

In theory every species and every zone can be forced into the framework of profit monomania, but there is a huge price to be paid. Millions are already paying it, most of them are in the global south. But nowhere – not the United States and Europe nor the BRIC “developing economies” - has immunity.

As Solon concludes: "The capitalist system has gone beyond control. Like a virus its going to kill the body that feeds it… it’s going to damage the Earth System in a way that makes it impossible for human life as we know it. We need to overthrow capitalism and develop a system that is based on the Community of the Earth."

Penny Cole
Environment editor

Wednesday, June 27, 2012

Infinity and beyond is Bank's view of crisis

Who’d be an economics forecaster at a time of chaos and crisis? Only six weeks ago, Bank of England experts thought they had the situation covered. Now they’ve ripped up those forecasts and are starting again.

Admitting they have no idea about what is going on, and even less about what to do, the worsening crisis in the eurozone led Mervyn King, the BoE’s governor, to excuse their astonishing bewilderment when he appeared before the Commons treasury committee:

“It is impossible to imagine a situation in which you just do not know what the situation will be in a part of the world that is close to you and is half of your trade”, he said. “And that makes it impossible to engage in any sensible forecasting.”

So for King and his colleagues, the laws of economics appear to have broken down. And there’s nothing in the history books to provide any insight.

Ever since the crisis erupted in Greece, European leaders, together with the heavy hitters from the IMF have attempted Herculean feats to keep it isolated, with firewalls and barriers of all kinds.

But the crisis has morphed. Strongman Hercules has given way (temporarily) to Sisyphus – the king punished by being compelled to roll an immense boulder up a hill, only to watch it roll back down, and to repeat this action forever.

Forever? Well, it certainly seems this way in the other illuminating comment from King - a weird, contradictory warning to the public against seeing any end to the crisis.

“When this crisis began in 2007-2008, most people including ourselves did not believe that we would still be right in the thick of it” [he really, really said it], “in the middle of it, quite this late,” King told MPs. “All the way through, I’ve said to this committee that I don’t think we are yet half-way through – I’ve always said that and I’m still saying it.”

So, if we’re to understand this correctly, the longer the crisis has gone on, the end disappears into infinity as “half-way” fades into the distance. He’s not wrong. On the same day, figures for the UK’s state borrowing showed that the deficit is still growing. Tax revenues are falling and unemployment has driven up welfare spending. Chancellor Osborne had to postpone a 3p petrol duty rise for fear of sending the economy over the edge. That’s how precipitate things are.

After taking a quick look at the books, Vassilis Rapanos, 64,  the finance minister of the newly elected Greek coalition government, resigned on Monday due to ill health.  

Also on Monday, Spain and Cyprus became the fourth and fifth casualties in the 17 country eurozone forced to admit bankruptcy and beg for help. Eurozone finance ministers are meeting today to consider the appeals. Spain is asking for €100 billion. Estimates put the cost of a bailout for Cyprus as high as half of its €17.3 billion economy.

The reaction from credit ratings agency Moody’s was predictable, whatever Mervyn might say. They downgraded the ratings of 28 of 33 rated banks, by one to four notches, following a cut to Spain's sovereign rating to just above junk status earlier this month.

With Germany’s Chancellor Angela Merkel refusing to share the total eurozone debt burden “as along as I live”, the struggle playing out in Europe, as in the rest of the world, is the endgame between national sovereignty and the transnational cabal of giant corporations and the investment funds that largely own them. They also have the World Trade Organisation and International Monetary Fund on their side.

A conspiracy? Yes, indeed, but one that results from the objective logic of the system of debt-fuelled profit-seeking growth known as capitalism. With its markets for commodities and credit super-saturated, its logic now demands contraction by up to 90% of pre-crisis levels and the destruction of public spending.

The interconnectedness that resulted from three decades of global expansion provides the path of transmission for the debt contagion. But in the right social hands, the technology, the infrastructure, the corporations themselves, are the source of the solution.  

Gerry Gold
Economics editor

Tuesday, June 26, 2012

New Labour's PFI legacy poisons NHS

Placing a major healthcare trust in Whitehall-led administration could signal the break-up of the NHS under the cover of a financial crisis that is largely the result of the pro-business policies of previous New Labour governments.

South London Healthcare Trust, which serves a million people, runs three hospitals and employs more than 6,000 staff, is in deficit to the tune of more than £1 million a week.
At the heart of its financial crisis are payments on a contract to build two of the hospitals.

These were made under the so-called Private Finance Initiative, which Gordon Brown in particular championed in the 1997-2010 New Labour governments. Under PFI, the finished buildings are leased back to the local NHS, which pays mounting interest payments over 25 years and more.

The PFI schemes in south London, which totalled more than £1 billion, cost more than £60 million annually in interest payments alone. There are also exorbitant costs for maintenance and small improvements, which the contractors set fees for doing.

Draft financial plans submitted by the hospitals to the Department of Health show that it faces a shortfall in its accounts of between £30 million and £75 million annually over the next five years.

Health secretary Andrew Lansley’s unprecedented decision to put the trust into administration will lead to a break-up and transfer of existing services. Some could end up in the hands of the private sector. A similar fate awaits another 20 hospitals in financial difficulty.

PFI deals became widespread from the late 1990s as a way of building hospitals and schools without finding the money up front but at higher-than-average interest rates. The enthusiasm for PFI expressed New Labour’s championing of the private sector as a “partner” for the public sector.

But this was no equal partnership, with the state guaranteeing the fulfilment of high-cost contracts. Lansley intends that the South London PFI contract will be paid directly by his department.

Through a sleight of hand, the costs to the taxpayer do not figure in public accounts and so do not contribute officially to the budget deficit (which the Tories have lost control of, if today’s figures are anything to go by). Nevertheless,  the total bill to the taxpayer over time is estimated at £229 billion on contracts valued at £62 billion.

In April a biting report by the National Audit Office found that each household will have to cough up nearly £400 next year to pay for hospitals, schools and motorways built under PFI.

The City firm Innisfree is the largest single investor in PFI, with money in 28 hospitals representing over 13,000 beds and 260 schools educating over 130,000 children. Innisfree’s profit margin was 53% in 2011. PFI is truly a licence to print money! 

Some PFI rip-off examples include:

  • A hospital which charged £52,000 for a job that cost £750. Demolishing a shelter for smokers resulted in the PFI contractor charging £2,600 a year for the “extra cleaning”.
  • A hospital in Bromley, south London, which will cost the NHS £1.2billion, more than 10 times what it is worth
  • An empty school which will cost taxpayers £370,000 a year until 2027. Another school had to pay £302 for a socket, five times the cost of the equipment it wanted to plug in
  • In Belfast, a school closed after seven years but the PFI contractor must be paid £370,000 a year for the next 16 years.

