US workers face more poverty, social crisis as capitalist offensive continues

source: CNN
by Richard Mellor
Afscme Local 444, retired

According to the most recent US Census Bureau's report released September 17th., as US GDP has tripled, American men working full time are earning less in real terms than we were in 1973. The huge gains in this period "....have gone mostly to the people at the top" Bloomberg BusinessWeek reports in this weeks issue. I think we all agree that "real terms" are the only terms that matter don't we?

"We've had 40 years of stagnation." says Sheldon Danziger who heads the Russell Sage Foundation that funds research about living standards. The poverty rate has also jumped almost three percent since 2007 and as should be expected, the young are the hardest hit.  Close to 22% of children live in poverty in the United States compared to 15% nationally the Census report adds. The situation can only get worse as the war against workers and the poor continues.  The effects are clear, monthly food-stamp use has risen 18% over the past four years according to Bloomberg Business Week and as the Republicans in Congress are pushing to cut spending on nutrition programs by a further $40 billion things will only get worse; "If the full-time, full-year male workers aren't benefiting from economic growth, why should we expect the poor to be." says Danziger.

Robert Gordon, an economics professor at Northwestern University tells BW that the US is "in for a long period of stagnation.". Michael Feroli of JPMorgan Chase points out that the capitalists are simply not investing in what he calls the "..innovation needed to boost efficiency." We have pointed out many times that workers, the poor and the middle class must cast aside this propaganda nonsense that there is no money in US society.  The corporations are sitting on trillions of dollars that they refuse to invest in the economy or in social infrastructure.  Let's not allow the propaganda to unduly influence what we know in our gut--- that the money is there.  I will continue to remind readers again and again, that by their own estimates, sections of the capitalist class have stashed away as much as $32 trillion dollars in offshore accounts to avoid paying taxes, this is equal to the GDP of both Japan and the US combined.  Then there is the trillions wasted on predatory wars fought on behalf of the 1% and their corporations.

Furthermore, as I stated in a previous commentary, Just 20Americans made as much from their 2012 investments as the entire SNAP budget for 47 million people. SNAP is the acronym for the Supplemental Nutritional Assistance Program that provides food and assistance to the millions of people, and soon to be millions more as the 1% forces the US working class on rations in order to make us more competitive with our brothers and sisters throughout the world and to pay for their economic crisis.  Politicians in Congress yesterday were boasting about how they will occupy the legislature floor until they could no longer stand in order to defeat Obamacare (this is not to defend Obamacare) but three trillion on the Iraq war is OK and the poor and low waged need a $40 billion trim, about half of what one human being, Bill Gates is worth.

I have felt the effects of these attacks on workers in my own neighborhood where petty theft has been on the increase, car and house break ins are occurring more frequently. The local news reported last night that in the Rockridge area of Oakland, a fairly affluent middle class (Using the US definition by income) community, a group of commuters waiting in line for car pick ups were robbed at gunpoint.  People wait in these lines for other commuters to pick them up so they can use the commuter lanes.  People stand there with computers, I phones, belongings etc. 

The robbery has shocked the community as robberies have risen over 40% in the last year.  The perpetrators were black youth from what I could gather from reports this morning. We will read all the racist laced Internet chatter about the need to get tough on crime and how we all need to be armed etc.  When I ran for Oakland City Council in 1996 I had a public debate up in Rockridge and this was a problem then, people coming up from West Oakland and breaking in to care stealing radios, CD players and such.  One of my campaign issues was for a $10 an hour minimum wage and my answer to the concerns residents had was that they are not the 1%, they are mostly middle class professional types, not walled off from the rest of society and the best best way to eliminate the crime was to openly and organizationally support the demand for jobs and a $10 an hour minimum wage. In other words, to show solidarity with other humans, victims of market forces.

I am not advocating that those less fortunate and more desperate among us are right to rob people in bus lines or each other in our communities, but people get desperate.  You can spend a lot of time in prison for robbing someone at gunpoint and if things get crazy and someone gets shot you many never see life outside of prison walls again.  The US Gulag is a notorious hellhole and hundreds of thousands of young black men occupy it. People have to eat.  The US is the worst of the advanced capitalist economies to be poor in. If you have no money here, you're "on your own baby."; Vietnam Vet---too bad, get a job, the flag waving is only for when they want our youth to go fight their wars, when they return they're a burden on profit making.

