Calculating the true cost of

living in a country built on oil

By Mark Engler

TomDispatch.com

August 13, 2010  |  

This might be an opportune time to make a disclosure: I am a BP shareholder. Admittedly, I’ve never attended the company’s annual meeting, and if I did, I would have very little weight to throw around.

I own two shares of BP stock. I received my stake in the company as a Christmas gift in 1989, when I was 14 years old. The previous June, I had taken a "summer enrichment" course in the Des Moines public schools, designed as an introduction to the world of business. The teacher gave each of us in the class a modest hypothetical budget to invest in the stock market.

Earnest young capitalists, we made our picks and then followed the quotes in the morning paper. I invested heavily in Amoco and finished the summer feeling that my portfolio had done quite well. As a result, my younger brother decided that I should receive a real piece of the enterprise that was once John D. Rockefeller's Standard Oil. He conspired with my mom to get me an Amoco share for the holidays.

I’ve watched the oil industry as an interested party ever since. In 1998, my Amoco stock split, turning my one share into two. Then, a few months later, the company was acquired by BP. This "oil mega-merger," as the BBC called it, gave me a stake in yet another energy titan. It also allowed the combined corporation to shed 6,000 jobs, prompting its new chief executive, Sir John Browne of BP, to confidently assure the press that "he hoped the merger will increase pre-tax profits of the two partners by 'at least' two billion dollars by the end of 2000."

The merger proved profitable indeed. Over time, the price of my stock nearly doubled. I received dividends every three months, usually of around 60 cents per share. And by the mid-2000s, BP was making some $20 billion per year in profits. The numbers looked good.

Of course, these are not the only numbers to consider. In fact, in the wake of BP's disaster in the Gulf of Mexico, they don’t seem like the right numbers at all. It’s time for a different accounting: What has that catastrophic spill cost our society? What price do we pay for our dependence on oil? How do we measure these things?

Costs of Business

When I first began receiving Amoco’s annual reports, they featured photos that celebrated robust industrial capabilities, like multicolored sunsets behind fields of horsehead oil pumps in Texas. These days, there's still some of that, but the reports tend to have more shots of solar panels, white windmills, and smiling school children (our future). Someone looking at the annual review the company sent me in 2001, for instance, might have been fooled by the photos of lush, palm-heavy landscapes in Indonesia, California, and Trinidad into thinking that it was a mailing from Conservation International.

Such changes in public relations were born of tragedy. Back in 1989, not three months before my summer business class, the Exxon Valdez collided with the Bligh reef in Alaska's Prince William Sound, breaching its hull. Even according to conservative estimates, it spilled more than 10 million gallons of oil and contaminated more than 1,200 miles of ecologically sensitive coastline. For years afterwards, we saw Exxon deal with the fallout of the catastrophe.

However many thousands of boats and booms the company deployed, it only managed to recover about 8% of the oil released. The rest evaporated, coated beaches, or sank to the bottom of the sea. The Exxon Valdez Oil Spill Trustee Council estimates that 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs were killed by the spill. Two decades later, some 16,000 gallons of leftover oil still poison wildlife in the Prince William Sound.

The cost to the planet was steep. The cost to Exxon could have been severe as well. While the company claims that it spent $2.1 billion on its clean-up efforts, it might have had to pay many times that in fines and lawsuit settlements. The government initially threatened $5 billion in criminal penalties, and in 1994 a federal jury ordered the company to pay $5.2 billion in punitive damages to Alaskans who had filed a class-action lawsuit. For a time, things at Exxon looked grim.

Although these were the worries of a rival corporation, Amoco investors did get a taste of what Exxon was experiencing. In 1990, after a dozen years of litigation, a federal judge in Chicago ordered my company to pay $132 million in damages to the French government and other parties.  They had all been harmed 12 years earlier when the Amoco Cadiz ran aground off the coast of Brittany, releasing 68 million gallons of oil. At the time, it was the largest tanker spill ever. It killed millions of sea urchins and mollusks, thousands of tons of oysters, and almost 20,000 birds.

In terms of the overall business, however, the judgment was only a blip on Amoco's radar screen. In the end, Exxon never made any $10 billion payout for its disaster either. The first Bush administration allowed the company to plead guilty to a small number of charges and settled for penalties and fines of around $1 billion. The judge who ultimately approved the settlement had earlier worried that the amount was too low: "I'm afraid these fines send the wrong message," he said, "and suggest that spills are a cost of business that can be absorbed."

It was a prescient concern, especially given the resolution of the class-action suit. In that arena, Exxon's lawyers proved patient and skilled. They held up the case in court for years until, in 2008, nearly two decades after the spill, the Supreme Court ruled that damages paid by the company would be limited to an exceptionally absorbable $507.5 million.

Emerging Unscathed

In the months during which the well under BP's Deepwater Horizon freely spewed crude into the Gulf of Mexico, it released 4.9 million barrels of oil, or 205.8 million gallons, according to a government panel tasked with measuring the spill. Depending on what estimates you use for the earlier disaster, this amounts to roughly 20 times as much oil as the Exxon Valdez released. In negotiations with the Obama administration, BP agreed to put $20 billion into a fund for cleanup. It has also indicated that it will pay "all legitimate claims" related to the disaster.

Despite such vows, how much of the final cost BP will actually end up paying is unclear. Spill-related damages and lost economic activity could amount to tens of billions of dollars more than what BP is currently setting aside. An Oxford Economics study predicts that costs to the tourism industry alone could exceed $22 billion. Damage to the natural environment, much of it potentially unseen, is almost impossible to quantify.

In the case of the Valdez spill, according to the Associated Press, "the state priced each seagull at $167, eagles at $22,000, harbor seals at $700, and killer whales at $300,000." Such an effort could be replicated for the Gulf. Yet a price tag of $167 per seagull seems tragically inadequate as a means of accounting for a destroyed population of birds, and it doesn’t begin to account for species that may seem less significant to us, but could be crucial to the ecosystem.

Now-deposed BP executive Tony Hayward repeatedly vowed to Gulf residents that the company would "make this right." Likewise, in 1989, after the Valdez ran aground, Don Cornett, Exxon's top official in Alaska, told locals dependent on the ruined fishing industry, "We will do whatever it takes to keep you whole. We do business straight." Of course, that was before Exxon went on to pursue years of dogged litigation to limit its liability.

Once the public furor dies down, as already seems to be happening, BP will have financial incentive to do the same. Though the price of my stock took a hit, plummeting from around $60 per share in early April -- before anyone had heard of the Deepwater Horizon -- to a low of $27 per share in late June, it has already rallied to above $40 as of this writing. Some analysts are betting that BP, like Exxon, will contain the cost of its spill, and then continue about its business in much the same manner it did before. As analyst Antonia Juhasz argues with regard to the Valdez disaster, "Exxon emerged virtually unscathed from the incident and is, today, the most profitable corporation the world has ever known."

What We Do Not Pay at the Pump

Aspects of this situation are reminiscent of the aftermath of another recent “spill.” They recall the way in which bailout banks like Goldman Sachs and JPMorgan Chase relied on billions of dollars in public funding to stay afloat after causing a global economic near-collapse, then turned around the next year to report massive profits and once again award exorbitant bonuses to their well-heeled employees. In each case, there is something deeply unsatisfying about how the market handles the destructive behavior of powerful economic actors.

It is not a new idea to suggest that the true costs inherent in many economic pursuits have been unfairly socialized. Nor does this notion apply only in moments of crisis. Economists give the name "externalities" to costs associated with a business that are not reflected on the balance sheet of that enterprise or in the prices of its products, but rather are borne by society at large. For example, if a factory can dump its waste in a local river and is never fined, it has successfully externalized the cost of waste disposal, which the public pays for in the form of polluted water and its consequences.

Oil has many externalities, and the BP disaster has been only the most recent trigger -- "the reminder we didn't need," as Carter Dougherty at BNet put it -- for refreshed awareness that the gas we buy is far more expensive to our country than what any of us pay at the pump.

