“Where Will The Money Come From?”

 

By Devinder Sharma

10 October, 2008
Countercurrents.org

Only a few months back, the day Finance Minister P Chidambaram in his budget speech announced Rs 60,000-crore loan waiver for the beleaguered farming community, there was an orchestrated outcry: "Where will this money come from?" Television anchors were visibly angry at this 'supposed windfall' for the farmers, the print media was outraged at this 'political and not economic' decision just before the ensuing elections, and the industry leaders were seen sulking.

Six months later, no one is asking the same question. With the global financial crisis failing to work itself out, the Reserve Bank of India (RBI) is under pressure to intervene. Soon after the Wall Street mayhem, the RBI had pumped in Rs 84,000-crore in the domestic banking system through liquidity facility adjustment. An additional Rs 20,000-crore has been released through a 0.5 per cent reduction in cash reserve ration (CRR).

Sounds technical but let me simplify. Liquidity in layman term means 'fund availability' or in simple words making available more cash. All over the industrialised world, governments are stepping in to provide more cash in the hands of the private banks, and India is no exception.

Despite the Finance Minister saying that the fundamentals are strong, the banks are on a massive borrowing spree. In the first week of October alone, they borrowed Rs 90,075-crore every day from RBI through liquid facility adjustment. In the days to come, the RBI is under pressure to release another Rs 30,000-crore through the CRR, and also to cut repo rate – the rate at which it lends to banks. And thanks to the loan waiver, the banks will receive another Rs 50,000-crore in the coming weeks as part reimbursement for the farm loan waiver and fertiliser loan.

Isn't it a fact that Rs 60,000-crore loan waiver (later enhanced to Rs 71,000-crore) was actually a relief to the banks? What seemed to be a 'political' decision in the name of pulling out the indebted farmers was actually meant to maintain and sustain the health of the banking system. If the government had not provided the loan waiver, banks would have been in terrible liquidity crisis. With farmers unable to repay, these banks would have been saddled with massive non-performing assets (or a shortfall in liquidity) or non-availability of Rs 71,000-crore in cash.

In other words, the loan waiver was a partial bailout for the banks. Now no one is asking: "Where will this money come from?" On the contrary, most analysts are asking for more 'speed and sagacity' to tide over the crisis.

If only such 'speed and sagacity' was shown to tide over the terrible agrarian crisis sweeping throughout the country for over a decade now, thousands of farmers would have been saved from committing suicide. If only the RBI had stepped in to make more cash (or liquidity) available, the nation could have easily provided an assured employment to each and every Indian not only for 100 days but for all the 365 days in a year. The National Rural Employment Guarantee Programme (NREGA) can be easily extended to bring every unemployed Indian under its gambit.

And it is here that I fail to understand the sagacious logic of keeping the poor hungry and then expecting a higher economic growth trajectory; of paying a multi-million dollar salary (in addition to lucrative perks) to the bosses of the banks and corporate houses and then make the man on the street pay for the losses; in other words the logic behind privatising the profits and socialising the losses.

Take the case of the bankrupt Lehman Brothers. While the shareholders in the company have been wiped out, Richard Fuld, its chief executive, walks away with US $ 480 million as his personal remuneration over eight years, and this includes a $ 14 million ocean-front villa in Florida, and a home in an exclusive ski resort. Lawmakers investigating the bailed out insurance company AIG, were shocked to learn that days after the government rescued the company, it unashamedly spent US $ 44,000 on a posh California retreat for its executives, complete with spa, banquets and golf outings.

Why blame the American corporate leaders when US president George Bush himself had given them a free rope: "Government should not decide the compensation for America's corporate executives." Probably what he meant was that come what may, the US government will continue to provide funds to meet obscene corporate salaries and perks.

Prime Minister Manmohan Singh too had removed the upper ceiling on corporate salaries. According to Merril-Lynch and Capgemini, driven by impressive economic gains and robust market capitalism growth in 2007, India led the world in High-Net-Worth-Individual population growth at 22.7 per cent. Two year earlier, in 2005, there were 83,000 high net worth individuals with a wealth of at least $ 1 million (and this does not include immovable property).

This brings me back to the same question. How long will the world go on encouraging an economic system that makes the rich richer and the poor poorer? While 36 billionaires in India have a collective economic wealth equivalent to one-third of the country's GDP, the country's 600 million farmers collectively account for only 17 per cent share. With every passing year, the share of agriculture in GDP continues to slide down still further. No wonder, the average monthly income of a farm household (which includes five members of a family and two cattle) does not exceed Rs 2,400.

Bailing out the farmers from a distressing situation is always considered to be bad economics. It is branded as a political compulsion, and the sooner politicians emerge out of it the better it would be for economic growth and development. This economic prescription, which every economists worth the name is willing to endorse, is invariably for the farming community, the landless workers and the marginalised communities. They need to learn to be enterprising, and therefore must stop living on government subsidies.

When it comes to the enterprising millionaires -- corporates and the banks -- government bailouts are not only a must, but should be done speedily. "Where will the money come from?" is not a question to be asked when you are subsidising the rich and the elite. It is their birth right. You need to understand.

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India hits bottleneck on way to prosperity

 

 

By David Pilling
Published: September 24 2008 20:15 | Last updated: September 24 2008 20:15

If ever there were a symbol of India's ambitions to become a modern nation, it would surely be the Nano, the tiny car with the even tinier price-tag. A triumph of homegrown engineering, the $2,200 (€1,490, £1,186) Nano encapsulates the dream of millions of Indians groping for a shot at urban prosperity. That process has stalled.
The Nano has run into trouble because of a messy tussle over land with dispossessed farmers. But the struggle to determine whether West Bengal's paddy fields yield up crops or cars is symbolic of something much bigger: the difficulty India has in emulating the manufacturing-led models of countries that have hauled themselves from poverty.
No big economy has prospered without undergoing a huge, often brutal, shift of labour from the countryside to cities and from farms to factories. In Britain, this process was underpinned by the enclosure acts of the 18th and 19th centuries, which drove people from the land by expropriating the commons, creating a landless working class that became fodder for the dark satanic mills of its industrialisation.
The pattern, with some variations, was repeated elsewhere, including in Japan and South Korea, where people were pushed by poverty and pulled by ambition to work in vast urban conglomerations. China, today, is in the throes of the biggest mass migration in history as people flock from subsistence farming to clock in at the world's workshop. As many as 600m people, or about 47 per cent of China's population, live in cities, at least 100 of which have swelled to more than 1m inhabitants. According to McKinsey, the consultancy, the country is adding a new Chicago a year to its urban throng.
Now look at India. According to Rana Hasan, labour expert at the Asian Development Bank, of the 406m labour force in 2000, 78 per cent lived in rural areas against just 22 per cent in towns and cities. The structural transformation from low-productivity farm labour to higher-productivity industry has been painfully slow. Today, agriculture employs about 60 per cent of the workforce but accounts for a measly one-fifth of national output. The predominantly urban, "organised" sector produces 40 per cent of output with just 7 per cent of the workforce.
According to unpublished research*, in 2004 there were 6.75m "standard workers" (working 300 days a year, eight hours a day) engaged in Indian manufacturing versus 61m in the Chinese sector. The Indian figure may underestimate the true picture by up to two-thirds because of "unregistered enterprises" that slip through the statistical net. Even so, there is a yawning gap with China.
India's information technology and service sector, no matter how dynamic, simply cannot absorb enough labour. To truly shine, India will need millions, perhaps tens of millions, more manufacturing jobs. Why has it not created them?
One answer is that it got off to a false start. Mahatma Gandhi's idealisation of rural simplicity set the tone for post-independence policies that concentrated on heavy-industry import substitution but was biased against creating labour-intensive manufacturing jobs. Policies of "reserving" entire production lines for small-scale enterprises throttled automation.
Even now that some of these policies are being dismantled, as states vie for investment, you often need up to 100 permits, chits and slips to set up a factory. Rigid labour laws, which make it hard to fire workers, as well as pot-holed roads and intermittent electricity supplies, remain formidable barriers to industrialisation.
More fundamentally still, as the dispute over land in West Bengal shows, it is hard to engineer mass migration in a democracy. In contrast to 18th century Britain and 21st century China, the vote of a dispossessed Indian peasant is worth the same as that of a would-be industrialist. Collectively, it is worth more. "You have to hand it to Indian democracy," says Mr Hasan. "It does give you a voice. But that makes it very difficult to negotiate change."
The fact that a process is slow and messy does not mean it is doomed, argues Kishore Mahbubani, dean of Singapore's Lee Kuan Yew School of Public Policy. India was slow off the mark, dismantling the Licence Raj in 1991, more than a decade after Deng Xiaoping unleashed China's potential. "My sense is that it will catch up," Mr Mahbubani says. Indeed, where investment has come, such as in automotive components, advocates argue that quality matches world standards.
Amartya Sen, Nobel economist, agrees that democracy need be no obstacle to industrialisation. But even if short-term obstacles – such as bureaucracy and access to land – are overcome, he sees a severe bottleneck ahead. That is the neglect of basic education and healthcare which, as well as being scandalous in its own right, deprives India of the fit and literate workforce any competitive industry requires.
Mao Zedong, for all the reckless horror he unleashed, did bring schools and rudimentary healthcare to the peasants. "The train of China's industrialisation runs on the secure foundation of Maoist rails," says Prof Sen. If India is to become a car-owning democracy, it will have to solve some basic problems first.

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On October 1, 1949, Mao stood in Tiananmen Square in the capital city of Beijing to announce the formation of the People’s Republic of China. He spoke to a crowd of millions and declared: “The Chinese people have stood up!”

Mao had led the Chinese people in 20 years of armed struggle to overthrow their oppressors and drive out foreign imperialism. Now the people had the power to build socialism—as a transitional society with the goal of a communist world free of classes, and all the oppressive relations and ideas that go along with class society.

On this historic day, Mao shared in the people’s joy and celebration, but he also understood, as he had pointed out, that: “The Chinese revolution is great, but the road after revolution will be longer, the work greater and more arduous...”

A New Socialist China

The masses of Chinese people, especially in the countryside, had been subjected to so many horrible things—unending poverty and hunger, tyrannical landlords, women degraded and oppressed in every corner of life, drug addiction, illiteracy, and lack of health care. There had been no way for the masses of people to change any of this. They had been at the mercy of an oppressive economic and social system—and a ruling class that enforced all this.

The new socialist China inherited all the scars from this old society. But now, state power was in the hands of the masses. Now, the people’s efforts to get rid of all the remnants of the old oppressive society would be backed by the state apparatus and the party. And now the people could approach problems in a completely different way.

The new government took immediate measures to confiscate and take over businesses that had been owned by foreign imperialists and big Chinese capitalists and the property of big landowners was seized and divided up among peasants.

New laws were passed outlawing arranged marriages and giving women, as well as men, the right to divorce. Selling children, which had been a common practice because of poverty, was banned, along with child labor. The workday was reduced from 12-16 hours to 8 hours.

Many things were done that immediately and dramatically improved people’s lives—and at the same time, drew them into the whole process of solving societal problems. For example, drugs, gambling and prostitution had been a huge problem. Big-time gangsters, pimps and opium peddlers, many of them connected with the secret police of the old reactionary government, were arrested. Meanwhile opium addicts, former prostitutes and petty criminals were given education, housing, health care and jobs—and the opportunity to become part of the whole process of remaking society.