So I appeal especially to working class (wage earners) readers of this blog, those of us who have had more fortunate circumstances liking keeping our homes and jobs over the past period not to fall in to the trap set for us of blaming the victims, of blaming our class brothers and sisters for circumstances they find themselves in that are overwhelmingly not of their own creation.  Poverty, racism, homelessness, petty crime, these are all market driven.   It is the same with small business, and by that I mean community mom and pops who live in a community, are part of it and contribute to it. Rather than oppose a $20 an hour minimum wage you too should support it openly.  Most workers recognize that under the present circumstances a small store owner, the local plumber or coffeehouse owner can't pay that; they can often rarely contribute to benefits as big absentee landlords jack up rents.  But by openly declaring support for such a minimum wage ($15 is gaining some momentum here at the moment) community business owners can build solidarity and links with the workers' movement and as this movement gains strength and momentum including standing it's own candidates for political office independent of the two Wall Street parties, a united movement of workers, the dispossessed, the poor and the undocumented who are among the most exploited of us, can in turn help free these small proprietors from the clutches of the corporations, insurance companies and other forces that bleed them dry. It is ridiculous for example that a community business is expected to pay for its one, two or three employees' health care.

For the workers movement it is important while we fight for the interests of workers, to appeal to this layer of community businesses between these two great classes in society and win them to our side.  If we do not, the 1% will win them to theirs.  We cannot drive back the capitalist offensive, let alone rid ourselves of it without a united working class movement and we can't build a united working class movement without fighting racism, sexism, and all forms of discrimination that they use to divide us.

The heads of organized Labor are also criminally negligent in that they have the resources and ability to turn this situation around but have completely capitulated to the capitalist offensive and regurgitate their ideological justification for it.  We will see some turmoil in these organizations as well at some point.

In my previous commentary I included a quote from the head of AIG who compared the anger Americans displayed at AIG corporate types getting bonuses after they ran the company to the ground and the taxpayer bailed them out, to white supremacists lynching blacks in the South. Give that a thought for a moment.  Yes, these people are human beings and in the new society they have the right to a job and a secure future, something they deny us. But as it stands they are not people who can be appealed to on a moral basis. The capitalist class has historically waged the most violent war against humanity and the natural world in their quest for profits, from the peasant wars of Europe, the war against women and their equal rights, the wars of conquest throughout the colonial world from Ireland to Peru.  They will not simply become nice because it's the right thing to do.  Believe me, the folks in the Pentagon would drop nuclear weapons on their own cities to save their privilege.

Like the feudal aristocracy though, some of them will break ranks but only when they see the united power of working people throughout the world and that there is no winning this war. The workers of Bangladesh, the Arab world millions of them women outside of US borders, are leading the struggle against the capitalist offensive.  It's high time we joined them.

AIG boss: workers' anger at their bonuses as bad as the lynching of blacks in the south

AIG boss, Robert Benmosche, the persecuted minority
by Richard Mellor
Afscme Local 444, retired
The CEO of AIG, the one who came after the "socialist" bailout of the company is very hurt and angry.  He told the Wall Street Journal that the anger the American people displayed over the bonuses the AIG coupon clippers were promised was as bad as the lynching of Blacks by the Klan and white supremacists in the American South:

Camp Rules: a poem

Camp Rules

A poem by Kevin Higgins

By all means explore what remains of the world
on the other side of the forest. 
But be back within the perimeter fence
by breakfast, your mouth motorised
by where they’re going wrong, or we’ll begin
making a sad sound when we say your name, 
and tilting our heads slightly to the left.

Questions are encouraged if the answer’s
the long form version of ‘yes’. Discipline
will be maintained by Nullifier Boyd’s
righteous bamboo stick, so big
it never need prove its existence.

Here, no one evades their taxes
or mentions the unfortunate business
 you witnessed in the main marquee
 this morning. Out there, the last thing
 many women notice is that the man
 strangling them is in desperate need
 of a dentist.

In the new society we’re building
we’ve abolished rape and murder.
We permit no such words.

