Thursday, April 30, 2009

The End of a Course on the History of Socialism and Communism

by Norman Markowitz

I am ending a course that I teach tonight in the history of Socialism and Communism. The students will be a little nervous because they are giving in their term papers and taking their take home finals to write. It is big course and a do a lot of other teaching and we are fighting to maintain our union contract so I will be working harder than usual and may not write for the blog as much as I would like

So I thought that I would give our readers both highlights of the final points that I will be making and also attach the exam for those who would like to respond to it. This is an experiment, a sort of Open University of the PA blog.

My first point is this: the developments of the late 20th century, seen widely as socialism's end, can also be seen as socialism's beginning/. the capitalist world system has produced not only a glutted grossly unequal global market, but transnational productive forces that have deepened rather than overcome its contradictions Capitalism seeks to make everything small and isolated, people and nations, to make the world into a very few little Switzerland's(rich, uncaring and expensive) a lot of little Guatemalas(poor and becoming poorer) and ,where possible a fair amount of big and little Congos, places to exploit raw materials, sell weapons, and make the oppression of the people largely invisible

The failure of socialist states and societies are real, mostly the failure to develop a socialist world system(the Soviet-Chinese conflict really crippled that possibility) but capitalism, as it carries forward an overproduction has produced mutual underdevelopment, stagnation in the rich countries, and deepening imisseration in the poor ones. And all of this, was demonstrable before the present economic crisis, the greatest since the great depression. If it weren't, there would be higher, not lower international labor standards, less, not more global "underdevelopment" in the form of destitution poverty and its many ills, from severe malnutrition to the lack of elemental sanitation, not to mention access to housing.

The "new world" economy has also produced what progressive historian Charles Beard long ago called "perpetual war for perpetual peace." Although Beard was no Marxist-Leninist, Lenin's theory of imperialism helps us and were he still alive him understand the truth of his comment. Conflicts between great powers over export zones, raw materials, captive markets, the development of economic blocs to protect their members and challenge others, and most of greatly increased militarization has become a much more central part of political economy and society. Lenin contended that capitalism in its imperialist phase could not create a stable world order, could not even stabilize itself, much less raise world living standards. It could only create bigger wars and revolutions.

But what about socialism? Marx and Engels saw capitalism developing fully after political revolutions for capitalism (whatever its leaders said the revolutions were for) followed a long period of capitalist development in the form of commodity production and the rise of a capitalist class seeking political power to both keep and expand its developing economic power.

This was why Marx and Engels, without ever making specific predictions, saw the rising working class in the most advanced countries as the center for the establishment of socialism through political revolutions that would organize society on socialist principles, because capitalist relations of production were completely dysfunctional to its development just as feudal relations of production were completely dysfunctional to the capitalist class and was no longer tenable for the masses of peasants producing agricultural goods according to the feudal system.

It may be that socialism will once more be centered in the advanced countries, although, as underdevelopment becomes mutual, the possibility of a world socialist system will become real as a global labor movement and political authority will become the only way to prevent economic and social collapse. This won't be any socialist "utopia," but a response on the part of the working classes of the world to save themselves from an emerging capitalist dystopia.

Of course, Marxism provided a framework to understand real social conditions and their historical roots. We can't say what China's socialist market economy will become and whether it will become a new model for socialism as the Soviet Union's centrally planned economy was in the past. We can't say that new peoples revolutions will not develop, even here in the U.S. and contribute both models and practical assistance to people struggling to achieve socialism. We can't even say that new horrors in terms of both economic crisis and political reaction, both old and new forms of fascism and new great wars are unlikely, not even impossible. But we, and this is my view can say that capitalist crisis, long chronic, is now becoming acute and that in the
world today,only socialism, not narrowly defined and restricted to one model or set of dogmas, is the only system/mode of production/ way of life that can positively replace capitalism

Those are the major points of the lecture. Here is the exam as we make the PA blog today an open university:

Take-home Final Examination Due Monday, May 7 7 P.M in class

l. Beginning with the Russian Empire Socialist Revolution of 1917,
Marxist socialism was both divided into Social Democratic and Communist
wings and transformed into a global movement.This divided movement
struggled both against itself, against local ruling groups and against
powerful foreign states, both liberal capitalist and fascist states,
throughout the 20th century, suffering both huge victories and major
defeats over the last ninety years.
From both class lectures and your readings in Eric Hobsbawm's Age of
Extremes ,including our earlier theoretical readings, classwork and
films,ask yourself the following questions:What were most important
achievements and failures of socialist movement in both its Communist
and Social Democratic wings in the twentieth century in regard to both
its attempts to gain power in and change the world?
Finally, and this is your speculative analysis based on what you have
studied and learned, what would you see as the future of both Marxist
ideology and the socialist movement today?

I am interested in learning what you have learned analytically about the
history of socialism and communism in the course as seen by your
selection of relevant material to develop your points, to chose
intelligently what to present and omit. Of course you are free to
disagree with and challenge anything from the readings class lectures
and films in developing your answer. Try to keep the exam in the range
of five to eight typewritten pages; this is a guideline. Answer the
question as fully as you think you have to



Here are five more books we need to review. If you would like to tackle one for us (about 800 words) please contact me at not with Comments below]-- Thomas Riggins, associate editor PA.

1.Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill) by David Cay Johnston

2. Crazy for God: How I Grew Up as One of the Elect, Helped Found the Religious Right, and Lived to Take All (or Almost All) of It Back by Frank Schaeffer

3. The Shadow Factory: The Ultra-Secret NSA from 9/11 to the Eavesdropping on America by James Bamford

4. Loser Take All: Election Fraud and The Subversion of Democracy, 2000 - 2008 by Mark Crispin Miller

5 The American Way of War: Guided Missiles, Misguided Men, and a Republic in Peril by Eugene Jarecki

First 100 Days comment

January 20 to April 30, 2009


How do you evaluate, comment, or just think about the first 100 days following 30 years of ultra-right Republican rule, with a slight respite of 8 years under the Clinton Administration? But, even there, the ultra-right Gingrich Congress, 1994-2000, trumped any moderate or decent policies the Clinton Administration sought. That this 30-year period of Reagan/ Bush and Bush carried with it a strong whiff of fascism is not a light description.

The affects of those 30 years most felt most strongly by the working class and nationally oppressed minorities in the US. That period unleashed economic and military weapons of imperialism in the broad Middle East area and around the world. It carried massive suffering and oppression.

Voters in the year 2008 elections sent a clear message to reverse that direction. The House of Representatives now has a massive Democratic Party majority. The U.S. Senate is also heavily Democratic. But, due to archaic Senate rules, a 60-vote majority is necessary for action on most controversial issues. The Democrats sit at 59. And, in the White House is the first African-American president in the history of the USA. For the first time in decades, these unique political ingredients are in place.

The Democratic Party platform and election promises by Barak Obama are now being put to the test in the traditional First 100 Days Assessment. Mass media, right wing, conservative and liberal/progressive circles are giving their spin to the new Administration. It is fitting that the Political Affairs of the CPUSA do the same.

This takes us back to the original premise. How do you evaluate/assess 100 days against 30 years of backwardness?

Our assessment of these first 100 days should avoid the liberal critiques, which push for traditional Democratic Party proposals. They should avoid also placing a screen on the activities of the administration, which are totally unrealistic.

We understand that large sections of Capital/Wall Street were very unhappy with the net results of the last 30 years. We know more importantly that workers, their families and communities were angry and are demanding a new economic and political course/plan.

A Unique Crisis?

The worldwide economic and financial crisis has struck at the heart of the capitalist system. Massive structural changes are taking place in regard to national and international economic development. Individual states in all of the US are reeling with massive budget deficits, each of them demanding concessions, in the main from working people and very little from the wealthy and powerful.

The goals of liberals and some progressives are to simply return the US to by gone years. There is talk about significant change, but in reality, that kind of change is not being sought. For the rest of the Congress, there is little or no desire for significant change.

Republicans, libertarians and other rights wingers demand more tax breaks for the wealthy and corporations; and, massive anti-working class cutbacks.

For left and Communists, when they see current crisis, they think back to the crises of the 1890s, 1907, the 1930s and for those aware of Asia, the 1990s. They see the time for radical change, change that would finally put Capital in the back seat and the working class in the driving seat of history.

The Democratic Party Majority

For us, we understand that the Democratic Party is not a united, progressive party. That is why the Progressive Caucus, the Black and Latin Caucuses and others are organizing within the Democratic Party to move that party in a progressive direction.

We also understand that the Republican Party, what is left of it after the 2008 elections, is a super right wing, with the whiff of fascism, as it was under Reagan and the Bushes. They may be a little smaller, but not less dangerous. [Most moderate Republicans lost their elections in 2008.]

Progressive elements within the Democratic Party know that they cannot achieve their goals without the broader movement taking making actions.

The vital independent role of the CPUSA and the left in regard to the Democratic Party is crucial. Working both in and outside of the mainstream will be necessary to achieve radical changes that are clearly needed. Establishing a strong set of independent goals and activities, which have our sights on a Socialist solution, is on the agenda.

Our Movement

The peoples' movement must come out of this crisis stronger and able to continue to struggle for democracy and economic rights. The current individual struggles are not in and of themselves sufficient. This means that everyone's struggles are everybody's struggle. Certainly, there must be major advances in housing, education, health care and other socio-economic needs; but they must be seen as a whole or else they will be picked apart. The leaders of these progressive movements must remain in constant contact and work in coalitions when possible. The Party's role is crucial in making this happen.

By doing that, we can emerge stronger into the next stage.