People’s social and political life was transformed and millions joined peasant associations, workers’ unions, women’s organizations, youth groups, and cultural, scientific, educational and other professional intellectual associations. Such mass organizations gave people a way to make and carry out important decisions in order to transform different spheres of society. In the cities, for example, “urban resident committees” representing hundreds of households helped settle family and neighborhood disputes, dealt with criminal activities and took care of public sanitation, fire prevention, relief for needy families and neighborhood cultural and recreational programs. Mass literacy campaigns were organized in villages, factories and poor neighborhoods.

Peasant associations based on poor and landless peasants were given the responsibility to carry out land reform. This was a radical economic as well as social change—for example women, for the first time, got land. By 1952, almost half of China’s farmable land had been redistributed and 300 million poor and landless peasants had gotten land.

Breakthroughs in Socialist Economics

When the revolution came to power, it immediately faced the question of how to transform society. Some party leaders—people who had marched right alongside Mao in the revolution against feudal landlords, capitalists tied to imperialist interests and foreign domination—now insisted that capitalism should be promoted without restriction. They said agriculture could not move forward until heavy industry was developed. They argued for relying on foreign technology and foreign loans, and maintaining private farming in the countryside. They went along with the dominant view of socialist economic development in the international communist movement, especially with regard to formerly dependent and backward countries, which was that you had to first build up modern productive forces—large factories, heavy machinery, new technology, etc.—and only then could you transform the relationships between people.

But Mao argued they should focus on revolutionizing forms of ownership and distribution and all the ways in which people work with each other to produce things—and on that basis spur the development of more advanced productive forces. In this way, carrying forward revolutionary changes and transformations among the people—starting with redistribution of land, but also efforts to promote collective ways of working together, as well as breaking down backward ideas from centuries of feudalism—could stimulate things like scientific farming techniques, opening up new farm lands, and improving water conservation.

This is an example of Mao’s developing understanding that revolutionizing how people think is critical to the whole process of changing society.

Putting the development of modern industry before the transformation of economic and social relations between people would lead to greater inequality because it would mean concentrating on developing the factories that were already the most advanced—in other words, the ones in the biggest cities. And this would only widen differences and inequalities between the countryside and cities and between poor and better-off areas, instead of restricting them. Instead, Mao argued for a much more dynamic back and forth between leaps in consciousness and leaps in production—what he later concentrated in his famous slogan, “Grasp Revolution, Promote Production.” And, crucially, Mao was able to win the struggle in the party at that time over what line, what approach to take to these fundamental issues.

Mao’s Leadership

The whole way Mao tackled and solved this problem gives a picture of what he was like and how he led. This path-breaking approach to building a new socialist economy came from a thorough studying and recasting of the positive and negative experience in building socialism in the Soviet Union, up until that time; investigation, and deep discussion with the masses of people; applying communist principles and method to the concrete situation in China; and on that basis coming up with a new understanding for how to go forward.

In 1951 Mao toured the countryside, talking with peasants and getting a first-hand look at what was going on. The revolution had confiscated land owned by the biggest landowners and distributed it to the poorest farmers with little or no land. But only by developing collective forms of working the land could the peasants not only increase production, but radically transform the ways in which people related to each other.

Mutual aid teams were formed where peasants shared their animals and tools and helped each other work individual plots of land. By 1952, over 40% of the peasants were in such teams. But these were still not large enough to deal with droughts or floods, they couldn’t carry out major technical improvements, and many were dominated by wealthier peasants.

Peasants were experimenting and coming up with creative ways to revolutionize production. And this involved a revolution in ideas and real transformations among the people—like taking on backward Confucian ideas about the subservient role of women, and replacing “me-first thinking” with a “serve the people” attitude.

On their own, some peasants started to form larger cooperatives and Mao keenly followed this, and encouraged it and led the party to mobilize the People’s Liberation Army soldiers to help lead this. By mid-1956, over 90% of peasant households were in such cooperatives.

This was Mao—leading and waging the class struggle in the context of developing a new socialist economy. This was the dynamic between the creative energy of the people under socialism and the role of communist leadership.

Great Leap Forward


Mao’s vision of socialism went beyond just giving people food, clothing and basic rights. He aimed for a revolution that would get rid of the old oppressive economic and social relations. A revolution that would challenge backward ideas and values that rested on and kept oppressive relations going. A revolution in how people think and act.

In 1958, Mao launched a bold new plan for socialist economic development with these goals in mind: The Great Leap Forward. A key element was the unleashing of a nationwide movement to form peasant communes—large collectives of people in the countryside that combined economic, social, cultural, militia and administrative activities.

Today, the Great Leap Forward is vilified as an irrational utopian experiment. But the truth is this was a real advance from the standpoint of developing more liberating economic and social relations.

The communes, which involved 15,000 to 25,000 people, made it possible to carry out big flood control and reforestation projects, build countywide roads or small-scale power plants, set up high schools, etc. Research centers were set up to develop new breeds of wheat, rice and other crops with greater yields. Hillsides were terraced to open up new farming land.

The communes provided people with a new and liberating political, social and cultural life. Finding collective solutions to social needs—instead of leaving each household to fend for itself—made it possible for women to more fully participate in the common cause of creating a new society. Communes organized cooperative home repair, community dining rooms, nurseries, and amateur theater groups.

In the course of these big economic and social transformations, old habits and values, superstition, prejudice and feudal customs were challenged. And the gaps between the city and countryside, and between workers and peasants, were narrowed.

Today people hear that the Great Leap Forward was a disaster—that people starved because of Mao’s policies, that the communes were really a form of slave labor. But this too is a lie.

There was famine during this time and many people died. But the difficulties of these years were a complex phenomenon: In 1959 China suffered extremely adverse climatic conditions of drought and flooding, some of the worst of the century in China. This greatly impacted food production. And the Soviet Union, which had restored capitalism in the mid-1950s, withdrew technical advisors and aid from China.

In addition, the leadership made mistakes. For example, too much time was spent in the rural areas on non-agricultural projects, which hurt food production. Local officials exaggerated reports on output, making it hard to know how much grain there really was and to plan accurately. But Mao, along with the revolutionary leadership of the party, did try to address these problems with new policies. For example, the amount of grain delivered to the state was lowered, some nonagricultural projects were scaled back in order to produce more food, grain was rationed and emergency grain was sent to regions in distress.

The fact is, and it is historically the case that, truly radical, transformative changes in society may cause initial dislocations and difficulties, but in the long run prove to be real breakthroughs. Such change involves breaking with old ways and experimenting with new ones and challenging custom and convention. This was the case with the Great Leap Forward. And the real truth is that by 1970, for the first time in its history, China was able to provide its population of 600 million people with a minimal diet and food security—which had everything to do with the economic, social and political accomplishments during the Great Leap Forward.

Getting Clearer on the Nature of Socialism

When socialism was overturned in the Soviet Union in the mid-1950s, this was a heartbreaking loss for everyone who dreamed of a better world. This had been the first place to establish a new socialist society and many great things had been accomplished in this first substantial and pathbreaking experience of socialism. (See the website of Set the Record Straight at thisiscommunism.org for documentation of these accomplishments.) So what did it mean that the revolution could be reversed—that capitalism could be restored?

Mao undertook a very deep study of the experience of Soviet society, learning from the positive achievements but also identifying and sharply criticizing mistakes in conception and practice that had maintained or even reinforced inequalities in society and led away from the goal of a classless, communist world. And Mao also took a critical look at the experience of socialist China up to that point.

Clearly, building socialism involved working to get rid of all the “scars” left over from the old oppressive society—a process that couldn’t happen overnight. Building socialism meant continually digging away at and transforming the old economic and social ways of doing things, as well as the old and oppressive ways of thinking that went along with all this.

But Mao was wrestling with and coming to understand something even beyond this. He was struggling to get a new and deeper analysis of the very nature of the socialist transition to communism. And what he was increasingly coming to understand—which up to this point, had not been really understood in the international communist movement—is that the victory of the revolution and the beginning development of socialism does not mean the end of classes and class struggle. As Mao would later put it:

“Socialist society covers a considerably long historical period. In the historical period of socialism, there are still classes, class contradictions and class struggle, there is the struggle between the socialist road and the capitalist road, and there is the danger of capitalist restoration. We must recognize the protracted and complex nature of this struggle.”

Mao looked at the fact that the people who organized and led the overthrow of socialism in the Soviet Union came from right within the top ranks of the communist party. And he looked around him and saw echoes of the same problem. He saw leaders within the top ranks of the Chinese Communist Party who wanted to restore capitalism, just as had been done in the Soviet Union.

Mao restlessly searched for a way to deal with this problem. From looking at the Soviet Union, he saw that just purging such party leaders would not solve the problem. Even if certain individuals didn’t make a comeback, others would come forward representing similar lines, so long as the underlying problems were not correctly identified and struggled against. Mao searched for ways to mobilize the broad masses of people to much more deeply and consciously take up the struggle over the whole direction of society, drawing the distinction between the capitalist road and the socialist road, to criticize party leaders who were taking the capitalist road and try to bring them back to the revolutionary road. He tried many things to unleash the people’s questioning and rebellious spirit, but as he later summed up, up to this point, he and the revolutionary leadership had not yet found the way to mobilize the masses “to criticize our dark side, in an all-around way and from below.”

Sharpening Class Struggle in China

Conservative forces in the party wanted profit measures to decide investment priorities. They promoted an educational system that turned out privileged professional and party elites. They pushed cultural works still dominated by old feudal themes and characters. Their approach towards the workers and peasants was basically “keep your nose to the grindstone, forget about engaging the big questions of how to run and transform all of society and contribute to revolution throughout the world.”

In the context of all this, Mao made what is his greatest contribution: the theory and practice of continuing the revolution under the dictatorship of the proletariat.

In socialist society you need the dictatorship of the proletariat to wage struggle against and defeat bourgeois class forces. Even as socialist society is constantly being revolutionized, remaining inequalities and differences in society will continue to provide the basis for bourgeois, capitalist relations and thinking—and the basis for the capitalist system to make a comeback. And what Mao came to understand is that the bigger danger here was not exploiters and oppressors from the old society—but a new bourgeois class, generated from the very contradictions of socialist society itself and concentrated right in the top levels of the party.

Party leaders, because of their positions of power, controlled resources and made decisions and developed policies that determined the direction of society. So how they exercised power—and with what aims—made all the difference in terms of whether or not society as a whole was going to move forward toward communism or back to capitalism. For example, were party leaders supporting policies that would break down inequalities or strengthen them? Were they working to unleash the conscious initiative of the people in the fight to transform society? This concentrated the class struggle under socialism. And the superstructure of socialist society—laws, art, culture, sports, science, and political institutions—not only reflected these class contradictions, but could and would greatly influence them in one way or the other.

Mao needed to find a way to shake up all of society; a way to revolutionize the party and all the institutions in society; a way to transform people’s thinking and understanding—and fully draw the broad masses of people into the class struggle to keep China on the socialist road.

The Fight to Stay on the Socialist Road

In the summer of 1965, Mao made a journey to the Chingkang Mountains, where in 1927 he had led 800 Red Army soldiers to form the first red base area and initiate the people’s war. This was a dangerous time. The enemies of the revolution who wanted to restore capitalism were gathering their strength and preparing for an all-out fight to seize power. In a poem, “Reascending Chingkangshan,” Mao wrote:

I have long aspired to reach for the clouds
And I again ascend Chingkangshan,
Coming from afar to view our old haunt,
I find new scenes replacing the old...

We can clasp the moon in the Ninth Heaven
And seize turtles deep down in the Five Seas:
We’ll return amid triumphant song and laughter.
Nothing is hard in this world
If you dare to scale the heights.