John Lister, director of campaign group, Health Emergency,  described PFI contracts as “a cosmic rip-off by almost every measure” which led to a “mass haemorrhaging of public cash”. He says:

“It also means that private sector profits are protected by legally binding contracts taking an increased share of declining trust budgets, while clinical services, patient care and the jobs of NHS staff are sacrificed, in an impossible battle to balance the books as the NHS faces real-terms cuts for the first time in a decade.”

With the Tories leaving PFI intact and preparing to launch a market-led health service on the unsuspecting public, the NHS has never been in such danger since it was founded in 1948.

Paul Feldman
Communications editor

Monday, June 25, 2012

Schools becoming cultural deserts

What kind of education you get - and the chance to participate in music, film, theatre and other forms of culture – is more than ever dependent on your parents’ status and income, how aggressive they are in getting you into a well-resourced school, if they can afford extra tuition and where you live.

Middle class and wealthy parents offset poor provision in many state schools by moving to other areas, sending their children to fee-paying schools or paying for  private tuition. But these options are difficult or impossible for those on lower incomes, those whose benefits are being slashed and those living outside urban centres.

Above all, children’s access to culture is most affected by inequality, as Action for Children’s Arts (ACA) reveals. Using information obtained through the Freedom of Information Act, the charity discovered that, while children under 12 years make up 15% of the population, “their share of the available public funding for the arts is rarely more than 1%”.

ACA found that the BBC’s budget for children’s programmes has fallen in comparison with five years ago and less than 1% of it is spent on original programmes made in the UK. It rightly argues for the central place of the arts in children’s learning, drawing on the 84-page Darren Henley review, commissioned by the government and published at the end of April.

But, while Henley extols the virtues of “cultural education” and calls for support and funding for various initiatives especially for talented students, he recommends increased backing from philanthropists and royal patronage. The review includes a ghastly proposal for “Downing Street cultural education medals” to be awarded to talented young people.

The reality is of course that cultural poverty is inseparable from economic poverty, as actor Michael Sheen pointed out, supporting the launch of the Children’s Cultural Poverty Forum in Wales: “It is mind-blowing to me, but in Wales 32% of children live in poverty.” He fears that many British schoolchildren no longer have a way of discovering culture. “My old school does not have a drama department. Anymore,” he said.

Promoting the well-being of children and those in education does mean exactly what ACA says, when it calls for “making theatre, music and dance affordable for families and schools”.

A recent inquiry into the difficulties of growing up in today’s world conducted by the Children’s Society concluded that “the aggressive pursuit of personal success by adults is now the greatest threat to British children”. But its recommendations have been lost to the winds of intensified commercialism, economic crisis and public spending cuts. 

Last year, the Mothers’ Union pointed to the cynical exploitation of children by market forces: “Childhood has become a marketing opportunity worth £99 billion in the UK and £350 million is spent in the UK each year on persuading children to consume.  Manipulative techniques exploit children’s natural credulity and use them as a conduit to the household purse.”

The brutally competitive nature of education with its emphasis on personal achievement - together with unequal access to culture  - is a blight on those growing up today. And it’s going to get worse under education secretary Michael Gove’s proposal to reintroduce a two-tier system of education. He plans to abolish GCSE’s and re-introduce O-levels – which would re-introduce dividing pupils into more and less academically capable streams.

Access to education and culture should be a right and not a privilege. Neither a big state nor Cameron’s Big Society are the answer. Tackling cultural inequality at its very heart requires a transfer of ownership and power away from the 1% to the 99%

Corinna Lotz
A World to Win secretary

Friday, June 22, 2012

Miliband plays the race card

The euro is heading for collapse, major banks were downgraded overnight, the global economy is plunging into depression and Ed Miliband chooses this very moment to play the reactionary race card.

Pandering to prejudice, the right-wing press and voters looking for scapegoats for social problems is what Labour leader Miliband is doing today, however much he dresses it up as a “policy rethink”.

In his Guardian interview, Miliband claims that workers from countries like Poland have driven down wages while denying British citizens jobs. Of course, he produces no evidence whatsoever to substantiate this.

Britain was one of three countries that allowed workers from new European Union member states to enter the country without restrictions after May 2004. But research in 2008 concluded: “Despite anecdotal evidence, we found little hard evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in the UK between 2004 and 2006.”

But Miliband is basing his new hard-line on the very same “anecdotal evidence”, including the amazing statement that people “in every kitchen” up and down the country are discussing what to do about immigration. 

And no doubt Miliband was inspired by recent findings from the right-wing Policy Exchange think-tank that a harder line on immigration would help Labour win back swing voters, as well as the views of Jon Cruddas, his new policy adviser.

By referring to sectors of the economy “where there is a problem”, Miliband immediately drags the issue of the numbers of migrant workers into the limelight. But having raised the hopes of racists that the numbers could be reduced somehow, Miliband only proposes that new vacancies should be notified to Jobcentre Plus!

Saying he will review immigrants access to benefits – all the statistics show EU workers claim less than the average UK citizen – and routes to local social housing is something you would expect from the right of the Tory Party. In his rush to reject New Labour’s relative open door policy, Miliband has found himself in the company of UKIP and other nationalist outfits.

His late Marxist father Ralph (a refugee from Nazi persecution) will no doubt be turning in his grave to hear son Ed argue that immigration should be seen as a “class issue” because “evidence” showed lower-paid workers and the unskilled suffer from cheap East European labour.

A genuine class-based approach would, however, be to insist that there is a divide and rule strategy to hand and that workers have to find ways to stick together against a common enemy or face joint immiseration.

Instead, Miliband said he was entering the debate on immigration in the context of his call for a more “responsible capitalism”. He wants the employers to pay better wages and treat everyone more fairly and end the “nasty, brutish and short-term” nature of the labour market.

That’s really going to happen!

Corporate-driven globalisation, which the New Labour governments endorsed 100%, benefited big business and the banks at the expense of working conditions and wages. Now that the global economy is in its worst-ever crisis, many people regard the system of capitalism as the problem and not the solution.

At this point, Miliband steps in to deflect people’s attention away from the incompetent ruling elites, the bloated bankers and the corporations whose obsession with profit has produced a catastrophe.

The present Labour leader, like those before him, is just what the system needs at this point. Instead of confronting those responsible for low wages, unemployment, poor housing and run-down services, let’s just fight amongst ourselves for the scraps. Miliband confirms that there is no point in Labour, none whatsoever.

Paul Feldman
Communications editor

Thursday, June 21, 2012

Rio earth summit 'epic failure' warning

"Abandon hope all ye who enter here" should have been written over the entrance to the  Rio+20 summit. For the draft text reneges on or waters down every principle of the original agreement and adds in a range of market initiatives that will weaken ecosystems and block sustainable development.