German capitalism – a success story?

by Michael Roberts

The German election has produced a victory for right-wing German Chancellor Mrs Angela Merkel, the best result for her party since 1990.  However, the existing coalition of Merkel’s Christian Democrat Union (CDU), the Bavarian Christian Social Union (CSU) and the small Free Democrats (FDP) cannot continue because the FDP failed to make the 5% voting share threshold to enter the German parliament (Bundestag).  The FDP vote is hugely down from 14.6% in 2009.   Most of those lost votes went to the CDU.  So even though Merkel’s CDU-CSU bloc has polled the most at about 42.5%, up from 34% in 2009, it will have to try to form a grand coalition with the opposition Social Democrats (SPD), which polled 26%, up a bit from the all-time post-war low of 23% that the SPD got in 2009.  The Greens polled badly at 8% (down from 10.7% in 2009) and were passed by the Left Bloc (die Linke) which polled 8.5%.  So, although old coalition polled 47% (compared to 48% in 2009) over the ‘left’ (SPD, Greens and die Linke) with 43% (down from 46% in 2009), Mrs Merkel must find new coalition partners.

Germany is the largest and most important capitalist economy in Europe, if not yet the most important European imperialist power (there it vies with the UK and France).  It is the main creditor and funder of the Eurozone member states.  So what does this election campaign and result tell us about the future of German capitalism and the strategy being adopted by its political leaders?
On the surface, all looks good for the economic health of Germany as there appears to be very little difference on policy between the CDU and the SPD.  You would find it hard to push a sheet of paper between them on major policy issues for Germany.  So it seems likely that a Grand Coalition between the CDU-CSU and SPD will be formed with two-thirds of the seats in parliament and German capitalism looks set fair for the status quo for another four years.

However that is too simple a calculation.  There are new economic and political pressures for German capitalism that will make it more unstable than before.  The first thing is that there has been a long-term trend in German (and other Euro) politics: namely, the fragmentation of electoral votes from two or three parties into several.  That’s a recipe for instability and paralysis, as we have seen in Greece, Italy, Belgium, the Netherlands etc.  This election has slightly reversed that trend with the two main parties polling about 56% compared to 50% last time, but that is no better than in 2005.  Some 16% of votes will not be represented in parliament due to the 5% hurdle — more than ever before.  The turnout may be slightly better than in the recession year 2009 at 73%, but it’s well down from the 1990s.
German turnout
And then there is the joker in the pack: the eurosceptic Alternative fur Deutschland party (AfD), a party made up of academics and other petty-bourgeois elements, strongly opposed to ‘handouts’ to the ‘free-spending’ peripheral Euro states and demanding a return to the D-mark.  The AfD polled 4.9%, just not quite enough to gain representation.  But by polling close to the 5% threshold, that will stir up new currents beneath the surface of serenity in German politics, especially leading up to the Euro elections next May.

Despite the Euro debt crisis and the ‘contingent’ costs to the pockets of the German taxpayers from the bailout payments to the distressed Eurozone states, the German ruling class is still convinced that the euro is worth having over the D-mark.  That is because German capitalism has gained most from the trade and capital integration of the single currency.  The best indicator of that is to look at what has happened to German capital’s rate of profit.  The European Commission AMECO database provides a measure of the net return on capital invested for many countries including Germany.  There are several technical issues with this measure, but I think it gives a relatively good guide to trends (partly because it is supported by alternative data from the Extended Penn World Tables that I have used before to measure country rates of profit).

The AMECO measure shows that Germany’s rate of profit fell consistently from the early 1960s to the early 1980s slump (down 30%) – much like the rest of the major capitalist economies in that period.  Then there was a recovery (some 33% up – using Penn measures)  with a short fall during the recession of the early 1990s and then stagnation during the 1990s as West Germany digested the integration of East Germany into its capitalist economy.  The real take-off in German profitability began with the formation of the Eurozone in 1999, generating two-thirds of all the rise from the early 1980s to 2007.
German net return on capital
German capitalism benefited hugely from expanding into the Eurozone with goods exports and capital investment until the Great Recession hit in 2008, while other Euro partners lost ground.
Change in rate of profit under EMU
Once the east was integrated, Germany’s manufacturing export base grew just as much as the new force in world manufacturing, China, did.
German exports
But the fall in profitability during the Great Recession was considerable and AMECO forecasts do not suggest a significant recovery in profitability since.  Indeed profitability will be below the level of 2005 from now on.  So things may be more difficult from hereon.