In May of 1966, Mao launched the Great Proletarian Cultural Revolution, calling on people to “bombard the headquarters.” He called on the people in their hundreds of millions to rise up and overthrow top party and government officials who were trying to bring capitalism back. This was a revolution within the revolution.

Mao was unleashing hundreds of millions of people to wrangle and debate over the direction of society, and to take responsibility for the fate of society. Mao and the revolutionary leadership in the party fought to help broad ranks of people to identify, criticize, and where necessary overthrow the top capitalist roaders—and seize back portions of state power where capitalist roaders were implementing lines and policies leading away from the goal of communism. This was a process of further revolutionizing society and empowering the masses of people.

The Cultural Revolution and Mao’s leadership of it are probably the most widely distorted and misunderstood period of Chinese history. For decades now, the defenders of capitalism have promoted a whole narrative of lies that vilify Mao and paint the Cultural Revolution as a nightmare.


“Socialist New Things” and the Further Transformation of Society

As Mao later explained, the target of the Cultural Revolution was “those persons in authority taking the capitalist road.” But the strategic aim of the struggle was to help the masses transform their world outlook, and through that, to transform the society around them in the further direction of a communist world.

Look at health care. In 1949, China only had 12,000 Western-trained doctors for a country of 500 million. By 1965, there were 200,000. But most of the medical care was still concentrated in the cities. New doctors were encouraged to work at elite urban hospitals, and to focus on making a career for themselves. Meanwhile, most peasants—the vast majority of China’s population—had little or no access to modern medical care. Such an approach to health care could only help to widen inequalities in society and strengthen the influence of capitalist tendencies.

Mao and those who rallied to his line sharply criticized the direction being taken by the Health Ministry, calling for radical transformations. Under his leadership, the focus of health care shifted to the countryside, even as overall health care improved in the cities. One of the most exciting developments of the Cultural Revolution was the “barefoot doctor” movement. Young peasants and urban youth were sent to the countryside and trained in basic health care and medicine geared to meet local needs and treat the most common illnesses. And doctors went to rural areas—at any given time, a third of the urban doctors were in the countryside. Life expectancy during the period of Mao’s leadership doubled from 32 years in 1949 to 65 years in 1976.

In education, leading capitalist roaders were arguing that China needed to focus primary attention on the “best” schools and the “brightest” students in order to build China into a modern country. They argued for ending the practices from the Great Leap Forward period when students spent part of their time growing crops at school for the cafeteria or working in small factories attached to the schools. The revolutionaries sharply criticized this, pointing out that it was impossible to keep moving forward toward communism unless they increasingly broke down the differences between intellectual and physical labor, between experts and the masses of common people.

One result of Mao’s call to transform education was that millions of students waged struggle against elitism in higher education. Before the Cultural Revolution, the universities were the province of the sons and daughters of party members and other privileged forces. Children competed in exams to enter a hierarchy of increasingly selective college-prep schools. For centuries, China’s feudal-Confucian educational system had created a small privileged elite, divorced from the common people and productive labor in society. The Cultural Revolution abolished this system of elite tracking and competitive exams. After completing high school, students went to live and work in rural areas or take up work in factories. After two or three years, students of any background could then apply to go college. And part of the college admission process involved evaluations from co-workers and communities of the applicants.

Similar “socialist new things” were brought into being in every section of society as people answered Mao’s call to revolutionize society and revolutionize themselves in the process.

As a crucial part of this, the Party itself began to be revolutionized. A whole section of the party took up this revolutionary line, deepening their understanding of the communist goal and the socialist transition period, and leading transformations in every sphere. New revolutionary leaders came forward from among the masses during this upheaval and ferment, and many joined the Party. And the relations among party cadre and the masses went through waves of revitalization and transformation, raising the consciousness and unleashing the initiative of the masses and fostering a spirit of openness to criticism and self-interrogation among the cadre.

The Loss of Socialist China and Lessons for the Future

Despite these transformations, Mao warned that final victory was far from settled. He pointed out that “it would be quite easy to rig up a capitalist system”—due to the pressures of imperialism, the still remaining “birthmarks” of capitalism (for example, inequalities between city and countryside, the still-remaining differences between mental and manual labor, etc.), and the fact that some powerful forces still in the leadership of the party had not been fully won to the line embodied in the Cultural Revolution and indeed in many cases harbored deep opposition to it.

When Mao died in 1976, the capitalist roaders in the Chinese Communist Party, led by Deng Xiaoping, seized the moment to stage a coup. Hundreds of thousands were arrested, including Mao’s closest comrades, the so-called “gang of four,” which included his wife, Jiang Qing. Thousands more were murdered. Where Mao had said “serve the people,” Deng crowed that “to get rich is glorious.” The coup and the destruction of socialism made China the hell it is today for the vast majority—once again dominated by imperialism, capitalist exploitation and backward feudal oppression, with the attendant extreme economic and social polarization.

The reasons why the capitalist roaders succeeded are complex—involving big international factors and developments—and how these interpenetrated with the class struggle in China. And within this, there were certain mistakes made by Mao and the revolutionaries grouped around him that weakened their ability to fend off the assaults from the capitalist roaders—especially after Mao died.

But the lesson to draw from this is not that socialism is impossible. The revolution did not fail, it was defeated. The fact that capitalist roaders had seized power was not so obvious at the time—not the least because they draped themselves in the words of socialism and Maoism. At this momentous juncture in the international communist movement, Bob Avakian deeply summed up the contributions Mao Tsetung had made to the science and practice of communist revolution. And he analyzed the class character of the new leadership in China and showed in great detail that a counter-revolution against Mao and socialism had taken place. At the same time he pointed to the tasks and challenges before genuine communists throughout the world to correctly sum up the world-historic and unprecedented experience of the Chinese revolution, and the theory Mao developed through the course of leading it, to learn as much as could be learned from that, and to advance further in the world revolutionary process.

Today there are no socialist countries in the world. The loss of socialist China in 1976 marked the end of a stage, of the first wave of proletarian revolution in the world.

Mao Tsetung was a great revolutionary communist who led a quarter of the planet’s people to liberate China out from under the thumb of imperialist oppressors—and then move on to build a liberating, socialist society for over 25 years. Mao led the Chinese people to “spring society into the air,” to radically change the conditions of their lives and change themselves in the process. He searched relentlessly for a way to prevent a new capitalist class from seizing power, and led the people in this fight down to his last breath. Under his leadership, this was the most advanced revolutionary experience in transforming society and transforming the people—the farthest humanity has gone in bringing into being a world free of exploitation and oppression.

Understanding the truth about Mao is important for everyone—the revolution he led was a major milestone in human history and everyone should know the truth about such a revolution and such a figure. And for those who truly want to change the world, there is even more at stake—for Mao’s revolutionary thinking and practice form a critical part of the foundation and a point of departure for rebuilding a revolutionary movement today.

Red Tory

A deeper shade of blueTories are now drawing on a radical conservative past that foretold flaws in Thatcher's market dogmaAll comments () Phillip Blond The Guardian, Thursday August 21 2008 Article historyWhen economic paradigms shift, ideology follows. Just as the Keynesian model broke down in the 1970s and ushered in the rise of Thatcherism, so the present crisis of neoliberal economics is precipitating a philosophical change in the Conservative party. The Tories are now speaking of sharing the benefits of growth and wealth, and the need for markets to generate fair outcomes. Moreover, they are distancing themselves from the current socioeconomic settlement because they recognise that it produces inequality and reinforces class barriers. They know that the community culture they want to resurrect was not only destroyed by the socialist state, but by the capitalist market. Say it softly, but the Tories could be poised to finally break with Thatcherism and its winner-takes-all monopoly capitalism.

The small governing elite of the party feels that this is the right way to go, but they lack a final intellectual synthesis and they also fear antagonising Thatcherites, who still constitute a sizeable slice of the party and a majority of the branch activists. But the unprecedented crisis of the world economy precipitated by the debt-leveraged collapse of free-market extremism has given the Tories a real opportunity to develop. They should worry less and carry the logic of their own civic philosophy through to its conclusion, for it could produce a genuinely critical account of the crisis and an alternative to the left/right neoliberal fundamentalism of the last 30 years.

For instance, the crisis of contemporary capitalism results from the congruence and culmination of three dominant trends: centralisation, monopolisation and speculation. Despite rightwing ideological claims, unregulated capital does not diffuse equitably among all market participants. The centralisation of money and power is the foundation of monopoly, and the precondition for unrestrained speculation. Thus the Conservative critique of centralisation means an end of cartel domination and a limit to inappropriate speculation.

Accordingly, the much-derided new civic philosophy of conservatism is actually key to reversing all the malign consequences of the Thatcher-Blair years. A genuinely local economy requires not just freedom from the target-driven, ethos-destroying logic of the state, but also liberation from the corporate business model. Corporate norms have obliterated owner-occupiers of small businesses and have created clone towns where every high street is the same, or ghost towns where the economies of scale kill off local enterprises. A revived localism inspires a diverse ecology of agriculture, industry and innovation, and a renewed sense of regional identity, reversing an economic monoculture predicated on finance and the City.

There are signs, therefore, that this localism is becoming the fulcrum around which conservatism could change. One example is Cameron's frustration at Policy Exchange's recent report that, in a disturbing echo of the rightwing "mobility of labour" argument, called for the abandonment of northern cities for the job-rich south. Likewise, the Conservative campaign against post office closures and the "disappearing Britain" campaign to save local shops all suggest a new distaste for the homogenising consequences of neoliberalism. So much so that the Conservative research department is trying to develop new central metrics of social value for a future government that would bypass mere short-term economic calculation. The agenda can go further: Boris Johnson's endorsement of a living wage for Londoners, rather than a minimum one, should be universal. Cameron's espousal of a work-life balance and the support of personal, rather than state, childcare is an echo of an electorally popular value system.

However, the final articulation of a post-Thatcherite economics would require elements from the radical conservative past - where figures such as William Cobbett, Thomas Carlyle and John Ruskin argued for a working class self-sufficiency, or English Catholic writers such as GK Chesterton and Hilaire Belloc argued that only widely distributed ownership could resist the dispossession and destruction of rabid capitalism. George Osborne's recognition in these pages yesterday that the flawed nature of unfettered markets suggests that the Tories have made the distinction between the current monopoly settlement and genuinely free markets. With a new view of competition that ensures markets support a genuine plurality by upholding social consensus and an extension of assets and ownership for all, modern conservatism could finally turn its back on Margaret Thatcher.

· Phillip Blond is a senior lecturer in theology and philosophy at the University of Cumbria. He is currently writing Red Tory, a book on radical Conservatism

Scarcity In An Age Of Plenty

By Joseph Stiglitz

17 June, 2008
The Guardian

Around the world, protests against soaring food and fuel prices are mounting. The poor — and even the middle classes — are seeing their incomes squeezed as the global economy enters a slowdown. Politicians want to respond to their constituents’ legitimate concerns, but do not know what to do.

In the United States, both Hillary Clinton and John McCain took the easy way out, and supported a suspension of the gasoline tax, at least for the summer. Only Barack Obama stood his ground and rejected the proposal, which would have merely increased demand for gasoline — and thereby offset the effect of the tax cut.

But if Clinton and McCain were wrong, what should be done? One cannot simply ignore the pleas of those who are suffering. In the US, real middle-class incomes have not yet recovered to the levels attained before the last recession in 1991.