A casual and shocking abandonment of the goals set out two decades ago has made the summit worthless. There will no new money to support poorer countries to advance in a sustainable way. The principle of Common But Differentiated Responsibilities (CBDR) – whereby better off countries have to make a greater reduction in their impact on the planet — is being sidelined and if the US has its way will disappear altogether.

Technology transfer, another key principle 20 years ago, is under attack. The US, EU, Canada and Australia want the whole phrase eliminated from the draft in favour of a focus on the kinds of research and innovation that might be saleable. But, according to the same unholy alliance, research into “planetary boundaries” should definitely not be on the agenda. A coalition of the Holy See and the US wants to delete a sentence giving women a right to reproductive health services i.e. contraception.

The new treaty's true focus is the weasel concept of "Green Economy" — market initiatives that may or may not make any actual contribution to sustainable development, but will be profitable.

The phrase “ecosystem services” has been introduced, reinforcing the idea that nature is nothing more than a source of raw materials for exploitation — but in a kind of green way, you understand. Putting monetary value on forests or clean water systems simply continues the failed idea that established the market in carbon credits.

The section on the health of the oceans has been undermined by the US and Venezuela, because of their involvement in offshore oil. Two actual commitments on deforestation have been deleted, replaced with empty platitudes.

Rio+20 has turned into an epic failure,” says Greenpeace head Kami Naidoo. “We were promised the ‘future we want’ but are now being presented with a ‘common vision’ of a polluter’s charter that will cook the planet, empty the oceans and wreck the rain forests.”  Jim Leape, head of World Wildlife Fund added: “If they embrace this document, then this will have been a waste of time.”

Well, of course Rio+20 is a waste of time – who actually thought it would be anything else? Not WWF and Greenpeace, who know full well that these summits deliver nothing, but continue to tie those who want action into hoping that this time, finally, they will deliver. That is because they do not see any actual alternative.

But that does not mean that there are no positive documents on the table that could be discuss and adopted in a world where truly democratic decisions were made in the interests of humanity.

The alternative treaty drafted by the plurinational state of Bolivia states that "the capitalist system is the principal cause of the imbalance because it puts the rules of the market and the accumulation of profit above the laws of nature. Nature is not simply a sum of elements, it’s not a source of resources that can be exploited, modified, altered, privatised, commercialised and transformed without any consequences.”

And it adds: “The postulates promoted under the Green Economy are wrong. The current environmental and climate crisis is not a simple market failure. The solution is not to put a price on nature. Nature is not a form of capital. It is wrong to say that we only value that which has a price, an owner, and brings profits. The market mechanisms that permit exchange among human beings and nations have proven incapable of contributing to an equitable distribution of wealth."

The challenge, therefore, is how to set about replacing these profit-creating mechanisms with shared progress towards the eradication of poverty, creating rights for human beings and for nature as a whole to halt climate change and restore the planet's ecology to a degree of health.

Penny Cole
Environment editor

Wednesday, June 20, 2012

Global economy 'off the rails'

No one any longs thinks that piling on the pressure through austerity, grinding millions into the dust, can possibly make any difference to the debt crisis. But despite increasingly strident calls, “pushing for growth” is a non-starter.

The influential Brookings Institution has just updated its tracking “Indices for the Global Economic Recovery”. Professor Eswar Prasad, inventor of the index introduced the latest findings with a stark warning:

The engines of world growth are running out of steam while the trailing wagons are going off the rails. Emerging market economies are facing sharp slowdowns in growth while many advanced economies slip into recession. Political fragmentation and gridlock have hurt confidence and stunted the effectiveness of macroeconomic policies. Financial markets have shed their optimism and investors are clamouring to retreat to safe havens as confidence has tumbled.

Parallel meetings of the G20 richest countries in Mexico and of 300 hedge fund traders and investors in Monaco have been able to do little more than watch the train wreck from the platform’s edge. The G20 declaration warned of the impending addition to the global catastrophe arising from US attempts to follow the European example, reducing, or even slowing the growth of its towering wall of debt.

Whilst in the European bolthole for the extraordinarily rich, Jamil Baz, chief investment strategist at GLG Partners told the speculators taking a break from sunning themselves on the terraces: “The crisis has not even started. It will take 20 years for us to reach escape velocity,” he said, tossing back another glass of champagne. “It will be devastating.”

For the Greek people, however, turned into guinea pigs by the EU, IMF and European Central Bank, their plight can’t get much worse. Tens of thousands of Greeks made unemployed and homeless by attempts to solve the deepening crisis queue for food at soup kitchens. The Orthodox Church says it is currently feeding a quarter of a million people daily. 

The Athens Chamber of Commerce says that 68,000 Greek businesses closed over the last 17 months and it expects a further 36,000 to close in the next 12 months. The economy is at a standstill. Businesses have no credit so no-one is paying for anything. The government which controls much of the economy has stopped paying its bills. As of last month, it owed nearly €7bn to the private sector. 

In 30 days it will run out of money, unless a coalition government can show eurozone authorities that it has both the determination and the means to implement a further round of brutalising austerity and so earn the next tranche of bailout funds. They’ll be certain to be relying on the fascist gangs of Golden Dawn who enjoy strong support from the police.

The Greek people are in the front of the firing line but they are not alone. The Spanish and Italian governments are screaming for more help and the terms of any deals will be no less stringent. International lenders, unimpressed by last week’s €100bn loan to Spain, have driven the country’s borrowing costs to even higher, impossible rates.

The logic of all this crash is another Great Depression, much worse than that of the 1930s, and a breakdown of political co-operation. You saw as much this week when Manuel Barroso, president of the European Commission, lost his cool in a press conference and blamed investment banks in the US for causing the recession when asked about the eurozone crisis.

Another world is not only possible but absolutely necessary for there is no way out through the current political system which is in a mutual dance of death with economic and financial elites.

A global network of local People’s Assemblies can act as opposing poles of attraction for all those whose interests lie in replacing the failed, bankrupt capitalist system. Assemblies can build on the achievements and successes of worker’s co-operatives, credit unions, and a broad range of democratically-owned and operated enterprises as the foundations of a new start. Allowing things to carry on as they are is not an option.

Gerry Gold
Economics editor

Tuesday, June 19, 2012

Poverty and inequality: the real State of the Union

As the leaders of the major economies gather for crisis talks in at the G20 in Mexico, they’ll be pondering how they can save capitalism from itself. What they won’t be doing is addressing the vast inequalities that have developed in countries like the United States.

While president Barack Obama and his Republican opponent Mitt Romney trade insults and accusations, neither will refer too often to the real State of the Union. Here, for your enlightenment, are some basic facts about a country usually described as the world’s richest nation:

Poverty: The US poverty rate is estimated at 16.0% of the population. The Department of Agriculture estimates that 14.5% of all households were "food insecure" in 2010.  

