Friday, August 31, 2007

Labor Day Hypocrisy

Labor Day Hypocrisy - by Stephen Lendman

Labor Day is commemorated on the first Monday in September each year since the first one was celebrated in New York in 1882. Around the world outside the US, socialist and labor movements are observed on May 1 to recognize organized labor's social and economic achievements and the workers in them. This day gets scant attention in the US, but where it's prominent it's commonly to remember the Haymarket Riot of May 4, 1886 in Chicago. It followed the city's May 1 general strike for an eight hour day that led to violence breaking out on the 4th.

Labor Day became a national federal holiday when Congress passed legislation for it in June, 1894 at a time working people had few rights, management had the upper hand, only wanted to exploit them for profit, and got away with it. It took many painful years of organizing, taking to the streets, going on strike, holding boycotts, battling police and National Guard forces, and paying with their blood and lives before real gains were won. They got an eight hour day, a living wage, on-the-job benefits and the pinnacle of labor's triumph in the 1930s with the passage of the landmark Wagner Act establishing the National Labor Relations Board (NLRB). It guaranteed labor the right to bargain collectively on equal terms with management for the first time ever.

All of it was won from the grassroots. Management gave nothing until forced to and neither did government. It always sides with business never yields a thing unless threatened with disruptive work stoppages or possible insurrection. All this is in a democracy that claims to be a government of the people, by the people and for the people, most of whom are ordinary working class ones.

Since a worried Congress passed the 1935 Wagner Act during The Great Depression, the state of organized labor declined, especially post-WW II. It accelerated precipitously during the Reagan years under an administration openly hostile to worker rights in its one-side support for management. It continued unabated, under Republican and Democrat administrations, and today stands at a multi-generational low.

Under George Bush conditions got much worse. Since coming into office in 2001, he sided with management openly on policies to strip workers of their right to organize and be able to bargain for a living wage and essential benefits. He hired anti-union officials, denied millions overtime pay, cut pay raises for 1.8 million federal workers claiming a "national emergency," and schemed to end Social Security as we know it by plotting (unsuccessfully so far) to let Wall Street sharks take it over.

Since labor's ascendency decades earlier, corporate America, in league with government, shamelessly denigrated unions and the rights of working people in them. In 1958, 34.7% of the work force was unionized, but now the figure is around 12% overall, and only 7.4% in the private sector - the lowest it's been in seven decades.

Even worse, most jobs are low-pay service sector ones because the nation's manufacturing base and many higher-paying positions in finance and technology have been offshored to low-wage developing nations. Workers there can be hired for a fraction of the pay scales here or as virtual serfs at below poverty wages as low as $2 a day or less and no benefits. They fill legions of sweatshop factory jobs in countries prohibiting unions and fair worker practice standards for Wal-Mart's "Always low prices" on the backs of ruthlessly exploited working people.

Nonetheless, on the first Monday each September, this nation "remembers" working Americans with a federally-mandated holiday in their "honor." Who's celebrating when it's disingenuously commemorated at a time worker rights are threatened, ignored, forgotten, and uncared about by heartless governments beholden to capital. They scorn working people who are no longer as deceived with meaningless bread and circus droppings at the expense of what they need most: good jobs at good pay, essential benefits, job security, and a government on their side doing what counts most - supporting their rights with worker-friendly legislation.

Workers are reminded every day that backing like that is off the table by governments shamelessly mocking their day. It's commemorated in name only by a nation beholden to capital, the corporate giants controlling it, and the best democracy their money can buy for them alone.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon US central time.

Wednesday, August 29, 2007

The War on Working Americans - Part II

The War on Working Americans - Part II - by Stephen Lendman

This article was written to assess the state of working America in the run-up to Labor Day, 2007. Organized labor today is severely weakened following decades of government and business duplicity to crush it. Part I reviewed the labor movement's rise in the 19th century and subsequent decline post-WW II and especially in the last three decades. Hope arose for some change in the Democrat-led 100th Congress. A weak effort emerged, but Senate Republicans killed it.

Organized labor is struggling to remain relevant and claw its way back. The enormous obstacles it faces are reviewed below as well as the condition of working Americans today in a globalized world affecting their lives and welfare heading "south" in the "land of opportunity" offering pathetically little.

The Loss of High-Paying Jobs from Outsourcing Under Globalized Market-Based Rules

World trade isn't new, and the General Agreement on Tariffs and Trade (GATT) was its mid-20th century version after 23 founding nations signed it on October 30, 1947 in Geneva. Earlier in 1946, they drafted the International Trade Organization (ILO) that followed the creation of the IMF and International Bank for Reconstruction (now the World Bank) at Bretton Woods in 1944. Fifty-three nations then signed the GATT in Havana in March, 1948 as the founding international instrument governing world trade.

Subsequent rounds of negotiations followed through number eight launched in Punta del Este, Uruguay (the Uruguay Round) in 1986. It was signed in Marrakesh, Morocco in April, 1994 by most of the 123 participating countries as the updated version of the original 1947 GATT. It was then succeeded by the WTO January 1, 1995, one year to the day after NAFTA took effect as another worker rights legislative weapon of mass job destruction. DR-CAFTA followed next for the Central American countries signing on to it after El Salvador did first in March, 2006.

The WTO is well-seasoned with a corporate-friendly alphabet soup of Uruguay-negotiated agreements like the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), General Agreement on Trade in Services (GATS), Agreement on Agriculture (AoA), Agreement on Technical Barriers to Trade (TBT), and others all designed for one purpose. It's to override member states' national sovereignty so they're now governed under a uniform set of global market trading rules favoring capital.

They're designed for the Global North, giant corporations and the rich at the expense of Global South developing nations, ordinary people everywhere, concern for environmental standards as well as sanity and public safety. Along with the IMF, World Bank, and other international lending agencies, this entire structure is big capital's neoliberal scheme to commoditize everything, including people and life itself in the human genome, to strip-mine the planet for profit.

Globalized trade has a long history, but the notion of a globalized marketplace came into its own in the 1980s. It was hailed as a western, mainly US, prescription for economic growth and prosperity lifting all boats. In fact, only yachts benefitted by design so the privileged could gain at the expense of all others preyed on.

The UN's International Labour Organization's (ILO) commission on the social dimensions of globalization is comprised of representatives from labor, government and business. In 2004, it issued a damning appraisal of world trade rules harm and the subsequent distress caused by unfair practices. It ranges from how TRIPS prevents affordable generic life-saving drugs being sold in developing countries to the shifting tax burden from business and the rich to workers, and much more.

In the US and West, the damage comes from exporting jobs and offshoring manufacturing and service operations to low-wage countries. It began in the late 1950s when modest numbers of them went to Canada to take advantage of the cost savings there. The pace then quickened in the 1960s and 1970s with the exodus of production jobs in autos, shoes, clothing, cheap electronics, and toys as well as routine service work like credit card receipt processing, airline reservations and basic software code writing.

What started as simple assembly and service work early on, then took off in the 1980s. It spread up and down the value chain and now embraces almost any type good or service not needing a home-based location such as retail clerks, plumbers, and carpenters; top-secret defense research, design and selected types of manufacturing; and certain types of specialized activities companies so far have kept at home. What's moving abroad, however, is big business getting bigger with Gartner Research estimating outsourcing generated $298.5 billion in 2003 global revenues.

The toll adds up to a global race to the bottom in a country where services now account for 84% of the economy. The once bedrock manufacturing portion is just 10% and falling as more good jobs in it are lost in an unending drain. Since the start of 2000 alone, about one in six factory jobs, over three million in total, have been affected. The sector is less than a third of its size 40 years ago and one-fourth the peak it hit during WW II.

It's been devastating for the nation's 130 million working people. No longer are unions strong and workers well-paid with assured good benefits like full health insurance coverage and pensions. Today, all types of financial services comprise the largest economic sector. Much of it is in trillions of dollars of high stakes speculation annually producing wads of cash for elite insiders (when things go as planned) and nothing for the welfare of most others and the good of the country.

Worst of all is the poor and declining quality of most service sector jobs measured by wages, benefits, job security and overall working conditions. It's because fewer good ones exist, unions are weak, and workers are at the mercy of employers indifferent to their plight. People are forced to work longer and harder for less just to stay even. Jobs in this sector are mostly concentrated in unskilled or low-skill areas of retail, health care and temporary services of all kinds. They pay lots less than full-time jobs, and have few or no benefits and little prospect for future improvement. This all happened by design to crush worker rights and commoditize them like all other production inputs.

The Department of Labor now projects job categories with the greatest future expected growth are cashiers; waiters and waitresses; other restaurant-related workers; janitors and cleaning personnel; retail clerks; and child care workers - all low-skill areas. Harvard degrees aren't required. Neither are high school ones.

Most in-demand higher-skilled jobs are projected to be for nurses, post-secondary teachers and sales representatives. There are still plenty of high-tech jobs in areas like network systems and data analysis and software engineering applications and systems. But watch out. They're being lost as well to low-wage countries in an unending domestic job drain affecting all types of work able to be done anywhere. It shows why domestic job growth is stagnant (despite the hype it isn't), eligible workers are dropping out of the work force, and the decline is sure to continue unless legislation stops it. None is in sight or imagined.

The loss of good well-paying jobs means fewer high-end and a range of low-skilled ones are all that remain for vast numbers of young people whose future looks bleak. Two research studies among others highlight the problem. One by University of California staffers in 2004 estimated up to 14 million American jobs are at risk to outsourcing, and another by Gartner Research predicts as many as 30% of high-tech jobs may be lost to low-wage countries by 2015. In addition, writing in the March/April, 2006 issue of Foreign Affairs on what he calls a "third Industrial Revolution," former Federal Reserve vice-chairman Alan Blinder estimated 28 - 42 million American service sector jobs are vulnerable and could be lost to foreign labor.

In low-wage countries, they're done at far less cost to US employers in their company-owned or subcontracted out operations. Blinder added starkly "We have so far barely seen the tip of the offshoring iceberg, the eventual dimensions of which may be staggering." Veteran financial analyst and writer Bob Chapman calls this the "rape of our economy" with enormous, wrenching and destructive consequences to the lives of millions of working people pursuing an illusory American dream.

It affects the skilled and unskilled alike for all types of jobs at risk. Chapman cites India as an example noting once only low-skill and routine programming jobs went there. Now, he says, it's "software aeronautical engineers, banking, insurance, investment banking and drug research" along with many other high-end jobs where companies can hire skilled professionals at a fifth the cost of US and European ones. So why wouldn't they, and more are in a growing trend.

All types of financial jobs at all levels are also being eliminated with financial institutions moving sizeable chunks of investment banking, research, trading operations, and other professional jobs abroad for big cost savings. Deloitte Touche estimates the industry will outsource 20% of its cost base by 2010 with more to come in a continuing job drain for big cost savings abroad. The ones lost will be in financial services and most other sectors in a trend looking like it won't end until the US is as low a wage nation as those now taking our jobs.

An Unprecedented Fall in Workers' Standard of Living

Over the past 30 years, most people have seen an unprecedented fall in their standard of living. Adjusted for inflation, the average American worker now earns less than in the mid-1970s with the minimum wage unchanged at $5.15 an hour since 1997 until the 110th Congress raised it in pathetically small steps to a wholly inadequate top level. Beginning July 24, it rose to $5.85, will go to $6.55 July 24, 2008 and to $7.25 July 24, 2009. Until the increase, minimum worker pay was at the lowest point relative to average wages since 1949. It got many states, comprising over half the population, to raise their own, but it's not enough.

A recent study released by the Center for Economic Policy Research (CEPR) shows the dire state of things. It reported about one in three jobs in the country, about 47 million of them, pay low wages (defined as two-thirds the median wage or $11.11 per hour or less) with few or no benefits like health insurance, pensions or retirement accounts. It's barely enough for a family of two adults and two children to exceed the official understated poverty level of $20,444 in 2006 (or $9.83 an hour), and by this definition one in four workers (35 million) only earned poverty-level wages. But millions of others fall below it because official statistics way understate the problem, and workers earning around $11.11 an hour in cities like New York, Chicago, Los Angeles and other large ones can't get by if they have to support a family on it.

These growing millions now comprise a permanent underclass in a nation unwilling to admit what census data and private research now show. America is a rigid class society by design with extreme wealth at the top, a declining (maybe dying) middle class, and a growing underclass of low-paid workers and poor, many desperately so.