It is interesting to consider the reason for the rise in the German rate of profit using Marxist categories.  The rise in the rate of profit from the early 1980s to 2007 can be broken down into a rise in the rate of surplus value of 38%, but only a small rise of 5% in the organic composition of capital.  This is consistent with Marx’s law of profitability in that the rate of profit rises when the increase in the rate of surplus value outstrips the increase in the organic composition of capital.  It seems that the ability to extract more surplus value out of the German working class while keeping the cost of constant capital from rising much was the story of German capitalism.  In other words, constant capital did not rise due to innovations and investment in new technology while surplus value did, due to the expansion of the workforce using imported labour from Turkey and elsewhere at first – and then expansion directly into Europe later.

The real jump in the rate of profit began with the start of the Eurozone.  In this period, the organic composition of capital was flat while the rate of surplus value rose 17%.  German capital was able to exploit cheap labour within EMU but also in Eastern Europe to keep costs down. The export of plant and capital to Spain, Poland, Italy, Greece, Hungary etc (without obstacle and in one currency) allowed German industry to dominate Europe and even parts of the rest of the world.
Most important, the fear of the export of jobs to other parts of Europe enabled German capitalists to impose significant curbs on the ability of German labour to raise their wages and conditions.  The large rise in the German rate of profit was accompanied by a sharp increase in the rate of surplus value or exploitation, particularly from 2003 onwards.
German ROSV - ROP
What happened from 2003 to enable German capitalism to exploit its workers so much more?  In 2003-2005 the SPD-led government implemented a number of wide-ranging labour market ‘reforms’, the so-called Hartz reforms. The first three parts of the reform package, Hartz I-III, were mainly concerned with creating new types of employment opportunities (Hartz I), introducing additional wage subsidies (Hartz II), and restructuring the Federal Employment Agency (Hartz III). The final part, Hartz IV, was implemented in 2005 and resulted in a significant cut in the unemployment benefits for the long-term unemployed.  Between 2005 and 2008 the unemployment rate fell from almost 11% to 7.5%, barely increased during the Great Recession and then continued its downward trend reaching 5.5% at the end of 2012, although it is still higher than in the golden age of expansion in the 1960s.
German unemployment rate (%)
German unemployment rate
A wonderful success then?  Not for labour. About one quarter of the German workforce now receive a “low income” wage, using a common definition of one that is less than two-thirds of the median, which is a higher proportion than all 17 European countries, except Lithuania.  A recent Institute for Employment Research (IAB) study found wage inequality in Germany has increased since the 1990s, particularly at the bottom end of the income spectrum. The number of temporary workers in Germany has almost trebled over the past 10 years to about 822,000, according to the Federal Employment Agency.  This is something we have seen across Europe – the dual labour system in Spain being the prime example.
German employment
So the reduced share of unemployed in the German workforce was achieved at the expense of the real incomes of those in work.  Fear of low benefits if you became unemployed, along with the threat of moving businesses abroad into the rest of the Eurozone or Eastern Europe, combined to force German workers to accept very low wage increases while German capitalists reaped big profit expansion.  German real wages fell during the Eurozone era and are now below the level of 1999, while German real GDP per capita has risen nearly 30%.
German real wages
No wonder German capitalism has been so ‘competitive’ in European and world markets.  The Hartz reforms may be regarded as a success by German capital and mainstream economists.  But they have always been very unpopular among the German public.  In this election, no major party has dared to run on a platform that openly endorses the Hartz reforms. Indeed, several parties tried to win votes by promising to roll back the Hartz reforms, including the SPD which initiated the reforms in 2003-2005 under Chancellor Gerhard Schroeder.
Of course, this is not to deny that the German working class is better off than its peers in the rest of the Eurozone and this explains why German voters who have voted, did so, by and large, for parties that wish to preserve the status quo.
German household income
The German ruling class and the leadership of the two main parties are generally agreed that the Eurozone must be kept intact as it is, despite the cost of the debt crises in the peripheral EMU states.  After all, German capitalism has gained hugely from the Eurozone,  as I have shown.  Greece should not probably have been allowed in, as Merkel and others have said on several occasions, but now it is in, it is too risky to kick Greece out as it sets a dangerous precedent.  And the cost of yet another Greek bailout in the next year is small.