When George Bush was elected, he claimed that tax cuts for the rich would cure all the economy’s ailments. The benefits of tax-cut-fuelled growth would trickle down to all — policies that have become fashionable in Europe and elsewhere, but that have failed. Tax cuts were supposed to stimulate savings, but household savings in the US have plummeted to zero. They were supposed to stimulate employment, but labour force participation is lower than in the 1990s. What growth did occur benefited only the few at the top.

Productivity grew, for a while, but it wasn’t because of Wall Street financial innovations. The financial products being created didn’t manage risk; they enhanced risk. They were so non-transparent and complex that neither Wall Street nor the ratings agencies could properly assess them. Meanwhile, the financial sector failed to create products that would help ordinary people manage the risks they faced, including the risks of home ownership. Millions of Americans will likely lose their homes and, with them, their life savings.

At the core of America’s success is technology, symbolised by Silicon Valley. The irony is that the scientists making the advances that enable technology-based growth, and the venture capital firms that finance it were not the ones reaping the biggest rewards in the heyday of the real estate bubble. These real investments are overshadowed by the games that have been absorbing most participants in financial markets.

The world needs to rethink the sources of growth. If the foundations of economic growth lie in advances in science and technology, not in speculation in real estate or financial markets, then tax systems must be realigned. Why should those who make their income by gambling in Wall Street’s casinos be taxed at a lower rate than those who earn their money in other ways? Capital gains should be taxed at least at as high a rate as ordinary income. (Such returns will, in any case, get a substantial benefit because the tax is not imposed until the gain is realised.) In addition, there should be a windfall profits tax on oil and gas companies.

Given the huge increase in inequality in most countries, higher taxes for those who have done well — to help those who have lost ground from globalisation and technological change — are in order, and could also ameliorate the strains imposed by soaring food and energy prices. Countries, like the US, with food stamp programmes, clearly need to increase the value of these subsidies in order to ensure that nutrition standards do not deteriorate. Those countries without such programmes might think about instituting them.

Two factors set off today’s crisis: the Iraq war contributed to the run-up in oil prices, including through increased instability in the Middle East, the low-cost provider of oil, while biofuels have meant that food and energy markets are increasingly integrated. Although the focus on renewable energy sources is welcome, policies that distort food supply are not. America’s subsidies for corn-based ethanol contribute more to the coffers of ethanol producers than they do to curtailing global warming. Huge agriculture subsidies in the US and the European Union have weakened agriculture in the developing world, where too little international assistance was directed at improving agriculture productivity. Development aid for agriculture has fallen from a high of 17% of total aid to just 3% today, with some international donors demanding that fertiliser subsidies be eliminated, making it even more difficult for cash-strapped farmers to compete.

Rich countries must reduce, if not eliminate, distortional agriculture and energy policies, and help those in the poorest countries improve their capacity to produce food. But this is just a start: we have treated our most precious resources — clean water and air — as if they were free. Only new patterns of consumption and production — a new economic model — can address that most fundamental resource problem.

Joseph Stiglitz is university professor at Columbia University. In 2001, he was awarded the Nobel Prize in economics. His latest book is Making Globalization Work.

copyright Project Syndicate/Institute for Human Sciences, 2006

Market Madness How Speculators are Manipulating & Profiting from the Global Food Crisis

 

 

By A.K. Gupta
Gupta's ZSpace page

  -- SPECIAL SERIES ON THE ECONOMY -- 

---

 

Unless you live in a bubble, like George Bush, who expressed total surprise in February when a reporter told him gas was nearing $4 a gallon, you've been socked hard in the pocketbook by rising prices. It's most evident at the supermarket—according to the Bureau of Labor Statistics, the cost of a gallon of milk has jumped 17 percent and a dozen eggs have leaped 40 percent in the last year and a loaf of bread is up nearly 30 percent in the last two years. At the gas pump the national average for regular gasoline notched a record $3.63 a gallon in early May, double from 2005, and it looks set to break the $4 barrier this summer. 

As dramatic as the consumer price increases are, the frenzy on commodity exchanges, where traders negotiate "futures" prices (and related financial products known as "options") is even more pronounced. The Commodity Futures Trading Commission (CFTC), in an unprecedented public webcast, held hearings on April 22 examining why agricultural commodity prices are skyrocketing. It noted, "In the last three months, the agricultural staples of wheat, corn, soybeans, rice and oats have hit all-time highs." 

Over the last year, wheat prices are up 95 percent, soybeans are up 88 percent, corn is up 66 percent, and Thai B grade rice, the world's trading benchmark, ended 2007 at about $360 a metric ton. It hit $760 at the end of March and continued its dizzying climb to $1,080 less than a month later. On top of that, crude oil futures have more than doubled since January 2007, coming within a hair of $120 a barrel this April. 

One striking aspect of the rising commodity prices is that when charted, they look similar to the Internet stock mania a decade ago or the charts of soaring (and plunging) home prices of late. This is no mere coincidence. One of the main factors in accelerating commodity and food costs is financial speculation. The same Wall Street banks and hedge funds that gave us the stock bubble and the housing bubble are reportedly throwing billions of dollars at the commodity markets, betting they can make a fast buck. One analyst interviewed by the Wall Street Journal estimates that "investors have poured roughly $175 billion to $200 billion into commodity-linked index funds since 2001." The Journal explained, "As with energy markets a few years ago, pension funds and hedge funds have flocked to grain investments as the supply of farm acreage and crop output shrinks relative to the growing global population and new demands for crops for biofuels and food. Many such investors make predominantly bullish bets," that is, expecting the price to rise. 

The daily fluctuations on commodity exchanges are at times greater than used to occur in an entire year. On February 25 alone, at the Minneapolis Grain Exchange, one type of wheat jumped 29 percent. On a single day in March, "the price of cotton jumped 15 percent despite reports showing cotton supplies were at near record highs," according to the Toronto Globe and Mail. During the CFTC hearings, commodity producers laid the blame for soaring prices at the speculators' door. A representative of the National Grain and Feed Association testified, "Sixty percent of the current [wheat] market is owned by an index fund. Clearly that's having an impact on the market," while a cotton producer stated, "The market is broken, it's out of whack." 

If there is a main culprit, it is the market. There is a lot of talk about growing consumption and falling supplies for both food and energy, but most of the data contradicts these claims. For example, despite a drought in Australia, ice and snow storms throughout China, and a cold, wet winter in the American breadbasket, the UN Food and Agricultural Organization projects global cereal production for 2007-2008 to increase by 92 million tons to 2.102 billion tons. But almost all this increase is from a record U.S. corn harvest, which is feeding the market for biofuels.

In essence, large speculators ranging from Wall Street banks and hedge funds to oil companies and agribusiness giants are making a killing from trading commodities. Analysts say some players may be manipulating the markets, but this is extremely difficult to prove because regulatory oversight of these markets has been deliberately rolled back. Still, many sectors appear to be engaging in blatant profiteering. This includes speculators, but also extends to food retailers, food producers, and fertilizer manufacturers. One of the ironies of the current situation is that even as the revenue of farmers is increasing furiously, especially in the United States, they are losing out on profits because of the wild gyrations in the commodities markets. 

Grain shortages abound because speculators' profits are literally coming at the expense of the world's poor. Food riots have occurred in Egypt, Cameroon, Burkina Faso, Mauritania, Ivory Coast, Senegal, and Ethiopia—countries where many people spend half their income or more on food (compared to less than 10 percent for Americans). The starkest indication of the deprivation is seen in countries like Haiti where, as rice prices have skyrocketed, the poor have been turning to mud cakes made with oil and sugar for sustenance.  

Raj Patel, author of Stuffed and Starved, says, "It's obviously a crime against humanity that this kind of financial speculation is allowed to continue. It's one thing to have speculation on the price of widgets or car parts, but it's another thing to have speculation in the fount of human life.... This should be a wake-up call to help us realize that food isn't a commodity, it's a human right." In a speech on April 2, World Bank President Robert Zoellick noted that food prices "have jumped 80 percent" since 2005, and "33 countries around the world face potential social unrest because of the acute hike in food and energy prices." A few weeks later, the World Food Program called high food prices "a silent tsunami" that has already pushed an estimated 100 million people deeper into poverty and which threatened "to plunge more than 100 million people on every continent into hunger." 

In the United States, the situation is troubling, if not as dire as the developing world. The U.S. Department of Agriculture estimates 12.1 percent of Americans, or more than 35 million people, experienced "food insecurity" in 2006. For many, this meant running out of food towards the end of the month, skipping meals, or not eating for a whole day. (Until the Bush administration changed definitions, this used to be known as "hunger.") Reports from media outlets, food banks, and soup kitchens indicate that food insecurity is increasing, caused by the leap in food and energy prices, along with the weakening economy, falling home prices, and fast-rising unemployment. Many low-income Americans, especially retirees on fixed incomes, are being forced to choose between eating, staying warm, or purchasing prescription drugs.  

One of the more disturbing signs of economic desperation is that many Americans are selling off their belongings to "meet higher gas, food and prescription drug bills," according to the Associated Press. The hard evidence comes from websites like Craigslist where the number of for-sale listings from March 2008 have "more than doubled to almost 15 million from the year-ago period" and are often accompanied by pleas like, "Please buy anything you can to help out." 

The Inflation Equation 

Understanding the nature and causes of inflation—when prices rise quickly and purchasing power diminishes —is difficult to grasp because there is a gap between people's daily experience and the official story. For years government officials have been declaring soothingly that inflation is "under control." The government reports that consumer inflation has been around 2-3 percent for the last 10 years and has jumped to almost 4 percent in the last 6 months. Some economists, including ones that run the website Shadow Government Statistics, claim the real inflation rate has been above 8 percent for the last decade and is closer to 12 percent at the moment. (They assert one reason the government manipulates the rate of inflation is to reduce cost-of-living adjustments that must be made to Social Security payments.) 

Any number of reasons has been put forth for rising commodity and food prices: diminishing inventories of grains, greater consumption of animal products in Asia, a growing global population, global warming, biofuels, natural limits, financial speculation, the falling dollar, escalating crude oil prices, World Bank and IMF policies, hoarding, export restrictions, and more. In one way or another, all of these factor into inflation. But it's not a jumble of reasons; there are a few critical causal chains and feedback loops behind the chaos. In broad terms, the nature of the globalized economy—the role of financial speculation, the dumping of subsidized foodstuffs from Western farmers in poor countries forced to "liberalize" their agricultural sectors, the declining dollar, and the overheated oil market—is why prices are shooting up. What ties all these factors together is politics. It's a political decision to allow rampant speculation in commodities; it's a political decision to decrease regulation of commodities trading; it's a political decision to devalue the dollar by increasing deficits and cutting interest rates; it's a political decision to force poor countries to dismantle supports for their farming sector; it's a political decision to force the poor to buy food in the marketplace, instead of making access to food a basic human right.

The Return of Malthus 

Much of the debate boils down to politics versus natural limits. This debate stretches back more than 200 years to Thomas Malthus's 1798 "Essay on the Principle of Population," in which he argued, as John Bellamy Foster put it, "There is a constant pressure of population against food supply which has always applied and will always apply." Without retracing the debate over hundreds of years (Foster's 1998 essay in Monthly Review, "Malthus' Essay on Population at Age 200: A Marxian View," is an excellent introduction), it's critical to note that it's still of great relevance today. Many people who speak of natural limits—such as the "peak oil" or "peak food" crowd—are neo- Malthusians. They often exhibit hostility toward the poor like Malthus, who wrote, "We cannot, in the nature of things, assist the poor, in any way, without enabling them to rear up to manhood a greater number of their children." 