Following the inequalities of the 1920s, the nation experienced what economic historians Claudia Goldin and Robert Margo called "the Great Compression." Income gaps narrowed from the positive effects of New Deal and Great Society programs, strong unions, and an equitable tax system for individuals and corporations. From then to now, call it "the Great Expansion" of inequality with the gap between rich and most others the greatest it's been since the Gilded Age of the "robber barons" and getting worse.

Business Week magazine highlighted the trend in December, 2003 and accompanying research. It showed a decline in social mobility over the past few decades. The article was called "Waking Up from the American Dream - Meritocracy and Equal Opportunity Are Fading Fast." It noted the "Wal-Martization" of the country corporate America embraces to control labor costs by outsourcing jobs, de-unionizing, hiring temps and part-timers, and dismantling internal career ladders to boost profits at the expense of people. What's left is a proliferation of dead-end, low-wage jobs with public policy skewed to keep it that way. It needs stressing again. This didn't happen by chance. It was by design to destroy organized labor, and so far it's working.

In its most recent State of Working America - 2006/2007, the Economic Policy Institute (EPI) reports the official poverty level in 2004 stood at 12.7% or 37 million people, including 13 million children. It also showed for the first time ever, poverty in the country grew in the first three years of an economic recovery. In its study, EPI cited factors today they call "historically unique:"

-- increased globalized trade;

-- low union membership;

-- more low-skilled and high-skilled immigration; and

-- fewer favorable social norms guiding employer behavior to provide "adequate safety nets, pensions, and health care arrangements."

EPI noted the biggest challenge in today's "new economy" isn't (macro) growth but how benefits get distributed with such a high proportion skewed upward.

Left out entirely are the 16 million 2005 census figures show are on the very bottom living in "extreme" poverty that's defined as a family of four with an annual income of $9903 or less. Even more disturbing is how fast the poverty rate is increasing. The numbers of those worst off grew by 26% from 2000 - 2005 or 56% faster than for the total poverty population. Further, it happened mostly in years of economic expansion after the 2001 recession ended late that year. Notable also is the disturbing decline in higher-paying jobs leaving what's left for unskilled or low-skill workers. They pay pitiful wages and few, if any, benefits with crumbling social safety net protection left to pick up the slack.

The Oakland Institute policy think tank promotes social and economic justice. It recently reported its disturbing assessment of things saying 10% of the US population (around 30 million) "experiences hunger or is at risk of going hungry." A December, 2006 Helsinki-based World Institute for Development Economics Research of the UN University study also reported disturbing findings. They showed the richest 1% of adults owned 40% of global assets in 2000, and the richest 10% held 85% of them.

EPI reported the top 1% controls more than one-third of America's wealth, the bottom 80% has 15.3%, and the top 20% holds 84.7% of it. In contrast, the poorest 20% are in debt and owe more than they own. Globalization, automation, outsourcing, the shift from manufacturing to services, weak unions, deregulation, and other harmful economic factors all add to the problem.

Other data show an astonishing generational shift of well over $1 trillion of national wealth annually from 90 million US working class households to for-profit corporations and the richest 1% of the population. It created what economist Paul Krugman calls an unprecedented wealth disparity getting worse that shames the nation and is destroying the bedrock middle class without which democracy can't survive.

A similar conclusion also came from an analysis of income tax data by Professor Emmanuel Saez of the University of California-Berkeley and Professor Thomas Piketty of the Paris School of Economics. Both men are noted for their work on income inequality. Their research found the top 1% of Americans in 2005 (about 3 million people) got their largest share of national income since 1928 - 21.8%, up from 19.8% a year ago or a 10% gain. Further, the top 10% received 48.5% of all reported income in 2005, also the highest level since 1928, up 2% from 2004, and one-third since the late 1970s.

The top one-tenth of 1% (about 300,000 people) did best of all, to no surprise. It got as much income in total as the bottom 150 million Americans combined. In addition, while total reported income rose almost 9% in 2005, average incomes for the bottom 90% of the population dropped .6% from the previous year.

Further, the Bush administration tax cuts for the wealthy greatly widened the income gap between rich and poor that was the whole idea behind them with a healthy piece of the benefits going to big corporations. In the 1950s, they contributed an average of 28% to federal revenues. That dropped to 21% in the 1960s and about 10% and falling since the 1980s. It's happening with the corporate tax rate at 35%, but few of the giants pay it. According to the Government Accountability Office (GAO), 94% of major corporations now pay less than 5% of their income in taxes, and corporate tax payments overall are at their lowest level in 60 years. In addition, many large companies pay no tax, and some end up with sizable rebates on top of huge corporate welfare subsidies under a system of socialism for big corporations and the rich and "free market" capitalism for the rest of us.

Saez and Piketty also reported their findings may be understated because the wealthy are more likely to file late tax returns so those who did weren't included in the study. Also, the IRS acknowledges it can account for only about 70% of business and investment income, most, of course, going to high-income earners. What's missing is $300 - $400 billion a year that adds up to trillions of untaxed dollars for the rich with the rest of us having to make up for it.

Recent US Commerce Department data is also disturbing. It shows the share of national income going to wages and salaries the lowest on record with their data going back to 1929. And the Center on Budget and Policy Priorities (CBPP) finds wage and salary growth in the current recovery growing at half the average rate for post-recessionary periods since the end of WW II while corporate profits in the current period grew over 50% more than the post-WW II average. It's the first time on record, corporate profits got a larger share of income growth in a recovery than wages and salaries - 46% to 34%.

The Growth and Shredding of Social Services in America

The golden age of social service benefits and worker protections emerged during The Great Depression, but they didn't begin then. An obligation was felt to help the needy as early as colonial times but without an organized effort to do it. Back then, local towns and villages did it through the poor relief system and almshouses. That began changing as the nation became less agrarian and more industrial when a number of states added services like cash allowances, mothers' pensions and by the mid-1920s old age assistance for the blind. Also, then and earlier, the Federal government and States began recognizing the need for public welfare social insurance financed through contributions guaranteeing protection for all rather than public assistance for the needy alone.

The first instance of it began in 1908 with a Federal workers' compensation law covering some government workers. States then added their own, and by 1929 all of them had it except four holdouts. Other efforts followed including State and local retirement plans and Federal benefits and services for veterans. Even the private sector added their own with token amounts of health care, pensions, life insurance and sick pay.

The Great Depression hard times of the 1930s changed everything creating a golden age for worker rights and benefits mentioned above. It followed the roaring 1920s era of anything goes corporate greed and loose regulation. It ushered in the Roosevelt administration's New Deal to aid the needy and reform the economy when 25% of the working public had no job in 1933. Those in power feared the worst knowing they had to act to save capitalism at a time of mass hostility to it they feared might erupt in a Russian-style 1917 revolution.

They did it then like never before or since starting by passing the National Industrial Recovery Act in 1933. It was based on a "bubble up" theory of recovery to raise wages and thereby stimulate consumer purchasing power hoping it would lead to increased production and new investment. Despite good intentions, things go as planned. The Depression dragged on until the 1939 early WW II build-up began ending it. It packed greater economic punch than in earlier public sector spending. Those efforts were less for reform and more for what John Maynard Keynes recommended - upgrading infrastructure to revive durable goods production that, in turn, would revive the economy.

Still New Deal policies were remarkable in how mirror opposite they were to what's been enacted since 1980 and especially in the gilded age of George Bush. There were stimulative loans and grants to the States and landmark measures like the FDIC insuring bank deposits, the SEC regulating financial markets, and the NLRB through the Wagner Act explained above. Most important was a broad array of social programs. They included Federal emergency relief, public works and others under an alphabet soup of initiatives. They were way inadequate, but, nonetheless, tried to jump-start a moribund economy by providing substantial work and relief for the unemployed and needy.

The high water mark came in 1935 with the passage of the landmark Social Security Act. To this day, it's still the single most important piece of social legislation in our history. More than any other government program, it's the one most responsible for keeping vast numbers of elderly people out of poverty as well as providing other essential services and benefits for the needy and disabled. Other important social legislation came out as well including Unemployment Insurance with the Federal government partnered with States; the Railroad Retirement System; Public Housing; and Social Security Old-Age and Survivors Insurance.

Post-WW II there was lots more:

-- the National School Lunch Program (established in 1946);

-- Aid to the Permanently and Totally Disabled (APTD - in 1950) that later became Supplemental Security Income (SSI) in 1972;

-- Social Security Disability Insurance (SSDI);

-- Medical Assistance for the Aged (preceding Medicare);

-- Aid to Families with Dependent Children (AFDC - 1960);

--the Food Stamp Program (1964);

-- the School Breakfast Program (1966);

-- the WIC food assistance program (1972);

-- Earned Income Tax Credit (EITC - 1975);

-- Low Income Home Energy Assistance; and

-- Temporary Assistance for Needy Families (TANF - 1997 successor to AFDC that was a huge step backwards explained below), among others.

Lyndon Johnson's Great Society earlier saw other landmark social legislation with the establishment of Medicare and Medicaid in 1965. It guaranteed the elderly and indigent health care coverage at affordable, minimal or no cost when they needed it most.

That was the good news, but it changed with the election of Ronald Reagan in 1980. Mark Weisbrot from the Center for Economic and Policy Research (CEPR) called his administration's rollback of social services his "project of building a bridge to the 19th century in areas of social policy." It was that and more, but despite it, the dominant media shamelessly exalted him in life (see Mark Hertsgaard 1989 book "On Bended Knee: The Press and the Reagan Presidency") and practically deified him following his death on June 4, 2004. Left out of the eulogies was the true scorched earth legacy he left behind. His "war on international terrorism" was a devastating precursor to its updated version under the current administration. This article, however, only addresses his domestic damage on people least able to handle it.

The Reagan administration instituted a generational decline of worker rights and vital social programs. It allowed them to erode through higher payroll taxes, raising the retirement age, increasing Medicare premiums, and cutting Medicaid benefits for the poor. His years were characterized by large increases in military spending, big tax cuts for the rich and big business while slashing social benefits, union worker rights and running up huge deficits.

Discretionary domestic spending for most social programs, other than Social Security, Medicare and Medicaid, was cut by one-third from 1981 - 1988. Programs for low income earners were hard hit with a 54% cut. Subsidized housing lost over 80%, housing assistance for the elderly 47%, and training and employment services over 68%. Reagan also reduced health and safety protections and weakened federal statutes guaranteeing workers the right to organize and bargain collectively.

Beneath his avuncular persona, Reagan was callous and indifferent to notions of equal justice, civil liberties and human need. He showed it in his support for the Christian Right's hate campaign against gays and lesbians in its early days of ascendency by refusing to address the AIDS problem he allowed to become a global epidemic.

HIV/AIDS first surfaced in the US among gay men in New York and California in 1981, Reagan's first year in office. It was called a "gay disease", and still is largely today by those who demean it. Most notably, extremist Christian Right leaders call it God's revenge against gay people they say are diseased sinners. When the Centers for Disease Control first reported the outbreak they, too, stigmatized the gay community as disease-carriers calling it GRID - gay-related immune deficiency.

Ronald Reagan went along with this notion refusing even to mention AIDS or do anything to address the problem in the first seven years in office. It caused enormous setbacks for HIV/AIDS research and appalling discrimination against the infected and gay community overall. In addition, there were no government-directed efforts at prevention or education. It thereby allowed a health problem that might have been contained to become an epidemic killing a half million people in the US alone and infecting an estimated one million others now living with the disease.

Worldwide the numbers are catastrophic with an estimated 25 million deaths and another 34 - 47 million people currently infected. In addition, millions more are added to the numbers each year who might have been helped if the Reagan administration had led a worldwide effort to contain what's now an out-of-control plague in parts of the world like sub-Saharan Africa. None of this was mentioned in Reagan's eulogy that should have been a denunciation for this and his other crimes against humanity George Bush is now doing his best to match or exceed.

The GHW Bush years followed the "Reagan Revolution." They were pathetically "kinder and gentler" domestically and made worse by a "new world order" imperial agenda harming working people everywhere that's standard practice now under all Presidents. It was the same under Bill Clinton who called himself a Democrat but never governed like one. His tenure included NAFTA and WTO responsible for mass and growing poverty, human misery and ecological destruction under one-way globalized trade rules providing cover for predatory capitalism.