UnemploymentUS unemployment is officially 8.2%. The employment-to-population ratio is nearly 5% lower than just five years ago. Anywhere between 10 and 15 million Americans are out of work.  

Discouraged workers. Discouraged workers are persons not currently looking for work because they believe that there are no jobs available for them. The unemployment rate that counts discouraged workers has soared to 15% of the workforce.

Income inequality: The US ranks third among all the advanced economies in the amount of income inequality. The top 1% of Americans control nearly a quarter of all the country's income, the highest share controlled by the top 1% since 1928.

Chief executive officers in 1965 made 24 times more than the average production worker, whereas in 2009 they made 185 times more, falling from a peak of 300 times in 2000.

income inequality
The median value of family income, when adjusted for inflation and before taxes, fell by 7.7% — from $49,600 in 2007 to $45,800 in 2010.

Racial gaps in education. High-school drop-out rates are least among whites and highest among Hispanics, while college enrolment rates are least among blacks and highest among whites.  

Child Poverty. In the United States, 21% of all children are in poverty, a poverty rate higher than what prevails in virtually all other rich nations.

Health insurance. In 2007, 8.1 million children under 18 years old were without health insurance. Children in poverty and Hispanic children were more likely to be uninsured.

“Bad jobs”. About 10% of full-time workers are in low-wage jobs, 30% don't have health insurance, and 40% don't have pensions.  

Wealth inequality. Ownership of wealth among households in the US has become more concentrated since the 1980s. The top 10% of households controlled 68.2% of the total wealth in 1983 and 73.1% of the total wealth in 2007.

Deregulation of the labour market. The percentage all wage and salary workers who are union members has declined from 24% in 1973 to 12.4% in 2008. At the same time, the real value of the minimum wage, which fell by 25% in the 1980s, has not recovered.

Incarceration. The incarceration rate in the United States has grown dramatically since the 1970s and the US now has one of the highest rates in the world. A full 37% of those who are both young black males and high school dropouts are now in prison or jail, a rate that's more than three times higher than in 1980.

In November, the half of America that votes in presidential elections will be presented with a “choice” between Romney, whose net worth is estimated at $200 million and would undoubtedly widen inequality, and Obama who has appeased the rich and watched inequality grow since he took office in 2008.  

For a system that claims it is based on competition and choice, there is really none at all when it comes to the ballot box.

Paul Feldman
Communications editor


Monday, June 18, 2012

Divide and rule in Greece and Egypt

The sigh of relief expressed by the financial markets and the major capitalist governments over the outcome of the Greek election reveals how desperate the ruling elites are for any “good news”, however ephemeral it proves to be.

The crisis of the euro is now centred on Spain, the fifth largest economy in Europe, which now faces sovereign bankruptcy as well as debt-ridden banks. And next in line is Italy.

Whatever the right-wing New Democracy-led government cobbles together, the fact is that the Greek economy has been smashed, working people can take no more austerity measures and basic supplies like medicine are drying up.

So nothing is different this morning, except that Syriza, which wanted to renegotiate the draconian bail-out terms, did not win. The Brussels bureaucracy and German chancellor Merkel were terrified that an “unreliable” left coalition might come to power in Greece, just as the euro is in its deepest ever crisis.

But it remains a narrow victory for the New Democracy, Greece’s conservative party, which garnered only 3% more of the vote than the Syriza left coalition. Party leader Antonis Samaras is now in negotiations to form a coalition with the Pasok pseudo-Socialist Party, which received 12%, in an attempt to increase his majority – in advance of either party’s agreement to the talks.

Real fear spread in the commanding heights of Europe after the May 6 general election in Greece when the Syriza party, lead by Alexis Tsipras, appeared out of nowhere to gain some 17% of the vote. Syriza’s share of the vote has risen to 27%, thus bucking the notion that European voters cannot be enthusiastic about a left radical party.

Syriza is a coalition of 13 groups including democratic socialists, euro-communists, Marxists and greens. It is, however, pro-European Union as well as in favour of staying in the euro and simply wanted to ease the burden on the Greek people.

Tapping into the suffering caused by the harsh terms of the bailout, Tsipras has won over public sector workers many of whom have received no wages for months, unemployed young people and Greeks of many political complexions who feel they have nothing to lose by taking a chance.  

Meanwhile, in Egypt, the military has effectively seized power as the country awaits the result of the presidential election. It has issued a declaration granting itself sweeping powers. The document by the Supreme Council of Armed Forces (Scaf) says new general elections cannot be held until a permanent constitution is drawn up. It also gives the Scaf legislative control.

On the eve of the elections, under the influence of pro-Mubarak judges, Egypt’s Constitutional Court, dissolved parliament. Emergency laws were then revived, which give the military free rein to arrest civilians without reference to the courts.

It is a pre-emptive coup d’état by Egypt’s “deep state” – the military-economic establishment – has moved to forcibly end the dual power situation that has prevailed in Egypt since Mubarak’s overthrow by a mass uprising last year.

The two candidates in the election both stood for reaction. On the one side, the Muslim Brotherhood Mohamed Mursi, on the other, the continuation of  Mubarak's “deep state” through prime minister Ahmed Shafiq. So in the absence of a real choice. In both rounds, voters opted for the candidate who would best counteract the contender they do not want. In other words, “the lesser of two evils”.

Have we seen the exercise of the people’s will in either of these elections?  In Greece, even though 55% of voters opposed the pro bail-out parties, the country now has a pro bail-out government! In Egypt, the army is determined to retain control – whatever the outcome of the presidential election while dissolving parliament altogether.

Elections have made no difference in either country to decide who truly holds power. The elections were in fact a form of democracy denied, with serving to polarise and divide society and allow the elites to stay in power – a form of “divide and rule”.  The conclusion?  If there ever was a time to create new forms of democratic expression such as people’s assemblies, it is now.

Corinna Lotz
A World to Win secretary


Friday, June 15, 2012

New financial meltdown under way

The potential for a second, more catastrophic breakdown of the global financial system is the reality behind emergency support for the banks announced by the chancellor George Osborne and the governor of the Bank of England, Mervyn King.

While attention was directed at the proposal to stimulate the economy with an £80 billion fund to lend on to borrowers – which few think will make any difference – the other half of the package is more critical.

A new credit crunch is well under way, driven by the slow-motion collapse of the eurozone. Banks in Britain, like all others, need short-term loans to maintain liquidity. But borrowing rates are rising because of the crisis of the euro. This is adding to banks’ reluctance to lend to business or would-be home owners.

So the Bank of England in a scheme exotically called the Extended Collateral Term Repo Facility will make it easier and cheaper for banks to borrow at least £5bn every month to cover any shortfalls in cash, according to Robert Peston, the BBC’s man who first broke the news of the collapse of Northern Rock in 2007.