In August 1987, the New York Times published an editorial with the bold title, "The Real Cost of Gas: $5 a Gallon." Given that, at the time, you could commonly fill up for 99 cents per gallon, and that even the energy crises of the 1970s did not push gas prices above $1.50 per gallon, $5-a-gallon gas was pretty much unimaginable. Yet the Times editorial stated that, "in light of the administration's willingness to risk lives and dollars in the defense of oil from the Persian Gulf… the real cost of oil should include the cost of the military forces protecting supplies." It argued for an energy policy that accounted for Pentagon expenditures.

Two Gulf wars later, an array of reports from both liberal and conservative sources suggest that $5 per gallon is anything but an outlandish estimate for the true cost of gas. It could, in fact, be far too low.

Taking military spending into account would only be a start toward reckoning with what we really pay for oil. But since the military takes up a massive part of our national budget, it would be a good start.

Anita Dancs, an economist with the Center for Popular Economics, notes that "energy security, according to national security documents, is a vital national interest and has been incorporated into military objectives and strategies for more than half a century." After breaking down the overall military budget and evaluating specific missions, she concludes that "we will pay $90 billion this year to secure oil. If spending on the Iraq War is included, the total rises to $166 billion." That would already add 56 cents to every gallon of gas we buy.

The late Milton Copulos was a veteran of the Heritage Foundation, an advisor to both President Ronald Reagan’s White House and the CIA, as well as the head of the right-wing National Defense Council Foundation. He was particularly concerned with dependence on foreign oil, and he highlighted how oil imports were both an economic boon to unsavory governments abroad and a missed opportunity for domestic investment. In 2006, Copulos argued that, if you add to oil-related defense spending such factors as the economic impact of periodic oil supply disruptions and the opportunity costs of money spent on oil imports that might have been used elsewhere in the economy, the "hidden" costs of the U.S. dependence on petroleum would total up to $825 billion per year.

"To put the figure in further perspective," he wrote, "it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil." At today's rates, that would hike the price at the pump to approximately $11 per gallon, or more than $250 to fill the tank of a typical SUV.

Gushing Subsidies

Military spending is just one type of public subsidy that benefits the oil industry and keeps the price at gas stations artificially low. When I made my adolescent wager on Amoco, I was not aware that the company also profited from massive tax breaks and other non-military forms of support. Yet these go a long way toward making the enterprise a safe bet for investors. Copulos factored some of them into his $11 per gallon calculation; others would drive the price still higher.

In early July, The New York Times reported: "With federal officials now considering a new tax on petroleum production to pay for [the BP oil spill] cleanup, the industry is fighting the measure… But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process."  Senator Robert Menendez (D-NJ) added, “The flow of revenues to oil companies is like the gusher at the bottom of the Gulf of Mexico: heavy and constant. There is no reason for these corporations to shortchange the American taxpayer.”

The Times story notes that BP was, for instance, able to write off 70% of what it was paying in rent for the Deepwater Horizon rig that caught fire, "a deduction of more than $225,000 a day since the lease began." Amazingly, BP is also claiming a $9.9 billion tax credit for its response to its oil spill in the Gulf of Mexico.

Not only does our government allow energy companies to avoid taxes in myriad ways, the variety of public supports for the oil industry outside the tax code are almost too numerous to list. A 1995 report by the Union of Concerned Scientists mentioned several, including these: the government invests in substantial energy research that directly benefits the oil industry; it spends millions to maintain a Strategic Petroleum Reserve, designed to help stabilize the oil supply; and it maintains a massive highway system that facilitates gas-intensive auto travel, only part of which is paid for by taxes on motorists.

Then, of course, there is the environmental price we pay, most notably in the form of global warming. As Ezra Klein wrote recently in Newsweek, some experts argue that carbon emissions from cars could be offset at the cost of about 65 cents per gallon (money that would presumably be invested in activities like reforestation). Others believe the cost would be much steeper -- perhaps steep enough to turn oil industry profits into losses.

Andrew Simms of the British New Economics Foundation calculated that, if you were to combine BP's exploration, extraction, and production activities with those involved in the sale of its products, you would end up with 1,458 million tons of CO2-equivalent entering the atmosphere per year. Pricing the cost of carbon emissions at $35 per ton, he puts the bill for climate-change damages at $51 billion. Since BP reported a mere $19 billion in profits in 2006, the year Simms was reviewing, he argues that it would have been "$31 billion in the red," or effectively bankrupt, if it had to cover the climate-change bill.

There's more, too. Consider that car exhaust and oil industry pollution mean an increase in smog and asthma, burdening our health-care system. Then count in the damage caused by massive oil spills we seldom hear about in places like Nigeria, Ecuador, or China, as well as the economic cost of traffic congestion and excess auto accidents made possible by subsidized car travel (costs which the willfully contrarian Freakonomics blog contends may be even more expensive than global warming). The final tally is staggering. High-end estimates of the true costs of the gas we use come to over $15 per gallon. Taxpayers subsidize significant parts of this sum without even knowing it.

That Which Makes Life Worthwhile

To the extent that energy corporations are made to spend more to do business in the future -- forced, for example, to pay for mandatory safety measures, pricier insurance policies, or taxes from which they were previously exempt -- some of the costs of oil could be "internalized." If enough costs were accounted for, some companies, no longer confident that their efforts would be profitable, might begin to reconsider exploiting harder-to-extract reserves of fossil fuels. A recent article in the British Guardian offered this scenario: "If the billions of dollars of annual subsidies and the many tax breaks the industry gets were withdrawn, and the cost of protecting oil companies in developing countries were added, then most of the world's oil would almost certainly be left in the ground."

Unfortunately, this is surely an overstatement. If the exploits of oil companies were made more costly, these companies would simply raise their prices and pass along the costs to consumers. And we would pay them because we are unwilling to give up the speed and convenience of driving, or the luxury of airline travel. We would pay them because we are unwilling to reduce our consumption of foods shipped to our grocery stores from far away, or diminish our energy consumption in many other ways. We would pay them in order to maintain at least a facsimile of our previous lives.

Or would we?

While it is too much to say that "most of the world's oil" would be abandoned, some might be. In 2008, when gas prices soared above $4 per gallon, Americans did behave differently. As the New York Times reported, we drove 10 billion fewer miles per month than the year before; surprising numbers of SUV owners traded in their vehicles for smaller, more efficient cars; and daily oil consumption was lowered by 900,000 barrels. Investors began to reconsider how "realistic" the costs of developing alternative energies might be and to fund them more seriously. In other words, Americans responded to the market.

This was a hopeful sign. At the same time, reacting to the market's cues will not be enough to sort out our relationship to oil and the oil business. We must also reckon with the market's limits. Appreciating the full magnitude of the Deepwater Horizon crisis requires us to recognize that the market is inherently unable to account for many of the things we hold most precious. Robert F. Kennedy pointed to this problem in one of his most powerful speeches, explaining that the gross national product measures everything “except that which makes life worthwhile."

Some things cannot be -- or should not be -- left to business spreadsheets. Calculating the cost of a destroyed ecosystem in the Gulf of Mexico or along the coast of Alaska means putting a price tag on things that are not meant to be priced. If you accept that a harbor seal's life is indeed worth $700, and a killer whale's $300,000, pretty soon you must accept that your own life has a price tag on it as well.

Yet taking the limits of economic calculus seriously has implications. It means that we cannot trust the market to solve its own problems -- to self-regulate and self-correct. It means that we need democratic action to place controls on corporate behavior. It means that some things must be considered not merely expensive but sacred, and defended against forces blind to their true value.

Those who believe that the price of my BP stock will recover in the next year might be wrong. Even if the stock bottoms out, however, that won’t restore a shattered Gulf, nor will it change a system that prizes easy consumption and deferred responsibility. We can only correct for the catastrophe oil has wrought by living according to a different measure.