So-called "welfare reform" in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) also was passed. Before it did, the needy got welfare payments through Aid to Families with Dependent Children or AFDC help. That changed in 1996 with time limits set so no one would be helped for more than five years under the new program called Temporary Assistance for Needy Families or TANF. Under it, the Federal government allots fixed block grants to the States they then administer at their discretion meaning the needy now get cheated by an uncaring state.

TANF also requires most recipients to participate in some kind of work or training to qualify for help. It doesn't matter that much of it goes to single mothers with young children needing them at home to provide care unavailable if the law prevents it. There's also no relief during recessions when jobs are lost and unskilled workers are least able to find one.

Clinton's main social initiative was his ill-conceived health care "reform." It was a complex mess based on the notion of "managed competition" and marketplace medicine instead of what's really needed in the form of a "single-payer" national health insurance program modeled on the kind in Western Europe, Canada or that all members of Congress and the administration get. They cover everyone, irrespective of ability to pay, and for US legislators and the executive it's gold-plated for life.

The Clinton plan (dubbed "Hillarycare") offered the public less choice for more affordability but wanted big insurers and HMOs to run it guaranteeing an illusion of full coverage the way it is now. Profits always trump need with insurers targeting young and healthy prospects while avoiding those posing the greatest risks.

The pace of social spending cuts accelerated dramatically under George Bush who'd eliminate them all given the choice, and he's working on it. He's against all of them to fund more tax cuts for the rich and provide multi-billions for his permanent state of war plus every imaginable weapon system the Pentagon and defense contractors want to wage them.

Bush's assault on organized labor was covered above, but he has lots more targets as well. Education is one of them in his appalling No Child Left Behind Act. It focuses on testing, not children. It's a boon to corporations supplying the materials but not to teachers who hate them. It forces them to teach "to the test" instead of educating students in course material that's the only way to run a classroom. Otherwise, kids don't learn, but that's part of the scheme as what kind of future do all but the well-off have to look forward to.

The Bush education agenda also promotes school vouchers disguising a broader goal to privatize public education and aid the white supremacist parochial part of it. Christian Right zealots support these schools because of their brand of hard right extremism dangerous to everyone outside the faithful. In most areas where vouchers are used, 80% of them are for these type schools. They renounce proved science like evolution and teach creationism instead, repackaged as "intelligent design."

They also preach an extremist Christian doctrine waging war on truth and democratic principles of a free and open society. They replace it with faith-based pseudoscience on everything from creation to HIV/AIDS to pregnancy prevention to global warming to militarism, and all the while denounce non-believers as heretics. These schools also threaten the survival of public education. They divert funding from them and violate the constitutional separation of church and state which is why the Bush administration supports them.

His administration also opposes college aid at a time tuitions and fees are more unaffordable than ever and rising much faster than inflation. An undergraduate year at Harvard now costs over $50,000 with all expenses included, but even lower-tuition state schools aren't affordable for many with the University of Illinois typical of most others. It's much cheaper than Harvard but still costs about $26,000 a year "base rate" that's unaffordable for low-income families without considerable financial aid. George Bush's solution - cut or freeze maximum allowable Pell Grants so even holding them steady means amounts offered don't keep up with rising costs and needy students lose out.

Bush's prescription for health care is no better at a time 47 million have no coverage, millions more are underinsured, and 80 million in the country have no coverage at some time during the year meaning they need to be judicious about when they're sick. Administration solutions are pathetic at best showing no intent to tackle a problem this huge. Suggested tax breaks are so inadequate, families with annual incomes under $10,000 would only save $23 in 2007. Those with higher incomes fare little better with the Bush plan only covering 9 million uninsured leaving 38 million others (and rising) with no help.

Then there's Bush's 2003 Kafkaesque Medicare Prescription Drug, Improvement, and Modernization Act (MMA) scamming seniors. It took strong-arming threats and bribes in an all-night congressional session to get it passed. Its controversial Part D costs tens of billions annually, does little for most Medicare recipients, but provides huge benefits for "Big Pharma." It's able to charge top dollar because the administration won't negotiate lower prices the way the Veteran's Administration (VA) does getting big savings on all drugs it buys so veterans today only pay $8 a prescription. Two decades ago, they paid nothing.

More social wreckage gets into each new FY budget with billions of new cuts heaped on past ones. It's to free up more funds for the military, the rich, and corporate allies with the White House now audaciously proposing a further cut in corporate tax rates. It's part of a near-three decade agenda furthering the interests of the privileged at the expense of all others. In America today, social welfare and the greater good are nonstarters.

Earlier damage included -

-- killing OSHA workplace ergonomic rules more than 10 years in the making;

-- revoking grants to study workplace safety and health;

-- cutting funding for job training; and

-- more cuts for enforcement positions at OSHA and the Mine Safety and Health Administration that was a key reason for the early 2006 Sago and Alma mine deaths in West Virginia, the latest tragedy in Utah (not earthquake caused), and the death of 60 miners and counting since January, 2006.

-- Bush also proposed paying welfare recipients below-minimum wages;

-- denying Homeland Security employees protection for being a whisleblower;

-- blocking release of funds to monitor Ground Zero;

-- ignoring New York rescue workers' health;

-- cutting health care benefits for veterans and billions more cuts for Medicare and Medicaid;

-- raising interest rates on student college loans;

-- cutting the number of WIC-eligible participants;

-- reducing the number of adults eligible for food stamps and children qualifying for school meals;

-- cutting the Commodity Supplemental Food Program, child care, Head Start, affordable housing units for the elderly, home energy assistance (LIHEAP), Employment/Training Services, and education for the disadvantaged; and

-- stiffening work requirements for two million adults (mostly single mothers) on welfare.

His administration is also at fault for the Walter Reed Hospital scandal because medical facilities for military personnel and veterans across the country are understaffed, underfunded and allowed to deteriorate under federal or private contractor management. The result is inadequate or sub-standard care for the severest of problems, and the worst is yet to come with tens of billions of new planned cuts through FY 2011. Only Bush's plummeting approval rating may slow him down. But it doesn't stop his war machine from getting all the funds it wants and lots more for the asking in supplemental add-ons.

Looking Ahead - Tough Choices with No Easy Answers

The state of working America today is bleak with few signs of improving in a globalized world of corporate omnipotence and an indifferent to hostile government. It backs the rights of the privileged while scorning the social welfare needs of all others. Somehow, some way this must change, but wishing only works if backed by effective action. A look back suggests how.

Past labor successes were noted above. What worked before can again, and there's nothing complicated about it. Above all, new leaders are needed because too many today are uninspiring at best. They must be committed and dedicated to the rights and needs of ordinary working people and be willing to go to the wall for them. Effective mass organizing is needed to build unity and strength of numbers, educate workers on what they lost, and lead the fight to win them back. It means taking to the streets, storming the halls of Congress, going on strikes, holding boycotts, doing battle when necessary that in the past meant paying for it in blood and lives.

It worked when it won an eight hour day, a living wage keeping pace with inflation, essential benefits like health care coverage and pensions, and a more level playing field guaranteeing labor the right to bargain collectively on equal terms with management. Those gains weren't handed over because change never comes from the top down. They were fought for and won with lots of blood and sweat expended to get them. Why not again?

It's called democracy, equity and justice and one thing about them is clear. Achieving and keeping them requires a strong middle class of ordinary working people that, in turn, needs a vibrant labor movement as a foundation and springboard for progressive grassroots social change. Organized labor is in tatters today at barely over 7% of private sector workers (a 100 year low). It's on life support, needs a survival strategy, and is heading for the dustbin of history only major change can avoid. The way is through organized people out-muscling organized money. It happened before and can again.

This is the great class struggle of our time against long odds for success. The stakes though are huge, and our future as a democratic society depends on the outcome as former US Supreme Court Justice Louis Brandeis explained in 1941 when he said "We can (either) have a democratic society or we can have great concentrated wealth in the hands of the few. We cannot have both." The concentration is greater than ever at a time American workers are in their weakest position in decades.

Bowed but not broken, they're in a war for survival with the rest of us, and their sovereign worker rights and ours in a free society are at stake. It's no time for timidity. It's a time for unity and pressing ahead. It happened once. Why not again, and the time to go for it is now with the rest of us pitching in to help for our own preservation and survival.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on The MicroEffect.com Saturdays at noon US central time.

Monday, August 27, 2007

The War on Working Americans - Part I

The War On Working Americans - Part I - Stephen Lendman

As Labor Day approaches, what better time to assess the state of working America. It's under assault and weakened by decades of eroding rights in the richest country in the world once regarded as a model democratic state. It's pure nonsense in a nation always dedicated to wealth and power, but don't try finding that discussed in the mainstream. Today, it's truer than ever making the struggle for equity and justice all the harder. That's what ordinary working people now face making beating those odds formidable at the least.

In a globalized world, the law of supply and demand is in play with lots more workers around everywhere than enough jobs for them. It keeps corporate costs low and profits high and growing with Business Week (BW) magazine reporting in its April 9 issue "the share of (US) national income going to corporate profits (compared to labor) is hovering around a 50 year high." BW then quoted Harvard economist Richard Freeman's research paper saying only "a global pandemic that kills millions of people" could cause a labor shortage and elevate worker bargaining power.

There's little in sight, and the result is a huge reserve army of unemployed or underemployed working people creating an inevitable race to the bottom in a corporatized marketplace. It harms workers everywhere, including in developed nations. They're outsourcing good jobs abroad to lower wage countries and pressuring workers to do more for less because they've got little bargaining power to fight back. More on this below.

Organized Labor in the US - Its Rise and Decline

Organized labor's rise began modestly and was fragile in the earliest days of the republic. It gained strength in good economic times, then lost it in downturns like the depression in 1873. By the 1880s, things were better as the nation underwent rapid industrialization. With it came rising prosperity and workers wanting a share of the benefits. They turned to unions for help with skilled artisans leading the way helping the unskilled as well in their efforts to organize.

New labor organizations arose, older ones expanded, and as they did, they grew more active and militant. It led to the "great uprising of labor" in 1886, including the landmark Chicago May 4 Haymarket Riot protesting police violence against strikers the previous day. Its impact was hugely negative at first. It forced organized labor to regroup and settle in for a long period of recovery.

This was at a time the incipient labor movement was over two million and rising beginning with its organizing efforts launching it in the 1870s. By the 1880s, it had enough strength to stage huge strikes for better pay and working conditions like the struggle for an eight hour day that had 80,000 strikers parading peacefully down Chicago's main Michigan Avenue on May 1, 1886 in what's now regarded as the first ever May Day Parade.

Workers were helped from community-based emerging independent political parties sensitive to their rights. That's unheard of today in an age where no effective political party stands for working people despite Democrats and Republicans saying they do. Workers are now on their own. They're left to struggle in a global marketplace with pathetically little help weak unions can provide.

Earlier in the 19th century, the first national union arose as workers began asserting their rights. It was called the National Labor Union (NLU), emerged after the Civil War, but was short-lived. Next came the Knights of Labor in 1869 with a mandate to protect all workers including women and blacks after 1883. They were represented by industry groups rather than trade and skill level that was common until then. Its goals were high but achievements few at a time of widespread worker repression in the 1880s. It led to its decline as a more resilient union emerged the result of disaffection with the Knights.

It was called the American Federation of Labor (AFL) and was founded by Samuel Gompers in 1886 to replace its predecessor, the Federation of Organized Trades and Labor Unions. The ill-fated American Railway Union (ARU) followed in 1893, the largest industrial union of its day for a time, and the Industrial Workers of the World (IWW) that at its peak in the 1920s had 100,000 members.

The Wobblies are still around 102 years after Big Bill Haywood, Eugene Debs and others founded the union in 1905 as a commitment to working people in their struggle with corporate employers. It's motto was "an injury to one is an injury to all," its goal was revolutionary, and it's still true to its root ideology today as stated in the current IWW Constitution:

"The working class and the employing class have nothing in common. There can be no peace so long as hunger and want are found among millions of the working people.....Between (workers and employers) a struggle must go on until the workers of the world organize as a class, take possession of the means of production, abolish the (unfair) wage system, and live in harmony with the Earth....It is the historic mission of the working class to do away with capitalism....By organizing industrially we are forming the structure of the new society within the shell of the old."