In exchange, the Bank will accept a call on virtually any kind of assets banks can offer, rubbish or otherwise. That’s how desperate things are.

Governor King said that the Bank “will provide banks with whatever liquidity they require given the prospect of turbulence ahead." There’s plenty of that about already. Yesterday, the interest on Spain’s sovereign debt rose to 7%. This is regarded as a threshold point at which repayment becomes unsustainable and a bail-out is required. Spain has already been given €100 billion this week to hand on to its bankrupt banks. Now the state itself is facing bankruptcy.

The world’s central banks are also nervously eyeing the outcome of Sunday’s second Greek election in two months. At best, it will result in another hung parliament; at worst, for capitalism, the left-wing bloc Syriza will win and demand a renegotiation of the draconian conditions attached to existing bail-outs by the European Union and the International Monetary Fund.

Either way, Greece’s membership of the euro is in jeopardy and its economy is seizing up altogether due to a lack of credit for the most basic commodities and services.

So stand by for an attempt at co-ordinated global action by increasingly anxious central banks before the markets reopen on Monday.

The options are rapidly closing, however. Providing cheap credit to banks won’t solve the problem of a contracting economy. Corporations and households alike are cutting back on spending at a time of a sharp decline in real earning power, part-time work and massive unemployment.

As King himself acknowledged in a graphic admission the “industrialised world have thrown everything bar the kitchen sink” at the global economic meltdown. Which makes his call for “bolder action” rather meaningless. Especially as China and India and other “emerging economies” are slowing rapidly, adding to what King called an “ugly picture” of the global economy.

In reality, global capitalism isn’t working and creating new credit facilities won’t make a jot of difference. The boom that collapsed in 2007 was driven by debt that ultimately undermined the financial system itself and precipitated a global recession.

Having thrown trillions of dollars, euros and pounds at the problem, nothing has changed. A “return to growth” remains a mirage. Once again, the global capitalist economy is at the precipice. An imminent lurch into outright depression is a distinct possibility.

The system of production for profit is the root problem, not the failure of currencies or banks. A more sustainable, co-operatively-based economic model is urgent. To achieve this, we want a democratic transformation of the political system to ensure we do not become the victims of a crisis not of our making.

Paul Feldman
Communications editor

Thursday, June 14, 2012

Hypermarket nation trumps Danny Boyle's vision

Film director Danny Boyle’s central vision for the 2012 Olympic opening ceremony is a representation of idealised rural life, with cows and sheep grazing, and a ploughman at work. It is, said Boyle, “the green and pleasant land. It is something that still exists, and something that cries out to all of us like a childhood memory".

How ironic that in the same week as Boyle’s attempt at nostalgia was unveiled, a report was published showing that the food networks that support agriculture in this more traditional form are collapsing under pressure from the supermarkets and out-of-town development.

A report from the Council for the Protection of Rural England (CPRE), finds that "despite their critical importance to the health of our high streets, local economies and much loved landscapes, local food networks are under-recognised and poorly supported".

The report – from Field to Fork – shows that across England local food outlets serve an estimated 16.3 million customers a week and local food sales through independent outlets are worth  £2.7 billion a year to the economy, supporting over 100,000 jobs.

“They support diversity, distinctiveness and innovation in the food and farming sectors, broaden choice for shoppers, promote seasonality, reduce food miles and shape the character of towns and countryside".

But they are under continuous pressure and cracking under the strain. As supermarkets have expanded their share of the food market to 77% of the total, they have displaced food from the high street and the street market. Where smaller supermarkets are integrated into high streets, some diversity is maintained but where they move to giant out of town locations they destroy local food networks.

In spite of many pious promises to act on reports from retail experts, including the latest one from Mary Portas, out-of-town shopping developments are still increasing.

In 1980 there were fewer than 300 superstores and hypermarkets – by 2007 the number had soared to 1,500. And by late 2011, applications had been submitted or permission granted for a reported 44 million square feet of new supermarket development, equivalent to 572 football fields, 80% of it out of town.

Local councils occasionally attempt to deny planning permission, whereupon the supermarkets simply appeal to central government or pile on the pressure until agreement is given.

The result has been a collapse in traditional specialist food stores, such as butchers and greengrocers, from around 120,000 in the 1950s to 18,000 in the late 2000s. Town centre vacancy rates now average 14% and can be as high as 30%.

The reality in Britain is of farmers struggling to get a decent return for their produce from supermarket buyers who wield market power ruthlessly. And there is now a new drive to further industrialise farming in response to this (see my recent blog on this).

Whilst the supermarkets claim to create jobs, in 1998 the National Retail Planning Forum examined the effects on employment following the opening of 93 edge-of-town supermarkets and found a net average loss of 276 jobs in each area.

For shoppers there is no real price advantage at supermarkets. They all now promise to charge exactly the same as their competitors for most brands, and try to fool us that this is a benefit, not a cartel at work.

Boyle is right - the rural landscape is what most people cherish. But the corporates cherish only their bottom line. Their vision of England is a giant hypermarket fed by industrial farmers working to ferociously low profit margins, shoppers handing over all their cash in one location for goods with little health value and of dubious provenance, low paid workers with no fixed hours, called in to work at a moment's notice – and big fat profits all round!

That wouldn't make for a great Olympic spectacle and it is certainly not sustaining what is left of the “green and pleasant land”.

Penny Cole
Environment editor

Wednesday, June 13, 2012

State is the enforcer of austerity

Q. Why did the 100 billion euro loan to bailout Spanish banks recycled from the 27 members of the European Union via the European Financial Stability Mechanism go to the government rather than, as some wanted, direct to the banks where it is needed?

A. Because the people who run the EFSM act as ciphers for the needs of the global capitalist system. And they have to ensure that states – governments, civil administrations, legal system, armed forces including police – extract the repayments on the loans from their populations.

In the social, economic and political system that operates currently there’s no other way to make it happen.

If the people of a country elect a government that’s less than willing to enact the needs of global investors, the “international community” does everything in its power to ensure that it is replaced, by a more compliant power.

It’s a salutary warning as the people of Greece go to the polls again this Sunday, deciding whether to back Syriza’s policy of opposing the bail-out conditions imposed on the country by the EU, the IMF and the European Central Bank.

Within hours of the announcement of the loan to Spain, after the briefest period of market traders’ profit-taking euphoria, the reality of the crisis returned. No amount of new credit can restore Spain, or any other part of the global economy to growth.

Potential lenders, so-called “vulture” funds, pushed Spain’s cost of borrowing to a new record of 6.8%. A further 18 banks had their credit rating reduced.

Stephanie Flanders, the BBC’s Economics Editor put it like this: “It's largely the grim prospects for the Spanish economy that has led Fitch and other ratings agencies to downgrade so many Spanish banks in recent days. Emergency lending is helpful. But it can't make the recession go away, and it can't take away the need for many more years of fiscal austerity...the vicious circle is complete. And not just in Spain.”