Some involved in the debate today, such as Lester Brown and the World Watch Institute, tread close to the Malthusian line in warning of the "population problem" and arguing that it is a major reason why commodity prices are rising. Despite talk of increased food aid—which involves buying more subsidized Western foodstuffs and dumping them in impoverished countries, thereby further undermining their food security by bankrupting small farmers who can't compete against free foods— there is a willingness to let the poor die en masse in adherence to the neoliberal agenda. 

There are, of course, limits to everything—food, population, energy. But as Marx argued in the Grundrisse, overpopulation is "a historically determined relation, in no way determined by abstract numbers or by the absolute limit of the productivity of the necessaries of life, but by limits posited by specific conditions of production." It is these limits imposed—such as biofuel production and speculation—that are behind the global food crisis.  

On the other side, there is a strategy to blame the developing world for both the food and fuel crisis. China and India, with their booming economies, are held as culprits for the rising demand and thus shrinking supplies of food and energy supplies. India and China's population and caloric intake is increasing, particularly that of meat and dairy products. But this is a decades-long trend. There is no way that steady growth over 20 or 30 years could cause commodity prices to double in a year or 2. For example, from 1990 to 2003, India's caloric intake grew by 155 calories a person, barely 12 calories a year, while China's grew by 231 calories, or 18 calories a year. (During this same period, the intake of the average American increased by 310 calories.) At the same time, despite adverse climatic events such as large crop failures in Australia, the world's cereal output has increased. Part of the problem, notes Raj Patel, is that by one estimate, "740 million tons of grains were fed to animals last year and that would cover the food deficit at the moment 14 times over." 

The biofuels industry has been eager to blame China. An April 2008 "study" published by the Biofuels Digest was headlined "China's Meat Consumption Causing Global Grain Shortage." But the study contradicted itself because it found that China's per capita meat consumption increased by less than seven pounds total from 2000 to 2007, a miniscule rise.  The same strategy of blaming China and India is being used to hang the energy crisis as well as global warming around their necks. China and India use about 10 million barrels a day of petroleum products. But that's half the U.S. consumption of 20.6 MBD and they have nearly 8 times the population between them. 

The "Dot-Corn" Bubble 

It is in industrial agriculture where the link between energy and food inflation becomes apparent. The food we eat is literally hydrocarbons like oil. Oil is used for pesticides and herbicides to plant, harvest, and mill grains, to manufacture food products, to transport them and drive them home from the supermarket. Oil is even more central to meat production as the animals are reared on grain-heavy diets. On top of this, fertilizer, the boon of industrial agriculture, is mostly produced from natural gas, which has also been rising in price. With diesel above $4 a gallon already, businesses are passing the costs through the commodity chain to consumers (and truckers). The rise in egg prices has been extreme and therein lies an interesting story. The average egg-laying hen will in a year produce 276 eggs and eat 83 pounds of feed, three-quarters of which is corn. 

With the rise in oil prices, there has been a boom in biofuels like corn-based ethanol. Last December, President Bush signed a law mandating the use of at least 36 billion gallons of biofuels by 2020. In the summer of 2006, when corn was $2 a bushel and oil $70 a barrel, ethanol producers averaged $1.06 in profits per gallon sold. But then, corn prices doubled to $4 a bushel last year and just breached $6 a bushel this April. Midwestern farmers giddily joke about a "dot-corn" bubble as many of them (and their suppliers) rake in the money, but for everyone else, including ethanol producers, it's been a disaster. Various analyses show that ethanol distilled from corn uses more energy to produce than it provides. It's also a worse greenhouse gas emitter than crude oil and it's driving up feed costs for cattle ranchers, hog farmers, and egg producers, which is a big reason why eggs are much more expensive.

The effects go further still. Corn or corn syrup is used in three-quarters of all processed foods, from bread, chips, and soda to peanut butter, oatmeal, and salad dressing. It's even found in diapers and dry cell batteries, meaning thousands of products are experiencing upward price pressure. Corn is also distorting agricultural production as U.S. farmers have shifted more cropland to corn and have planted less soy and wheat. In 2007, 24 percent of the corn crop, some 3.2 billion bushels, was made into ethanol.  

The price of wheat has skyrocketed, boosted by the weak dollar, falling supplies, and speculation. The price of soybean oil is also increasing, partly because of its use for biodiesel. In August 2007, "376.2 million pounds of soybean oil were used for bio-diesel production, accounting for 20.6 percent of the monthly use of U.S. soybean oil," according to the University of Illinois. Having planted so much corn last year, some U.S. farmers are switching to other crops, partly because oil-thirsty corn, even at $6 a bushel, is seeing its margins squeezed by soaring costs for fertilizer and diesel. 

The Oil Factor 

Rising energy prices are a major factor in the escalating costs of agricultural products. But there is still the issue of why oil prices have almost quintupled since 2002. There are three main explanations: supply and demand, speculation, and the U.S. government's monetary policy. The White House and many pundits point to supply and demand because it's presented as a natural economic law beyond anyone's control. In this view China, India, and the rest of the developing world are the culprits. Yes, China's and India's consumption is rising rapidly, as is that of Middle East countries awash in oil. But from 2002 to 2006, even as oil prices tripled, global oil production kept up with demand by increasing 7.6 million barrels a day to 84.6 MBD. Demand growth has also slowed to a 1.1 million barrel per day annual increase from 2005 to 2008. This is compared to a 3 MBD increase in 2004 alone.  

Even more telling, OPEC has announced numerous production cuts over the last year because it wants to keep oil prices high. So if we are supposedly experiencing natural limits to the production of oil, why is production being reduced? OPEC country ministers publicly proclaim they want to keep oil prices high because of falling value of the dollar. The falling dollar is being caused by two main factors: the U.S. trade and the federal budget deficits. 

There is also an issue of "excess capacity." The cushion between production and consumption has fallen dramatically in the last six years, which has created supply hiccups and higher prices. The cause is not geological limits, however, but another factor: U.S. foreign policy. The Bush administration has destabilized three major oil producers that have suffered declining production in recent years—Iran, Iraq, and Venezuela. 

The commodities building blocks of the modern economy include everything from coal, oil, wood, gold, and copper to cotton, milk, corn, cattle, and sugar. Manufacturers need commodities to produce finished goods while consumers usually encounter commodities at the grocery store. Commodities trading, such as livestock, dates back to ancient times, but the modern "futures" market was established in Chicago in the 1840s. There, at the board of trade, commodities are standardized according to "quantity, quality, delivery month, and terms," while traders negotiate prices and contract amounts. Ideally, this system, through the buying and selling of futures contracts, allows farmers to determine what to plant based on futures prices for corn and wheat while an industrial-scale baker can lock in prices for flour, butter, and sugar months in advance. 

After the Internet bubble burst in 2000, the Fed lowered interest rates to historic lows, which increased the amount of money being borrowed and thus the amount of money in circulation. This is known as monetary inflation. What happens is the money supply increases at a faster rate than the production of goods and services. When many more dollars are competing for these goods and services, the result is an inevitable rise in prices. An example of how this works is the link between rising oil prices and the Fed's interest rate cuts. Since the Fed started slashing rates last September, the dollar has plunged against the euro, oil has risen by more than $40 a barrel and gold, at one point, by some $300 an ounce. The Fed is increasing the money supply, which means there are now more dollars in circulation than before against the euro, so the dollar falls in value. As the dollar drops against the euro, oil-producing countries demand more dollars per barrel.

Another inflationary factor is the federal budget deficit, which has doubled under Bush's watch, and the trade deficit. To stabilize the "current account balance," the United States needs an inflow of nearly $1 trillion a year to make up the difference. Dollars flow out because of our overconsumption and excessive government spending, while investments flow in to buy corporate, consumer, and government debt. The torrential outflow of dollars, however, weakens the value of the dollar. The trade deficit is running at about $58 billion a month. More than two-thirds of that goes to pay for the 12.5 million barrels of imported oil we use every day. Rising oil prices have become a vicious feedback loop. As oil prices spiral upwards and dollars flow out, the dollar drops in value, spurring the next round of oil price increases, a greater outflow of dollars, and a further drop in value. 

There is one other factor that's rarely talked about, except in the financial press—speculation, which "amplifies" price moves. After the Internet bubble popped, many investment banks and hedge funds began speculating in commodities. Speculators, when they buy a futures contract, create demand. But they are not interested in getting the actual pork bellies or coal. They just want to make a fast buck. When inflation rises significantly, commodities become an attractive investment because they increase in price rapidly. But the speculation completes the feedback loop by making the price rise inevitable and drawing in more speculators. 

This is a major factor in the oil markets. In 2004 the New York Times recounted one speculative episode: "When low inventories and news of violent attacks on oil executives and facilities in Saudi Arabia drove oil futures up, speculators piled on, according to market analysts. Their buying forced crude prices up even higher, attracting yet more investors betting on a continued rise, and so on in a classic spiral." Even the head of Exxon, in a March 5 press conference, admitted speculation was a big factor. According to the financial news website Marketwatch, CEO Rex Tillerson called the price increases "pretty crazy" and said, "A weak dollar accounts for about a third of the recent record run in oil prices, another third on geopolitical uncertainty and the rest on market speculation." 

The Enron Loophole 

What made the oil market speculation possible was legislation passed in the waning days of the Clinton administration. At the behest of energy-trading companies like Enron, a shadow electronic trading system was created that allowed speculators to trade oil futures contracts beyond the regulatory oversight of the Commodities Future Trading Commission. The CFTC is empowered to establish trading limits ''as the Commission finds are necessary to diminish, eliminate, or prevent" the "burden" arising from speculation. Because the CFTC can't track much of the oil trading now, it can't stop the speculation. A U.S. Senate subcommittee report from June 2006 squarely blamed speculators for much of the rise in oil prices, estimating more than $60 billion had poured into the markets at that point. 

The report noted that even as oil prices were rising, so were oil inventories because suppliers were gambling they could get more money down the road. The same exact thing occurred earlier this year. Crude oil prices zoomed nearly $20 a barrel in January and February. But in eight of nine weeks, U.S. oil inventories increased to multi-year highs. Tyson Slocum, director of Public Citizen's Energy Program, explains how it works: "You've got hundreds of parties entering into an electronic format to exchange massive volumes of crude oil and gasoline and natural gas and electric power and coal and ethanol and whatever else they want to do. And it's all unregulated." The players, says Slocum, include, "Goldman Sachs, Morgan Stanley, Merrill Lynch, Citigroup and a huge host of hedge funds. Deutsche Bank, Credit Suisse, UBS—all the big investment banks. The big oil companies that are traders are BP, Shell, and Marathon. Exxon Mobil really is not a big trader."  

There are some "legitimate supply-demand issues that are driving prices up," he says. But "supply and demand does not justify the level of prices that we are seeing right now. I think that has to do with the increased level of trading volume, volatility and speculation that is represented by a lot of these new players." Slocum adds that because we "lack any effective transparency...that marketplace has an invitation to engage in anti-competitive behavior—colluding, rigging bets, price fixing." 

It's hard to say if agricultural commodities markets are being manipulated, but there appears to be naked profiteering. For one, at the Chicago Board of Trade, there has been a big leap in electronic trading. The volume of wheat and oat contracts in the electronic arena (as opposed to the classic "open pit" where traders physically meet) has increased by more than 130 percent in 2008 so far, while rice contracts have ballooned by 219 percent. Patel says he thinks that "hedge funds and grain-trading divisions of the large agribusinesses are making a ton of cash, like Cargill and Archer Daniels Midland." 