But there are are some differences between the CDU and the SPD over the Eurozone.  The CDU does not want any integration of debt and debt payments within the Eurozone through things like a euro redemption fund or Eurozone bonds, while the SPD does.  The CDU does not want German capital taking on any contingent liability of the future or existing debt of the likes of Italy or Spain, even if it never happens that they cannot service it.  Even so, a Grand Coalition will agree eventually to ease the terms of repayment of the bailout recipients  – indeed it will probably put repayment back for likes of Greece to the indefinite future.  Remember that the US allowed the UK to repay what they owed the US after the second world war for ages  – it was only fully paid off in 2005!

However, the Grand Coalition will be set with difficulties from its beginning.  It will be under the pressure from the right, the eurosceptics and the small business FDP to refuse any further bailouts and apply severe austerity to the peripheral EMU states and France.  The SPD will be under pressure from the left to break with the coalition  to reverse the Hartz reforms, spend more and avoid nuclear energy or leave the coalition.

German capitalism may have been a ‘success story’ over the last 25 years since the integration of East Germany.  But its long-term prospects do not look so good from here.  It has a declining and ageing workforce (this will be the last election in which the majority of voters were under the age of 55) and less areas for exploitation of new labour outside Germany, while competition from the likes of China and Asia will mount.  And the costs of maintaining the Eurozone will grow.  All these are issues for the strategists of German capital now that there will be a new coalition in power.
German demographics
The German electorate may have voted for the status quo again in this election, but the relatively low turnout and the low share of the vote for the main parties show that there is growing disillusionment with the ‘success’ of German capitalism that has given just a few crumbs for the working class off the table of bounty for German capital income.  And the burden on the working class in paying for the further ambitions of German capitalism is set to rise.

Israeli troops confiscate supplies, abuse French diplomat

The arrogance of the Zionist regime and its thugs. This is near a village they demolished to make way for settlers.Can you imagine if an Israeli diplomat were treated this way abroad.  There'd be a torrent of accusations about Anti-Semitism, their favorite weapon.

Reprint and video from +972

A French diplomat and several of her European colleagues were manhandled today by Israeli troops near the recently demolished village of Khirbet al-Makhul in the West Bank, Reuters said. The diplomats were accompanying a truck of tents and emergency aid supplies, and the French diplomat, Marion Castaing, was physically dragged out of the truck and thrown to the ground in disregard of her diplomatic immunity. The troops then confiscated the truck and drove it away. A picture, below, taken by an eyewitness at the scene (who wishes to remain anonymous) and sent to The National correspondent Hugh Naylor shows Castaing lying at the feet of armed troops. Judging by the uniform, the troops belong to the paramilitary Border Police, which handles much of the grunt jobs of the occupation.

It is not clear from the picture whether the policeman in the frame is aiming the rifle at the detained diplomat, or merely holding it at his side. French diplomat Marion Castaing lies at the feet of Israeli troops, West Bank, 20.9.2013. (photo provided by European aid worker who wished to remain anonymous) The diplomat herself sounds understandably livid, commenting to Reuters that “this is how international law is respected here.” There has been no official comment from the French embassy as of yet.

The IDF issued an announcement a few hours later, alleging that ” dozens of Palestinian and European activists [sic] tried to set up an illegal outpost in an area close to the community of Hemdat. The Palestinian activists threw stones at IDF forces that arrived to evict them. Three rioters who refused to be evicted and attacked the soldiers were detained, and the truck was confiscated.” A Red Cross convoy that set out for the same village was stopped and turned back on Tuesday. The original Reuters report seems to have been filed by correspondent Noah Browning, but the byline in subsequent reprints was amended to Crispian Balmer, the Reuters bureau chief for Israel and the Palestinian Territories.

Update (September 21, 12 p.m.): The following video was uploaded by Palestinian filmmaker Enas I. al-Muthaffar. In the clip, there is no visible stone throwing or other violent activity on the side of the aid workers, diplomats or Palestinians prior to the arrests and use of stun grenades.