Mark Engler is a senior analyst with Foreign Policy In Focus, a TomDispatch regular, and the author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books). He can be reached via the website Democracy Uprising. Research assistance provided by Tim LaRocco and Arthur Phillips. To listen to a TomCast audio interview with Engler click here or, to download it to your iPod, here.

Airless Maglev High-Speed Train

By Andrew Nusca

Aug. 9, 2010

High-speed rail just got a whole lot faster.

China is reportedly developing a high-speed train that will travel at 1,000 kilometers per hour, or approx. 621 miles per hour, through Maglev lines in airless tubes underground.

Researchers at the National Power Traction Laboratory of Southwest Jiaotong University reportedly toldBeijing-based Legal Evening News that they were working on a prototype “vactrain” with an average speed of 500 to 600 kilometers per hour (approx. 311 to 373 miles per hour.)

The researchers say the technology could be in use within a decade. In the meantime, a smaller model train may be introduced in two or three years, they said.

The technology at the heart of the train is Maglev, short for magnetic levitation, technology. A concept that’s been around for more than 100 years, Maglev tech entails the suspension of a train via powerful magnets to remove the friction present at the rails of conventional trains.

The catch with maglev technology is that there’s still friction from the air rushing past the train as it hurtles down the tracks. To date, the fastest Maglev train managed about 361 miles per hour — not much faster than a conventional high-speed train.

But an airless tube — a vacuum — would remove that air drag, allowing for impressive speeds. (The trains themselves will contain pressurized air, just like an airplane.) A cheaper alternative to removing the air completely is to depressurize it, the researchers say.

Inventor and ET3 CEO Daryl Oster holds the U.S. patent for Evacuated Tube Transport, or ETT, technology. As you might expect, Oster has reportedly been working with Chinese researchers Shen Zhiyun, Zhang Yaoping and Wang Jiasu at the university on the concept.

The researchers say the train is cost-competitive with a traditional high-speed train because it has a smaller tunnel and requires less boring.

Here’s a rather rosy video about an existing maglev system in China, via the eagle-eyed folks at AltTransport:

The best use of such train technology? Transoceanic travel. One proposal by Channel Tunnel pioneer Frank Davidson and engineer Yoshihiro Kyonati entailed floating a tube above the ocean floor, anchored with cables.

Call it the Concorde 2.0: live in New York, work in London. Or travel from New York to Los Angeles in 45 minutes, according to Oster’s calculations.

A 2007 Worcester Polytechnic Institute report (.pdf) elaborates:

The Vactrain outweighs the current modes of transport in several ways, making it a ground-breaking idea. It has a clear edge over present airplanes, trains and automobiles as it causes no pollution and does not operate with gas or petroleum. Thus, while the present transportation would soon be in a sticky situation with the energy crises which the world is facing with dwindling resources of petroleum and gas, the Vactrain would emerge victorious. Moreover, the Vactrain is unaffected by any extremes in weather conditions. It has low maintenance costs as it employs the high-lifetime maglev technology, which also minimized wear due to friction. Additionally, it has low operation costs and 25% energy consumption when compared to aircrafts. Due to all these factors, the Vactrain triumphs over the current means not just in the future but even in present situations making it highly superior.

The Chinese aren’t the only ones working on a vactrain, by the way: according to the report, both the U.S. and Switzerland are developing similar technology.

Illustrations: ET3

Brings Renewable Energy

to Northwest Indiana

By Andrea Buffa
Apollo News Service 

July 22, 2010 - Tracy Hall of Munster, Indiana has been an electrician for 30 years. He is among the thousands of construction trades workers hit by the current recession, who have seen unemployment in the trades rise to almost 25 percent nationally. But Hall hasn’t had time to sit around getting depressed about the state of the economy. Instead, he’s spent the time when work has been scarce developing a new expertise. As the only union worker in Indiana who is certified as a solar photovoltaic installer by the North American Board of Certified Energy Practitioners, and a LEED Accredited Professional by the U.S. Green Building Council, he has become one of Northwest Indiana’s most knowledgeable renewable energy technicians.

“Tracy has single-handedly become one of the experts in the region on renewable energy—and not just the pros and cons of renewable energy, but the installation specifics and the technical aspects of how you build and install solar systems and wind mills,” said Howard Fink, the town administrator of Merrillville, Indiana, where Hall installed solar panels on the town hall building.

Hall’s story shows the positive impact that one determined individual can have on the adoption of clean energy practices by his workplace and local community. He convinced his labor union, Local 697 of the International Brotherhood of Electrical Workers (IBEW), to offer a journey-level class in solar photovoltaics and then set about obtaining the skills he would need in order to be able to teach the class. Hall attended workshops offered by the Illinois Solar Energy Association, studied LEED green building standards at Wilbur Wright College in Chicago, participated in online courses offered by Solar Energy International and graduated from solar installation classes at the Midwest Renewable Energy Association. He also went to an IBEW training-the-trainer course on photovoltaics so that he would be prepared not only to do installations but also to teach about them.

“We’ve got to start making changes if we want our children to have a future,” Hall said. “It’s become a passion for me. I just want to leave this world knowing that I did something that was meaningful.”

After attending so many courses and workshops, Hall had the training and the passion, but he still lacked one thing: hands-on practice installing a solar PV system. When he found out about an Indiana Office of Energy Development (OED) grant program designed to support the purchase and installation of alternative energy systems, he decided to apply. He approached the town administrator of Merrillville about a project that would begin with Hall teaching a solar PV installation class to journey-level electricians and apprentices through his labor union and culminate with the trainees installing solar panels on the roof of the Merrillville town hall. The trainees would donate their work, and, if approved, the grant would help the city purchase the solar PV system.

“We wanted to do the project as a training opportunity with the local unions so the building trades had the opportunity to get accustomed to installing these systems,” said Howard Fink, Merrillville’s town administrator. “We also did it as an educational tool for residents to learn about the environmental benefits of renewable energy.”

As soon as Hall and Fink got word that their project had been approved for a $23,500 Alternative Power and Energy Grant, Hall began training 12 of his union members in solar photovoltaics using the IBEW’s national curriculum. In March 2009, the trainees installed a small five-kilowatt solar PV system on the Merrillville town hall building. It was the first commercial photovoltaic installation in Lake County.

Since then, Hall has continued to be a tireless advocate for renewable energy in Northwest Indiana and throughout the state. He applied for and received another OED grant, this one for $73,500, to install solar panels on the roof of Local 697’s new union hall, which they hope will achieve LEED gold certification. Hall also trained electricians at IBEW Local 531, whose hands on experience came from installing solar panels on a parochial school in Porter County.

Hall says he prefers to work within labor unions, because “it’s important that people earn a living wage and have health benefits and retirement benefits. When you get work outside of the local union, you don’t have those benefits in the construction industry.”

Despite Hall’s successes, his effort to promote renewable energy has not been without its challenges. Demand is slow for renewable energy systems in Indiana, which means that Hall hasn’t been able to find full-time work in his new area of expertise. In part, this is because Indiana has few policies to spur local demand for renewable energy. According to Laura Arnold of the Indiana Renewable Energy Association, several attempts to pass a state-level renewable energy standard have failed. Another challenge, Arnold said, is the economy. “There is a strong interest in renewable energy in our state, just like there is in most other states, but with people’s uncertainty about the economy, they are just not making a lot of discretionary purchases.”

Hall is hoping that if Indiana state legislators won’t act to create a renewable energy market in the state, Congress will. The U.S. House of Representatives has already passed comprehensive clean energy and climate legislation, the American Clean Energy and Security Act, but the Senate has yet to pass a similar bill. “A federal renewable energy standard would be very helpful,” Hall said. “And if we could put a cap [and price] on carbon, that would help fund these kinds of projects.”

Regardless of what happens at the federal level, Fink believes renewable energy use will increase in Indiana. “The public attitude toward renewable energy is strong … As time goes on and costs go down and as more people are certified in installing the systems, you’re going to see them installed in homes and businesses in our region and around the country,” Fink said.