In 2007 Cargill posted a 36 percent increase in profit over the previous year, ADM 67 percent, and ConAgra 30 percent. In the first quarter of 2008 Cargill announced an 86 percent increase in profit to $1.03 billion, which it attributed in part to the fact that "investment monies have streamed into commodity markets," meaning "prices are setting new highs and markets are extraordinarily volatile." 

Another sector profiting handsomely is fertilizer companies. In the last few years, fertilizer prices have risen dramatically. Some, such as urea and diammonium phosphate, have almost doubled or tripled in the last year. In fact, the price charts of some fertilizers closely match crude oil prices. That would make sense, except most fertilizer is manufactured by using natural gas and natural gas prices have been swinging up and down since 2000, not climbing a steep mountainside like oil.

This year, fertilizer companies have been experiencing the "sweet smell of success," as Forbes puts it. On April 4, Mosaic, the world's second-largest fertilizer maker and a Cargill unit, announced a 12-fold increase in profits to $520.8 million. Another manufacturer, Bunge, said its profits increased to $289 million from $14 million a year ago, and a third, Potash, announced its "first-quarter net earnings nearly tripled to $566.0 million." What makes these huge profits so suspicious is if their costs were increasing dramatically, their profits should be pinched. Instead, Forbes noted, there was only a "slight rise in raw material costs." 

That's not to say they are manipulating the price increases that take place in the futures markets, but they do seem to be taking full advantage of it. Patel says food retailers are also profiteering. He says "corporations are using food price inflation as an excuse to ratchet up prices.... In fact, in the UK and Spain and South Africa, retailers such as Tesco and Asda [the British division of Wal-Mart] are under criminal investigation for their price-fixing of milk and chicken and bread." A report posted on the website grain.org, "Making a Killing from Hunger," detailed the profit increases among food manufacturers and retailers. Nestlé's worldwide sales grew 7 percent in 2007, Tesco reported a record profit of 12.3 percent last year, Unilever said its profit margins were increasing, and "France's Carrefour and the U.S.'s Wal-Mart, say that foo d sales are the main factor sustaining their profit increases." That's not to say every corporation is raking it in; some food manufacturers, such as Kraft Foods, have announced declining profits due to higher input costs. 

The Great Rice Panic 

There is no one explanation for why all commodities are rising in price. As the world's workshop, China creates demand-driven inflation for various industrial commodities.  It needs mountains of coal, huge swaths of forests, and great veins of copper ore to feed its industry. 

In contrast, since the end of 2007, the price of Thai B grade rice doubled to $760 a ton by the end of March and then hit $1,080 weeks later. The reason for the initial rise is attributed to various supply and demand causes—a pest outbreak in Vietnam, low global stocks, the biofuel boom, rising demand from rising affluence. But speculation is driving these huge price leaps here, too. Essentially, all parties involved in the rice trade are engaging in fear-induced speculation. Major rice-exporting countries like India, Thailand, and Vietnam are limiting exports to ensure the domestic market is satisfied, thereby constraining supplies for rice importers. Farmers, including many in Thailand, are reportedly hoarding rice because, as one observer told the Guardian (UK), "Who's going to sell rice at $750 a ton when they think it's going to hit $1,000?" According to anecdotal reports, many consumers in Asia are buying large supplies of rice now because of fears they will pay more down the road. 

All this panic and speculation feeds on itself. Absent a global famine, normal demand or supply issues cannot explain why rice prices have tripled in Asia in just a few months. 

Another explanation comes by way of the interplay between environment and economics. Australia used to be one of the largest producers and exporters of rice in the world, but 6 years of drought have reduced the crop to virtually nothing, just 2 percent of its former self. In describing the situation, the New York Times notes, while it's difficult to say any short-term weather pattern is caused by global warming, the "severe drought is consistent with what climatologists predict will be a problem of increasing frequency." 

The rice industry has collapsed because farmers are turning to other commodities. For instance, "Some farmers are abandoning rice, which requires large amounts of water, to plant less water-intensive crops like wheat." Others are turning to wine grapes, which also use less water and bring pre-tax profits of $2,000 an acre versus $240 an acre for rice. Others are finding it more valuable to sell their water rights or even land to grape growers. One result, then, is because of market-based decisions, wine production is increasing for affluent populations while the poorest rice-dependent populations are left to scramble in the marketplace for food to survive. 

Putting the inflation genie back into the bottle is no simple task. One immediate solution is to better regulate commodities markets and tax futures contracts. A similar idea has been proposed on currency speculation, known as the Tobin Tax. A small tax would not hinder the actual buyers and sellers, but it would take a bite out of speculative interest. 

For the United States, the answers are much more difficult. The Fed is using inflationary policies to devalue U.S.-denominated debt, which helps the government and corporations, but harms consumers. Cutting the federal deficit is a no-brainer, but unlikely, and involve repealing the tax cuts for the wealthy and ending the Iraq War. The trade deficit must be cut, but even in the best-case scenario, it would take decades to build a new energy infrastructure independent of imported oil. 

Some suggest inducing a severe recession, as the Fed did in the early 1980s by jacking interest rates, but the pain would be severe for many Americans. A better solution is a real green energy and infrastructure program combined with single-payer national health care and expanded unemployment and welfare benefits. This could cushion the impact of the recession, while shifting the United States to a healthier economic base. But in this neoliberal world, that's about as likely to happen as George Bush ever admitting he's wrong. 

 

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Twenty Nine Reasons People Need To Pull Their Heads Out Of The Sand

 

 

By Wanda Marie Woodward

17 May, 2008
Countercurrents.org

When money speaks, the truth keeps silent.
Russian Proverb

All it takes for evil to exist is for good people to do nothing.
Edmund Burke

Corporations have been enthroned…An era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the prejudices of the people…until wealth is aggregated in a few hands…and the Republic is destroyed.
Abraham Lincoln

Less than two years ago, I sent an email to an acquaintance regarding some pressing topic like global environmental degradation, erosion of habeas corpus in America, or the millions of women and girls around the world who are being sold as sex slaves, victims of female genital mutilation, raped, beaten, and murdered. The response from the acquaintance shocked me, especially since she was highly educated, is a mental health professional (supposedly with lots of compassion), and has two small children who will, of course, inherit the legacy of the condition in which she and I and 6.6 billion others will leave this world. To paraphrase, she said: "Oh, I can't read this stuff. I bury my head in the sand because there is so much and I can't do anything about it."

I read an article recently by a gentleman who has proposed a new diagnostic label for people who are apathetic, indifferent, or otherwise not predisposed to engage in some kind of activity to assist others who are suffering, disadvantaged, unempowered, and/or oppressed (White, 2004). The diagnosis is called "Political Apathy Disorder" and it is defined as "failure to develop a social conscience" and its "essential feature is a pervasive pattern of failing to help reduce human suffering in the world combined with overconsumption of society's limited resources" (p. 47). Being a psychotherapist and someone who stays informed about the overwhelming challenges and dangers which are facing our planet, I was unsure whether to laugh or cry. Actually, I did both.

This acquaintance that dismissed my email was using the common defense mechanism called denial as a way to avoid the threats to her sense of well-being as well as her relatively comfortable lifestyle. It is something that people all over the world do and, while it is an understandable desire to want to avoid pain and suffering and to seek comfort, safety, and happiness, in today's world to do so without also simultaneously helping others less fortunate will have dire effects on the entire globe. A hundred years ago, when nations were fairly isolated from each other, the consequences of indifference and inaction towards helping disadvantaged people were minimal to the person who responded with disregard. Life could go on as usual, maintaining the status quo, ignoring the long-term effects. In Buddhist lingo, the karma would take a long time to rebound. Today, that karma due to apathy and indifference is swiftly reverberating all around us, like a boomerang that just whizzes around and comes back to hit us before we can escape it. There will always be those whose very nature is to reach out to help others. We call these people altruistic. They want to help others merely for the sake of helping others, nothing else to be gained from it other than it is inherent in the nature of that person's being to want to alleviate another person's suffering.

It is a moral and existential imperative that we unite to overcome the greatest adversaries which confront us: ignorance, apathy, hatred, prejudice, greed, and evil. In fact, with the current state of the world, greed is synonymous with evil. There are three essential areas that I refer to as the Triad of Destruction: 1. overpopulation, 2. consumerism, and 3. capitalism. This triad is the genesis of global warming. Undergirding this triangle is a duality of avarice and ignorance. Capitalists fall into the camp of unbridled greed, some of whom are ignorant, but many are fully aware of the deleterious effects that consumerism has upon the Common Good. Most people fall into the camp of the uninformed, many of whom are so physically and psychologically drained by the day-to-day burdens of earning a dwindling living just to pay for the essentials that they either lack the time to stay educated on current events, they avoid reading more depressing news because it is too emotionally and mentally taxing or, like the acquaintance at the beginning of the article, they feel helpless and hopeless.

Voluntary avoidance is an option, but below is a list of 29 good reasons that people need to be informed and unite to act for the Common Good. While it is not exhaustive by any means, and others could provide additional reasons, these are a good start. Time is running out and using denial to escape these harsh realities is no longer an option.

1. According to a Washington Post article in 1998, a poll was conducted by the New York Museum of Natural History which found that seven out of ten scientists from the American Institute of Biological Sciences are convinced that a mass extinction is underway and that within 30 years, one fifth of all living species could become extinct (Warrick, 1998). In 2005, respected scientist Professor Peter Raven, Director of the Missouri Botanical Garden, stated that, unless humankind changes behaviors, as many as two-thirds of world species could be extinct by 2100 (Collins, 2005).

2. According to World Wildlife Fund Director-General, James Leape, we would need a total of five planets to sustain the world's population if everyone on the planet had the same consumption rate as America. This finding was reported in the 2006 Living Planet Report which is the outcome of an annual study that has been conducted since 1998 to determine the rate of change in global biodiversity and the pressure on the biosphere which manifests from the human consumption of natural resources (World Wildlife Federation, 2006a). The 2006 Report also noted that in 2003, the world exceeded biocapacity by 25%. This means that with a global population of 6.6 billion people, the world is currently consuming at a rate of 25% more than what the earth is capable of regenerating. What will that rate be when the world has 10 billion people?

3. The world's population in 1600 was at 500 million (Leakey & Lewin, 1995). Two hundred years later in the year 1800, it had doubled to one billion. By 1940, another 140 years, the global population tripled to 3 billion. From 1940 to present day, 66 years later, the world's population has more than doubled to 6.6 billion. It is projected to be around ten billion by 2050.

4. Global greenhouse gases due to anthropogenic causes have increased 70% between 1970 and 2004 with carbon dioxide, the most significant greenhouse gas, having increased 80% between the same 34 year period. Two other green house gases, methane and nitrous oxide, have also increased substantially and rank high in terms of a negative affect on the environment. If global average temperature exceeds 3.5 degrees Celsius, it is projected that between 40-70% of species will be at risk for extinction. Eleven of the past twelve years (1995-2006) have been the warmest years of record for global surface temperature since 1850 (IPCC, 2007, p. 1). Global warming is creating changes in the migratory patterns of animals, altering the timing of plant flowerings, causing changes in the flow of the Gulfstream, and creating changes in the ocean and the atmosphere which increase the occurrence of natural disasters such as hurricanes and tornadoes. The primary causes are fossil fuel use (gasoline to power cars, boats, etc.) and agricultural and land use changes (deforestation, multinational farming methods, soil erosion, etc.).