After 100 Days

There is no question that the new Administration hit the ground running on January 20th. It has been working at a fever pitch, which corresponds, to the general crisis. On the other hand, the Republican Party has been doing the opposite. Opposing practically all proposals, hoping for a repeat of the 1992-94 period, which this strategy netted them the 1994 Congress, and 6 years of fascistic kinds of proposals. It also set the stage for 8 years of the Bush Administration. This doomsday strategy by the right wing must and will fail.

Before making a few comments about the January 20 to April 30 periods; it must also be said that any assessment must also look to the future for greater and broader political action. Becoming discouraged or too optimistic over each of these issues or together is not an option.

Some issues/Some Thoughts:

The Financial Crisis

There is widespread understanding and agreement that the Administration needed to invest more public money in the economy. And, that more public money will invest in the near future. Putting all or far more public control of these taxpayers money in public hands was a demand that most progressive economists made and are still making.

The appointment of routine Wall Street operatives to key Treasury and related positions, while expected, is still worrisome. The decisions in this arena followed suit.

The Federal Budget

Health care – The federal budget put forward by the Administration put hundreds of millions of dollars aside for health care issues. This move was unprecedented. Clearly, the Administration set the course for a strong action on health care. The setback by having to remove Tom Daschle from the leader of the health care policy arena did not appear to set back actions to be taken. Daschle's ties to the medical/health industry may have hurt the Administration's goals. The health policy person appointed is worrisome; her track record with the Clinton Administration was not good. The new head of Health and Human Services, the governor of Kansas, has a strong pro-women record. She is untested on serious health policy issues.

The Administration made it clear during their campaign that it would not be seeking a "Single Payer" approach to the health care crisis. In response to that, the demand from the Progressive Caucus is that short of the "Single Payer" approach, it, "will support comprehensive health care reform legislation only if it includes a public plan option on a level playing field with private health insurance plans." This "Public Plan" means a government option that would mirror the Medicare Program. The Administration is silent on this option as we complete the first 100 days.

The Senate, lead by center/right Max Baucus of Montana and liberal Ted Kennedy, has made an announcement that it will be "marking up" a legislative proposal by the end of June, 2009. If accomplished, this will be a major feat; and, clearly set the stage for not repeating the 1993-94 fiasco.

If Baucus's proposals, as stated over the past 6 months, prevail there will be a public option, an option that will require expansion, but at least it will be on the table. The extent, to which Medicare will be the model for the public program, is the extent to which the proposals will work.

The Administration signed legislation to expand health care for children, SCHIP, which was vetoed by the Republicans. Stem cell research was also expanded, reversing years of anti-stem cell research actions by the Republicans.

Both within the United States and via its foreign policy, the new Administration has completely reversed the anti-women proposal of the Bush Administration, especially those involving reproductive rights.

Equal pay for woman, another decision of the Administration, while not seen as a health issue, is one.

Also, as of March 1, 2009, workers layed off will have 2/3rd of their continuation of benefits {COBRA] paid by the federal government, making health services, at least for one year affordable.

Also, the level of discussion on various public health care and health care delivery issues are on the highest level in decades. For example, community health centers are sure to get expanded financial support.

Also, an effort by some conservative Democrats to have veterans seek health care outside of the Veterans Health system was stopped. The President made a special presentation that VA health services would be expanded.

Education - Here the Administration is repeating its campaign promise of strong public education with an equally significant push for charter schools. The Administration rejected vouchers. Almost every education teacher, administrator and policy person rejects charter schools, especially with their increasingly disastrous record experiences. The Administration has promised close oversight over charter schools.

Social Spending - Issues like housing are crucial as the mortgage crisis deepens and homelessness increases. Public housing is not even on the agenda. That has to change. Housing is a public health and human decency issue.

Military Spending – Military spending is a health and other social services issue. Money for armaments takes money from social needs. It appears that the Pentagon military budget is increasing but at a less rate. Anti-war and peace loving people oppose this increase and want far bigger reductions in military spending.

War and Peace

Candidate Obama is, unfortunately, fulfilling his campaign promises in regard to Iraq and Afghanistan. Stopping increases in these wars and ending them will be necessary to achieve every other program in Congress. The pursuing of the Vietnam War destroyed the successes of Lyndon Johnson's years, i.e., Medicare/Medicaid, Civil Rights legislation, etc.

Open opposition to water boarding and other acts of U. S interrogation that were terror acts themselves was very good And, the closing of Guantanemo were welcome policy decisions.

The appointment of routine foreign policy people to all key State and Defense Department positions does not auger well.

Climate Change and Global Warming

Signing the Kyoto Agreements and pushing strong environmental controls, the Administration seems on the right track. The appointment of decent scientist to key environmental position looks good.

The Working Class and Labor

The appointment of decent to pro-labor people to key labor department positions is very good. This is the first time in 30 years that such appointments were made. Hilda Solis as head of Labor and Jordan Barab in job safety and health could not be better. Also, the lead labor lawyer for the Department has a strong record of being pro-worker.

Signing the equal pay for women was a major action in the first days of the Administration. It was the "Lilly Ledbetter Fair Pay Act." The act will allow for much longer times periods for workers to sue their employers.

The most important legislative action that the Administration can do to support the working class and labor is to make sure the Employee Free Choice Act is passed. The Administration still seems to support this, but there is deep worry that he will not use his power over Congressional Democrats and wavering Republicans to win passage.

The passage of EFCA will bring unionization to hospital workers, autoworkers and every other worker in the South, southwest and all across the country where the hope to join a union had been very dim, if not nonexistent.

Corporate fears that EFCA will change the landscape of labor and management relations are absolutely true. That is why they are fighting tooth and nail against EFCA.

This is the first time in 30 years that labor law reform is possible. Getting will hard, but the table is set for the victory.

Women's Issues/Gender Issues

Reproductive Rights are being restored from the ultra-right wing. Important strides are being made here.

The Fights Against Racism; Xenophobia

President Obama's trips to Europe, Latin America [Trinidad-Tobago] and Mexico are rubbing out the harsh ultra right memories of Reagan/Bush. The next steps will follow with the substance of the Administration's policies.

Changing the Role of US Imperialism

Foreign Policy and Interests – So far the Administration is saying all the right things at the International meetings and bi-laterals meetings. In Europe and in Latin America, the Administration is turning away from the Reagan and Bush years of Xenophobia. The next steps will be closely watched.

Nuclear weapons/Star Wars

Signing the non-proliferation treaty and other statements are a very good sign. This is a great public health measure.

Middle East/engagement/dialogue

Assigning George Mitchell for Middle East negotiations was a good step. His experience in Northern Ireland and England should be useful. Outreach to Syria, Lebanon and Iran are all-important steps. Events seem to be moving away from the ultra right Bush years.


There is a new engagement underway, which seems quite refreshing. What actually happens will be closely watched. The activities of the movement will be instrumental in influencing the direction of the Administration in the next period of time.

Shifts in the Mainstream Parties

The move of Arlen Specter to the Democratic Party is a sign that the ultra right policies of the Republican Party are wearing thin on mainstream Republicans. It is also a sign that the new Administration is winning over centrist's elements. Just what this means for major policy issues, such as, health, labor, education, housing and environment will again have more to with the peoples' movements than these shifts. But, the shifts are important to watch and evaluate.

The Socialist World

How the Administration deals with Cuba, China, Vietnam and other Socialist and workers lead countries is yet to be seen. The Administration engagement in South America, i.e., Venezuela, Bolivia, El Salvador, Ecuador and less so countries like Brasil, Argentina, Chile and other countries; will be closely watched over the next period. There are strong signals that the Administration is moving in a good direction. Of course, the other side is that the decades of imperialism by the USA over all other countries in the Western Hemisphere is still very much alive and potentially aggressive. That tension will respond to the pressure of peace and democracy; that pressure must be applied.

Pandemic flu actions

Pandemic Flu Requires Social Solidarity; NOT ISOLATION

Phil E. Benjamin

Dr. Margaret Chan, Director-General of the World Health Organization, has called for Social Solidarity to stop and turn back the flu pandemic gripping the world. She made it clear that the pandemic meant, by definition, operative for about 5 years, that if this kind of occurrence includes many countries, than it is determined to be a pandemic.

The next part of the definition is the severity of the problem. And, that has yet to be determined.

She called on drug manufacturers to set aside their profit goals and see the production of anti-viral medicines as part of the social solidarity needed in this time of crisis.

$1.5 Billion in the U.S.

President Barak Obama, with congressional approval, has budged $1.5 billion to control this flu virus.

Using Dr. Chan's warning, this money must not be fed to the drug companies. If necessary, the U.S.'s own laboratories should be used to furnish anti-viral drugs to people in need.

The $1.5 billion should be used to rebuild the U.S. public health infrastructure that is in great disrepair.

Today's NY Times article, "Recession Has Left Health Agencies Weakened in Swine flu Flight, Officials Say," document the crisis in public health in the United States. NACHO, the National Association of County and City Health Department, has called for immediate action to replace layed off professionals, doctors and nurses, and the hiring of public health educators to teach people the simple activities of public health.

ASTO, the Association of State and Territorial Health Officials, have also chimed in with the crisis on that level.

Solidarity Across the Borders

There is a great need for solidarity between United States and Mexico at this time. President Obama will not be closing the borders!

LETS GET TO WORK!!!! Start with the simple act of washing your hands, covering your mouth when coughing, and similar things. Then call upon your elected officials to support public health agencies across the country and around the world.