That philosophy under dedicated men like Haywood, Debs and others set the Wobblies on a collision course with government and big business that tried to crush it. During WW I in 1917, it was vicious under Woodrow Wilson's Justice Department (DOJ). It used the repressive Espionage and Sedition Acts to raid and disrupt union meeting halls across the country. It's the same tactic used today against Latino immigrants and Muslims in the concocted "war on terrorism" and the one against undocumented workers.

In 1917 and later, Wilson's DOJ acted much the same way arresting 165 Wobbly leaders on the grounds they hindered the war effort by using their First Amendment right to speak out against it. They were tried near war's end in 1918, all convicted, and given long prison terms under a Democrat President thought of reverentially today. Bill Haywood was luckier. After conviction, he was released on bail and fled to the Soviet Union where he remained until his death, but the IWW was never again the same.

They were hammered again from 1918 - 21 during the infamous Palmer Raids under Wilson Attorney General Mitchell Palmer. He targeted radical left wing groups like the Wobblies at the time of the first "Red Scare" after the 1917 Russian Revolution. It launched J. Edgar Hoover's career in the DOJ Bureau of Investigation's new General Intelligence Division that later became the FBI in 1935. The IWW is still around, still dedicated to its founding principles, but it's worldwide membership is only around 2000, mostly in the US.

The AFL fared much better. It became the largest union in the first half of the 20th century even after the founding of the Congress of Industrial Organizations (CIO) in 1935 with which it merged in 1955. Today, it's still the country's largest federation of unions. Its web site claims a membership of around 10 million workers, even after the Service Employees International Union (SEIU), Teamsters, UNITE-HERE and United Food and Commercial Workers (UFCW) broke away from the federation in 2005. The United Brotherhood of Carpenters and Joiners of America (UBC) did as well in 2001, and the Laborers International Union of North America (LIUNA) left in 2006. They formed a new Change to Win federation in September, 2005 representing about 5.5 million workers. It likely left AFL-CIO with fewer members than it claims with its true size closer to 8 million or less.

AFL-CIO's state is a metaphor for the times. Organized labor today is weak in the face of declining membership and corporate dominance with workers losing out in a globalized world. It's fall has been long-term and painful with worker rights hammered since the 1980s. It's a long way today from when the landmark Wagner Act passed in 1935 under Franklin Roosevelt. It established the National Labor Relations Board (NLRB) guaranteeing labor the right to bargain collectively on equal terms with management for the first time ever, but it wasn't an act of kindness.

It came at the height of The Great Depression when those in power feared the worst. FDR and Congress acted to save capitalism at a time they feared mass worker hostility might boil over like it did in 1917 Soviet Russia. Like all other worker victories, this one came through struggle. It was from organizing, pressing their demands, taking to the streets, going on strike, holding boycotts, battling police and National Guard forces supporting management against working people, paying with their blood and lives and finally achieving results. They got an eight-hour day, a living wage, and on-the-job benefits because strong unions went head-to-head with management and won. It's worlds different now with corporate giants in bed with friendly governments, and Democrats and Republicans vying to see which party can be more accommodative.

From the 19th century forward, it was never easy for labor from the height of the movement's strength to the present. Unions were always disadvantaged even at a time of reasonable labor-management harmony. The passage of the harsh 1947 Taft-Hartley Labor-Management Relations Act showed how tenuous their position always was. Harry Truman vetoed the bill but was overridden. He called it a "slave labor bill" and then hypocritically used it 10 times, the most ever by any President to this day. The law throttles organized labor by giving the President power to stop strikes by court-ordered injunction for 80 days. He can claim the national interest, some other one, or none at all that's always the same one - to help corporate management deny workers their rights.

Taft-Hartley is still the law and was last invoked by GW Bush in the summer of 2002 against 10,500 west coast dock workers "locked out" (not striking) by the Pacific Maritime Association representing shipping companies and terminal operators.

Earlier in 2001 and new in office, Bush showed his anti-labor stripes straightaway. He invoked the Railway Labor Act blocking a threatened strike by 10,000 mechanics, cleaners and custodians at Northwest Airlines set for March 12. He acted again against United Airlines' 15,000 mechanics in December. He also took management's side in August, 2006 against Northwest's 8700 flight attendants' planned job action against the bankrupt airline's unfair demands for huge wage cuts and increases in hours worked. Bill Clinton was just as unfriendly invoking the Railway Labor Act against American Airline's pilots and to prevent railroad strikes 13 times.

Laws like these, and Presidents' willingness to use them, crushed the spirit and letter of the Wagner Act. They greatly weakened or revoked hard won provisions, and as a consequence, diminished union clout. Taft-Hartley allows stiff penalties for union violations but minimal ones for companies. It enacted a list of "unfair (union) labor practices" prohibiting jurisdictional strikes (relating to worker job assignments), secondary boycotts (against firms doing business with others being struck), wildcat strikes, sit-downs, slow-downs, mass-picketing against scabs brought it, closed shops (in which employees must join unions), union contributions to federal political campaigns, and more while legalizing employer interventions aimed at preventing unionizing drives.

It began a process of gradual erosion of union power to bargain collectively. That's their weapon now weakened because of devious employer tactics. They can illegally fire union sympathizers (thousands each year) and get away with only minor wrist slap fines after years of expensive litigation to prove wrongdoing. Further, employers can fire workers for any lawful reason like incompetence or no stated reason at all. Even the right to strike is neutralized with employers able to hire replacements or threaten to ship jobs offshore. With government on their side, they're empowered to fire union workers and legally replace them with lower-paid scabs or Latino immigrants.

The Reagan administration marked the beginning of the current trend in its first year. He was contemptuous of organized labor while hypocritically saying "I support unions and the rights of workers to organize and bargain collectively." He showed it in August, 1981 by firing 11,000 striking PATCO air traffic controllers, jailing its leaders, fining the union millions of dollars, and effectively busting it in service to the monied interests backing him. It was a shot across organized labor's bow and a clear message to business and industry of what to expect from a friendly Republican President. Nothing changed since under Democrat or Republican administrations with workers unable to match the power and influence of capital. The toll ever since has been devastating.

Union membership has been in steady decline from its post-war high of 34.7% in the 1950s. It held fairly constant through most of the 1970s at around 24% where it stood in 1979. At the end of the Reagan era, it was down to 16.8% and is currently around 12% overall with about 36% of government workers unionized but only 7.4% of them in the private sector. It's the lowest it's been since the beginning of the mass unionization struggles of the 1930s and in the private sector in over 100 years. It's because of Democrat and Republican antipathy to organized labor and corporate threats to close plants and outsource jobs. It's forced workers to take pay cuts and fewer benefits that are dropping to where they'll be none, and they'll be on their own to live or die by market-based rules rigged against them.

George Bush supports corporate interests aiming to crush unions so they have free reign to treat workers any way they wish or go find other work. In the wake of 9/11, he took on public sector unions straightaway. He denied 170,000 new Department of Homeland Security (DHS) employees their civil service protection and right to bargain collectively. Those affected included Transportation Security Administration (TSA) newly federalized airport screeners. They lost their right to unionize in the name of national security that could as easily been for any reason or none at all. But this was just for starters. Bush also wants federal positions contracted out to private companies. That jeopardizes 850,000 federal employees likely to get lower pay, fewer benefits, loss of other unionized rights, and many of them ending up out of work.

Overall, organized workers always get higher wages and greater benefits, which explains why strong unions are vital. The evidence comes from David Sirota in his his 2006 book, "Hostile Takeover." He showed:

-- 89% of union members have employer-paid health care coverage compared to 67% for nonunion members; as fewer companies now provide it, those numbers are lower; in addition, companies continue making employees pay a greater share of the cost of coverage;

-- employers pay a larger share of union member health care premiums than nonunion members get (but the percentage is falling);

-- over two-thirds of union members have short-term disability insurance compared to about one-third for nonunion workers;

-- union members get about 26% more vacation time and 14% more total paid leave than nonunion workers; and

-- Economic Policy Institute (EPI) data show union influence gets high school graduating members about 8.8% more pay than nonunion workers.

Greater worker clout under unions is why management wants to destroy them. It's to deny working people their right to organize, earn more and get greater benefits corporations don't want to provide. It's happening in the gilded age of George Bush, and a recent example came in a ruling late last year when his administration's NLRB ruled 3-2 against registered nurses' right to union membership if they perform certain minimal supervisory duties.

It was in a case where United Auto Workers (UAW) were trying to organize nurses at a Taylor, Michigan-based hospital. US labor law doesn't guarantee supervisors the right to organize making the NLRB ruling hugely important for up to eight million workers in other trades. It may potentially deny their right henceforth to qualify for union representation if employers want to use this ruling to add enough supervisory responsibilities to employees' job descriptions to throw them into a union-exempt category.

Bush further ended the Clinton administration's regulation requiring federal agencies vet companies' compliance with the law when awarding federal contracts. He also issued harsh anti-union, anti-worker executive orders (EOs) as well as a tsunami of other repressive ones. He barred automatic union-recognition agreements on federally funded construction projects, abolished labor-management cooperation partnerships aimed at improving productivity and working conditions, and mandated contractors henceforth must inform employees they no longer had to join a union without having to tell them it's their legal right.

Just the way Ronald Reagan busted PATCO, George Bush tipped his hand straightaway in office. He's a company man and union-hater, so henceforth it's been open season on workers and their rights under his administration. His policies range from:

-- a one-sided support for management;

-- stripping workers of their right to unionize;

-- cutting pay raises for 1.8 million federal workers on the pretext of a "national emergency;"

-- denying millions overtime pay;

-- appointing anti-union officials;

-- scheming to weaken (and then end) retirement security by replacing Social Security with risky private accounts managed by Wall Street sharks that so far has gotten nowhere because of public opposition to it;

-- weakening environmental regulations and protections; and more in an endless war on workers in service to corporate interests that elected and own him.

The failed "immigration reform" legislation was, in fact, a Trojan Horse. It's down but not dead and remains a thinly veiled scheme targeting all workers. It's a dagger aimed straight at organized labor in a plan to create a workplace of unempowered serfs, a "bracero America," including US citizens having few or no benefits and no security. If this legislation ever becomes law, workers will be at the mercy of business to hire and fire them at will.

Another anti-labor tool is the repressive Department of Homeland Security (DHS) and its Immigration and Customs Enforcement (ICE) arm. It conducts paramilitary border and workplace assaults on undocumented Latino workers as part of a larger agenda to disenfranchise all working Americans and deny them the right to bargain collectively with management through unions. By targeting undocumented workers first, the eventual aim is to create a large exploitable disposable reserve army worker pool; strip all workers of their rights; empower employers to offer low wage, low or no benefit jobs; and pretty much be able to operate as they please.

The Employee Free Choice Act (EFCA) - Some Hope for Worker Rights Now Denied

EFCA was introduced to "amend the (landmark pro-labor) National Labor Relations Act (passed in 1935)" that's been systematically dismembered piece by piece ever since. Its aim was to "establish an efficient system to enable employees to form, join, or assist labor organizations, to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes." On June 26, Senate Republicans blocked labor's top legislative priority by preventing the bill's supporters from getting the 60 votes needed to end debate and bring it to a vote.

For now the bill is dead, but if it ever passes, it will change federal law on worker rights. They'll henceforth be able to organize by signing cards authorizing union representation, penalize employers violating worker rights to do it, and establish new mediation and arbitration processes for first-contract disputes. It might also end or slow down the firing, demoting, laying off, or suspending without pay of over 20,000 US workers annually because of their union activities.

The bill was introduced in the 108th and 109th Republican-controlled Congresses but failed to pass. It was introduced again in the 110th Congress on February 5, 2007, got 233 co-sponsors by month's end, and passed in the House March 1, 2007 for the first time. On March 2, it was placed on the Senate calendar where leading Democrats expected it to pass despite Republican opposition. They were wrong.

That's bad news for a bill that would have won back some worker rights after decades of losing them. It's backed by over five dozen organizations including the NAACP, United for a Fair Economy, Jobs with Justice and numerous other civil, human and labor rights groups. The US Chamber of Commerce and other organizations joined with big business against the bill. They oppose all worker rights, and their lobbying paid off. They claimed the bill allowed them the right to organize before employers can explain why doing it is not in their best interest. Ignored is that union workers always have more rights that include higher pay, greater benefits and added job security. That's bad for business and why corporate giants fought to kill the bill.