In the meantime, Hall plans to keep pursuing his passion for clean energy. “My family respects me for what I’m doing,” he said. “When I did the Merrillville project, when I came home that day, my wife was just glowing. To me, that was really worth putting a lot of effort into this work.”

Down With Suburbia; Down With

Bloomberg's New York City

BY Greg Lindsay

Fast Company, Wed Jul 21, 2010'

via http://solidarityeconomy.net

"New York? The whole damn place has been turned into a suburb," sneered David Harvey, startling a roomful of New Yorkers who prided themselves on the same things he derided: the makeover of the city's parks; the new network of bike lanes; the pedestrian malls along Broadway. "The feel of the city is losing its urbanity and being made okay for suburbanites to enjoy Times Square," he continued, going on to condemn New York's gentrification not on aesthetic or nostalgic grounds, but for being at the root of the financial crisis.

Harvey is having a bit of a moment in America, as much as any neo-Marxist economic geographer can. Earlier this month, his lucid explanation of the "econopocalyspe" (accompanied by animated whiteboard doodles) was a modest hit on Boing Boing. Richard Florida borrowed his concept of the "spatial fix"--the idea that capitalism gets bigger and badder every time it's wriggles out of a crisis--for his latest book, The Great Reset. And Harvey's own book-length explanation of the crisis, The Enigma of Capital is set to be published on these shores in September.

On Tuesday night in Manhattan, Harvey made a rare American appearance to discuss "experimental geography" and the role cities and suburbia played in the crisis. Starting from the idea of a "geographic unconscious"--"the way we think of space and time as 'natural' when they're really constructed,"--Harvey blamed suburbia for brainwashing Americans into being good capitalists.

But the connections between urbanism and capitalism go deeper than that. In an essay published in New Left Review, he drew connections between Haussmann's Paris, postwar America, gentrification and China's instant cities. In each case, the construction efforts employed huge quantities of labor and required new forms of capital and credit, whether FHA mortgages or CDOs. In his estimation, China's breakneck urbanization and the appetite for raw materials this creates is the only thing propping global capitalism up.

At the same time, gentrification has become just another name for suburbia. "Shopping malls, multiplexes and box stores proliferate," he wrote, "as do fast-food and artisanal market-places. We now have, as urban sociologist Sharon Zukin puts it, 'pacification by cappuccino'. Even the incoherent, bland and monotonous suburban tract development that continues to dominate in many areas now gets its antidote in a 'new urbanism' movement that touts the sale of community and boutique lifestyles to fulfill urban dreams."

And New York is the biggest offender of them all. "The billionaire mayor, Michael Bloomberg, is reshaping the city along lines favourable to developers, Wall Street and transnational capitalist-class elements, and promoting the city as an optimal location for high-value businesses and a fantastic destination for tourists. He is, in effect, turning Manhattan into one vast gated community for the rich." Harvey is merely putting into Marxist terms the same laments offered recently by Patti Smith ("New York has closed itself off to the young and the struggling... So my advice is: Find a new city") and the anonymous blogger behind Lost City, who viciously described Bloomberg's city as "homogenous, anodyne, whitewashed, suburban, toothless, chain-store-ridden, ordinary, exclusive and terribly, terribly expensive. A town for tourists and the upper 2%."

Cities like New York "are increasing being constructed around spectacle," Harvey argued Tuesday night. "One aspect of capital is that it wants to move faster and faster; capital cannot abide a long period without change." In cities like Beijing, Shanghai and Mumbai, this change is being brought about by land grabs and slum clearance. In New York and other financial capitals, it's gentrification "making cities a spectacle that is instantly consumed." In other words, we're blinded by the lights to our Matrix-like existence. "We're all suburbanites now, without knowing it," he said. "We're all neoliberals now, without knowing it."

In its place, Harvey has called for a "right to the city" to be recognized as a human right. Considering the urban tsunami that's coming--3 billion additional city-dwellers on top of 3.3 billion now--he has a point. The future of humanity is an urban future, and at this moment America is staring at millions of home foreclosures while China is bulldozing neighborhoods as it sees fit.

Like any committed socialist, Harvey ended his brief talk with a call to arms (a theorist's call to arms, but still): "We've got to revolutionize the geographic subconscious; we've got to revolutionize daily life--that's what really matters. In changing the city, we change ourselves. The real question is: what kind of people do we want to be?"

Wow Crowd at Foundation Meeting

Margaret Bernstein, The Plain Dealer

View full sizeMarvin Fong / The Plain Dealer

All the seniors from the Cleveland School of Science and Medicine will attend college.

CLEVELAND, Ohio, June 10 -- Cleveland Foundation leaders enlivened their annual meeting Tuesday at Severance Hall by spotlighting several examples of hope hewn from poverty.

President and Chief Executive Officer Ronald B. Richard said signs of success are sprouting for the 10 "innovation schools" his foundation has helped fund in the Cleveland school district in recent years.

He then wowed the crowd by telling them that 100 percent of seniors at the School of Science and Medicine on the John Hay campus have been accepted to four-year colleges.

The audience of about 600 cheered and some wiped away tears when nine John Hay youths in lab coats trooped on stage to announce, in confident voices, the colleges that accepted them and the scholarship dollars they won.

"Fixing America's failing public school systems is, at present, the single most important mission of our nation, and of our city," Richard said, to enthusiastic applause. "And for the Cleveland Foundation, it's priority No. 1."

He updated attendees on several other foundation projects, including the worker-owned Evergreen Cooperative in University Circle, which has created 38 jobs so far for Cleveland residents, with potential for 500 more.

Keynote speaker Lily Yeh, who transformed a poor Philadelphia community into a colorful arts village, said she was moved to hear of Cleveland's philanthropic activism. "It takes my breath away," she said.

Established in 1914, the Cleveland Foundation is the world's first community foundation. In 2009, it gave out $79 million in local grants for education, neighborhood revitalization, economic development, youth and human services and the arts.

Board Chairman David Goldberg said that after a difficult 2008, the foundation has rebounded financially and reclaimed its position as the nation's second-largest community foundation. Its assets stand at $1.8 billion, and are surging back after dropping to $1.6 billion in 2008, he said.

Nationally, grant dollars given out by community foundations fell by about 10 percent in 2009, but the Cleveland Foundation's grants dropped by less than 6 percent, he said.

To reach this Plain Dealer reporter: mbernstein@plaind.com, 216-999-4876

© 2010 cleveland.com. All rights reserved.

* Caracas slum a lab for Chavez's socialist project

* Radical groups are key part of president's support

* Opposition sees militants as Chavez's personal army

By Esteban Israel

Reuters, July 6, 2010

CARACAS, July 6 (Reuters) - While President Hugo Chavez struggles to revive the battered bolivar, in a hillside slum overlooking his palace, die-hard supporters are talking about getting rid of the Venezuelan currency altogether.

Welcome to the 23 de Enero barrio, home to about 100,000 people and something of a laboratory for Chavez's nationwide socialist experiment. Here you find dogs named "Comrade Mao", and even a "revolutionary car wash."

"We are creating a popular bank and are going to issue a communal currency: little pieces of cardboard," says Salvador Rooselt, a soft-spoken 24-year-old law student and community leader who often quotes Lenin and Marx.

Some 20 militant groups sometimes described as Chavez's "storm troopers" run this urban jungle in western Caracas, where hulking concrete buildings daubed with colorful murals -- one depicting Jesus Christ brandishing an AK-47 rifle -- show off the neighborhood's radical tradition.

"We are giving capitalism a punch in its social metabolism," said Rooselt, of the Alexis Vive group, wearing its trademark bandana with the image of guerrilla icon Ernesto Che Guevara around his neck.

A deeply-rooted socialist ideology, absolute territorial control and financing from the government have allowed Alexis Vive to put into practice some of the ideas Chavez is struggling to implement in the rest of Venezuela.

Socialist stores sell milk and meat from recently nationalized producers at about a 50 percent discount. Residents do voluntary work, kids are encouraged to steer clear of drugs, and some youths have even joined a pioneer organization modeled on similar groups in Communist Cuba.