House Committee hearing on OSHA and worker protections

GOP says hate crimes are protected free speech

by Joel Wendland

In preparing for an article on the passage of landmark hate crimes prevention legislation, also known as the Matthew Shepard Act, in the House yesterday, I watched some of the debate on the floor of that august body. But I had to turn it off, it was too infuriating. The rationale put forward by the GOP leaders for their opposition to the bill was that hate crimes are protected by Constitutional provisions of free speech.

If you pass this bill, one GOP member after another repeated, people who urge anti-gay hate or violence against gay people (or for other legally protected categories) will be "chilled" into silence. Rep. Virginia Foxx (R-N.C.) led the GOP side of the debate, and again and again she defended the right of people to hate and to commit violent acts against LGBT people.

Texas Rep. Louie Gohmert even read St. Paul's proscription against homosexuality into the record – notably ignoring Christ's commandment to love even your enemies – arguing that any Christian who believes in the Bible would be subject to prosecution under the law because of that passage. Gohmert ignored the fact that the Old Testament records God's commandment to the Israelites to commit genocide against the people living in Canaan and seems to have not noticed that no one has been prosecuted for war crimes because they may believe in the justice of that act (or of stoning of adulterous women or segregating women during their menstrual cycle etc.)

The Republicans' new found civil libertarian streak appears out of nowhere, however, suggesting deep hypocrisy on the matter. Where was their impassioned defense of the free speech rights of the Dixie Chicks, for example, when their rather mild 2003 criticism of George W. Bush earned them death threats and CD burning parties by some in Republican and right-wing circles. Silence from free speech civil libertarians like Reps. Foxx and Gohmert when a radio station ordered its DJs to not play Dixie Chicks song because of their comment.

Over and over again Republican pundits and politicians told the Dixie Chicks to "shut up and sing."

Others who offered criticisms of Bush were repeatedly accused of treason or lack of patriotism. When former Attorney General John Ashcroft told Congress and the country that criticisms of the administration and dissent from its policy amounted to aiding terrorism, not a peep from Republican stalwarts now defending the rights of hatemongers to express with actions their hatred of people they don't like.

Apparently, for Republicans, free speech is reserved for those who hate and commit violent acts motivated by hate.

It would be good to see civil rights and civil liberties groups spend about, I don't know, $1 million in Foxx's district to defeat her in the 2010 election. I bet it could be done.


Misunderstanding Marx: Brad Delong and the Collapse of Neoliberalism

by Thomas Riggins

The blogosphere has lately witnessed some interest in a lecture, "Understanding Marxism" posted by Professor Brad Delong of the University of California and a former Clinton administration official. Delong calls himself a neoliberal economist and his lecture is such a confused jumble of misrepresentations and misunderstandings of even the most elementary rudiments of Marxism that its refutation will serve the two fold purpose of clarifying some elementary ideas of basic Marxism 101 and of exposing the absolute insipidity of neoliberal thinking.

The first thing that struck me about this article, "Understanding Karl Marx" by Brad Delong, besides how poorly written it was, is how uninformed the author appears to be on both the origins of Marxism and just what Marx thought. It takes a lot of HUTSPAH to write an article when you don't yourself appear to understand what you are writing about.

Take the opening sentence of the article: "In the beginning was Karl Marx, with his vision of how the Industrial Revolution would transform everything and be followed by a Great Communist Social Revolution-- greater than the political French Revolution-- that would wash us up on the shores of Utopia." Already we can see Delong's understanding is based more on Tom Stoppard than Das Kapital.

Anyone familiar with Marx realizes that he was not the "beginning" of the theory and practice of socialism associated with his name. Both he, and his intellectual collaborator Frederich Engels, arrived at their theories based on the work of a long history of thinkers, both in economics and philosophy, that preceded them. Neither were "utopians" in any use of that term that is relevant to the history of early socialist theory or practice, nor would they have juxtaposed a communist revolution as "social" as compared to an inferior French revolution that was "political."

This first sentence is a hint of what is to come. A series of ill informed assertions and claims, without any supporting arguments in most cases, personal opinions and prejudices put forth in a pontifical manner, and value judgments dished out as if they were factual statements. I haven't the inclination to deal with all the nonsense in this garbled attack on Marx, but I will highlight a few examples of what I am referring to to give the reader some basis to evaluate my criticisms.

Delong says that Marx was "part prophet" and gives some of Marx's opinions about the future of India to demonstrate that he was a failure. This from a man who considers Milton Friedman and Lawrence Summers as two of his gurus and was caught as flat footed as were most in his profession by the collapse of the world capitalist economy.

What did Marx say about India? He said that building a network of railroads would be the "forerunner of modern industry" in that country. That this would lead to the economic development of India but it would not solve the problems of backwardness and poverty for the Indian masses. Every thing Marx said in the rather long extract Delong gives from his writings on India has come to pass. All, except one thing. Marx claimed that until socialism is established in the most industrially advanced countries (and thus is introduced to the more backward) human degradation and exploitation will continue under the capitalist system.

To this Delong replies: "Large-scale prophecy of a glorious utopian future is bound to be false when applied to this world." He follows this up with a lot of idiotic comments about the New Jerusalem and Marx's not having visited the island of Patmos (the old stomping grounds of St. John the Divine). Delong clearly thinks that human exploitation and degradation will never end in any kind of socialist future. He is perfectly content with making his own large-scale prophecy and ridicules Marx not so much for prophecy making but for not seeing the future through the eyes of the Ayatollah Friedman-- the true prophet of the glorious future of the unregulated market.

He now tells us what he sees as the "three big ideas" of "Marx the political activist." All three turn out to be theoretical ideas (which were never held by Marx in the simple minded way Delong presents them) and have nothing to do with activism. Marx's activism consisted of forming the International Workingmen's Association, agitating for reforms and improvements in the conditions of the working class (and the abolition of slavery) by giving talks and speeches to worker's groups, and writing popular pamphlets and newspaper articles to raise the class consciousness of working people.

Here are the three "activist" ideas according to Delong. First, before capitalism, exploited people were hypnotized into believing their exploiters "deserved" to take their spoils, but under capitalism "naked exploitation" would be revealed and "class society could not survive." Delong thinks this "completely wrong." But Marx had no such thoughts about the exploited people in pre capitalist times, being fully aware of the numerous slave rebellions and wars against exploitation in the classical world and of the many peasant uprisings in the Middle Ages. As for the awareness of the "naked exploitation" of capitalist society, well the outcome of this is yet to be determined, but Marx was under no delusion that "awareness" alone (i.e., class consciousness) would lead to liberation. He was talking about the struggle of an entire historical epoch, a struggle that is going on at this very moment and we understand very well whose side Delong represents.

Second, the ruling class will never share the social product they control with the workers. Social democracy, which provides income relief and social benefits for the working class will "inevitably collapse or be overthrown" because the right wing doesn't believe it is just to pay workers more than their "marginal product" ( which can only mean to pay them more than the wages socially necessary to reproduce their class). This is very confused thinking. Delong means a faction of the ruling class will never share the wealth because for social democracy to be overthrown by the right wing, then the "left" wing of the ruling class would have to be in power. In a proper socialist state there would be no right wing left to overthrow the workers. But Marx cannot have thought along these lines because in his day there was no distinction between "social democracy" and "socialism." Delong is trying to read back into Marx his limited understanding of twentieth century history.

Third, Marx thought people would work in factories and live in cities, realize their common interests, revolt, and make a just society. Peasants could not do that because they were isolated in the old days and were like "a sack of potatoes which can attain no organization." Delong has obviously missed The Peasant War in Germany when thousands of sacks of potatoes from all over the place rose up to prevent themselves from being mashed, roasted and boiled. Delong tells us that working class consciousness "as a primary source " of identification was weak as ethnos and nationality were more important. He gives 1914 as an example. It is true working class leaders in most countries sided with their governments but not all. The socialist leaders in Russia and the U.S. did not, for example. But workers still thought of themselves as workers for all that. Class struggle and class consciousness still dominate many sections of the working class in different countries and defines their political struggles to this day. Here I think Delong mistook a passing phase for an enduring trend.

Next, Delong moves to "Marx the economist." Here he discusses six of Marx's "big ideas" which he classifies as the "the three goods and the three bads." Lets look at the three goods first.

1. He says Marx was one of the first to realize that periodical crises were a feature of capitalism. By gosh we are having one of them right now-- with Delong's buddies and acquaintances, Tim Geithner, Ben Bernanke and Larry Summers, "in the Hot Seats." But not to worry. Delong tells us he doesn't think that Marx is correct in holding that "financial crises [Marx speaks of crises of over production] were evidence of the long-term unsustainability of the system." Well, that's a relief. "We modern neoliberal economists," Delong writes, "view it not as a fatal lymphoma, but rather like malaria." Delong says we have the tools to save the economy these days-- they are Keynesianism, or if you don't like that, we have monetarism (Friedman). The fact that we can choose, as we "prefer" Delong says, between two conflicting theories gives the impression that neoliberals don't know what they are talking about. In any event, since crises are like malaria they are not "life threatening" but more like "occasional night sweats and fevers." Delong says we have the "economic policy quinine" [two flavors in fact] to manage the problems. I sure hope no one discovers that there are drug resistant forms of malaria. The patient just might die!

2. The second good was that Marx got the industrial revolution right, that it had the possibility to create an abundance to make a great a society where "we people can be lovers of wisdom without being supported by the labor of a mass of illiterate, brutalized, half-starved, and overworked slaves." Delong says that previous societies needed these overworked slaves to produce the surplus that the thinkers and lovers of wisdom needed to live off of. Delong is correct if he thinks Marx saw that industrial capitalism would lead to the abandonment and abolishment of slavery as the major source for the extraction of surplus value for the ruling class and that wage labor (or wage slavery) would become the new means to extract surplus value. In fact feudalism had already abolished slavery. But he is a real nit if he thinks the capitalist system which he is so enamored of, has come anywhere near doing this. Workers in the advanced capitalist countries certainly live better than they did two hundred years ago but they are not part of that "we" that Delong is part of that can sit around loving wisdom all day without depending on the labors of others. The conditions of living of most working people and especially agricultural workers all over the world leaves much to be desired. Marx thought that the possibility of abundance for the people's of the world abided in the creation of SOCIALISM not NAFTA.