They have a powerful ally in the White House making their job a lot easier. In a mid-February speech before a business lobby group, Dick Cheney announced George Bush would veto EFCA legislation if it passed on his watch. He assured those attending this administration will keep its anti-labor record unblemished on something polls show 77% of working Americans want but won't get as long as George Bush is in office.

Global Unionization - Another Potential Ray of Hope

In April editions of The American Prospect, the Washington Post and ZNet, Harold Meyerson wrote about "a radical new direction for the globalized economy" in his article titled "Unions Gone Global." He noted the United Steel Workers (USW) here are negotiating a merger with two of Britain's largest unions to create "the first genuinely multinational trade union" that with about three million members will be the world's largest. Meyerson reported the goal, as USW's Gerald Fernandez put it, is "to fight financial globalization (by) fight(ing) it globally....by building a global union (in this case a) federation of metal, mining, and general workers."

The partners in this one stated a commitment to "fund human rights and union rights in parts of Africa and Colombia" where more unionists are killed annually than anywhere else, and the country gets billions in US aid each year to help out. They also plan a global effort "to protect employees' retirement benefits" from corporate predators wanting to end them. For now, there's no way to know if the idea behind the merger will spread, whether workers here and abroad will benefit from it, or even if the USW and their British partners will follow through effectively on their committed aims to help win back what unionized workers have been losing for years.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour Saturdays on TheMicroEffect.com at noon US central time.

Friday, August 24, 2007

Market Efficiency Hokum

Market Efficiency Hokum - by Stephen Lendman

You know the story triumphantly heard in the West. Markets work best when governments let them operate freely - unconstrained by rules, regulations and taxes about which noted economist Milton Friedman once said in an interview he was "in favor of cutting....under any circumstances and for any excuse, for any reason, whenever it's possible (because) the big problem is not taxes (but government) spending.

Friedman is no longer with us, but by his reasoning, the solution to curbing it is "to hold down the amount of income (government) has (and presto) the way to do it is to cut taxes." He seemed to forget about borrowing and the Federal Reserve's ability to print limitless amounts of ready cash the way it's been doing for years and during the current credit squeeze. Friedman further added in the same interchange "If the White House were under (GW) Bush, and House and Senate....under the Democrats, I do not believe there would be much spending."

Clearly, either the Nobel laureate wasn't paying attention or age was taking its toll late in his life. Since 2001, Democrats embraced tax cutting and overspending policies as enthusiastically as Republicans with both parties directing the benefits hugely to the right pockets. They're on Wall Street and in corporate boardrooms where recipients know "free markets" work great with a little creative resource directing from Washington.

Financial Market Efficiency

In investment finance, Eugene Fama is generally regarded as the father of efficient market theory, also known as the "efficient market hypothesis (EMH)." He wrote his 1964 doctoral dissertation on it titled "The Behavior of Stock Market Prices" in which he concluded stock (and by implication other financial market) price movements are unpredictable and follow a "random walk" reflecting all available information known at the time. Thus, no one, in theory, has an advantage over another as everyone has equal access to everything publicly known (aside from "insiders" with a huge advantage). That includes rumored and actual financial, economic, political, social and all other information, all of which is reflected in asset prices at any given time.

Those buying this theory believe Milton Friedman knew best. He became the modern-day godfather of "free market" capitalism and leading exponent that markets work efficiently and best when unfettered by government intervention that generally gets things wrong. In 1958, Friedman explained it in his famous "I, Pencil" essay. In it, he illustrated the notion of Adam Smith's invisible hand and conservative economist Friedrich Hayek's teachings on the importance of "dispersed knowledge" and how the price system communicates information to "make (people) do desirable things without anyone having to tell them what to do."

Friedman's "pencil" story explained "a complex combination of miracles: a tree, zinc, copper, graphite, and so on." Added to these ingredients from nature is "an even more extraordinary miracle: the configuration of creative human energies - millions of tiny know-hows configuring naturally and spontaneously (responding to) human necessity and desire and in the absence of any human master-minding." None of them working independently was trying to make a pencil. No one directed them from a central office. They didn't know each other, lived in many countries, spoke different languages, practiced different religions, and may have even hated each other. Yet, their unrelated contributions produced a pencil.

By Friedman's reasoning, this could never happen through central planning. It sounds good in theory, but how does it jibe with reality. The Soviets split the atom, were first in space ahead of the US with Sputnik 1, and developed many advanced technologies even though they were outclassed and outspent by the West overall with greater resources to do it.

In practical reality, governments, like individuals operating freely in the marketplace, can succeed or fail. It comes down to people skills and how well they do their jobs. Top down or bottom up has little final effect on the end result, but does direct what's undertaken and what isn't. Top down in Canada, Western Europe and Venezuela delivers excellent state-funded health care to everyone. Bottom up in America offers it to anyone who can pay, but if not, you're out of luck if your employer won't provide it. Forty-seven million and counting had their luck run out, and Friedman's pencil making miracle won't treat them when they'll ill.

Put another way, if "free market" capitalism works best and America is its lead exponent, why then:

-- is poverty high and rising in the world's richest country;

-- incomes stagnating;

-- higher education becoming unaffordable for the majority;

-- public education crumbling;

-- jobs at all levels disappearing to low-wage countries;

-- the nation's vital infrastructure in a deplorable state;

-- 3.5 million or more homeless and heading higher in the wake of subprime defaults;

-- the standard of living of most in the country declining; and,

-- the nation, in fact, bankrupt according to a 2006 study for the St. Louis Fed.

Clearly, something is wrong with the "pencil miracle" working for some but not for most. Friedman no longer can respond and his acolytes won't.

The Myth that Markets Get It Right and Operate Efficiently

Economist Hyman Minsky was mostly ignored while he lived, but his star may be rising 11 years after his death in 1996. Some described him as a radical Keynesian based on the theories of economist John Maynard Keynes who taught economies operate best when mixed. He believed state and private sectors both play important roles with government stepping in to stimulate or constrain economic activity whenever private sector forces aren't able to do it best alone.

It's the opposite of "supply-side" Reaganomics and its illusory "trickle down" notion that economic growth works best through stimulative tax cuts its proponents claim promote investment that benefits everyone. It was Reagan-baloney then and now, and so is the notion markets are efficient and work best when left alone.

Minsky explained it, and people are now taking note in the wake of current market turbulence. His work showed financial market exuberance often becomes excessive, especially if no regulatory constraints are in place to curb it. He developed his theories in two books - "John Maynard Keynes" and "Stabilizing an Unstable Economy" as well as in numerous articles and essays.

In them, he constructed a "financial instability hypothesis" building on the work of Keynes' "General Theory of Employment, Interest and Money." He provided a framework for distinguishing between stabilizing and destabilizing free market debt structures he summarized as follows:

"Three distinct income-debt relations for economic units....labeled as hedge, speculative and Ponzi finance, can be identified."

-- "Hedge financing units are those which can fulfill all of their contractual payment obligations by their cash flows: the greater the weight of equity financing in the liability structure, the greater the likelihood that the unit is a hedge financing unit."

-- "Speculative finance units are units that can meet their payment commitments on 'income account' on their liabilities, even as they cannot repay the principle out of income cash flows. Such units need to 'roll over' their liabilities - issue new debt to meet commitments on maturing debt."

-- "For Ponzi units, the cash flows from operations are (insufficient)....either (to repay)....principle or interest on outstanding debts by their cash flows from operations. Such units can sell assets or borrow. Borrowing to pay interest....lowers the equity of a unit, even as it increases liabilities and the prior commitment of future incomes."

"....if hedge financing dominates....the economy may....be (in) equilibrium. In contrast, the greater the weight of speculative (and/or) Ponzi finance, the greater the likelihood that the economy is a deviation-amplifying system....(based on) the financial instability hypothesis (and) over periods of prolonged prosperity, the economy transits from financial relations (creating stability) to financial relations (creating) an unstable system."

"....over a protracted period of good times, capitalist economies (trend toward) a large weight (of) units engaged in speculative and Ponzi finance. (If this happens when) an economy is (experiencing inflation and the Federal Reserve tries) to exorcise (it) by monetary constraint....speculative units will become Ponzi (ones) and the net worth of previous Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to (sell out). This is likely to lead to a collapse of asset values."

Minsky developed a seven stage framework showing how this works:

Stage One - Displacement

Disturbances of various kinds change investor perceptions and disrupt markets. It may be a tightened economic policy from higher interest rates or investors and lenders retrenching in reaction to:

-- a housing bubble, credit squeeze, and growing subprime mortgage delinquencies and defaults with spreading contagion affecting:

-- other mortgages, and the toxic waste derivative alchemy of:

-- collateralized debt obligation (CDO) instruments (packages of mostly risky junk and other debt),

--commercial and residential mortgage-backed securities (CMBS and RBMS - asset backed by mortgage principle and interest payments), and even

-- commercial and AAA paper; plus

-- home equity loans harder to service after mortgage reset increases.

Stage Two - Prices start to rise

Following displacement, markets bottom and prices begin rising as fundamentals improve. Investors start noticing as it becomes evident and gains momentum.

Stage Three - Easy credit

Recovery needs help and plentiful easy credit provides it. As conditions improve, it fuels speculation enticing more investors to jump in for financial opportunities or to borrow for a new home or other consumer spending. The easier and more plentiful credit gets, the more willing lenders are to give it including to borrowers with questionable credit ratings. Yale Economist Robert Shiller shares the view that "booms....generate laxity in standards for loans because there a general sense of optimism (like) what we saw in the late 80s" preceding the 1987 crash that doesn't necessarily signal an imminent one now.

New type financial instruments and arrangements also arise as lenders find creative and risky ways to make more money. In recent years, sharply rising housing prices enticed more buyers, and lenders got sloppy and greedy by providing interest-only mortgages to marginal buyers unable to make a down payment.

Stage Four - Overtrading

The cheaper and easier credit is, the greater the incentive to overtrade to cash in. Trading volume rises and shortages emerge. Prices begin accelerating and easy profits are made creating more greed and foolish behavior.

Stage Five - Euphoria

This is the most dangerous phase. Cooler heads are worried but fraudsters prevail claiming this time is different, and markets have a long way to go before topping out. Greed trumps good sense and investors foolishly think they're safe and can get out in time. Stories of easy riches abound, so why miss out. Into the fire they go, often after the easy money was made, and the outcome is predictable. The fraudsters sell at the top to small investors mistakenly buying at the wrong time and getting burned.

Stage Six - Insider profit taking

The pros have seen it before, understand things have gone too far, and quietly sell to the greater fools buying all they can. It's the beginning of the end.

Stage Seven - Revulsion

When cheap credit ends, enough insiders sell, or an unexpected piece of bad news roils markets, it becomes infectious. It can happen quickly turning euphoria into revulsion panicking investors to sell. They begin outnumbering buyers and prices tumble. Downward momentum is far greater and faster than when heading up.

Sound familiar? It's a "Minsky Moment," and the irony is most investors know easy credit, overtrading and euphoria create bubbles that always burst. The internet and tech one did in March, 2000, and since mid-July, reality caught up with excess speculation in equity prices, the housing bubble, growing mortgage delinquencies and subprime defaults. Goldilocks awoke and sought shelter as lenders remembered how to say "no." This time, central banks rode to the rescue (they hope) with huge cash infusions, the Fed cut its discount rate a half point August 17, and it signaled lower "fed funds" rates ahead if markets remain tight.

Intervention may reignite "animal spirits" and work short-term but won't easily band-aid over what noted investor Jeremy Grantham calls "the broadest overpricing of financial assets - equities, real estate, and fixed income - ever recorded" with the financial system dangerously "overstretched (and) overleveraged." His view is that current conditions have "almost never been this dire," and we're "watching a (too late to stop) very slow motion train wreck." Minsky would have noticed, too.

Grantham's exhaustive research shows all markets revert to their mean values, and all bubbles burst as the greatest Fed-engineered equity one ever in US history did in 2000 but didn't complete its corrective work. In Grantham's view, lots more pain is coming and before it's over, it will be mean, nasty and long, affecting everyone. Minsky saw it earlier, studied it, and wrote about it exhaustively when no one noticed. If he were living today, he'd say "I told you so."