"I'm sure President Chavez supports our initiatives and seeks to implement them at a national level," Rooselt said.

Alexis Vive spreads its message via Radio Arsenal, an underground FM station Rooselt says was inspired by Vladimir Lenin's experience with a political newspaper a century ago.

They are also turning their hands to urban agriculture and fish farming to feed locals, and say that the future communal bank will extend micro-credit to foster economic independence.

"TENSE ALLIANCE"

Despite being a stronghold of the "chavista" movement with a massive electoral muscle that has helped the president win votes for more than a decade, 23 de Enero's radicalism has often proved a political liability for Venezuela's leader.

A series of attacks targeting opposition symbols such as the Globovision television station, and even the Roman Catholic Archdiocese, have led Chavez to publicly distance himself from these groups in the past -- although some neighbors think they still take direct orders from "Comandante Presidente."

George Ciccariello-Maher, a social scientist with a PhD from the University of California, Berkeley who has studied Venezuela's radical movements, calls it a "tense alliance" between the president and the barrios.

"Chavez depends on the radical sectors for support, but neither side truly trusts one another ... If he were to destroy them, he would be destroying his own base as well," he said.

Gone are the days when local groups proudly displayed their automatic weapons in front of visiting reporters. Militants from Alexis Vive say their armed struggle is over.

"Ever since the revolutionary process started there haven't been any weapons. We joined the Bolivarian militias," said Rooselt, referring to a 35,000-strong armed force recently launched by Chavez to defend his socialist revolution.

But other more belligerent groups within 23 de Enero appear to be still armed to the teeth.

In January, one of the groups released a video to the media showing its members dressed in military attire and brandishing automatic weapons and a rocket-propelled grenade launcher.

They called on Chavez to clean his government of corrupt "false socialists."

Security in 23 de Enero remains tight. Rooselt's told Reuters he received a call by cell phone the moment two reporters were spotted in the neighborhood.

That might explain why crime rates here have dropped by 95 percent, according to the militants, who say they have turned it into one of the safest places in crime-ridden Caracas.

"SPEARHEAD OF THE REVOLUTION"

Known in the past as "Little Vietnam," 23 de Enero has a long history of left-wing radicalism. The neighborhood's name refers to January 23, 1958, the date on which military dictator Marcos Perez Jimenez was toppled.

The community, mostly made up of rural workers attracted to the capital by Venezuela's oil boom, played a key role in the 1989 riots known as the "Caracazo," which claimed scores of lives when the army shelled buildings in the area for days.

Alexis Vive, for instance, honors community leader Alexis Gonzalez, who was killed by the police in 2002.

Berkeley's Ciccariello-Maher calls 23 de Enero an example of "alternative sovereignty" beyond the control of the state.

"The neighborhood and movements it nurtures represent both the laboratory and spearhead of the Bolivarian Revolution ... It is in 23 de Enero that the most radical forces are located, forces which drive the process forward," he said.

The government is finding new ways of supporting 23 de Enero. In a plot behind a local market, neighbors in Che Guevara bandanas are building a state-funded brick factory equipped with Iranian-technology.

Not far from there, a group of former paratroopers who joined a failed coup d'etat by Chavez in 1992 have set up a "revolutionary car wash" next to a wall displaying a huge picture of the late Colombian guerrilla commander Marulanda.

"Here in 23 de Enero we are committed to take this process to the very end," said cooperative member Martin Campos, a 38-year-old retired soldier sporting a yellow baseball cap with a red star. "We are chavistas. Red, very red." (Editing by Daniel Wallis and Anthony Boadle)

for Full Employment!

The Progressive Path

Out of Our Crisis

A Project of the Labor Committee of CCDS

The Committees of Correspondence for Democracy and Socialism

www.cc-ds.org

The Struggle for Full Employment:

A Strategy to Defeat the Neoliberal Assault

on the US Working Class

by Randy Shannon

Treasurer, PA 4^th CD Chapter,

Progressive Democrats of America

----------------------------------------------------------------

“In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.

Among these are:

The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;”

- President Franklin D. Roosevelt: State of the Union Address, January 11, 1944

------------------------------------------------------------------------

“Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment.”

- United Nations Universal Declaration of Human Rights, December 10, 1948

I. Introduction

The “Great Recession” that began in 2007 has caused the greatest percent of job losses since the Great Depression of 1929. This crisis is the end of an era of unrestrained ‘neo-liberal’ capitalism that became public policy during the Reagan administration. The crisis marks a new level of instability with the growth of a global financial elite that targeted US workers and our trade unions after World War II.

The election of President Obama reflected the growing struggle of America’s progressive majority to reverse the neo-liberal policy of war and austerity that has undermined the social advances established by the New Deal and the United Nations. It also begins a long period of readjustment for capitalism as it responds to multiple crises, struggles to maintain its system of social control, and seeks a new system of profit accumulation.

Serial Crises

During the seven decades since World War II, US workers have faced ten periods during which the economy lost jobs for over twelve months. Each successive recession in employment lasted longer than the previous downturn.

In the above chart, each line represents an employment crisis since World War II. The vertical axis shows the percent of jobs lost each month and the horizontal axis shows the duration of the crisis in months since the last peak in employment. The right end of each line is the point at which employment returned to its former high.

In the crisis of 1990 the economy lost jobs for two and one half years. Then in the 2001 recession, it was four years before job losses ended. Although these last two downturns were prolonged, and the recoveries were weak, job losses at around 2% were not enough to cause widespread protest.

The New Reality

The 2007 recession started just two years after the end of the four year downturn of 2001. After 28 months the number of jobs lost remains at over 5%. Unlike previous instances of sharp declines followed by quick rebounds, this recession has seen five months of job losses over 6% with little recovery. The recent growth in manufacturing and construction resulting partly from the ARRA stimulus has resulted in new hiring that has slightly slowed the rate of job losses.

These job losses correspond to a current official unemployment rate of nearly 10 percent. Add the underemployed, and the rate goes to 17 percent. One out of five males of working age is jobless. Some 35 percent of African American youth are jobless. Many younger workers now in their thirties have never seen regular employment in living wage jobs. In sum, 25 million workers out of a work force of 153 million are unemployed or underemployed.

The social infrastructure built over the decades since the Great Depression has also suffered. Neo-liberal policies focus on defunding the social network that allows families, communities, and states to survive. The long term decline in wages has been matched by a long term decline in access to quality healthcare, education, pensions, and social services that maintained a minimal equality among different income levels.

Questions and Answers

We all naturally look to our own resources to improve the chances of finding or keeping a job. But as we see more people out of work, it becomes apparent that we must look to our social networks for help. Beyond that, we must explore our collective power through political action to change the economic climate from war and austerity to peace and prosperity.

The trend of employment crises will continue. The bankers’ control of the levers of power accumulated under Clinton and the Bushes guaranteed their access to the public purse to cover their losses. Their hijacking of the public treasury is the root cause of current and future crises.

Only a fundamental restructuring of the system that thrives on crises will end them. The struggle for full employment and for democratization of our economic system must find expression in the political aspirations of the progressive majority that won the 2008 election. The progressive majority can achieve democratic economic and social planning based on human rights that supplants greed and market chaos.

Our top priority must be passage of legislation that makes full employment the primary goal of economic policy. The US Government, as the employer of last resort, must provide an employment “public option” for all who are able and willing to work but cannot find a job in the private economy.

II. First, Stop the Bleeding!

Each job that is lost imperils the next job due to the loss of workers’ purchasing power and the loss of tax revenues to local governments. The social and economic costs of the job losses snowball regardless of the underlying cause. The US Government can borrow or create money to reverse the loss of jobs, and must take immediate action.

The demands for action and the response of our Government deserve an evaluation.

Labor Calls for Immediate Action

The AFL-CIO issued a Five-Point Jobs Program that President Richard Trumka calls “a short-term jobs program:”

The AFL-CIO is calling on Congress and the Obama administration to take five steps now to care for the jobless and put America back to work.