3. The Third Good, according to Delong, was that Marx got a lot of the history of England right and his history of the development of capitalism 1500--1850 is still "worth grappling with." Delong agrees with Marx that "the benefits of industrialization" take "generations to kick in" while the "costs of redistributions and power grabs in the interests of market efficiency and the politically powerful rising mercantile classes kick in immediately." This is a round about way of saying capitalism benefits the elite (the capitalists) from the git-go but workers and ordinary people have to wait "generations" to get any benefits. This is the really, really, really slow trickle down theory. Well, so much for the three goods, lets look at the three bads.

1. The First Bad. Delong says Marx holds that increase in labor productivity leads to lower wages for workers therefore capitalism leads to "a combination of obscene luxury and mass poverty." Delong says this is an "empirical question" and he just thinks Marx is wrong. Yes, and Marx would agree with Delong if that is how the problem is formulated. There are issues here. Marx distinguished between absolute and relative wages and said that as labor becomes more productive its RELATIVE position with respect to the capitalist widens. An example would be the gap between the average workers pay and that of the top capitalists was about 1 to 40 twenty years ago and its now about 1 to 400! Marx talked about the ABSOLUTE decline in wages (or income) for the unemployed people who made up the reserve army of labor and others marginalized by society-- the homeless, the mentally ill, the uneducated, etc. The second issue is that Marx was writing about capitalism as it was in the 1850s-- not the capitalism of today that has implemented REFORMS to prevent this absolute immiseration of people. Reforms in large measure prompted by the growth of the labor movement and the influence of progressive demands inspired by the works of Karl Marx. So, Marx was basically correct and the First Bad is not a bad at all.

2. The Second Bad. Delong says Marx thought working for wages was bad and wanted a more humane society so people could "serve their fellow humans." Marx didn't express himself this way at all. He didn't talk about wage labor being "bad". He analyzed how capitalism functions and what its consequences were. Delong thinks he was moralizing about the poor living conditions of the workers in his day. Delong says he thinks "Marx mistook the effects of capitalism for the effects of poverty." What Delong doesn't see is that if you live under a capitalist system and have widespread poverty, that poverty is an effect of the system. Anyway, Delong is all for the "cash nexus" relations of capitalism. People who try to build society on other foundations "do not wind up in their happy place." I suppose we are in a "happy place" today. But that's life. "We neoliberal economists," Delong writes, "shrug our shoulders" and believe "there is no reason why people cannot find jobs they like [he has got to be smoking something-- they can't find jobs at all!] or insist on differentials that compensate them for jobs they don't." Really now. I don't like my job and I insist that I get paid more money as a result. After all wages are not determined by the costs of replacing labor power, but by whether or not I like my job. If I Iike it you can pay me less by the way. This guy is supposed to know something about economics?

3. The Third Bad. We are told Marx thought capitalism "was incapable of delivering an acceptable distribution of income for anything but the briefest of historical intervals." Why? Delong thought Marx was "pushed" to that view by watching the rise to power of Napoleon III backed by a ruling class that thought democracy only lasted as long it could "pull the wool over the workers eyes" and" their property would be saver under a dictatorship." This is actually a meaningless theory as Delong gives us no way to quantifiably measure what he means by "acceptable distribution of wages" or "briefest historical interval." Marx thought that capitalism functions by exploiting the labor power of workers and extracting surplus value from it. In Das Kapital he provides a mathematical formulation of this thesis which allows for the quantification and measurement of the factors involved in this process so that scientific understanding can be achieved. Delong provides only feeling, half baked opinions and vague impressions, all, very subjective, of why he "thinks" Marx is wrong. He tells us that an acceptable income distribution may be hard to maintain but Marx is too rigid in saying the ruling class is "incapable" of providing it. A counter example is Europe in the last 50 years [no U.S. example?] where the creation of "the twentieth- century social democratic mixed economy democratic state can abolish all Marx's fears that capitalist prosperity must be accomplished by great inequality and great misery." Does it now? Social democracy has mixed a great deal of Marxism into capitalism to get that hybrid economy-- progressive income tax, public education, a "well-established public safety net"-- all adopted from the demands in the COMMUNIST MANIFESTO, and not very high on the to do list of American shoulder shrugging neoliberals. Meanwhile, since the "Crash of '08" the working class in Europe has become mobilized to fight back against neoliberal policies which want to shred the safety net and roll back the worker's gains of the last 50 years. In the U.S. workers and their unions are also gearing up to fight back against neoliberalism: you have only to look around you to see that Marx's views are so far superior to the ramblings of Delong and his fellow neoliberals that professional economists (non Marxists) are no longer to be taken seriously.

Delong thinks Marx was a great thinker, almost as great as he himself, (remember the Three Goods) and now wants to figure out how he could have arrived at the Three Bads (which we have seen are really just another Three Goods, for a total of Six Goods.) All Marx's mistakes, Delong says, ultimately derive from two sources: Hegel and Engels.

Lets look at Hegel first. It appears that Delong was bored by reading the first chapter of Das Kapital (he says so) and didn't understand it all. He was especially driven to distraction by the last section on the "Fetishism of Commodities". All that Hegelian dialectic was too much for him-- especially the idea that it is "value" not real "prices" that "are the elements of the real important reality."

Delong declares, "Now I have never found anybody who thinks this way." I am sure that he hasn't. That is why what passes for "economics" in the U.S. is junk science and Delong and his tribe were caught flatfooted by the crisis of 2008. They haven't the faintest idea how the real economy works.

This is one of the reasons Business Week recently asked "What Good Are Economists Anyway?" This was the title of an article by Peter Coy in the 4-27-2009 issue. He writes "Economists mostly failed to predict the worse economic crisis since the 1930s. Now they can't agree how to solve it. People are beginning to wonder: What good are economists anyway." Coy thinks they have some value yet but you only have read Delong to realize they are mostly worthless except as propagandists for the failed free market. I agree with the housing bloger on, quoted my Coy, who wrote: "If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables." A few days in the fields and Delong would know the difference between "value" and "price."

Here is how he understands it now. "Things have value not because of the abstraction that socially-necessary labor time is needed to produce them but because of the concretion [?!] that somebody somewhere wants to use it [i.e., a commodity] and has something else that others find useful to trade in turn." That is just pure idealist hogwash. The whole capitalist system boils down to somebody somewhere wants something I have and I want something they have. This is the Iranian Bazaar Model. Because Marx was led astray into his Hegelian version of the labor theory of value he "vanishes into the swamp which is the attempt to reconcile the labor theory of value with economic reality, and never comes out."

Why is Delong so opposed to Marx on this issue? Because if Marx is right Delong knows that capitalism, the system he supports, is an oppressive unjust system. If "the system forces you to sell your labor power for its value which is less than the value of the goods you make [then] human freedom is totally incompatible with wage labor or market exchange" [he should have just said capitalism-- there are markets in non capitalist systems]. Now if capitalism is unjust "that leads the political movements that Marx founded down very strange and very destructive roads." As if the capitalist movements which brought us the international slave trade, colonization, two world wars, and the present mess have not taken us down some "very destructive roads." Well, Delong tells us at this point that he has "done" Hegel and now he will take care of the Engels connection.

To make a long story short, Delong thinks that because Engels' family owned factories in Manchester, and Manchester was indeed a horrible place of dark Satanic mills in 1848, Marx got a bad impression of capitalism. But Manchester was the exception.

If Engels had lived in Birmingham Marx would have seen a different side of capitalism. Birmingham had few large factories and many workers worked from home and or worked in small establishments with the master. In other words, by looking at Manchester, the heart of the Industrial revolution in Britain, instead of Birmingham, a backwater that was lagging behind and still representative of the past rather than the future of capitalist development, Marx misrepresented the facts.

Such is how Delong attempts to "understand" Marxism. With "economists" such as this representing contemporary capitalist "thought" is it too much to hope for that we will soon see the speedy dissolution of this out of date and ruinous social formation?

Wednesday, April 29, 2009

UK cuts off military aid to Colombia

UK ends bilateral military aid to Colombia
Sibylla Brodzinsky in Bogotá, Wednesday 29 April 2009 12.31 BST

Britain has quietly ended nearly a decade of military aid to Colombia's armed forces after accusations of gross violations of human rights, including the murder of civilians who were shot and reported as guerrillas killed in combat.

The Colombian government was "extremely surprised" by the decision to cut off the bilateral cooperation programmes, the deputy defence minister, Sergio Jaramillo, told the Guardian.

The British foreign secretary, David Miliband, announced the move in a written statement to the House of Commons last month, stating that the government "shares the concern … that there are officers and soldiers of the Colombian armed forces who have been involved in, or allowed, abuses".

"Our bilateral human rights projects with the Colombian ministry of defence will cease," the statement said.


Obama calls for reform of unfair drug sentencing

Obama seeks to change crack sentences
Associated Press

WASHINGTON – The Obama administration is asking Congress to close the big gap in prison sentences for dealing crack versus powdered cocaine, a law that critics say is unfair to blacks.