Federal Reserve Engineered Housing Bubble and Resultant Financial Market Turmoil

Astute observers continue to speculate and comment that the housing bubble and resultant current financial market turmoil came from deliberate widespread malfeasance aided by considerable cash infusion help from the Federal Reserve in the lead on the scheme.

Economist Paul Krugman is one of the latest with his views expressed in an August 16 New York Times op ed piece titled "Workouts, Not Bailouts." He began by debunking Wall Streeter Treasury Secretary Henry Paulson's ludicrous April claim that the housing market was "at or near the bottom" followed by his equally absurd August view that subprime mortgages were "largely contained." Krugman's response: "the time for denial is past....housing starts and applications for building permits have fallen to their lowest levels in a decade, showing that home construction is still in free fall....home prices are still way too high (at 70% above their long-term trend values according to the Center for Economic and Policy Research, and) the housing slump (will be around) for years, not months" with all those empty unbought homes needing hard to find buyers to fill them.

In addition, mortgage problems are "anything but contained" and aren't confined to the subprime category. Krugman believes current real estate troubles and mortgage fallout bear similarity to the late 1990s stock bubble. Like today, they were accompanied by market manipulation and scandalous fraud at companies like Enron and WorldCom. In his view, "it is becoming increasingly clear that the real-estate bubble of recent years (like the 1990s stock bubble)....caused and was fed by widespread malfeasance." He left out the Fed but named co-conspiratorial players like Moody's Investors Service and other rating agencies getting paid lots of money to claim "dubious mortgage-backed securities to be highest-quality, AAA assets." In this role, they're no different than were "complaisant accountants" like Arthur Andersen that lost its license to practice from its role in the Enron fallout.

In the end, this scandal may be more far-reaching than earlier ones because so many underwriters and other firms are part of the fraud or are seeking to profit from it. At this point, it's hard separating villains from victims as, in some cases, they may be one in the same. They're all involved in dispersing up to trillions of dollars of risks through the derivative alchemy of highly complex, hard to value, packages of mostly subprime CDO and various other type debt instruments that may even end up in so-called safe money market funds unbeknownst to their unsuspecting owners.

Before this scandal ends, they'll be plenty of pain to go around, but as always, small investors and low income subprime and other mortgage homeowners will be hurt most. Krugman says this is "a clear case for government intervention," but it won't be the kind he wants. He cites a "serious market failure (needing fixing to) help (as many as) hundreds of thousands" of Americans who otherwise may lose their homes and/or financial nest eggs. Faced with this problem, "The federal government shouldn't be providing bailouts, (it should) arrange workouts....we've done (it) before (and it worked) - for third-world countries, not for US citizens." It helped both debtors escape default and creditors get back most of their money.

By providing huge cash infusions to ease credit and reignite "animal spirits," the Fed and other central banks showed they aren't listening. It proves what Ralph Nader said in his August 19 Countercurrents article called "Corporate Capitalists: Government Comes To The Rescue" that's also on CounterPunch titled "Greed and Folly on Wall Street." With "corporate capitalists' knees" a bit shaky, Nader recalled what his father once explained years ago when he asked and then told his children: "Why will capitalism always survive? Because socialism will always be used to save it." Put another way, the American business ethic has always been socialism for the rich, and, sink or swim, free market capitalism for the rest of us.

As the housing slump deepens and many tens of thousands of subprime and other mortgage holders default, vulture investors will profit hugely buying troubled assets at a fraction of their value as they always do in troubled economic times. Writer Danny Schechter calls the current subprime credit squeeze debacle a "sub-crime ponzi scheme (in a) highly rigged casino-like market system" targeting unsuspecting victims. Schechter wants a "jailout" for "criminal....financial institutions (posing) as respectable players." Krugman, on the other hand, wants a "workout" for the victims. Neither will get what he wants. In the end, as ordinary people lose out, big government will again rescue "corporate capitalism" (at least in the short-term) the way it always does when it gets in trouble. It's the "American way." It'll be no different this time.

Stephen Lendman lives in Chicago and can be reached in Chicago at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon US central time.

Wednesday, August 22, 2007

America and Venezuela - Constitutional Worlds Apart

America and Venezuela: Constitutional Worlds Apart - by Stephen Lendman

Although imperfect, no country anywhere is closer to a model democracy than Venezuela under President Hugo Rafael Chavez Frias. In contrast, none is a more shameless failure than America, but it was true long before the age of George W. Bush. The difference under his regime is that the mask is off revealing a repressive state masquerading as a democratic republic. This article compares the constitutional laws of each country and how they're implemented. The result shows world's apart differences between these two nominally democratic states - one that's real, impressive and improving and the other that's mostly pretense and under George Bush lawless, corrupted, in tatters, and morally depraved.

US Constitutional Law from the Beginning

Before they're old enough to understand its meaning, young US children are taught to "pledge allegiance to the flag of the United States of America and to the Republic for which it stands," and, by inference, its bedrock supreme constitutional law of the land. At that early age, they likely haven't yet heard of it, but soon will with plenty of misinformation about a document far less glorious than it's made out to be.

This article draws on Ferdinand Lundberg's powerfully important 1980 book, "Cracks in the Constitution," that's every bit as relevant today as then. In it, he deconstructs the nation's foundational legal document, separating myth from reality about what he called "the great totempole of American society." He analyzed it, piece by piece, revealing its intentionally crafted flaws. It's not at all the "Rock of Ages" it's cracked up to be, but students at all levels don't learn that in classrooms from teachers going along with the deception or who simply don't know the truth about their subject matter.

The Constitution falls far short of a "masterpiece of political architecture," but it's even worse than that. It was the product of very ordinary scheming politicians (not the Mt. Rushmore types they're portrayed as in history books) and their friends crafting the law of the land to serve themselves while leaving out the greater public that was nowhere in sight in 1787 Philadelphia. Unlike the Venezuelan Constitution, discussed below, "The People" were never consulted or even considered, and nothing in the end was put to a vote beyond the state legislative bodies that had to ratify it. In contrast to popular myth, the framers crafted a Constitution that didn't constrain or fetter the federal government nor did they create a government of limited powers.

They devised a government of men, not laws, that was composed of self-serving devious officials who lied, connived, used or abused the law at their whim, and pretty much operated ad libitum to discharge their duties as they wished. In that respect, things weren't much different then from now except the times were simpler, the nation smaller, and the ambitions of those in charge much less far-reaching than today.

The Constitution can easily be read in 30 minutes or less and just as easily be misunderstood. The opening Preamble contains its sole myth referring to "We the people of the United States of America." The only people who mattered were white male property owners. All others nowhere entered the picture, then or mostly since, proving democracy operatively is little more than a fantasy. But try explaining that to people today thinking otherwise because that's all they were taught from the beginning to believe.

They were never told the American revolution was nothing more than a minority of the colonists seceding from the British empire planning essentially the same type government repackaged under new management. Using high-minded language in Article I, Section 8 of the supreme law of the land, the founders and their successors ignored the minimum objective all governments are, or should be, entrusted to do - "provide for....(the) general welfare" of their people under a system of constitutional law serving everyone. But that's not its only flaw build in by design.

Our revered document is called "The Living Constitution," and Article VI, Section 2 defines it as the supreme law of the land. In fact, it's loosely structured for governments to do as they wish or not wish with the notion of a "government of the people, by the people, for the people" a nonstarter. "The People" don't govern either directly or through representatives, in spite of commonly held myths. "The People" are governed, like it or not, the way sitting governments choose to do it. As a consequence, "The Living Constitution" was a "huge flop" and still is.

Setting the Record Straight on the Framers

Popular myth aside, the 55 delegates who met in Philadelphia from May to September, 1787 were very ordinary self-serving, privileged, property-owning white men. They weren't extraordinarily learned, profound in their thinking or in any way special. Only 25 attended college (that was pretty rudimentary at the time), and Washington never got beyond the fifth grade.

Lundberg described them as a devious bunch of wheeler-dealers likely meeting in smoke-filled rooms (literally or figuratively) cutting deals the way things work today. He called them no "all-star political team" (except for George Washington) compared to more distinguished figures who weren't there like Jefferson, Adams (the most noted constitutional theorist of his day), John Jay (the first Supreme Court Chief Justice), Thomas Paine, Patrick Henry and others. Madison and Alexander Hamilton, who did attend, were virtual unknowns at the time, yet ever since Madison has been mischaracterized as the Constitution's father. In fact, he only played a modest role.

The delegates came to Philadelphia in May, 1787, assembled, did their work, sent it to the states, and left in a despondent mood. They disliked the final product, some could barely tolerate it, yet 39 of the 55 attendees knowingly signed a document they believed flawed while we today extoll it like it came down from Mt. Sinai. The whole process we call a first-class historical event was, in fact, an entirely routine uninspiring political caucus producing no "prodigies of statecraft, no wonders of political (judgment), no vaulting philosophies, no Promethean vistas." Contradicting everything we've been "indoctrinated from ears to toes" to believe, the notion that the Constitution is "a document of salvation....a magic talisman," or a gift to the common man is pure fantasy.

The central achievement of the convention, and a big one (until the Civil War changed things), was the cobbling together of disparate and squabbling states into a union. It held together, tenuously at best, for over seven decades but not actually until Appomattox "at bayonet point." The convention succeeded in gaining formal approval for what the leading power figures wanted and then got it rammed through the state ratification process to become the law of the land.

After much wheeling and dealing, they achieved mightily but not without considerable effort. Enough states balked to thwart the whole process and had to be won over with concessions like legitimizing slavery for southern interests and more. Then consider the Bill of Rights, why they were added, for whom, and why adopting them made the difference. It came down to no Bill of Rights, no Constitution, but they weren't for "The People" who were out of sight and mind.

These "glorified" first 10 Amendments were first rejected twice, then only added to assure enough state delegates voted to ratify the final document with them included. Many in smaller states were displeased enough to want a second convention that might have derailed the whole process had it happened. To prevent it, concessions were made including adding the Bill of Rights because they addressed key state delegate concerns like the following:

-- prohibitions against quartering troops in their property,

-- unreasonable searches and seizures there as well,

-- the right to have state militias,

-- the right of people to bear arms, but not as the 2nd Amendment today is interpreted,

-- the rights of free speech, the press, religion, assembly and petition, all to serve monied and propertied interests alone - not "The People,"

-- due process of law with speedy public trials for the privileged, and

-- various other provisions worked out through compromise to become our acclaimed Bill of Rights. Two additional amendments were proposed but rejected by the majority. They would have banned monopolies and standing armies, matters of great future import that might have made a huge difference thereafter. We'll never know for sure.

In the end and in spite of its defects, the framers felt it was the best they could do at the time and kept their fingers crossed it would work to their advantage. None of them suggested or wanted "a sheltered haven....for the innumerable heavily laden, bedraggled, scrofulous and oppressed of the earth." On the contrary, they intended to keep them that way meaning things weren't much different then than now, and the founders weren't the noble characters they're made out to be.

There were no populists or civil libertarians among them with men like Washington and Jefferson (who was abroad and didn't attend) being slave-owners. In fact, they were little more than crass opportunists who willfully acted against the will of "The People" they ignored and disdained. In spite of it, they're practically deified and ranked with the Apostles, and one of them (Washington) sits in the most prominent spot atop Mt. Rushmore.

The constitutional convention ended September 17, 1787 "in an atmosphere verging on glumness." Of the 55 attending delegates, 39 signed as a pro forma exercise before sending it to the states with power to accept or reject it. Again, "The People" were nowhere in sight in Philadelphia or at the state level where the real tussle began before the founders could declare victory.

What Was Achieved and What Wasn't

Contrary to popular myth, the new government wasn't constrained by constitutional checks and balances of the three branches created within it. In fact, then and since, sitting governments have acted expediently, with or without popular approval, and within or outside the law. In this respect, our system functions no differently than most others operating as we do. It's accomplished through "the narrowest possible interpretations of the Constitution," but it's free to go "further afield under broader or fanciful official interpretations." History records many examples under noted Presidents like Lincoln, T. and F. Roosevelt and Wilson along with less distinguished ones like Reagan, Clinton, Nixon, GHW Bush and his bad seed son, the worst ever of a bad lot.