5. The IPCC report says that, by 2080, 1.1 to 3.2 billion people will experience water scarcity, 200-600 million will be starving, and 2 to 7 million people each year will experience coastal flooding (cited in Vidal, 2007). As many as one billion people, or 17% of the world's population, may be forced to abandon their homes over the next 50 years and migrate to another more habitable geographical area. Most of these people will be from poor and undeveloped countries. A combination of social, civil and military conflicts, large-scale development projects, and global environmental decline will make life inhabitable for hundreds of millions of people, mostly from Africa, south Asia, and the Middle East where, ironically, the least amount of consumption takes place.

6. The Union of Concerned Scientists, a leading science-based non-profit organization working for a healthier environment, reports that America has 5% of the world's population, but emits 25% of the world's carbon dioxide (UCS, 2006). The Union of Concerned Scientists' web site also exposes the efforts of ExxonMobil which spent $16 million between 1998 and 2005 hiring advocacy organizations that intentionally discredit the overwhelming evidence pointing to global warming (UCS, 2006).

7. When oil and gas senior executives speak to lawmakers and the public, they report smaller profit margins (around 8 to 10 percent) than when they speak to Wall Street analysts and shareholders (Slocum, 2006).

8. On a global scale, there was an average species decline between 1970 and 2000 of 40% with species in rivers, lakes and marshlands having declined by 50% during the same period (Global Biodiversity Outlook 2, 2006). Research points to declines in amphibians, African mammals, birds in agricultural lands, corals, and common fish species. The World Conservation Union, or IUCN, Red List of Threatened Species is recognized as the most reliable evaluation of the world's species. According to the 2007 Red List, life on earth is disappearing fast and the extinction process will continue unless urgent action is taken. There is a total of 41,415 species on the Red list (IUCN, 2007). Last year, 16,118 were facing extinction and now 16,306 are threatened. The aggregate number of extinct species is 785. The Red List reports that 25% of mammals, 13% of all birds, 33% of all amphibians, and 70% of the world's assessed plants are now threatened with extinction. One of the most disturbing statistics is that of the vertebrate family which includes mammals, birds, reptiles, amphibians, and fishes. The entire vertebrate family saw an increase in threatened species jump from 3,314 in 1996 to 5,742 in 2007. Life in the ocean is in peril. According to the 2007 IUCN Red List, there are some 41, 415 species of marine life listed and, out of that, 30% are at risk for extinction. Some other vertebrates facing extinction are the tigers in India which are now thought to total no more than 1,500. In 2002, there were 3,642. Of particular concern is the rapid loss of plant species. From 1996 to 2007, the number of critically endangered plant species jumped from 909 to 1,569 and the number of endangered during the same period rose from 1,197 to 2, 278. The number of vulnerable plants during that period rose from 3,222 to 4,600. Altogether, the number of plant species that are threatened jumped from 5,328 in 1996 to 8,447 in 2007. Twenty percent (20%) of the earth's reefs have been destroyed over the past thirty years and another 50% are endangered by human activity.

9. According to the Natural Resources Defense Council, electric power plants caused 67% of the total sulfur dioxide, more than 25% of the nitrogen oxides, 33% of the mercury, and 40% of the carbon dioxide emissions in the United States in 1998 (Natural Defense Resources Council, 2003). Approximately 120 million Americans live in areas with unhealthy air.

10. The use of toxins, pesticides, and chemicals over the past sixty years has posed a substantial problem for wildlife and humans. Between 1930 and 2000, the global production of man-made chemicals skyrocketed from 1 million to 400 million tons per year (World Wildlife Federation, 2006b). Since the middle of the 20th century, the amount of pesticides sprayed on crops has increased by 26%. Because these pesticides seep into the soil, the crops that are grown absorb it. Humans eat the crops which are absorbed in the body.

11. Factory farms in the United States produce 500 million tons of manure each year which is three times the amount of human sanitary waste (Pew Oceans Commission, 2003). This poses serious threats to the water we drink and the oceans, rivers, lakes, and streams. Large multimillion dollar corporations own many of the farms that generate pollution in the large lagoons that collect the urine and manure from the animals. Because lagoons have broken, failed, or overflowed, these leakages cause fish to be killed and the people living near the lagoons to report higher incidences of illnesses (Marks, 2001). Gases such as ammonia, hydrogen sulfide, and methane are emitted from the lagoons and the irrigation pivots. These gases are toxic, consume oxygen, and are even potentially explosive. People residing near the lagoons have reported a host of physical ailments including headaches, excessive coughing, respiration problems, nausea, diarrhea, dizziness, depression, and fatigue. Also hazardous are the pathogenic microbes in the animal waste that can infect humans. The amount of meat production in 2006 hit a record 276 million tons which results in greater amounts of sludge from these farms. According to the Center for Food Safety, a non-profit public interest and environmental advocacy organization, millions of tons of potentially toxic sewage sludge has been used as crop fertilizer to millions of acres of farmland in America (Center for Food Safety, n.d.). Municipal governments sell sewage sludge to farmers as a way to dispose of unwanted byproducts from the municipal wastewater treatment plants. Sewage sludge contains anything that is flushed in a toilet or put down a kitchen sink. Many people have become ill from the heavy metals, industrial compounds, viruses, bacteria, drug residues, and radioactive materials which are found within the sewage sludge which is, as mentioned, put on the crops. Government monitoring of this hazardous waste is lax.

12. According to the Environmental Protection Agency (EPA), Americans discarded 246 million tons of municipal solid waste in 2005 and businesses threw away 7.6 billion tons of industrial waste in the same year (EPA, 2007). This is an increase of 60% since 1980. Municipal residential waste includes items such as paper, yard trimmings, food scraps, plastics, metals, rubber, leather, wood, glass, sofas, computers, and refrigerators. It excludes industrial and hazardous waste. About 11% of landfills are made of plastic waste, a total of 26.7 million tons. Thirty five percent (35%) is made of paper, a total of 83 million tons. The amount of plastic thrown away increased from less than 1% in 1960 to 11.3% in 2003. The amount of paper discarded increased three fold between 1960 and 2003. The majority of municipal solid waste is comprised of containers and packaging followed by nondurable goods such as clothing, shoes, and other textiles. Globally, humans use 1.5 million tons of petroleum-based plastic to make bottles on an annual basis. It takes one million years for glass bottles to decompose. For aluminum cans, it takes 80 to 100 years while tin cans take 50 to 100 years. It takes a plastic coated milk carton five years to decompose and cigarette butts take anywhere from one to 12 years to degrade. It is a 25 to 40 year decomposition process for leather shoes and a 30 to 40 year process for nylon fabric. Environmentalists say that it will take 50 years for all the oil from the Exxon Valdez spill to finally degrade.

13. The World Wildlife Federation (2007) reports that the use of toxic man-made chemicals has increased from 1 million to 400 million tons between 1930 and 2000. They are seeping into the soil and into the food chain of all animals which, ultimately, ends up in the human body.

14. The tropical rainforest is a rich biosystem and contains the greatest diversity of species of biomes on earth which is why there is so much attention given to its preservation. This system is a home for 50-90% of all living organisms and to 90% of primates. It provides home and sanctuary to 50 million creatures that are unable to survive anywhere other than in the tropical rainforest. Serious threats from deforestation, road construction, clearing the land for agricultural purposes, and climate change are decimating it and its flora of animal wildlife. The logging industry needs the wood from forests to provide products such as paper, wood for home and commercial construction, packaging, and a host of others.

McDonald's needs 800 square miles of trees to make the amount of paper that they need solely for their packaging of products. As more and more people eat hamburgers and steaks, factory farms are necessary to grow the livestock. In the South American Amazon region, there are 100,000 beef ranchers. Norman Myers, the Oxford University environmentalist and expert on biodiversity, was the first to bring widespread attention to deforestation when he wrote The Sinking Ark in 1979 in which he estimated that more than 80,000 square miles per year of forests are being felled. This amounts to one acre per second being cut down. In the Amazon, there is an average of 1,500 acres of forest cut down each day.

15. Today, 50% of the forests that originally covered 48% of the earth are gone (NRDC, 2004). Americans use 27% of the worldwide consumption of commercially harvested wood yet only 5% of the world' population is in the United States. The United States is the largest consumer and producer of industrial wood and the world's largest importer of wood (Shugart, Sedjo, & Sohngen, 2003). In the construction industry, approximately 1/6 of the wood that is delivered is never used. It is predicted that, by the year 2050, global wood consumption will increase by 50%. In the U.S., more than 50% of the coastal temperate rainforests that once covered areas from California to Alaska have been destroyed. Mexico is losing an estimated 600,000 to 2.5 million acres of forests each year. Most of the mahogany exported from Peru is illegally logged by corporations, a major threat to forests all over the world. Canada provides 80% of their forest products to U.S. consumers. Only 8% of Canada's valuable boreal forest is sufficiently protected.

16. The United States has lost over 50% of the wetlands in the lower 48 states. The rate of loss is predicted at 60,000 acres per year. Louisiana has lost 500,000 acres of wetlands since the 1950s (Pew Oceans Commission, 2003).

17. Humans have wiped out 90% of the ocean's large fish (World Wildlife Federation, 2006) and exploited 52% of the world's fish populations. Of the remaining fish population, 24% are overexploited, depleted or making a recovery from collapse. The world now has only 17% of the ocean fish that it had 100 years ago. In 2004, 156 million tons of seafood was consumed, three times the average amount of per person seafood eaten in 1950 (Worldwatch Institute, 2007). During the 1980s and early 1990s, scientists estimated that 25% of the fish that were caught (60 billion pounds each year) were discarded (Pew Oceans Commission, 2003). It is clear that the 19th century biologist, Thomas Huxley, was mistaken when he made the statement that all the sea fisheries were inexhaustible. The global industrialized fishing fleet is currently 2.5 times larger than what the ocean can sustain. What that means is that humans are consuming 2.5 times more than what the oceans can regenerate.

18. Invasive species is largely a man-made act in which one species is purposely moved from its natural environment and transported to another environment resulting in the extinction of species. Few people are aware that invasive species is one of the most serious global environmental challenges that we face today. Hundreds of extinctions have resulted from invasive species. The impact of alien invasive species is immediate and, in most cases, irreversible. Some species relocate unintentionally, but it is still through man-made intervention such as when a species attaches itself to the bottom of ships and is transported to another area. When foreign species are imported into the U.S., it does generate billions of dollars for the economy, but it also poses threats to agriculture and the environment (Schmitz & Simberloff, 2005). Global trade is a direct contributor to this threat to nature.
19. CEOs are now earning $10,000 to $12,000 per hour while the average salary increase for the average American worker is less than two percent (Democracy Now, 2007). If we pause briefly to compare work hours and wages between the average CEO and the average American worker, we see an egregious disparity. Ninety percent (90%) of Americans earn less than $100,000 per year, thus, the year of labor that it takes 90% of Americans to earn $100,000, it only takes the average CEO a total of 10 hours to earn. Sixty six percent (66%) of Americans earn less than $50,000 per year, thus, the year of labor it takes 66% of Americans to earn $50,000, it only takes the average CEO a total of five hours to earn. Fifty percent (50%) of Americans make less than 30,000 per year, so the average CEO makes that in less than three hours. The CEO does not even have labor for an entire day. According to the Drum Major Institute (2006), a non-partisan, non-profit think tank, their 2006 Injustice Index finds that the ratio of the average U.S. CEO annual pay to minimum wage worker's is 821:1 whereas twenty years ago the ratio was 40:1. According to Kevin Murphy of the University of Southern California, the average U.S. CEO pay rose 369 times that of the average worker in 2005 while it was 191 times in 1993 and 36 times in 1976 (Krugman, 2002). Compare the 1993 ratio of U.S. CEO pay to the average American worker of 191:1 to the same ratio in Germany which was 23:1 and Japan which was 17:1 (Clinton, 1992). In 2006, the top 20 CEOs of U.S. companies made three times more than the top 20 CEOs of European companies that had higher sales profits than their U.S. counterparts (Sahadi, 2007). In August 2007, the Institute for Policy Studies and United for a Fair Economy published their joint study on the wage gap between average American workers versus CEOs, private equity managers and hedge fund managers. Private equity and hedge fund managers' pay averaged $657.5 million in 2006 which is 16,000 times more than the average full-time worker and it is 61 times larger than the average CEO pay (Sahadi, 2007).