Such sentencing reform efforts tend to focus on lowering the mandatory minimum sentences for crack cocaine possession, but in prepared testimony to the Senate Judiciary Subcommittee on Crime and Drugs, Assistant Attorney General Lanny Breuer did not spell out exactly how the administration hopes to make the law more fair.

"The administration believes Congress' goal should be to completely eliminate the disparity in prison sentences between crack cocaine and powdered cocaine," Breuer said in written testimony to be delivered Wednesday.

Federal law now has what lawyers call a "100-to-1" ratio for cocaine sentences, in which a person selling five grams of crack faces the same five-year mandatory minimum sentence as someone selling 500 grams of powder cocaine.

Critics of the law say it unfairly punishes black offenders, pointing to statistics showing 82 percent of federal crack cocaine convicts were black, while nine percent were white.

President Barack Obama had called for such a change while campaigning for the White House.

Read more here...

Does it matter if it's a "bang" or a "whimper"

Workers To Control Chrysler
by Dollars and Sense

The Financial Times is reporting that under a restructuring deal for Chrysler, the United Auto Workers (UAW) will own 55% of the auto company's stock, Italy's Fiat will get 35%, and the remainder will be divvied up between the company's secured lenders and the federal government.

As part of the deal, the reformulated company will cut its contribution to the employee health care fund by half, and Fiat will contribute its "know how" and technology, but no cash.

The worker revolution seems to have come not with a bang but with a whimper.

Obama admin. takes steps to stop private insurers from exploiting seniors

This is from the Alliance for Retired Americans, a labor affiliated group. Note: Obama has called for eliminating all subsidies to Medicare Advantage plans created by Bush's privatization scheme in 2005, saving as much as $175 billion over the next ten years:

The Centers for Medicare and Medicaid Services recently established stricter rules for private insurance companies, effectively cutting subsidies to Medicare Advantage (MA) plans by up to 5%. Currently, the government overpays MA plans an average 14% more per beneficiary than for traditional fee-for-service Medicare. However, according to The Wall Street Journal, under the new regulations, MA plans cannot charge low-income and sick patients more than traditional Medicare, must explain what is covered in the Part D “doughnut hole” coverage gap, and will face extra scrutiny if patients’ annual out-of-pocket costs are not capped at $3,400 or less. The changes are designed to allow consumers to more easily compare options and costs. Medicare officials said they would try to eliminate plans with fewer than ten enrollees that are similar to other plans and make it hard for seniors to compare. Also changing: charges for hospitalizations, outpatient services and other services often associated with chronic illnesses – services for which MA plans have been particularly likely to charge patients more than traditional Medicare would. However, many industry experts say beneficiaries enrolled in MA plans will likely face increased premiums or fewer benefits next year. “The Alliance welcomes the changes,” said Edward Coyle, Executive Director of the Alliance. “Insurance companies will no longer be able to use their government subsidies to unfairly treat sick and disadvantaged seniors.”

Steps toward bank nationalization

New moves by administration seen as step toward bank nationalization
by John Wojcik
People's Weekly World Newspaper

In a major change of course, Obama administration officials are saying they don’t have to ask Congress to add money to the Bush administration’s bank bailout and that they can convert the government’s existing loans into common stock. Although the move would turn federal bailout money already handed out into available capital for the banks, it would give the government a major ownership stake in the nation’s largest 19 banks.

Some Republicans are already complaining that the move will make the government the largest shareholder in several banks and that it is really just a back door to nationalization. Others are saying the administration is making the move because it is unwilling to ask Congress for more money when mass opposition to bank bailouts is so high.

In the next few weeks federal bank regulators will finish the so-called stress tests they are conducting on the nation’s largest 19 banks. Several major banks, including Bank of America, are expected to fail those tests with results showing that they need billions. Under the administration’s new approach the “stress” would be relieved, not by pumping in more federal tax dollars, but by changing existing loans to common stock.

Rahm Emanuel, the White House chief of staff, said, on a television news program Sunday, that the government had enough money to shore up the banks without asking Congress for any additional money. He did not elaborate further. The shift in administration strategy announced today clarifies his statement.

The 19 big banks have received more than $140 billion from the government, and all of that has been in exchange for nonvoting preferred shares that pay an annual interest rate of 5 percent.

The Obama administration already decided in January in its deal with Citibank what it is now prepared to do with more of the big 19 banks. The Citibank deal would convert $25 billion of preferred stock, in effect, a loan, into common stock, which represents equity for taxpayers.

After doing this, the government would hold 36 percent of Citigroup’s common shares, making it the largest shareholder and bringing it close to having nationalized a major bank.

Read the rest of the article here...

French Universities Off the Hook

FRANCE: Universities exploding in anger
John C Mullen
26 April 2009
University World News

For more than 10 weeks now, French universities have been disrupted by strikes, mass meetings, demonstrations and occupations as a daily occurrence in an unheard-of wave of protest by university staff and students against President Nicolas Sarkozy's neoliberal reforms of higher education. A dozen mass demonstrations with tens of thousands of people have been held, motorway tollbooths have been occupied and university council meetings invaded. Parallel university lectures, in streets, shopping centres or on trams have been used to help popularise the movement that shows no sign of stopping.

In a spectacular action known as "The springtime of the chairs", all the chairs were removed from many universities to stop classes and used to build protest sculptures. "University all night long" events were organised while in front of the Paris town hall there is a permanent march, 24 hours a day, that began three weeks ago.

When Sarkozy mocked the idea of studying "old literature" such as The Princess of Cleves, the movement reacted with public readings of this work (considered to be the first true novel written in French, in 1678) across France and a parody of it lampooning Sarkozy circulated on the internet. One group of researchers produced a movement rap song and hundreds of staff have resigned from their administrative responsibilities.

Though some of the trade union leaderships and many trade union activists have played an important part, the movement is independent of any particular organisation, and is impressively democratic. There have been eight, day-long national delegate meetings to decide on strategy and tactics, and the movement is far from over yet.

University lecturers had previously been moderate and 'sensible' in the extreme and had not had a national strike for at least 30 years. They tended to follow mass student movements with a tolerant but very distant gaze. The stereotype of hordes of Marxist lecturers in French universities, if it ever was true, is at least 25 years out of date and many were more used to dusty seminars than to noisy demonstrations.


US State Department Statement on Ecuador's Elections

Robert Wood
Acting Department Spokesman,
Office of the Spokesman
Bureau of Public Affairs
Washington, DC
April 28, 2009

We salute the people of Ecuador for conducting peaceful and transparent elections on April 26, 2009, and congratulate President Correa on his victory.

The United States will continue to build on our cooperation with Ecuador, consistent with our commitment to supporting Ecuadorian democracy, prosperity, and security.

AFL-CIO Statement on Specter Joining the Democratic Party

AFL-CIO Statement on Specter Joining the Democratic Party
by Tula Connell, Apr 28, 2009

Sen. Arlen Specter from Pennsylvania announced a short while ago he is switching from the Republican to the Democratic Party. Specter’s vote on the Employee Free Choice Act has been pivotal in determining whether the critical working families’ legislation will pass. Here’s AFL-CIO Legislative Affairs Director Bill Samuel on Specter’s announcement:

We look forward to continuing an open and honest debate with Senator Specter about the issues that are important to Pennsylvania and America. We move forward with the understanding that America’s workers support elected officials based on their positions on issues that matter to working people, not political affiliations.

This is a new day for the Employee Free Choice Act and labor law reform. Sen. Specter has said all along that he recognizes the need to reform our broken labor law system and we will continue to work with Congress to give workers back the freedom to form and join unions and pass legislation that stays true to the principals of the Employee free Choice Act.

The Employee Free Choice Act is built on three fundamental principles and we believe a bill that stays true to these will become law:

* Workers need to have a real choice to form a union and bargain for a better life, free from intimidation;
* We have to stop the endless delays; companies can’t just stall to stop workers’ choice;
* There have to be real penalties for violating the law.

Benefits of a public option in healthcare reform

A public option would require private insurers to compete for business, which would likely drive down costs, provide people with more choices in the market place, improve quality and access, and prevent some of the worst abuses of the private market.

See this article from the Economic Policy Institute:

Many leading policy makers, including President Obama and Senate Finance Committee Chairman Max Baucus, have argued that the creation of a public insurance plan is a necessary part of comprehensive U.S. health care reform. This public insurance plan would compete directly with private insurers within a new national insurance exchange. Americans in the exchange would be able to choose between an array of private plans, or the new public plan, within a marketplace that ensured a common set of rules for all insurers. Some have argued that a well-designed exchange with sufficient regulations would make a public plan option unnecessary. This is unlikely to be the case as a public plan provides crucial benefits to the U.S. health care system even within a well-designed exchange.


Obama admin. overturns Bush's mountaintop mining rule

Bush Rule Allowing Coal Waste Valley Fills 'Legally Defective'
Environmental News Service

WASHINGTON, DC, April 27, 2009 (ENS) – A last minute Bush-era rule that allows coal mine operators to fill valley streams with waste rock whenever they consider alternative options to be too expensive is "legally defective" Interior Secretary Ken Salazar determined today.

Under the Bush rule, coal companies can dispose of excess mountaintop spoil in perennial and intermittent streams and within 100 feet of those streams.

Salazar directed the U.S. Justice Department to file a pleading with the U.S. District Court in Washington, DC requesting that the "stream buffer zone rule" be vacated due to this deficiency and remanded to the Department of the Interior for further action.

"In its last weeks in office, the Bush Administration pushed through a rule that allows coal mine operators to dump mountaintop fill into streambeds if it's found to be the cheapest and most convenient disposal option," said Secretary Salazar.