1. Extend the lifeline for jobless workers. Unless Congress acts now, supplemental unemployment benefits, additional food assistance and expansion of COBRA health care benefits will expire at the end of the year. They must be extended for another 12 months to prevent working families from bankruptcy, home foreclosure and loss of health care. Extending benefits also will boost personal spending and create jobs throughout the economy.

2. Rebuild America’s schools, roads and energy systems. America still has at least $2.2 trillion in unmet infrastructure needs. We should put people to work to fix our nation’s broken-down school buildings and invest in transportation, green technology, energy efficiency and more.

3. Increase aid to state and local governments to maintain vital services. State and local governments and school districts have a $178 billion budget shortfall this year alone—while the recession creates greater need for their services. States and communities must get help to maintain critical frontline services, prevent massive job cuts and avoid deep damage to education just when our children need it most.

4. Put people to work doing work that needs to be done. If the private sector can't or won't provide the needed jobs, the government should step up to the plate, putting people who need jobs together with work that needs to be done. These should never be replacements for existing public jobs. They must pay competitive wages and should target distressed communities.

5. Put TARP funds to work for Main Street. The bank bailout helped Wall Street, not Main Street. We should put some of the billions of dollars in leftover Troubled Asset Relief Program funds to work creating jobs by enabling community banks to lend money to small- and medium-size businesses. If small businesses can get credit, they will create jobs.

U.S. Secretary of Labor Hilda Solis and AFL-CIO

President Richard Trumka at dedication of a

Memorial to workers killed on the job

In November 2009, a coalition of national organizations including the Economic Policy Institute, the AFL-CIO, the Center for Community Change, the Leadership Conference on Civil Rights, the NAACP, and the National Council of La Raza issued “An Urgent Call for Action to Stem the U.S. Jobs Crisis.” The call reiterated the AFL-CIO plan and reflected the widespread unity of sectors of labor, minority communities, social change, and academic leaders on the need for urgent action.

President Agrees to Stopgap Measures

According to the AFL-CIO News Blog, US Secretary of Labor Hilda Solis told the AFL-CIO Executive Council meeting in February 2010 that

…creating good jobs that offer affordable health care and retirement security is the Obama administration’s top priority.

The first steps must be to pass long-term extensions of emergency unemployment compensation, full federal funding of extended benefits and the COBRA subsidy so the nation can keep in place the much-needed safety net that the Recovery Act established.

Solis said the administration’s job program also includes:

· Fiscal relief for state and local governments, which are facing a $178 billion budget shortfall this year alone.

· More large-scale infrastructure projects. This is the most direct way to bring jobs to people.  

· Aid to small businesses—an important engine of economic growth—through tax cuts and a Small Business Lending Fund, using $30 billion from the Troubled Asset Relief Program (TARP).

III. Deficit Hawks and Tax Cutters

Deficit Fetish

In his November 2009 Nation magazine article “In the Shadow of Hoover,” William Greider wrote:

While he was in China, Barack Obama made a bizarre declaration that the US government must reduce its budget deficits in order to avoid “a double-dip recession.”…In an interview with Fox News, the president said: “It is important to recognize if we keep on adding to the deficit, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a double-dip recession."

In a November 2009 article on Huffington Post, Ryan Grimm wrote:

Centrist political pundits, House Republicans, Blue Dog Democrats and -- on Monday's front page -- the New York Times, have all raised alarms about the growing deficit. [Cong. Steny] Hoyer told the Huffington Post that he is actively working with Senate Majority Leader Harry Reid (D-Nev.) to institute "statutory pay-as-you-go" (PAYGO) -- a law that would require all congressional spending to be offset by revenue increases or spending cuts elsewhere. That statute would contain emergency exemptions that allow for present spending on jobs to increase, said Hoyer.

In January 2010 the New York Times reported on President Obama’s proposed budget cuts to reduce the deficit:

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

At the May 2010 G20 Summit finance ministers abandoned support for fiscal stimulus to end the economic crisis and instead declared their support for “measures to deliver fiscal sustainability.” Global financiers are demanding that the cost of their crisis be born by the working families of the world.

Military Spending

The New York Times, upholding a widespread media taboo, has deliberately omitted discussion of the $trillions of “off budget” costs of the occupations of Iraq and Afghanistan, and other global projections of US military force in its reporting on the US deficit issue.

However, there are cracks appearing in the code of silence around the effect of the military budget on the debt and energy crises. A February 15, 2010 article in Time, “How to Tame the Budget Deficit,” by the director of Columbia University’s Earth Institute, Jeffrey D. Sachs states:

Ending the wars in Iraq and Afghanistan, slashing pay to overpriced contractors and eliminating unnecessary weapons systems could perhaps save 2% to 3% of GDP each year. These are areas where the US is squandering its income and blood, yet the President’s proposed budget for fiscal year 2011 would actually increase military spending to more than $750 billion, from around $720 billion this year.

Military spending dwarfs almost everything else. In the White House’s proposed budget, military spending would be nearly six times the federal outlay for education and 26 times the outlays for development assistance and humanitarian aid – despite the fact that the Administration often promotes development as a central pillar of our national security strategy.

Deficit Fetish Debunked

Nobel Prize Columbia University economist Joseph Stiglitz debunked the “deficit fetish” in a February 2010 Politico column, excerpted here.

The deficit hawks from the banking system went on vacation from the fall of 2008 through the spring of 2009, while they demanded money be doled out freely - to themselves. But now that the public clearly won’t stand for another free lunch at its expense, the deficit hawks are back at work, more vocal than ever about the need to cut government spending.
They say it was necessary to the health of the economy to dole out money to the banks; but not necessary to the health of our society to make sure everyone has access to health care. It was…acceptable to break the social contract between America’s elderly and the rest of society, by cutting back on Social Security.

It was a mistake to give in to bankers’ pleas for deregulation before the crisis; a mistake to give into their demand for a bailout without constraints and without appropriate compensation for the government during the crisis; and even more wrong now to give into demands for unfettered deficit reductions, including an end to the stimulus.
There are no easy ways out of the mess that the financial sector has created. But giving into mindless deficit fetishism risks higher unemployment and a larger long-run debt.

The bankers’ political offensive against the working class was openly displayed in early March 2010 by Republican Senator Jim Bunning’s filibuster against extension of unemployment and healthcare benefits for the long term unemployed as a “protest” against deficit spending.

In another concession to the bankers’ demands to intensify the austerity regime, President Obama announced an executive Deficit Reduction Panel. The Senate had rejected a proposal for a legislative panel that would have the authority to force through legislation cutting Medicare and Social Security with only an up or down vote.

Tax Cut “Jobs” Program

The American Recovery and Reinvestment Act of 2009 allocated 37% of the total $787 billion stimulus to tax cuts. This was the price for their votes demanded by then Republican Sen. Arlen Specter and Blue Dog Democratic Senators to halt the precipitous losses of jobs and housing. The tax cuts do not stimulate spending or hiring in an economic downturn. They are simply the tribute extracted by the bankers who control the Senate majority.

The Bush cash rebate of 2008 was a similar ‘stimulus’ that mostly went to pay off consumer debt and resulted in no job creation nor slowing of the crisis, but served to transfer more wealth from taxpayers to the banks.

In a time of national crisis only the greed of bankers is so ruthless as to demand a tax cut ransom to allow the stimulus bill to pass. The power that can extract more tax cuts even in an economic crisis was plainly explained by Illinois Sen. Dick Durbin in 2009:

And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place.

The bankers see the jobs crisis as an exploitable opportunity. The mass political pressure to do something to rescue the victims of the bank-engineered financial crisis provides the opening. Tax cuts were a major part of the March 2010 so-called jobs bill passed by the Senate. The $33 billion tax cuts to small businesses will go to pay off debt or current wages. The bill contains no jobs creation measures, but extends subsistence support for the unemployed and Medicaid.