20. Paul Krugman (2002), an economist at MIT and regular columnist for The New York Times, reports that in a 29 year period between 1970 and 1999, the average annual salary in America rose ten percent (10%) whereas, during the same period, according to Fortune magazine, the average real annual compensation of the top CEOs in America rose more than 1,000 times the pay of ordinary American workers and, according to a 2001 Congressional Budget Office study, between 1979 and 1997, the after-tax incomes of the top 1 percent of American families rose 157 percent (157%). Krugman (2005) reports that the average income of the top one percent (1%) of Americans has doubled since 1973 and the income of the top 0.1% has tripled. According to the United Nations Development Report (United Nations, 1999), the net wealth of the ten wealthiest billionaires is $133,000,000,000 (133 billion dollars), more than 1.5 times the total national income of the least developed countries. Doug Henwood (1998), in Wall Street: How It Works and for Whom, writes that the richest 5% of Americans own 95% of all stock shares and the top 1% of the population owns 25% of the productive capital and future profits of corporate America. In Henwood's (2003) After the New Economy, he exposes that the richest 10% of Americans possess over ¾ of all the wealth in America and the bottom 50% has almost none of the wealth, but notes that they do have substantial debt. In a government study, the group which had the largest growth in total income between 2000 and 2005 was the top 0.001% individuals who make $1 million or more and which grew by more than 26% during these five years (Johnston, 2007). In the recent government report of the top 0.001% who make $1 million+, that group not only walked away with almost 47% of the total income gains in 2005 compared to 2000, but, according to Citizens for Tax Justice, they captured 62% of the savings from the reduced tax rates on long-term capital gains and dividends for the wealthy that President Bush signed into law in 2003 (Johnston, 2007). If the richest 5% of Americans own 95% of all stock shares and the top 1% of the population owns 25% of the productive capital and future profits of corporate America, it does not take a math genius to deduce that President Bush's tax cuts for the wealthy have overwhelmingly benefited 5% of Americans and have resulted in vastly deteriorated economic outlooks for the other 95%. The Citizens for Tax Justice reports that out of 134 million American taxpayers, those who make $10 million or more—a total of 11,433 taxpayers---saved almost $1.9 million each and reaped 28% of the investment tax cut savings. As an aggregate, these 11,433 Americans saved $21.7 billion in taxes on their investments as a direct result of President Bush's tax cuts for the top wealthiest in America while the other 90% of American who make less than $100,000 a year saved an average of $318 on each investment.

21. One investment bank has commented that the current period for corporations is "the golden era of profitability" (Greenhouse & Leonhardt, 2006, p. A.1) with corporate profits climbing to the highest amount since the 1960s. Even though productivity levels have risen by double digits in the past decade, American workers' pay increases have risen by less than 2%. As Herbert (2007) describes it this way: "If your productivity increases by 18% and your pay goes up 1%, you've been dealt a hand full of jokers in which jokers aren't wild" (p. A.19). Most productivity gains have gone straight into the pockets of corporate executives. The savings rate for middle and poor class is now negative and more Americans are filing for bankruptcy than they are for divorce (Herbert, 2007). Moreover, 30 million Americans, or 25% of the U.S. workforce, make less than $9.00 per hour, or just $17,280 per year and, according to 2004 U.S. Census Bureau statistics, 37 million Americans now live in poverty (Hartmann, 2006).

22. Multinational corporations own animal patents to clone animals. The first animal patent that was issued was in 1988 for the "Oncomouse," a genetically manipulated mouse to develop cancers that mirror human diseases. The research was conducted at Harvard University, but it was DuPont that was awarded the European Patent 169672 on the mouse in 1992. More than 660 animal patents have been issued in the United States since 1988. This means corporations have power over the DNA structure if cloning is not banned. If there is no ethical and moral line to be drawn with cloning of animals, how long will it take until humans are cloned? What happens if another Hitler or Stalin assume power?

23. More than 75 percent of workers in most of the industrial nations are performing work that is primarily simple and repetitive (Rifkin, 2004). In the United States, out of 124 million workers, more than 90 million jobs are at risk for replacement by machines. Currently, 3.6 billion out of 5.4 billion people in the world lack adequate cash or credit to purchase goods and services (Barnet & Cavanagh, 1994). Human androids are being made that will, one day, be indiscernible to a real human being (Whitehouse, 2005). Will they have a conscience? Not only will these androids take over work because of their slavish, blind obedience to authority and the wealthy capitalists, how will billions of unemployed real human beings survive and how will a real human being know if they are marrying a human being or an android? Will androids have legal and political rights? If so, without a conscience, how will they vote and what will they demand? If they become leaders, what will become of the world?

24. Corporations and individuals now own patents on 20 human pathogens (Crichton, 2007). This allows the owner of the patents to halt research, prevent medical testing, and to withhold vital information from a patient or doctor. A corporation can charge any amount for tests related to that disease. The owner of the genome for Hepatitis C is paid millions of dollars by researchers to study the disease. Not surprisingly, researchers turn to studying other less expensive diseases. When SARS was spreading around the world, medical researchers were reticent to study it because of the patent concerns behind it. The inhibition of innovation and research makes the patenting of human genes particularly insidious. Corporations literally have the power to prevent the finding of cures for disease. Perhaps the most disturbing patent is that of U.S. patent 5,476,995 on Tracey the sheep. Tracey had human genes injected into her mammary glands to produce a certain protein. The alteration of her genetic make-up allows the two companies which own her, Pharmaceutical Proteins Ltd. and Bayer, to describe her as a human invention. This takes the concept of Orwellian doublespeak and turns it into the more accurate phrase: diabolical deception.

25. Millions of birds, cats, dogs, farm animals, fish, mice, monkeys, rats, rabbits and a host of other domestic and wild animals are subjected to animal testing by psychologists, biologists, biochemists, physiologists, and geneticists. In a 2005 study, it was reported that the United States used 1.14 million animals (excluding rats, mice, birds and cold-blooded species), and an estimated 100 million mice for research (PETA, 2006a). Of these, it is known that 84, 662 animals suffered pain without pain relief. In the same study, it was found that Canada used 2.32 million animals for research and 167,000 animals were subjected to experiments that cause severe pain. In Great Britain, a total of 2.45 million animal experiments were conducted.

26. The military testing of weapons in which they use animals as subjects is a particularly horrible practice, but the public remains largely uninformed about it. According to PETA (2006b), the U.S. military uses AK-47 rifles, biological and chemical weapons, and nuclear blasts to test on animals. In 2001, the Department of Defense (DOD) reported that more than 330,000 dogs, cats, guinea pigs, hamsters, rabbits, nonhuman primates, rats, mice, dolphins, fish, and other animals had been subjects in their military tests. This excludes the experiments conducted by nongovernmental organizations in which sheep, goats, and pigs are shot in wound experiments, so the aggregate number of military tests in which animals are used is likely underreported.

27. President George W. Bush has backed out of important treaties since gaining power. He backed out of the Kyoto Treaty after assuming office in 2001 which meant he refused to honor commitments to work with over 100 other countries who had signed the treaty in addressing global warming. That was troubling enough. Then in December 2001 Bush announced that the United States would no longer honor the 1972 Anti-Ballistic Missile Treaty that the U.S. signed with Russia in which there was a sort of balance of powers established. This withdrawal marked the first formal unilateral withdrawal of a major power from a nuclear arms treaty and it also triggered Russia to withdraw from its commitments under the START II arms reduction treaty. If that wasn't alarming enough, in 2002, the Department of Defense presented the Nuclear Posture Review to Congress which expanded the range of situations in which the U.S. could use nuclear weapons allowing the option of using nuclear weapons against non-nuclear nations. This was another withdrawal from an agreement the U.S. had made in 1995 when it said it would not use nuclear weapons against non-nuclear weapon parties unless they attacked the U.S. while allied with another nuclear-weapon country. The Nuclear Posture Review to Congress also allowed pre-emptive attacks and permitted the development of nuclear warheads. In November 2006, Bush posted plans on a public website stating intentions to build nuclear weapons. Immediately following, six Arab nations made formal announcements that they were launching nuclear programs of their own. The International Atomic Energy Agency (IAEA) announced that Saudia Arabia, Algeria, Morocco, Tunisia, the United Arab of Emirates, and Egypt had revealed their nuclear ambitions the prior month and were giving formal notice of those plans. Arms experts called this announcement a "stunning reversal of policy" in the Arab world because of a long past of commitments to a nuclear free Middle East. While the six countries told the IAEA that their intention was the pursuit of nuclear energy, not nuclear weapons, it is clear that nuclear energy technology can be turned into weaponry. Then in mid 2007, Bush announced he was going to build a missile shield in Eastern Europe. Vladimir Putin responded by notifying NATO governments that Russia would suspend its obligations under the 1990 Conventional Forces in Europe Treaty, a cold war treaty that limited arms proliferation. Putin said that the bullying of President Bush was forcing Russia to make this move particularly with two major moves: the combination of the U.S. backing away from the Anti-Ballistic Missile Treaty and its intention to rearm Eastern Europe.

28. There are currently (as of April 2008) nine countries that have nuclear weapons: United States, Great Britain, France, Russia, North Korea, China, India, Pakistan and Israel.

29. Following the bombing of Japan, a group of American atomic scientists published an article in the Bulletin of the Atomic Scientists (BAS) establishing the Doomsday Clock and set it at 7 minutes before the close of midnight. It was intended to be a stark symbol of how close the world was approaching total obliteration. In 2006, the BAS directors and affiliated scientists met to reassess what the most grievous threats to life on the planet are today. The decision was made that global warming is second only to nuclear annihilation and so the Doomsday clock was moved up by two minutes. It is now set at five minutes before midnight.

The informed, compassionate, and active are tasked with daunting and overwhelming challenges. It is imperative for us to build bridges and remain connected during these profoundly troubling times. Let us persevere, stay informed, remain sober and realistic, and act with moral conscience on the scientific information that is available to us. And let us keep hope alive.

Wanda is a psychotherapist and author of The Anatomy of the Soul: An Authentic Psychology published in 2004 which posits an original theoretical model of the Soul, or Transcendent Psyche. Her second book, Malignant Masculine Power: The Narcissistic Consciousness of Deceit, Exploitation, Domination, and Destruction That is Leading the World Toward Annihilation, posits an original theoretical model of masculine psychosocial pathology and will be published later in 2008. She is currently pursuing a doctorate in psychology and enjoys reading, writing, listening to classical and easy listening music, meditating, and gardening. She is interested in issues pertaining to gender psychology, philosophy, spirituality, socioeconomic justice, and peace.

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