Under the controversial mountaintop removal method of mining, coal seams running through the upper fraction of a mountain, ridge, or hill are reached by blasting and removing each layer of rock above the seam. The removed rock is placed in adjacent valleys, permanently eliminating the valley streams. These terraced fills of waste rock can be hundreds of feet tall.
Valley fill at the Hobet-21 mine in southern West Virginia July 2007 (Photo by Vivian Stockman, Ohio Valley Environmental Coalition courtesy NASA)

In the past 20 years, thousands of miles of streams in Appalachia, constituting over two percent of the streams in the area, have been impacted by the discharges associated with mountaintop mining. In West Virginia alone, over 200 miles of streams have been permanently lost.

"We must responsibly develop our coal supplies to help us achieve energy independence, but we cannot do so without appropriately assessing the impact such development might have on local communities and natural habitat and the species it supports," Secretary Salazar said today

"The so-called 'stream buffer zone rule' simply doesn't pass muster with respect to adequately protecting water quality and stream habitat that communities rely on in coal country," he said.

The Bush rule replaced a rule that had been on the books since the Reagan-era rule of 1983. This earlier rule provides greater protection for communities and habitat by allowing the dumping of overburden within 100 feet of a perennial or intermittent stream only upon finding that such activities "will not adversely affect the water quantity or quality or other environmental resources of the stream."

Under the Bush rule, disposal into streambeds is permissible when alternatives are considered "unreasonable," which occurs under the Bush rule whenever the cost of pursuing an alternative "is substantially greater" than normal costs.

Two lawsuits were filed immediately after the Bush rule was published.

If the court accepts the United States' request and vacates and remands the rule, the 1983 rule will continue to remain in force in all of the states that have delegated authority under the Surface Mining Control and Reclamation Act. Only two states, Washington and Tennessee, do not have delegated authority under this Act.

Environmental groups are likely to be pleased with Salazar's decision.

This is the second recent victory for environmental groups fighting mountaintop removal mining and the dumping of waste rock known as valley fill.

On March 31, a federal judge in Charleston, West Virginia ruled in favor of three environmental groups that challenged the U.S. Army Corps of Engineers' decision to issue a nationwide permit, NWP 21, authorizing the discharge of dredged and fill material associated with surface coal mining activities, which includes mountaintop mining. A nationwide permit takes the place of individual permitting decided on a case by case basis.

Chief Judge Joseph Goodwin ruled that the Corps was "arbitrary and capricious" in its decisions that a nationwide permit would only have minimal cumulative environmental impacts and that no environmental impact statement was needed.

Salazar said today that the federal Office of Surface Mining expects to issue guidance to states regarding application of the 1983 rule. Also, OSM expects to solicit public comment on the potential development of a comprehensive new stream buffer zone rule.

A new rule would update the 1983 rule, address ambiguities and fill interpretational gaps, while implementing the statutory requirements set forth in the Surface Mining Control and Reclamation Act. It would ensure that SMCRA requirements are coordinated with Clean Water Act obligations administered by the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency.

Equal Pay Day: Gender Gap Harms Working Families

Equal Pay Day: Gender Gap Harms Working Families — April 28th is Equal Pay Day. Because on average women earn about 78 cents for every dollar men earn, it took the average working woman from January 1st of last year until April 28th of this year to earn the same income the average man earned in 2008 alone.

Read the full article here...

Does the Obama Rescue Plan Screw the Working Class?

It does IF the reforms suggested in this article are not in the pot!

Trying to Revive the Bubble Economy:
Obama's Awful Financial Recovery Plan
(from Counter Point)

Martin Wolf started off his Financial Times column for February 11 with the bold question: “Has Barack Obama’s presidency already failed?” The stock market had a similar opinion, plunging 382 points. Having promised “change,” Mr. Obama is giving us more Clinton-Bush via Robert Rubin’s protégé, Tim Geithner. Tuesday’s $2.5 trillion Financial Stabilization Plan to re-inflate the Bubble Economy is basically an extension of the Bush-Paulson giveaway – yet more Rubinomics for financial insiders in the emerging Wall Street trusts. The financial system is to be concentrated into a cartel of just a few giant conglomerates to act as the economy’s central planners and resource allocators. This makes banks the big winners in the game of “chicken” they’ve been playing with Washington, a shakedown holding the economy hostage. “Give us what we want or we’ll plunge the economy into financial crisis.” Washington has given them $9 trillion so far, with promises now of another $2 trillion– and still counting.

A true reform – one designed to undo the systemic market distortions that led to the real estate bubble – would have set out to reverse the Clinton-Rubin repeal of the Glass-Steagall Act so as to prevent the corrupting conflicts of interest that have resulted in vertical trusts such as Citibank and Bank of America/Countrywide/Merrill Lynch. By unleashing these conglomerate grupos (to use the term popularized under Pinochet with Chicago Boy direction – a dress rehearsal of the mass financial bankruptcies they caused in Chile by the end of the 1970s) the Clinton administration enabled banks to merge with junk mortgage companies, junk-money managers, fictitious property appraisal companies, and law-evasion firms all designed to package debts to investors who trusted them enough to let them rake off enough commissions and capital gains to make their managers the world’s highest-paid economic planners.

Today’s economic collapse is the direct result of their planning philosophy. It actually was taught as “wealth creation” and still is, as supposedly more productive than the public regulation and oversight so detested by Wall Street and its Chicago School aficionados. The financial powerhouses created by this “free market” philosophy span the entire FIRE sector – finance, insurance and real estate, “financializing” housing and commercial property markets in ways guaranteed to make money by creating and selling debt. Mr. Obama’s advisors are precisely those of the Clinton Administration who supported trustification of the FIRE sector. This is the broad deregulatory medium in which today’s bad-debt disaster has been able to spread so much more rapidly than at any time since the 1920s.

The commercial banks have used their credit-creating power not to expand the production of goods and services or raise living standards but simply to inflate prices for real estate (making fortunes for their brokerage, property appraisal and insurance affiliates), stocks and bonds (making more fortunes for their investment bank subsidiaries), fine arts (whose demand is now essentially for trophies, degrading the idea of art accordingly) and other assets already in place.

The resulting and real estate bubbles were not inevitable, not economically necessary. They were financially engineered by the political deregulatory power acquired by banks corrupting Congress through campaign contributions and public relations “think tanks” (more in the character of doublethink tanks) to promote the perverse fiction that Wall Street can be and indeed is automatically self-regulating -- a travesty of Adam Smith’s “Invisible Hand.” This hand is better thought of as covert. The myth of “free markets” is now supposed to consist of governments withdrawing from planning and taxing wealth, so as to leave resource allocation and the economic surplus to bankers rather than elected public representatives. This is what classically is called oligarchy, not democracy.

This centralization of planning, debt creation and revenue-extracting power is defended as the alternative to Hayek’s road to serfdom. But it is itself the road to debt peonage, a.k.a. the post-industrial economy or “Information Economy.” The latter term is another euphemistic travesty in view of the kind of information the banking system has promoted in the junk accounting crafted by their accounting firms and tax lawyers (off-balance-sheet entities registered on offshore tax-avoidance islands), the AAA applause provided as “information” to investors by the bond-rating cartel, and indeed the national income and product accounts that depict the FIRE sector as being part of the “real” economy, not as an institutional wrapping of special interests and government-sanctioned privilege  acting in an extractive rather than a productive way.

“Thanks for the bonuses,” bankers in the United States and England testified this week before Congress and Parliament. “We’ll keep the money, but rest assured that we are truly sorry for having to ask you for another few trillion dollars. At least you should remember our theme song: We are still better managers than the government, and the bulwark against government bureaucratic resource allocation.” This is the ideological Big Lie sold by the Chicago School “free market” celebration of dismantling government power over finance, all defended by complex math rivaling that of nuclear physics that the financial sector is part of the “real” economy automatically producing a fair and equitable equilibrium.

This is not bad news for stockholders of more local and relatively healthy banks (healthy in the sense of avoiding negative equity). Their stocks soared and were by far the major gainers on Tuesday’s stock market, while Wall Street’s large Bad Banks plunged to new lows. Solvent local banks are the sort that were normal prior to repeal of Glass Steagall. They are to be bought by the large “troubled” banks, whose “toxic loans” reflect a basically toxic operating philosophy. In other words, small banks who have made loans carefully will be sucked into Citibank, Bank of America, JP Morgan Chase and Wells Fargo – the Big Four or Five where the junk mortgages, junk CDOs and junk derivatives are concentrated, and have used Treasury money from the past bailout to buy out smaller banks that were not infected with such reckless financial opportunism. Even the Wall Street Journal editorialized regarding the Obama Treasury’s new “Public-Private Investment Fund” to pump a trillion dollars into this mess: “Mr. Geithner would be wise to put someone strong and independent in charge of this fund – someone who can say no to Congress and has no ties to Citigroup, Robert Rubin or Wall Street.”

None of this can solve today’s financial problem. The debt overhead far exceeds the economy’s ability to pay. If the banks would indeed do what Pres. Obama’s appointees are begging them to do and lend more, the debt burden would become even heavier and buying access to housing even more costly. When the banks look back fondly on what Alan Greenspan called “wealth creation,” we can see today that the less euphemistic terminology would be “debt creation.” This is the objective of the new bank giveaway. It threatens to spread the distortions that the large banks have introduced until the entire system presumably looks like Citibank, long the number-one offender of “stretching the envelope,” its euphemism for breaking the law bit by bit and daring government regulators and prosecutors to try and stop it and thereby plunging the U.S. financial system into crisis. This is the shakedown that is being played out this week. And the Obama administration blinked – as these same regulators did when they were in charge of the Clinton administration’s bank policy. So much for the promised change!
The three-pronged Treasury program seems to be only Stage One of a two-stage “dream recovery plan” for Wall Street. Enough hints have trickled out for the past three months in Wall Street Journal op-eds to tip the hand for what may be in store. Watch for the magic phrase “equity kicker,” first heard in the S&L mortgage crisis of the 1980s. It refers to the banker’s share of capital gains, that is, asset price inflation in Bubble #2 that the Recovery Program hopes to sponsor.