Key to understanding the American system is that "government is completely autonomous, detached, (and) in a realm of its own" with its "main interest (being) economic (for the privileged) at all times." Constitutional shackles and constraining barriers are pure fantasy. Regardless of law, custom or anything else, sitting US governments have always been freelancing and able to operate as they please. They've also consistently been unresponsive to the public interest, uncaring and disinterested in the will and needs of the majority, and generally able to get around or remake the law to suit their purpose. George W. Bush is only the latest and most extreme example of a tradition begun under Washington, who when elected unanimously (by virtual coronation) was one of the two richest men in the country.

The Legislative Branch

The Constitution then and since confers unlimited powers on the government constituted under its three branches of the Congress, Executive and Judiciary. Article I (with seven in all plus 27 Amendments) deals with the legislative branch. Section 8, Sub-section 18 states Congress has power "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution....or in any department or officer thereof." It's for government then to decide what's "necessary" and "proper" meaning the sky's the limit under the concept of sovereignty.

The Executive and Judiciary branches are dealt with below with the three branches comprising a labyrinthine system the framers devised under the Roman notion of "divide and rule" as follows:

-- a powerful (and at times omnipotent) chief executive at the top,

-- a bicameral legislature with a single member in the upper chamber able to subvert all others in it through the power of the filibuster (meaning pirate in Spanish),

-- a committee system controlled mostly by seniority or a political powerbroker,

-- delay and circumlocution deliberately built into the system,

-- a separate judiciary able to overrule the Congress and Executive, but too often is a partner, not an adversary,

-- staggered elections to assure continuity by preventing too many officials being voted out together,

-- a two-party system with multiple constituencies, especially vulnerable to corruption and the influence of big (corporate) money that runs everything today making the whole system farcical, dishonest and a democracy only in the minds of the deceived and delusional.

The Judiciary

Article III of the Constitution establishes the Supreme Court saying only: "The judicial power shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish." Congress is explicitly empowered to regulate the Court, but, in fact, the opposite often happens or, at times, it cuts both ways. The function of Congress is to make laws with the Court in place to interpret them and decide their constitutionality if challenged and it decides to adjudicate.

As for the common notion of "judicial review," it's nowhere mentioned in the Constitution nor did the framers authorize it. Nonetheless, courts use it to judge the constitutionality of laws in place and public sector body actions. They derive their power to do it by deduction from two separate parts of the Constitution: Article VI, Section 2 saying the Constitution, laws and treaties are the supreme law of the land and judges are bound by them; then in Article III, Section 1 saying judicial power applies to all cases, implying judicial review is allowed. Under this interpretation of the law, appointed judges, in theory, "have a power unprecedented in history - to annul acts of the Congress and President."

With or without this power, Lundberg makes a powerful case overall that the constitutional story comes down to a question of money and money arrangement - who gets it, how, why, when, where, what for, and under what conditions. Also addressed is who the law leaves out. The story has nothing whatever to do with guaranteeing life, liberty, and the pursuit of happiness (Jefferson's Orwellian language meaning property); establishing justice; upholding the rule of law equitably for everyone; promoting the general welfare; or securing the blessings of freedom for "The People" unconsidered, unimportant and ignored by the three branches of government serving monied and property interests only, of which they are a part.

The Executive Branch

Lundberg's theme is clear and unequivocal. Under US constitutional law, the President is the most powerful political official on earth, bar none under any other system of government. "The office he holds is inherently imperial," regardless of the occupant or how he governs, and the Constitution confers this on him. Unlike the British model, with the executive as a collectivity, the US system "is absolutely unique, and dangerously vulnerable" with one man in charge fully able to exploit his position. "The American President (stands) midway between a collective executive and an absolute dictator (and in times of war like now) becomes, in fact, quite constitutionally, a full-fledged dictator." Disturbingly, the public hasn't a clue about what's going on.

A single sentence, easily passed over or misunderstood, constitutes the essence of presidential power. It effectively grants the Executive a near-limitless source, only constrained to the degree he chooses. It's from Article II, Section 1 reading: "The executive power shall be vested in a President of the United States of America. Article II, Section 3 then almost nonchalantly adds: "The President shall take care that the laws be faithfully executed" without saying Presidents are virtually empowered to make laws as well as execute them even though nothing in the Constitution specifically permits this practice. More on that below.

To understand how the US government works, it's essential to know what executive power is, in fact, knowing it's concentrated in the hands of one man for good or ill. Also crucial is how Presidents are elected - "literally (by) electoral (unelected by the public) dummies" in an Electoral College. The scheme is a long-acknowledged constitutional anomaly as these state bodies are able to subvert the popular vote, never meet or consult like the College of Cardinals electing a Pope, and, in effect, reduce and corrupt the process into a shameless farce.

Once elected, it only gets worse because the power of the presidency is awesome and frightening. The nation's chief executive:

-- is commander-in-chief of the military functioning as a virtual dictator in times of war; although Article I, Section 8 grants only Congress that right, the President, in fact, can do it any time he wishes "without consulting anyone" and, of course, has done it many times;

-- can grant commutations or pardons except in cases of impeachment;

-- can make treaties that become the law of the land, with the advice and consent of two-thirds of the Senate (not ratification as commonly believed); can also terminate treaties with a mere announcement as George Bush did renouncing the important ABM Treaty with the former Soviet Union; in addition, and with no constitutional sanction, he can rule by decree through executive agreements with foreign governments that in some cases are momentous ones like those made at Yalta and Potsdam near the end of WW II. While short of treaties, they then become the law of the land.

-- can appoint administration officials, diplomats, federal judges with Senate approval, that's usually routine, or can fill any vacancy through (Senate) recess appointments; can also discharge any appointed executive official other than judges and statutory administrative officials;

-- can veto congressional legislation, and history shows through the book's publication they're sustained 96% of the time;

-- while Congress alone has appropriating authority, only the President has the power to release funds for spending by the executive branch or not release them;

-- Presidents also have a huge bureaucracy at their disposal, including powerful officials like the Secretaries of Defense, State, Treasury, and Homeland Security and the Attorney General in charge of the Justice Department;

-- Presidents also command center stage any time they wish. They can request and get national prime time television for any purpose with guaranteed extensive post-appearance coverage promoting his message with nary a disagreement with it on any issue;

-- throughout history, going back to George Washington, Presidents have issued Executive Orders (EOs) although the Constitution "nowhere implicitly or explicitly gives a President (the) power (to make) new law" by issuing "one-man, often far-reaching" EOs. However, Presidents have so much power they can do as they wish, only constrained by their own discretion.

-- George Bush also usurped "Unitary Executive" power to brazenly and openly declare what this section highlights - that the law is what he says it is. He proved it in six and a half years of subverting congressional legislation through a record-breaking number of unconstitutional "signing statements." - They rewrote over 1132 law provisions through 147 separate "statements," more than all previous Presidents combined. Through this practice, George Bush expanded presidential power well beyond the usual practices recounted above.

-- Presidents are, in fact, empowered to do almost anything not expressively forbidden in the Constitution, and very little is; more importantly, with a little ingenuity and lots of creative chutzpah, the President "can make almost any (constitutional) text mean whatever (he) wants it to mean" so, in fact, his authority is practically absolute or plenary. And the Supreme Court supports this notion as an "inherent power of sovereignty." If the US has sovereignty, it has all powers therein, and the President, as the sole executive, can exercise them freely without constitutional authorization or restraint.

In effect, "the President....is virtually a sovereign in his own person." Compared to the power of the President, Congress is mostly "a paper tiger, easily soothed or repulsed." The courts, as well, can be gotten around with a little creative exercise of presidential power, and in the case of George Bush, at times just ignoring their decisions when they disagree with his. As Lundberg put it: "One should never under-estimate the power of the President....nor over-estimate that of the Supreme Court. The supposed system of equitable checks and balances does not exist, in fact, (because Congress and the courts don't effectively use their constitutional authority)....the separation in the Constitution between legislative and the executive is wholly artificial."

Further, it's pure myth that the government is constrained by limited powers. Quite the opposite is true "which at the point of execution (resides in) one man," the President. In addition, "Until the American electorate creates effective political parties (which it never has done), Congress....will always be pretty much under (Presidents') thumb(s)." Under the "American constitutional system (the President) is very much a de facto king," and under George Bush a corrupted, devious, criminal and dangerous one.

As for impeaching and convicting a President for malfeasance, Article II, Section 4 states it can only be for "treason, bribery, or other high crimes and misdemeanors." Based on the historical record, it's near-impossible to do with no President ever having been removed from office this way, and only two were impeached, both unjustly. John Adams, the most distinguished constitutional theorist of his day, said it would take a national convulsion to remove a President by impeachment, which is not to say it won't ever happen and very likely one day will with no time better than the present to prove it.

In sum from the above, the US system of constitutional law is full of flaws and faults. "The People" were deliberately and willfully left out of the process proving the Constitution doesn't recognize democracy in America in spite of the commonly held view it does. In addition, the President, at his own discretion, can usurp dictatorial powers and end republican government by a stroke of his pen. That should awaken everyone to the clear and present danger that any time, for any reason, the President of the United States can declare a state of emergency, suspend the law of the land and rule by decree.

Constitutional Government in Venezuela

How does America's system of government contrast with rule under the 1999 Constitution of the Bolivarian Republic of Venezuela? Hugo Chavez was first elected president in December, 1998 and took office in February, 1999. He then held a national referendum so his people could decide whether to convene a National Constituent Assembly to draft a new constitution to embody his visionary agenda. It passed overwhelmingly followed three months later by elections to the National Assembly to which members of Chavez's MVR party and those allied with it won 95% of the seats. They then drafted the revolutionary Constitucion de la Republica Bolivariana de Venezuela. It was put to a nationwide vote in December, 1999 and overwhelmingly approved changing everything for the Venezuelan people.

It established a model humanistic participatory social democracy, unimaginable in the US, providing real (not imagined) checks and balances in the nation's five branches of government. They comprise the executive, legislative and judicial ones plus two others. One is the independent national electoral council that regulates and handles state and civil society organization electoral procedures to assure they conform to the law requiring free, fair and open elections. The other is a citizen or public power branch functioning as a unique institution. It lets ordinary people serve as ombudsmen to assure the other government branches comply with constitutionally-mandated requirements. This branch includes the attorney general, the defender of the people, and the comptroller general.

The Legislative Branch

Venezuela is governed under a unicameral legislative system called the National Assembly. It's composed of 167 members (compared to 535 in the two US Houses) elected to serve for five years and allowed to run two more times. It differs from the bicameral system in the US but is broadly similar to governments like in the UK. Although it's bicameral, it's governed solely by publicly elected members of the House of Commons that includes the Prime Minister and his cabinet as members of Parliament. The upper House of Lords is merely token and advisory, there by tradition like the Queen, with no power to overrule the lower House that runs everything.

The Office of the President

The President is elected with a plurality of universally guaranteed suffrage. Article 56 of the Bolivarian Constitution states: "All persons have the right to be registered free of charge with the Civil Registry Office after birth, and to obtain public documents constituting evidence of the biological identity, in accordance with law." In addition, all Venezuelans are enfranchised to vote under one national standard and are encouraged to do it under a model democratic system with the vast majority in it actively participating.

In contrast, the US system is quite different. Precise voting rights qualifications are for the states to decide with no constitutionally mandated suffrage standard applying across the board for everyone. The result is many US citizens are denied their franchise right. They're unable to participate in the electoral process for a variety of reasons no democratic state should tolerate, but America built it into the system by design.

The Judicial System

Under Article 2 in The Bolivarian Constitution, the judicial system shares equal importance to the law of the land. But it wasn't always that way earlier when the Venezuelan judiciary had an odious reputation before Chavez was elected. It had a long history of corruption, a disturbing record of being beholden to political benefactors, and a tradition of failing to provide an adequate system of justice for most Venezuelans. Chavez vowed to change things and undertook a major restructuring effort after taking office. He put this government branch under the Supreme Tribunal of Justice and made it independent of the others. The law now requires those serving be elected by a two-thirds legislative majority (not the previous simple one), and tighter requirements are in place regarding eligible candidates along with public hearings to vet them.

In addition, to root out long-standing corrupt practices, Chavez created a Judicial Restructuring Commission to review existing judgeships and replace those not fit to serve. Henceforth, all sitting judges with eight or more corruption charges pending are disqualified. It effectively eliminated 80% of those on the bench in short order and showed the extent of malfeasance in the national judicial culture. It also suggested the huge amount throughout the government from generations of institutionalized privilege. Those in power were licensed to steal the country blind and enrich themselves and foreign investors at the expense of the vast majority.