The second phase of the crisis that erupted five years ago is engulfing the world and the global economy is contracting. Unemployment levels are already higher in some countries than were reached in the worst period of the 1930s. Millions have lost their jobs and homes, millions more have had their wages slashed, seen pensions wiped out.

The only plans on the table from governments, central banks and international agencies like the IMF are far more doses of austerity which are certain to see more public services eliminated, and “restructuring” by which they mean wiping out surplus productive capacity.

The Greek heath service is in already in tatters increasingly unable to provide life-saving drugs, as pharmaceutical companies refuse supplies until bills are paid.

Zombie car manufacturing giant, GM, brought back from the dead in 2009, employs more than 200,000 world-wide and operates in 157 countries. With a return to growth off the agenda, GM is pushing to rid itself of responsibility for paying pensions to former workers.

Its CEO Dan Akerson, says that the European car industry has an overcapacity of 7-10 plants, and is in “constructive” discussion with unions which will see tens of thousands of job losses accompanied by savage wage and benefit cuts.

As recent history has shown, the spiral-down logic of capitalist contraction leads only one way – to forced labour. It’s no coincidence that the plight of unpaid security staff featured so prominently in the Royal Jubilee celebrations. The continued existence of the for-profit regime depends on unimaginable conditions for those in any kind of productive work, and the abandonment of the rest to their own fates.

The alternative to the profit system is one based on identifying and satisfying the needs of the 99%. To make it happen, we’ll have to replace the worn-out, compromised system of politics dominated by corporate interests, with a global network of People’s Assemblies which can take the productive resources into social ownership and set them to work under democratic control.

Gerry Gold
Economics editor

Tuesday, June 12, 2012

Another Reformation anyone?

If the Church of England really wanted to attack the government, there are plenty of issues it could seize on: child poverty, homelessness, unemployment, inequality, bankers’ bonuses, spending cuts etc etc. Opposing gay marriage neatly reveals the CoE’s priorities.

What concerns the CoE’s hierarchy more than anything else is its privileged position within the state as the established church. It gets to do royal weddings, has seats in the House of Lords for bishops and its own canon laws are recognised and incorporated by the state.

This exclusive position owes everything to political opportunism and expediency and nothing to divine intervention. In 1533, when England was under the Church of Rome, divorce was forbidden. Henry VIII persuaded Thomas Cranmer, then Archbishop of Canterbury, to ignore the Vatican, dissolve his previous marriage and allow him to marry Anne Boleyn. This set in train the English Reformation, the break with Rome and the creation of the CoE.

With congregations continuing to decline and the CoE deeply split over a number of issues like women bishops, seizing on gay marriage proposals is partly a deflection from its own internal problems. But its vitriolic attack on the government’s consultation paper is nonetheless deeply reactionary and positively feudal in tone.

“In common with almost all other Churches, the Church of England holds, as a matter of doctrine and derived from the teaching of Christ himself, that marriage in general – and not just the marriage of Christians – is, in its nature, a lifelong union of one man with one woman,” the formal response says.

Even in biblical terms, this is wrong. Solomon, the King of Israel, had 700 wives and 300 concubines, for example. The reference to “lifelong union” is almost catholic in sentiment and flies in the face of modern society, where divorce is commonplace and a large number of single households with children live with no fear of retribution.

The real concern is about remaining the established church. It fears that the duty of Anglican clergy to perform marriages for any parishioner who wanted one might disappear, undermining the CoE’s role as the state church. The hierarchy fears a clash between church law and parliamentary law could prompt a break-up of the 500-year-old relationship.

This is scaremongering nonsense. As Ben Summerskill, chief executive of Stonewall, which campaigns for gay rights, said: "I have not come across such a master class in melodramatic scaremongering - that somehow this is the biggest upheaval since the sacking of the monasteries - since as a journalist myself a decade ago I was summoned to a government briefing to be told about weapons of mass destruction in Iraq."

He finds it “odd” that the CoE “should be obsessing about a few thousand gay couples once again when there are currently three million children in Britain living in single-parent households" and there are major issues like global poverty and the HIV pandemic.

There is nothing odd about it, unfortunately.

The CoE, like all state institutions, is fighting its corner, defending its privileges and special place in the sun by citing god-given “rights”. Police do the same, and so do army generals. All change is presented as the end of civilisation as we know it. Steps towards equality are often ignored in practice, with the police being a case in point when it comes to institutional racism and sexism.

Religion should be a personal matter in any case and the state should play no part in matters of faith. Disestablishmentarianism is an extremely long word but a useful, progressive concept which can be part of the drive to democratise society from top to bottom.

Another Reformation anyone?

Paul Feldman
Communications editor

Monday, June 11, 2012

Health check reveals electoral politics is sick

Parliamentary election results across the Channel indicate that Francois Hollande’s Socialist Party will gain a majority in France’s National Assembly. But in case anyone gets too excited about a revival of the European “left”, a quick health check of electoral politics is needed.

Only 57% of French voters took the trouble to cast their votes. Former President Nicholas Sarkozy’s conservative UMP party lost support due to its austerity policies. Marine Le Pen’s neo-fascist National Front party took third place in the polls. It increased its proportion from 4% in 2007 to a total of 14% today.

In the former mining town of Henin-Beaumont in the Pas de Calais, the National Front leader has taken the lead over Left-Front coalition leader Jean-Luc Melanchon. Le Pen used scurillous dirty tricks, distributing flyers depicting Melenchon in Nazi garb or featuring messages in Arabic script.

The National Front’s electoral success may still not win it a seat in the French Assembly, but it is a clear sign of discontent in an area haunted by the ghosts of the mining industry. The fact that the Front won 42% of the vote in one of France’s most populous areas on the basis of openly anti-Muslim, anti-Europe and racist demagogy is sobering.

Meanwhile, British politicians are busy making their own bids to stir up nationalism. Ed Miliband used the jubilee flag-waving atmosphere to make crude attacks on Scottish independence with ludicrous statements that a vote to leave the UK would mean that Scots were no longer British!

New opinion polls indicate that Labour is outflanking both the Coalition parties. No doubt, this is fuelled by fears about the ConDems’ vicious austerity policies as well as the Conservative’s bad showing at the Leveson inquiry. But Miliband’s party is also playing along with backward sentiments on race and so-called welfare benefit “cheats”.

Home secretary Teresa May is close on his heels with her own anti-immigration attacks and is attempting to wave the nationalist flag even harder than Miliband. May has repeatedly demanded that the Human Rights Act be scrapped. She has now issued a warning to judges that she intends to override their powers. She wants Parliament to set out guidelines for courts that would render parts of the European Convention on Human Rights null and void.