The first question to ask about any Recovery Program is, “Recovery for whom?” The answer given on Tuesday is, “For the people who design the Program and their constituency” – in this case, the bank lobby. The second question is, “Just what is it they want to ‘recover’?” The answer is, the Bubble Economy. For the financial sector it was a golden age. Having enjoyed the Greenspan Bubble that made them so rich, its managers would love to create yet more wealth for themselves by indebting the “real” economy yet further while inflating prices all over again to make new capital gains.

The problem for today’s financial elites is that it is not possible to inflate another bubble from today’s debt levels, widespread negative equity, and still-high level of real estate, stock and bond prices. No amount of new capital will induce banks to provide credit to real estate already over-mortgaged or to individuals and corporations already over-indebted. Moody’s and other leading professional observers have forecast property prices to keep on plunging for at least the next year, which is as far as the eye can see in today’s unstable conditions. So the smartest money is still waiting like vultures in the wings – waiting for government guarantees that toxic loans will pay off. Another no-risk private profit to be subsidized by public-sector losses.

While the Obama administration’s financial planners wring their hands in public and say “We feel your pain” to debtors at large, they know that the past ten years have been a golden age for the banking system and the rest of Wall Street. Like feudal lords claiming the economic surplus for themselves while administering austerity for the population at large, the wealthiest 1 per cent of the population has raised their appropriation of the nationwide returns to wealth – dividends, interest, rent and capital gains – from 37 per cent of the total ten years ago to 57 per cent five years ago and it seems nearly 70 per cent today. This is the highest proportion since records have been kept. We are approaching Russian kleptocratic levels.

The officials drawn from Wall Street who now control of the Treasury and Federal Reserve repeat the right-wing Big Lie: Poor “subprime families” have brought the system down, exploiting the rich by trying to ape their betters and live beyond their means. Taking out subprime loans and not revealing their actual ability to pay, the NINJA poor (no income, no job, no audit) signed up to obtain “liars’ loans” as no-documentation Alt-A loans are called in the financial junk-paper trade.
I learned the reality a few years ago in London, talking to a commercial banker. “We’ve had an intellectual breakthrough,” he said. “It’s changed our credit philosophy.”

“What is it?” I asked, imagining that he was about to come out with yet a new magical mathematics formula?

“The poor are honest,” he said, accompanying his words with his jaw dropping open as if to say, “Who would have guessed?”
The meaning was clear enough. The poor pay their debts as a matter of honor, even at great personal sacrifice and what today’s neoliberal Chicago School language would call uneconomic behavior. Unlike Donald Trump, they are less likely to walk away from their homes when market prices sink below the mortgage level. This sociological gullibility does not make economic sense, but reflects a group morality that has made them rich pickings for predatory lenders such as Countrywide, Wachovia and Citibank. So it’s not the “lying poor.” It’s the banksters’ fault after all!

For this elite the Bubble Economy was a deliberate policy they would love to recover. The problem is how to start a new bubble to make yet another fortune? The alternative is not so bad – to keep the bonuses, capital gains and golden parachutes they have given themselves, and run. But perhaps they can improve in Bubble Economy #2.
The Treasury’s newest Financial Stability Plan (Bailout 2.0) is only the first step. It aims at putting in place enough new bank-lending capacity to start inflating prices on credit all over again. But a new bubble can’t be started from today’s asset-price levels. How can the $10 to $20 trillion capital-gain run-up of the Greenspan years been repeated in an economy that is “all loaned up”?

One thing Wall Street knows is that in order to make money, asset prices not only need to rise, they have to go down again. Without going down, after all, how can they rise up? Without a crucifixion for the economy, how can there be a resurrection? The more frenetic the price fibrillation, the easier it is for computerized buy-and-sell programs to make money on options and derivatives.

So here’s the situation as I see it. The first objective is to preserve the wealth of the creditor class – Wall Street, the banks and the other financial vehicles that enrich the wealthiest 1 per cent and, to be fair within America’s emerging new financial oligarchy, the richest 10 per cent of the population. Stage One involves buying out their bad loans at a price that saves them from taking a loss. The money will be depicted to voters as a “loan,” to be repaid by banks extracting enough new debt charges in the new rigged game the Treasury is setting up. The current loss will be shifted the onto “taxpayers” and made up by new debtors – in both cases labor, onto whose shoulders the tax burden has been shifted steadily, step by step since 1980.
An “aggregator” bank (sounds like “alligator,” from the swamps of toxic waste) will buy the bad debts and put them in a public agency. The government calls this the “bad” bank. (This is Geithner’s first point.) But it does good for Wall Street – by buying loans that have gone bad, along with loans and derivative guarantees and swaps that never were good in the first place. If the private sector refuses to buy these bad loans at prices the banks are asking for, why should the government pretend that these debt claims are worth more. Vulture funds are said to be offering about what they were when Lehman Brothers went bankrupt: about 22 cents on the dollar. The banks are asking for 75 cents on the dollar. What will the government offer?

Perhaps the worst alternative is that is now being promoted by the banks and vulture investors in tandem: the government will guarantee the price at which private investors buy toxic financial waste from the banks. A vulture fund would be happy enough to pay 75 cents on the dollar for worthless junk if the government were to provide a guarantee. The Treasury and Federal Reserve pretend that they simply would be “providing liquidity” to “frozen markets.” But the problem is not liquidity and it is not subjective “market psychology.” It is “solvency,” that is, a realistic awareness that toxic waste and bad derivatives gambles are junk. Mr. Geithner has not been able to come to terms with how to value this – without bringing the Obama administration down in a wave of populist protest – any more than Mr. Paulson was able to carry out his original Tarp proposal along these lines.

The hardest task for today’s banksters is to revive opportunities for creditors to make a new killing. (It’s the economy that’s being killed, of course.) This seems to be the aim of the Public/Private investment company that Mr. Geithner is establishing as the second element in his plan. The easiest free lunch is to ride the wave of a new bubble – a fresh wave of asset-price inflation to be introduced to “cure” the problem of debt deflation.

Here’s how I imagine the ploy might work. Suppose a hapless family has bought a home for $500,000, with a full 100 per cent $500,000 adjustable-rate mortgage scheduled to reset this year at 8 per cent. Suppose too that the current market price will fall to $250,000, a loss of 50 per cent by yearend 2009. Sometime in mid 2010 would seem to be long enough for prices to decline by enough to make “recovery” possible – Bubble Economy 2.0. Without such a plunge, there will be no economy to “rescue,” no opportunity for Tim Geithner and Laurence Summers to “feel your pain” and pull out of their pocket the following package – a variant on the “cash for trash” swap, a public agency to acquire the $500,000 mortgage that is going bad, heading toward only a $250,000 market price.

The “bad bank” was not quite ready to be created this week, but the embryo is there. It will take the form of a public/private partnership (PPP) of the sort that Tony Blair made so notorious in Britain. And speaking of Mr. Blair, I am writing this from England, where almost every America-watcher I talk to has expressed amazement at Obama’s performance last week idealizing England’s counterpart to George Bush when it comes to unpopularity contests. Blair’s tenure in office was a horror story, not something to be congratulated for. He entered into the disastrous public/private partnership that doubled, tripled or quadrupled the cost of public projects by adding on a heavy financial overhead. If Obama does not realize how he shocked Britain and much of Europe with his praise, then he is in danger of foisting a similar public/private financialized “partnership” on the United States.

The new public/private institution will be financed with private funds – in fact, with the money now being given to re-capitalize America’s banks (headed by the Wall St. banks that have done so badly). Banks will use the Treasury money they have received by “borrowing” against their junk mortgages at or near par to buy shares in a new $5 trillion institution created along the lines of the unfortunate Fanny Mae and Freddie Mac. Its bonds will be guaranteed. (That’s the “public” part – “socializing” the risk.) The PPP institution will have the power to buy and renegotiate the mortgages that have passed into the hands of the government and other holders. This “Homeowner Rescue Trust” will use its private funding for the “socially responsible” purpose of “saving the taxpayer” and middle class homeowners by renegotiating the mortgage down from its original $500,000 to the new $250,000 market price.

Here’s the patter talk you can expect, with the usual euphemisms. The Homeowners Rescue PPP will appear as a veritable Savior Bank resurrected from the wreckage of Bubble #1. Its clients will be families strapped by their mortgage debt and feeling more and more desperate as the price of their major asset plummets more deeply into Negative Equity territory. To them, the new PPP will say: “We’ve got a deal to save you. We’ll renegotiate your mortgage down to the current market price, $250,000, and we’ll also lower your interest rate to just 5.50 per cent, the new rate. This will cut your monthly debt charges by nearly two thirds. Not only can you afford to stay in your home, you will escape from your negative equity.”