This $33 billion ‘tax boost’ for small business is only 2% of the $1.5 trillion reduction in small business borrowing over the last year due to the embargo on lending by the banks. This jobs bill “is really not a jobs bill,” said Cong. Barbara Lee. It is only one tenth of the amount needed for each of the next three years to cut the jobless rate to 4% by the end of Obama’s first term.

Street Heat

The public acknowledgement of the unemployment crisis and the promises of forceful measures by the President, followed by extended legislative battles that produced ineffective measures by Congress, frame the growing anger in the face of widespread suffering. The AFL-CIO and other organizations, such as Jobs with Justice and Jobs for America NOW are organizing lobbying campaigns, marches and rallies across the nation to demand jobs.

October 2009 Massachusetts March and Rally for Jobs

Jobs for America NOW claims to be the largest national coalition agitating for jobs. Its program is similar to the AFL-CIO program and the jobs program outlined by US Secretary of Labor Hilda Solis, but with more emphasis on stimulus spending:

Jobs for America Now, is a broad coalition of 60 national organizations. Its members have endorsed a five-point program that would extend unemployment benefits; provide fiscal relief to state and local governments; create jobs in distressed communities that face severe unemployment; invest in infrastructure such as schools, transportation and energy efficiency; and spur private-sector job growth by providing incentives and credit to small and medium-sized businesses.

Jobs with Justice is an older organization with a broader agenda that includes organizing for equal pay, supporting workers unfairly disciplined for union organizing, advocating for health care and immigrant rights, as well as organizing the unemployed. Jobs with Justice is trade union supported and brings mainly young people into the labor movement. It works to build labor-community alliances.

Many grass-roots organizations are taking up the demand for jobs. In North Carolina, Rev. Dr. William J. Barber, President of the North Carolina NAACP, and leader of HK on J, a broad coalition of grass roots movements organizing for economic and social justice in NC, issued “A Call for a Third Reconstruction.”

We don’t need Union soldiers ...But we do need massive infusions of capital to jump-start the economic and political energies in our region…

Funded by the national treasury to be sure – but created and run by our Southern Movement – we must demand massive infusions of federal funds to create millions of new jobs to reconstruct environmentally sound communities, schools, health care facilities, and new forms of justice across the South.

IV. Effects of Long Term Unemployment

The right to work is a fundamental human right because many of the other social and economic human rights proclaimed by the United Nations cannot be enjoyed without a paying job.

The above chart shows that while short-term unemployment is decreasing as a result of the stimulus, long-term unemployment is still on the rise.

Social Impact

An examination of the effects of long-term unemployment is essential to understanding not only where we may be headed as a nation but the present day reality of people of color in the US. This understanding frames our view of what’s at stake in the struggle for full employment. The March 2010 issue of The Atlantic carried an extended discussion of the severe social effects of long-term unemployment in the article “How a New Jobless Era Will Transform America” by Don Peck.

Even if the economy were to immediately begin producing 600,000 jobs a month…it would take roughly two years to dig ourselves out of the hole we’re in…But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years.

A slowly sinking generation, a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods; a thinning veneer of national amity—the social legacies of the Great Recession are still being written, but their breadth and depth are immense. As problems, they are enormously complex, and their solutions will be equally so.

We are in a very deep hole, and we’ve been in it for a relatively long time already...We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.

Long Term Discrimination The long-term character of poverty and unemployment that is disproportionately high among African-American workers is a legacy of the crime of slavery. Black people labored in the United States for 200 years without compensation, without the right to own property, without the right to establish families, and without the right to education. The militaristic institutions formed in the South to protect slavery survived to overthrow Reconstruction. From the reign of lynch terror, the defense of the anti-democratic Jim Crow system, resistance to the Supreme Court desegregation decisions, to undermining the War on Poverty, they continue to use the rhetoric of state’s rights to mobilize racist opposition to unemployment compensation, Medicaid, and healthcare reform.

Racist employment and educational practices continue to enforce an economic apartheid against workers of color. The status of single African-American and Hispanic women, victims of long-term unemployment and discrimination, was covered in a March 2010 article in the Pittsburgh Post-Gazette: “Study finds median wealth for single black women at $5.”

Researchers at the Insight Center for Community Economic Development based in Oakland, Calif., analyzed data from the 2007 Survey of Consumer Finances, a voluminous report the Federal Reserve Board issues every three years that examines household finances in this country.

Among the most startling revelations in the wealth data is that while single white women in the prime of their working years (ages 36 to 49) have a median wealth of $42,600…the median wealth for single black women is only $5.

For all working-age black women 18 to 64, the financial picture is bleak. Their median household wealth is only $100. Hispanic women in that age group have a median wealth of $120.

Claudia Jones - in 1949 developed

the theory of the triple oppression

of Black women based on sex, race, and class

The Plutocracy

The shocking income disparity based on race and sex is a pale reflection of the greatest income disparity in the US, that based on class. Wealth is so massively concentrated in the upper 1% of the population that the bottom 90% has very little wealth at all. In “The Plutocracy Reborn” Rhonda Winter shows that a minute fraction of the wealthiest own 976 times the total wealth of the bottom 90% of Americans. “This is not sustainable, and makes for a very volatile economy...This dire economic situation just didn’t happen by accident either.”

The marked disparity of wealth in the US is rooted in the excess profits derived from the ‘superexploitation’ of people of color. A Journal of Political Economy article estimates the lifetime loss of wages of a black worker is $115,000 due to the “racial wage gap.”

V. Industrial Policy

A successful strategy for winning full employment must address the current lack of a comprehensive US industrial policy that supports domestic wealth-creating jobs. Growth and consumption based on international borrowing and dollar supremacy is not sustainable. The US must rebuild a substantial manufacturing sector to sustain itself as a major center of global economic stability. The neo-liberal “free trade” policy that is simply the unregulated flow of capital must be replaced with democratic control of capital that invests in industry to promote full employment.

Political economists in academia and in labor-associated think tanks have responded to the new jobs crisis with various proposals. Building on the immediate demands by labor and jobs advocacy groups, and going beyond the legislative proposals of the White House and the Democratic Party, these proposals attempt to address the problem with a new industrial policy.

'We’ve Lost Our Industrial Base'

In his keynote speech to the January 2010 Pennsylvania Progressive Summit, USW President Leo Gerard focused on the loss of wealth-creating manufacturing jobs.

We’ve lost our industrial base. We’ve lost our manufacturing base. And for those of you from the public sector, you can’t have a public sector if we’re not creating real wealth. And we don’t create real wealth by manipulating stock. We don’t create real wealth by having phony asset bubbles; we don’t create real wealth with tech bubbles…

We create real wealth when we take raw material, ingenuity, creativity, engineering, and people’s work and we put it together, and we make something. We add value to it. Then we take those things that we’ve made and we put them together with something else that adds value…and first thing you know, you have…a car that can get 35 miles per gallon.

Those manufacturing jobs going from 25% to 10% of [US] GDP didn’t happen by accident. Since the passage of NAFTA America has accumulated a $6.5 trillion trade debt to the rest of the world. Last year America had a $600 billion trade deficit of which $250 billion was with China.

Exporting Wealth Production

The 2009 Alliance for American Manufacturing book Manufacturing a Better Future for America describes the dramatic loss of manufacturing jobs in the United States that are the wealth-creating engine of economic growth.

The furniture industry lost at least 60 percent of its production capacity in the U.S. from 2000 to 2008 with the closure of 270 major factories during that period.

U.S. printed circuit board manufacturers accounted for less than 8 percent of global production in 2007, down from 26 percent in 2000, yet printed circuit boards are used in tens of thousands of different products.

The U.S. steel industry produced 91.5 million tons of steel in 2008…China’s steel industry produced 500 million tons in 2008…

There was only one American company among the top 10 worldwide in photovoltaic cell production in 2007. There is only one U.S. wind energy company ranked among the top 10 largest in the world.