She said on BBC1 that the right to family life (enshrined in the Convention) was “not an absolute right. So in the interests of the economy or of controlling migration or of public order... the state has a right to qualify this right to a family life”.

(Of course, the ConDems are not going to allow even their nationalism to over-ride their class-monetary “principles”. May’s willingness to break up families and deny people’s right to bring their spouses into Britain is tempered by financial considerations. While you cannot bring your wife or husband into Britain from outside the European Union if you are poor, if you earn £18,600 or more a year, there won’t be any problem.)

But in her crude attempts to ride roughshod over the “legal niceties”, her assaults on human rights are simply another way of whipping up crude nationalism. Sadly for those who hoped that the legislation would undermine endemic racism in Britain’s institutions, years of New Labour government simply made matters worse.

But for anyone who believes that Labour offers an alternative, May is merely following in the footsteps of New Labour’s Home Secretary David Blunkett. As human rights expert Dr Parnesh Sharma has noted “the Human Rights Act never really had much of a chance with Labour disowning it almost as soon as it became law.”

Samuel Johnson’s nostrum that patriotism is the last resort of a scoundrel has never been more true than today. It is the desperate resort of political elites in a discredited system that is losing legitimacy for increasing numbers of people.

Corinna Lotz
A World to Win secretary

Friday, June 08, 2012

Wanted: a democratic alternative to Merkel and Cameron

The choice between living in a European so-called “super state”, as advocated by German chancellor Angela Merkel, or an independent, “sovereign” state, as viewed by prime minister David Cameron is, in reality, no choice at all.
Merkel is in no position to enforce a complete political and economic integration of the 17 countries that make up the ill-fated eurozone, let alone the entire European Union. And Cameron is simply playing the nationalist card when he says his government will always put “British interests” first.

The driving force behind the comments made by Merkel and Cameron in Berlin yesterday is an economic crisis that has swung wildly out of control, gathering a momentum that overwhelms conventional politics as well as underming the European Union project itself.

Launching the euro in 1999 was viewed as a step towards the harmonisation of the European economy. Within a few years, it became the world’s second largest reserve currency after the dollar. Now it is on its back, brought down by debt mountains across the continent.

But Merkel is mistaken if she thinks that total integration of fiscal and monetary policy under a single European state would save the euro and/or prevent this from happening again. Leaving aside the political impossibility of her ambition, the real problem lies in the cause of the crisis itself.

Debt, as we have pointed out many times, is actually the product of far deeper problems inherent within the capitalist system, and not the source of the global crisis. The amassing of household, corporate and government debt was necessary to fund and fuel the expansion of the economy in the period of intense globalisation.

When consumers were maxed out on credit and the economy began to slow in the earlier part of this century, the banks were caught holding worthless, so-called toxic assets. They stopped lending, several went under and the world was plunged into recession. Tax revenues fell and sovereign debt soared.

The contraction is deepening. Italy’s industrial output fell a staggering 9.2% in April, it was revealed today. Spain is bankrupt and is reported to be planning to formally ask for an EU bail-out over the weekend. China’s economy has slowed rapidly, dashing the hopes of those who thought it would take up the slack.

Under these conditions, integrating the EU states into a single entity – even if this were a realistic possibility – is meaningless because the problem lies within the nature of the capitalist system itself, not political will. Naturally, neither Merkel nor Cameron can or will address this as they are ruling class politicians who endorse the status quo of globalised capitalism.

A European capitalist “super state” is an ugly and dangerous concept, as World War II demonstrated in practice. British nationalism is an equally nasty prospect, whether it is in the hands of Cameron, UKIP or the Labour leader Ed Miliband, whose reactionary speech on Scottish independence yesterday left him wrapped in the flag of St George.

There is an alternative, however. An equal partnership, even a federation, of European states committed to a joint, sustainable future is possible as well as necessary. That has to be driven by the aspirations of ordinary people themselves and not the ruling elites.
If it is made part of a project to liberate ourselves from the grip of corporations and banks, a democratically-run Europe is worth struggling for.

Paul Feldman
Communications editor 

Thursday, June 07, 2012

Old Macdonald losing out to agri-business

Pressure is building up for the creation of massive animal processing plants in the UK to replace traditional dairy and pig production, despite concerns about water pollution, animal welfare, environmental damage and the wiping out of small farms.

Farmers’ leader Peter Kendall claims large scale installations are essential to feed the population and keep food prices down. He wants permission to be given for a 1,000-cow unit in Powys and a 2,500 pig farm in Derbyshire.

Bigger farms are more profitable and can therefore afford better equipment, more space and experts able "to protect the environment and animals", he claims in the face of all the evidence.

That includes recent allegations of horrific abuse at pig farms in the US and a new report showing that most intensive farms in the EU are not sticking to agreed welfare standards.

The government also believes that intensification is needed to cope with population increase, climate change and other factors and is waiting for a working group to report.
All this is, in fact, hogwash. The intensive farming of livestock is not a contribution to ending world hunger and climate change - it is a net contributor to both.

The industrial model, far from being the answer is actually hugely wasteful. Factory farms are food consumers, not food producers. A recent UN food security report says: “When livestock are raised in intensive systems, they convert carbohydrates and protein that might otherwise be eaten directly by humans and use them to produce a smaller quantity of energy and protein. In these situations, livestock can be said to reduce the food balance."

In other words, intensive animal rearing puts farm animals in competition with people for food, and as Compassion in World Farming reports, it is people who are losing out.

- For every 6kg of plant protein such as cereals fed to livestock, only 1kg of protein on average is given back in the form of meat or other livestock products.
- for every 100 food calories of edible crops fed to livestock, we get back just 30 calories as meat and milk - a 70% loss.
- One third of the world’s cereal harvest is fed to farm animals. If this were fed to people, it could feed 3 billion.
- Up to one third of the world’s landed fish catch never reaches a human mouth, much of it is diverted to feed farmed fish, pigs or poultry.
- One third of food produced globally for human consumption is lost or wasted. In the EU, we waste up to half our food. That’s enough to feed the world’s hungry many times over.

The biggest intensive unit in the world is the Al Safi Dairy Farm, in Saudi Arabia, an underground bunker where 24,000 cattle who never see the sun produce 12 5million litres of milk a year. Hog plants in the US can have as many as 10,000 pigs and in the EU the majority of pigs are now intensively farmed.

This is not a sentimental issue, though the denaturing of animals rightly fills most people with disgust. It is to do with the future of life on the planet. Huge swathes of virgin forest continue to be cleared to grow soya, which is fed to cattle. Their waste is not recycled into the food product cycle and so the whole process becomes an absolute loss to the planet's ecology.

It is incredible that nature's best waste munchers - the pig and chicken - are being fed pure grain in intensive systems. Within mixed farming they would be far more environmentally useful.