The family probably will say, “Great.” But they will have to make a concession. That’s where the new public/private partnership makes its killing. Funded with private money that will take the “risk” (and also reap the rewards), the Savior Bank will say to the family that agrees to renegotiate its mortgage: “Now that the government has absorbed a loss (in today’s travesty of “socializing” the financial system) while letting let you stay in your home, we need to recover the money that’s been lost. If we make you whole, we want to be made whole too. So when the time comes for you to sell your home or renegotiate your mortgage, our Homeowners Rescue PPP will receive the capital gain up to the original amount written off.”
In other words, if the homeowner sells the property for $400,000, the Homeowners Rescue PPP will get $150,000 of the capital gain. If the home sells for $500,000, the bank will get $250,000. And if it sells for more, thanks to some new clone of Alan Greenspan acting as bubblemeister, the capital gain will be split in some way. If the split is 50/50 and the home sells for $600,000, the owner will split the $100,000 further capital gain with the Homeowners Rescue PPP. It thus will make much more through its appropriation of capital gains (the new debt-fueled asset-price inflation being put in place) than it extracts in interest!

This would make Bubble 2.0 even richer for Wall Street than the Greenspan bubble! Last time around, it was the middle class that got the gains – even if new buyers had to enter a lifetime of debt peonage to buy higher-priced homes. It really was the bank that got the gains, of course, because mortgage interest charges absorbed the entire rental value and even the hoped-for price gain. But homeowners at least had a chance at the free ride, if they didn’t squander their money in refinancing their mortgages to “cash out” on their equity to support their living standards in a generation whose wage levels had stagnated since 1979. As Mr. Greenspan observed in testimony before Congress, a major reason why wages have not risen is that workers are afraid to strike or even to complain about being worked harder and harder for longer and longer hours (“raising productivity”), because they are one paycheck away from missing their mortgage payment – or, if renters, one paycheck or two away from homelessness.

This is the happy condition of normalcy that Wall Street’s financial planners would like to recover. This time around, they may not be obliged to make their gains in a way that also makes middle class homeowners rich. In the wake of Bubble Economy #1, today’s debt-strapped homeowners are willing to settle merely for a plan that leaves them in their homes! The Homeowners Rescue PPP can appropriate for its stockholder banks and other large investors the capital gains that have been the driving force of U.S. “wealth creation,” bubble-style. That is what the term “equity kicker” means.

This situation confronts the economy with a dilemma. The only policies deemed politically correct these days are those that make the situation worse: yet more government money in the hope that banks will create yet more credit/debt to raise house prices and make them even more unaffordable; credit/debt to inflate a new Bubble Economy #2.

Lobbyists for Wall Street’s enormous Bad Bank conglomerates are screaming that all real solutions to today’s debt problem and tax shift onto labor are politically incorrect, above all the time-honored debt write-downs to bring the debt burden within the ability to pay. That is what the market is supposed to do, after all, by bankruptcy in an anarchic collapse if not by more deliberate and targeted government policy. The Bad Banks, having demanded “free markets” all these years, fear a really free market when it threatens their bonuses and other takings. For Wall Street, free markets are “free” of public regulation against predatory lending; “free” of taxing the wealthy so as to shift the burden onto labor; “free” for the financial sector to wrap itself around the “real” economy like parasitic ivy around a tree to extract the surplus.

This is a travesty of freedom. As the premature neoliberal Adam Smith explained, “The government of an exclusive company of merchants, is, perhaps, the worst of all governments.” But worst of all is the “freedom” of today’s economic discussion from the wisdom of classical political economy and from historical experience regarding how societies through the ages have coped with the debt overhead.

How to save the economy from Wall Street
There is an alternative to ward all this off, and it is the classic definition of freedom from debt peonage and predatory credit. The only real solution to today’s debt overhang is a debt write-down. Until this occurs, debt service will crowd out spending on goods and services and there will be no recovery. Debt deflation will drag the economy down while assets are transferred further into the hands of the wealthiest 10 percent of the population, operating via the financial sector.

If Obama means what he says, he would use his office as a bully pulpit to urge repeal the present harsh creditor-oriented bankruptcy law sponsored by the banks and credit-card companies [and pushed through by then-Senator Joe Biden. Editors]. He would campaign to restore the long-term trend of laws favoring debtors rather than creditors, and introduce legislation to restore the practice of writing down debts to reflect the debtor’s ability to pay, imposing market reality to debts that are far in excess of realistic valuations.

A second policy would be to restore the power of state attorneys general to bring financial fraud charges against the most egregious mortgage lenders – the prosecutions that the Bush Administration got thrown out of court by claiming that under an 1864 National Bank Act clause, the federal government had the right to override state prosecutions of national banks – and then appointing a non-prosecutor to this enforcement position.

On the basis of reinstated fraud charges, the government might claw back the bank bonuses, salaries and bank earnings that represented the profits from America’s greatest financial and real estate fraud in history. And to prevent repetition of the past decade’s experience, the Obama Administration might help popularize a new psychology of debt. The government could encourage “the poor” to act as “economically” as Donald Trumps or Angelo Mozilos would do, making it clear that debt write-downs are a right.

Also to ward off repetition of the Bubble Economy, the Treasury could impose the “Tobin tax” of 1 per cent on purchases and options for stocks, bonds and foreign currency. Critics of this tax point out that it can be evaded by speculators trading offshore in the rights to securities held in U.S. accounts. But the government could simply refuse to provide deposit insurance and other support to institutions trading offshore, or simply could announce that trades in such “deposit receipts” for shares would not have legal standing. As for trades in derivatives, depository institutions – including conglomerates owning such banks – can simply be banned as inherently unsafe. If foreigners wish to speculate on financial horse races, let them.

Financial policy ultimately rests on tax policy. It is the ability to levy taxes, after all, that gives value to Treasury money (just as it is the inability to collect on debts that has depreciated the value of commercial bank deposits). It is easy enough for fiscal policy to prevent a new real estate bubble. Simply shift the tax system back to where it originally was, on the land’s site-rental value. The “free lunch” (what John Stuart Mill called the “unearned increment” of rising land prices, a gain that landlords made “in their sleep”) would serve as the tax base instead of burdening labor and industry with income taxes and sales taxes. This would achieve the kind of free market that Adam Smith, John Stuart Mill and Alfred Marshall described, and which the Progressive Era aimed to achieve with America’s first income tax in 1913. It would be a market free of the free lunch that Chicago Boys insist does not exist.  But the recent Bubble Economy and today’s Bailout Sequel have been all about getting a free lunch.

A land tax would prevent housing prices from rising again. It is the most hated tax in America today, largely because of the disinformation campaign that has been mounted by the real estate interests and amplified by the banks that stand behind them. The reality is that taxing land appreciation rather than wages or corporate profits would save homeowners from having to take on so much debt in order to obtain housing. It would save the economy from seeing “wealth creation” take the form of the “unearned increment” being capitalized into higher bank loans with their associated carrying charges (interest and amortization).

The wealth tax originally fell mainly on real estate. The most immediate and politically feasible priority of the Obama Administration thus should be to repeal the Bush Administration’s drastic tax cuts for the top brackets and its moratorium on the estate tax. The aim should be to bring down the polarization between creditors and debtors that has concentrated over two-thirds of the returns to wealth in the richest 1 per cent of the population.
If alternatives to the Bubble Economy such as these are not promoted, we will know that promises of change were mere rhetoric, Tony Blair style. Mr. Geithner may have given the game away in his February 10 statement that “Access to public support is a privilege, not a right.” The literal meaning of “privilege” is “private law” (Lat. leges), a law to benefit individuals as a special interest separate from the public interest. The problem is that Mr. Geithner is seeking to save a system that creates no real jobs products. The debt that banks sell is not really a “product.” Extracting interest and receiving public bailouts to make financial gamblers whole is extractive, not productive.

The banking system often has been characterized as parasitic. The metaphor is appropriate on more than one plane. Most people think of parasites simply as leeches, draining nourishment from the host. But biological nature is more complex. In order for parasites to succeed they must first numb the host’s pain-warning system so that they can get a foothold. They then take control of the host’s brain. The trick the host into believing that the parasite is part of its own body, and indeed even its child, to be nurtured, protected and given preference. They turn the host into a zombie. So the problem we are facing is not “zombie banks,” but the ability of Wall Street to create a zombie economy.

This is what the financial sector has done vis-à-vis the economy at large. It depicts itself and the rest of the symbiotic FIRE sector as part of the “real” economy, so that its extraction of interest, economic rent and monopoly prices is payment for providing a “service”: the privilege of credit creation, landlordship and “corporate management. Like his predecessor Hank Paulson, Mr. Geithner claims that recovery cannot occur until the banking system is put back on its feet in sufficiently solvent and indeed, prosperous condition to “get credit flowing again,” he said. “Without credit, economies cannot grow at their potential.” But is the solution really to create yet more debt for the already debt-ridden U.S. economy? It was the Greenspan debt bubble that brought it to a halt! Interest and amortization charges on new debt will eats into the ability of consumers and companies to spend and invest. Claiming that economic recovery must be led by renewed debt creation threatens only to deepen debt dependency and further erode discretionary consumer spending power.

When it comes to cleaning up the Greenspan Bubble legacy by writing down homeowner mortgage debt, the Treasury proposal offers homeowners $50 billion – just 5 percent of the $10 trillion Wall Street bailout to date, and less than half the amount given to AIG to pay its hedge fund speculators on their derivative gambles. The Treasury has handed out $25 billion to each and every big bank, so just two of these banks alone got as much as the reported one-quarter of all homeowners in America suffering from Negative Equity on their homes and in need of mortgage renegotiation. Yet today’s economic shrinkage cannot be reversed without a recovery in consumer demand. The economy has lost the “virtual wealth” in higher-priced homes and the stock market, and must rely on after-tax earnings. But I see little concern for wage earners in the Treasury plan. Without debt relief, consumer spending and business investment will not recover.

This debt dimension is what the Treasury’s “recovery” plan leaves out of account. It seeks to recover the debt-bubble economy, not the real economy of production and consumption.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can bereached via his website,