Reform in all areas of government is still a work in progress, including in the judiciary needing much of it. The process hasn't been perfect because of the enormity of the task. By the end of 2000, about 70% of sitting judges in the so-called capital region of Caracas, Miranda and Vargas states were replaced by provisional ones with charges of old judges removed for equally beholden new ones. It may be true and points to how hard the going is to change the long-standing culture of privilege and institute real democratic reforms throughout the government.

Nonetheless, the Constitution established Chavez's vision for a foundation and legal framework for revolutionary structural change. He's been working since to transform the nation incrementally into a model participatory social democracy serving all Venezuelans instead of for the privileged few alone the way it traditionally was in the past and how US framers designed American constitutional law. The differences between the two nations couldn't be more stark.

The spirit of the Venezuelan Bolivarian Constitution is stated straightaway in its Preamble:...."to establish a democratic, participatory and self-reliant, multiethnic and multicultural society in a just, federal and decentralized State that embodies the values of freedom, independence, peace, solidarity, the common good, the nation's territorial integrity, comity and the rule of law for this and future generations;"

It further "guarantees the right to life, work, learning, education, social justice and equality, without discrimination or subordination of any kind; promotes peaceful cooperation among nations and further strengthens Latin American integration in accordance with the principle of nonintervention and national self-determination of the people, the universal and indivisible guarantee of human rights, the democratization of imitational society, nuclear disarmament, ecological balance and environmental resources as the common and inalienable heritage of humanity;......"

This language would be unimaginable in the US Constitution, and, unlike our federal law, they're more than words. This is Hugo Chavez's commitment to all Venezuelans ordained under nine Title headings, 350 Articles, and 18 Temporary Provisions. It's a first class democratic document, little known in the West, that greatly outclasses and shames what US framers' enacted for themselves and privileged friends alone. Democracy was nowhere in sight then nor has it shown up since. In Venezuela under Hugo Chavez, it's resplendent, glorious, still imperfect and a work in progress, but heading in the right direction with newly proposed changes discussed below.

The contrast with America today couldn't be greater. The nation under George Bush is ruled by Patriot and Military Commissions Act justice under an institutionalized imperial system of militarized savage capitalism empowering the rich to exploit all others. A state of permanent war exists; civil liberties are disappearing and human rights are a nonstarter; dissent is a crime; social decay is growing; a culture of secrecy and growing fear prevail; torture is practically sanctified; injustice is tolerated; the dominant media function as virtual national thought-control police gatekeepers; and the law is what a boy-emperor president says it is. Aside from the privileged it serves, democracy in America is only in the minds of the bewildered and last of the true-believers who sooner or later will discover the truth.

Consider Venezuela's Bolivarian spirit in contrast. The people freely and openly choose their leaders in honest, independently monitored elections. They're unemcumbered by a farcical electoral college voting scheme (for Presidents) and a system of rigged electronic voting machine and other electoral engineered fraud corrupting the entire process sub rosa. They also have unimaginable benefits like free quality health and dental care (mandated in Articles 83 - 85) as a "fundamental social right and....responsibility of the state....to guarantee....to improve the quality of life and common welfare." It's administered through a national public health system proscribed from being privatized. That's how health delivery in America gets corrupted for profit. The result is 47 million and counting are uninsured, many millions more have too little coverage, and the cost of care is unaffordable for all but the well-off or those on Medicare, Medicaid (if qualify) or under disappearing company-paid plans.

The Constitution also enacted the principle of participatory democracy from the grassroots for everyone. It's mandated in Articles 166 and 192 establishing citizen assemblies as a constitutional right for ordinary people to be empowered to participate in governing along with their elected officials. Constitutionally guaranteed rights also ban discrimination; promote gender equity; and insure free speech; a free press; free, fair, and open elections; equal rights for indigenous people (assured a minimum three National Assembly legislative seats); and mandates government make quality free education available for all to the highest levels, as well as housing and an improved social security pension system for seniors, and much more.

Hugo Chavez brought permanent change, and most Venezuelans won't tolerate returning to the ugly past. Why should they? They never got these essential social services before. Under a leader who cares, they do now, and their lives improved enormously.

Other Venezuelan Constitutionally Guaranteed Rights

The Bolivarian Constitution is a glorious document, fundamentally different in spirit and letter from its US counterpart it shames by comparison. Before Chavez took office in February, 1999, Venezuela only paid lip service to civil liberties, human rights and needs. They're now mandated by law. It encompasses an impressive array of basic rights and essential services like government-paid health care, education, housing, employment and human dignity enforced and funded by a caring government as the law requires.

Article 58 in the Constitution also guarantees the right to "timely, true, and impartial" information "without censorship, in accordance with the principles of this constitution." The opposite is true in America where major media are state propaganda instruments for the privileged.

Articles 71 - 74 establish four types of popular national referenda never imagined or held in America outside the local or state level where they're often non-binding. The US is one of only five major democracies never to have permitted this type citizen participation. In Venezuela under Hugo Chavez, the practice is mandated by law and institutionalized to give people at the grass roots a say in running their government. Four types of referenda are allowed:

--consultative - for a popular, non-binding vote on "national transcendent" issues like trade agreements;

-- recall - applied to all elected officials up to the President;

-- approving - a binding vote to approve laws, constitutional amendments, and treaties relating to national sovereignty; and

-- rescinding - to rescind or change existing laws.

Referenda can be initiated by the National Assembly, the President, or by petition from 10 - 20% of registered voters, with different procedural requirements applying for each.

Social, family, cultural, educational and economic rights are guaranteed under Chapters V - VII with the government backing them financially.

Indigenous Native Peoples' rights are covered in Chapter VIII. Even environmental rights are addressed with Article 127 stating "It is the right and duty of each generation to protect and maintain the environment for its own benefit and that of the world of the future....The State shall protect the environment, biological and genetic diversity, ecological processes....and other areas of ecological importance." Try imagining any US federal law with teeth containing this type language let alone the Constitution that includes nothing in its Articles or Amendments.

Citizen Power gets considerable attention under Articles 273 - 291. It's exercised by "the Republican Ethics Council, consisting of the People Defender, the General Prosecutor and the General Comptroller of the Republic....Citizen Power is independent and its organs enjoy operating, financial and administrative autonomy." Citizen Power organs are legally charged with "preventing, investigating and punishing actions that undermine public ethics and administrative morals, to assure lawful sound management of public property....(to help) create citizenship, together with solidarity, freedom, democracy, social responsibility, work" and more.

Venezuela's Constitution covers much more as well under each of its nine Titles from:

-- stating its fundamental Bolivarian principles in Title I, to

-- National Security in Title VII,

-- Protection of the Constitution in Title VIII to assure its continuity in the event of "acts of force" or unlawful repeal with each citizen having a duty to reinstate it if that need arises; and finally

-- Constitutional Reforms in Title IX in the form of amendments, other reforms to revise or replace any of its provisions, and the National Constituent Assembly with power "resting with the people of Venezuela." They're empowered to call an Assembly to transform the State, create a new "juridical order" and draft a new Constitution to be submitted to a national referendum for the people to accept or reject. That's how democracy is supposed to work. In Venezuela it does. In the US, it doesn't, never did, and was never conceived or intended to from the nation's founding to the present.

This happens because Americans know painfully little about their law of the land hidden from them in plain view. They're taught misinformation about it and the framers who drafted it. Few ever read it beyond a quoted line or two and even fewer ever think about it. In contrast, in Venezuela, the Bolivarian Constitution is sold in pocket-sized form almost everywhere. People buy, read and study it. Why? Because it's a vital unifying part of their lives codifying core democratic values and principles Venezuelan people cherish and wish to keep.

Prospective Venezuelan Constitutional Reforms

In July, President Chavez announced he'd be sending the National Assembly a proposal of suggested constitutional reforms to debate and consider. He stressed Venezuelans would then get to vote on them in a national referendum so that "the majority will decide if they approve....constitutional reform."

Chavez submitted his proposal in an August 15 address to the National Assembly that will debate and rule on them in three extraordinary sessions over the next 60 to 90 days. Included are amendments to 33 of the Constitution's 350 articles to "complete the death of the old, hegemonic oligarchy and the old, exploitative capitalist system, and complete the birth of the new state." Chavez stressed the need to update the 1999 Constitution because it's "ambiguous (and) a product of that moment. The world (today) is very different from (then). (Reforms now are) essential for continuing the process of revolutionary transition." They include:

-- extending presidential terms from six to seven years;

-- unlimited reelections (that countries like England, France, Germany and others now allow); Chavez wants the reelection option to be "the sovereign decision of the constituent people of Venezuela;"

-- guaranteeing the right to work and establishing policies to develop and generate productive employment;

-- creation of a Social Stability Fund for "non-dependent" or self-employed workers so they have the same rights as other workers including pensions, paid vacations and prenatal and postnatal leave entitlements;

-- reducing the workday to six hours so businesses would have to employ more workers and hold unemployment down;

-- ending the autonomy of Venezuela's Central Bank;

-- recognition of different kinds of property defined as social, collective, mixed and private;

-- redefining the role of the military so henceforth "The Bolivarian Armed Forces (will) constitute an essential patriotic, popular and anti-imperialist body organized by the state to guarantee the independence and sovereignty of the nation...;" and

-- guaranteeing state control over the nation's oil industry to prevent any future privatization of this vital resource;

Chavez also wants other changes to strengthen the nation's participatory democracy at the grassroots. He stresses "one of the central ideas is my proposal to open, at the constitutional level, the roads to accelerate the transfer of power to the people" in an "Explosion of Communal (or popular) Power." It's already there in more than 26,000 democratically functioning grassroots communal councils. They're government-sanctioned, funded, operating throughout the country, and may double in number and be strengthened further under proposed constitutional changes.

Chavez wants "Popular (people) Power" to be a "State Power" along with the Legislature, Executive, Judicial, Citizen and Electoral ones and considers this constitutional change the most important one of all. If it happens, various sovereign powers and duties now handled at the federal, state and municipal levels will be transfered to local communal, worker, campesino, student and other councils. This will strengthen Venezuela's bedrock participatory democracy making it even more unique and impressive than it already is.

In America, it's unimaginable a President or other government officials would recommend "People Power" become our fourth government branch, co-equal with the others, with citizens empowered to vote in national referenda on crucial proposed changes in law.

Chavez also proposed a "new geometry of power" by amending article 16 that now states "the territory of the nation is divided into those of the States, the Capital District, federal dependencies and federal territories. The territory is organized into Municipalities." Chavez wants this amended so popular referenda can create "federal districts" in specific areas to serve as states. He called this idea "profoundly revolutionary (and needed) to remove the old oligarchic, exploiter hegemony, the old society, and (quoting Gramsci weaken the former) historic block. If we don't change the (old) superstructure (it) will defeat us."

Chavez also stressed this new structure is needed to be in place when "Venezuela (grows to) 40 - 50 million people." His plan includes "restructur(ing) Caracas" into a Federal District with more local autonomy, as it was at an earlier time.

These proposals and other initiatives are part of his overall socialism for the 21st century plan that's also very business-friendly. Chavez opposes savage capitalism, not private enterprise, and under his stewardship domestic and foreign businesses have thrived. They're a dominant force powering the economy to accelerated growth since 2003 with latest Central Bank 2nd quarter, 2007 figures coming in at 8.9%. With oil prices high and world economies prospering, this trend is likely to continue. That's good news for business and households sharing in the benefits through greater purchasing power.

Chavez wants his new United Socialist Party (PSUV) to drive the revolutionary process and continue his agenda of reform for all Venezuelans. He wants everyone to enjoy the benefits, not just a privileged few like in the past and in the US today. Under his leadership, their future is bright while in America poverty is growing, the middle class is dying, and the darkness of tyranny threatens everyone under George Bush with his agenda likely continuing under a new president in 2009.

Governance differences exist between these two nations because their constitutional laws are mirror opposite, and America has no one like Hugo Chavez. He's a rare leader who cares and backs his rhetoric with progressive people-friendly policies. In the US, there's George Bush, and that pretty much explains the problem. Knowing that, which leader would you choose and under which system of government would you prefer to live?

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon US central time.