In the UK over 800 million meat chickens are reared each year. Keeping them free range would need an area around a third of the size of the Isle of Wight, less than one thousandth of the nation’s total farmland. Integrating them within mixed farming systems would benefit production, sustainability - and the chickens. We need to take the profit out of food and tell the National Farmers Union and agri-business to take a running jump.

Penny Cole
Environment editor

Wednesday, June 06, 2012

Warnings of new economic collapse mount

With Spain no longer able to borrow on the money markets, German banks downgraded and key indicators pointing towards a massive international downturn, the global economy is heading towards a new meltdown.

As the G7, the group of the world’s richest countries, held an emergency teleconference to discuss the financial crisis in the eurozone, and its implications for the global economy, they got the news that a tipping point had been reached in Spain.

After weeks of denial, Cristobal Montoro, the country’s finance minister appealed for European leaders to allow the country’s troubled banks to get direct financial help. The country's high borrowing costs effectively excludes it from accessing credit markets.

Mariano Rajoy, Spain’s prime minister, warned that the country was in a situation of “extreme difficulty”. But the European Union only allows bail-outs through the agency of government, so Spain’s appeal is certain to fall on deaf ears.

This morning, German banks became the latest victim of the contagion of economic and financial crisis as it spreads rapidly throughout Europe and ricochets around the rest of the world.

Credit rating agency Moody’s downgraded seven German banks and their subsidiaries, including Commerzbank, the country’s second largest, as well as one German subsidiary of a foreign group. The agency said its decision was taken because of "increased risk of further shocks emanating from the euro area debt crisis," and the banks' inability to compensate for losses.

The inseparable connection between finance and economic activity – the production and exchange of goods and services it reflects – is underlined by a warning on contracting global money supply. The measure of cash and overnight deposits for China, the eurozone, Britain and the US has been contracting since the early spring. China's money supply has been falling at the fastest pace since records began.

According to Telegraph columnist Ambrose Evans-Pritchard, “any further falls risk a full-blown global recession”. The relationship between money and real production is a two-way street.  As the global slump deepens irretrievably, pressure on governments and central banks to print more money must appear in inflation – a consequential decline in the value of money – somewhere in the system.

The current contraction of money supply is closely connected with commodity prices which are falling hard, with Brent crude oil down to a 16-month low of under $97 a barrel. Sliding commodity prices are also the result of contracting production.

The predictive power of money supply figures serve to confirm the expectations of production managers throughout the world recorded in the country by country purchasing managers’ indexes (PMI). Figures below 50 indicate a contraction. The euro zone PMI fell to 45.9 in May, down from 46.7 in April. Germany’s index dropped to 49.6, down from 50.5, and that of France fell from 45.9 to 44.7.

China is far from exempt. Previously seen as an economic bright spot, its managers also expect the worst, recording negative figures. HSBC’s preliminary PMI for China fell to 48.7 in May from 49.3 the month before. The index has been below 50 for seven consecutive months.

In Britain, the PMI for manufacturers plunged to 45.9 in May from a downwardly revised 50.2 in April, its lowest reading since May 2009 and the second-steepest fall in the survey's 20-year history. Analysts had expected a more modest dip below the 50-point mark that separates contraction from expansion, to 49.8.

"This is a collapse, this is a huge decline. We're still a little bit above the lows we hit in the depths of the 2009 recession, but we're heading that way sharply," said Ross Walker, an economist at RBS.

The deepening global crisis has already left hundreds of millions of victims in its wake as they’ve lost jobs, homes, savings and pensions – and any hope of a future in the current, capitalist system. Capitalism isn’t working – let’s make it history before the world is plunged into an unprecedented depression with all the political consequences that entails.

Gerry Gold
Economics editor

Tuesday, June 05, 2012

Meanwhile, back in the real world

The establishment have milked it for all it’s worth but tomorrow, after the last stage-managed event surrounding that diamond jubilee is over, for the vast majority of the population it will be back to reality with a bang.

For the jobless teenagers bussed in from Bristol, Bath and Plymouth to sleep rough and work for nothing as stewards during the Thames procession on Saturday, it will be back to grinding poverty and a total absence of a worthwhile future.

For the unemployed it will be another week of fruitless searches for jobs; for those with disabilities, it will mean fending off intrusive medical tests (run by a private company on a pay-by-results contract) intended to force them into menial jobs.

For tens of thousands of homeless households tomorrow will mean another night in temporary accommodation, disrupting children’s education and making it impossible to bring up a family in a sustainable way.

For public sector workers, it’s the start of another month of jobs cuts and increased pension contributions deducted unilaterally on the orders of the ConDem government. And another year of a pay freeze while food prices, in particular, continue to soar.

For those lucky enough to have jobs, Wednesday will for many see a return to a hostile work environment where management makes sure everyone knows their place, getting to work on an overpriced, overcrowded transport system.

An unprecedented, co-ordinated state operation, incorporating the media and led by the BBC, has driven reality into a corner in favour of relentless pomp and pageantry that has gone on for hour after hour, day after day.

No matter that people are being slaughtered by the Assad regime in Syria, or that the Obama administration is using drones to execute at will in Pakistan, or that the global economy is irreversibly heading for a second, far worse crash. More important, beacons are being lit across Britain, loads of boats are struggling down the Thames and some pop stars are holding a concert outside Buckingham Palace.

The last few days have seemed virtually authoritarian in atmosphere, with a contrived “celebration” organised to mark what? The fact that a privileged woman, a huge landowner with several palaces, immense wealth, including a hidden collection of masterpieces, has held an unelected position for 60 years.

Discredited politicians have tried to use the occasion to create a sense of flag-waving Britishness that died with empire and is not particularly supported by the citizens of Wales and Scotland, let alone the minority population in the north of Ireland.

The ConDem government, perhaps the most despised in recent history, no doubt hopes that the queen’s diamond jubilee has taken some of the attention away from its austerity policies which have helped to deepen the recession triggered by the financial crisis of 2007-8.

Of course, the monarchy is not the all-powerful ruler who cites divine authority from God. That period of history ended with the execution of Charles 1 by Cromwell’s parliamentary forces in January 1649.

But it symbolises the fraudulent nature of what passes for democracy despite the immense struggles of the Levellers of the English Civil War, the radical movement of reformers of the late 18th century, the Chartists of the 19th century and the Suffragettes of the 20th century.

Present democracy is little more than a show, a façade behind which corporations and financial institutions, markets and bond dealers, call all the shots. The monarchy is part of that theatre, with Her Majesty’s government the accomplices who direct the state to give big business what it wants and needs.

A fresh constitutional settlement is urgent to meet the aspirations of a disenfranchised majority of working people, replacing the power of the corporatocracy. Such a democracy could never include an unelected, hereditary head of state but would instead express the power of those whose labour actually makes society possible. Tomorrow is as good a time to start on this project as any.

Paul Feldman
Communications editor