The U.S. machine tool industry – the backbone of an industrial economy – produced $3.6 billion in equipment in 2007, less than 5% of global output. Since 1998 U.S. machine tool consumption has fallen by 30 percent.

U.S. luggage producers account for 1% of the American market. U.S. production of high-performance outerwear…accounts for less than 2% of all the outerwear sold to Americans. Only one American manufacturer of ceramic tile remains…Of the 80 major chemical plants either on the drawing boards or under construction, none are in the U.S.

In 2007, only 2% of all new semiconductor fabrication plants under construction in the world were located in the U.S. None of the 1.2 billion cell phones sold in the world in 2008 were manufactured in the U.S.

Approximately 40,000 U.S. manufacturing plants have closed in the seven years ending in 2008

Innovation vs Industrial Policy

Various interest groups are offering one-sided or narrow solutions. An example of a narrow approach is a discussion on jobs by an MIT roundtable titled “The Future of Manufacturing – Advanced Technologies” covered in the March 2010 MIT News.

“To recover from the current economic downturn, it has been estimated that we need to create on the order of 17 million to 20 million new jobs in the coming decade,” noted Hockfield in her opening remarks at the event, which was co-sponsored by the Council on Competitiveness, an industry group. “And it’s very hard to imagine where those jobs are going to come from unless we seriously get busy reinventing manufacturing...”

Hockfield also directly addressed the commonly held notion that the United States cannot compete in manufacturing against low-wage countries, citing the success of Japan and Germany, both of which feature trade surpluses and high wages. “I take this as positive proof that building a strong advanced manufacturing sector is not impossible, but very much worth pursuing…A key hope for progress lies in tapping unprecedented new manufacturing technologies.”

Technical innovation alone will not sustain the US manufacturing industry because of the rapid globalisation of new technology. Technical innovation without an industrial policy serves to create a new level of higher productivity that will cause more unemployment.

Professor Joan Fitzgerald of Northeastern University explains how countries such as Germany are able to compete against low wage countries such as China in “Losing Our Future.” She also contrasts Germany and China’s industrial policies that support green energy jobs to the lack of such U.S. protection.

Germany's soft mercantilist approach favors German firms. Both national policy and the preferences of German companies to use domestic suppliers have led to the development of strong supply chains. While Germany has turned to Chinese and other foreign suppliers of some components, both the government and the industry seek to keep high-end manufacturing in Germany. These policies have put Germany among the world's leading exporters of wind and solar technology. Comparative advantage was created by public policy.

In addition to rules enacted in 2006 requiring utilities to purchase more wind and solar energy, China raised tariffs on imported wind turbines and dramatically reduced import duties on components, many of which are in short supply. To develop its own supply chains, China has gradually increased domestic content requirements for wind-farm developments -- from 40 percent in 1996 to 70 percent since 2004.

…the U.S. needs to pass an energy bill with a strong portfolio standard to create a larger U.S. market for renewable energy. Then we need to combine our energy policy with a coherent industrial policy whereby industries that aim to become global winners thanks to government subsidies do not just produce offshore for global markets but provide good jobs in the U.S.

Further, we need to require more local sourcing of components of foreign wind and solar companies in the U.S. and help our manufacturers retool to fill this demand. And we need to insist that foreign competitors like China play by fair rules of trade. It is committing industrial suicide if we leave our remaining great corporations and our start-ups to negotiate one-sided trade and production deals with nations whose policies are far more strategic than our own.

Main Street Recovery Program

In December 2008, as the economic crisis picked up steam, the Institute for America’s Future, a Washington, DC think tank with broad union support, issued “A Main Street Recovery Program.”

With a deep and long global downturn now more likely, any plan for reviving the economy should be substantial, strategic, and sustained.

Restoring economic growth will require a strong and multifaceted plan. Reviving the financial system itself will require far more than the hastily assembled and badly designed $700 billion bailout passed in September. We must 1) remedy the costly defects in the current plans; 2) put it place a systematic program of real mortgage relief for homeowners, and 3) enact comprehensive reform of financial markets.

Beyond these immediate steps the union-endorsed plan called for $450 billion a year to be invested in green infrastructure projects, infrastructure modernization, aid to states, public education, and research and development. It also called for increasing access and lowering the costs of health care, extending unemployment compensation, and increasing food stamps and other aid to the poor.

This program represented the optimism of the labor-led progressive majority that the change promised by candidate Obama would quickly become government policy. This hope was dashed by the reality that changing the President was, as Obama himself said in Chicago the night of the election, “only the beginning of the change you seek.”

A Permanent Jobs Program

In February 2009 the Chicago Political Economy Group (CPEG) issued “A Permanent Jobs Program for the U.S.: Economic Restructuring to Meet Human Needs.” It posits that the economic train wreck of neo-liberalism provides the political basis for a new economic reconstruction in the US based on a jobs program.

The Program …addresses the underlying structural problems of the real economy. We …believe that a significant and sustained effort to expand long term employment is an essential part of any solution to our larger economic difficulties.

In addition to the current stimulus plans, we propose the creation of 3.5 million new high quality jobs each year for five years.

We propose that the federal government create and/or subsidize private sector job creation in three broad areas:

(1) Investment in public infrastructure such as transportation, educational and health care facilities, and parks;

(2) Current social services, which will include a major upgrading of pay and working conditions of human service jobs such as those in child, elder and health care;

(3) Industries of the future, particularly the areas of energy, agriculture, and other broadly defined “green” technologies.

The CPEG calls for jobs that are “necessary for our country’s economic and social development,” paying good wages with union rights. They would be financed by taxes on wealth and financial transactions, by a reduction in wasteful military spending, and by increasing the money supply. The implementation of the jobs program will require “substantial public mobilization that pressures the national political leadership.”

Whether in the updating of decaying infrastructure, providing needed additional social services in health, education, and human services, or developing forward-looking industries in areas such as green technology, the gap between what the economy does produce and what it could produce and use is significant. We believe the best approach to addressing that gap is a job creation plan.

Our [leaders’] preoccupation with building the financial sector has resulted in an implicit acceptance of the acceleration of deindustrialization… However, instead of investing in high value added production and for displaced industrial workers such as has been done in…Europe, we have passively accepted the loss of jobs, urging education as a cure all for lagging incomes and job opportunities. The result has been that manufacturing, a sector that accounted for more of the GDP than finance in the 1970s, is now a shrunken skeleton…

Energy, its sources, uses, and costs should be at the core of our forward-looking industrial policy. It is clear that, left to their own devices, the major private sector energy companies have little incentive to shift our energy consumption in a direction that is either more efficient or less costly to the consumer.

High-speed rail reduces emissions by 80%.

Public Investment

In December 2009 “Public Investment, Industrial Policy and U.S. Economic Renewal” by Robert Pollin and Dean Baker was jointly released by the Center for Economic and Policy Research and the Political Economy Research Institute. This document further developed the political and economic analysis proffered by the Chicago group.

“Public Investment” gives a detailed economic and historic analysis debunking the right wing’s contention that public investment inhibits rather than encourages private investment. It also shows that manufacturing corporations’ own speculation on Wall Street dramatically exceeded their investment in plant and equipment.

This pattern supports our central point: considering the U.S. economy for roughly the past 30 years, there has been, in general, no shortage of funds available to corporations. The corporations have not experienced financial crowding out. Rather, credit has been abundantly available, as long as the funds were channeled into Wall Street speculation and related forms of financial asset purchases rather than into productive investments.

“Public Investment” defines industrial policy as a key element within a “developmental state.” It examines past and present industrial policy practiced in the US, focusing on the success of the Pentagon in financing and sustaining the development of revolutionary technologies. The paper concludes with a detailed jobs proposal related to modernization and rationalization of the transportation system and development of a green energy system.

The United States has had a long, varied history grappling with the idea and practice of industrial policy, beginning in 1791 with then Treasury Secretary Alexander Hamilton’s proposal to Congress, “Report on the Subject of Manufacturers.” Hamilton’s proposals included measures to manage international trade, subsidies for domestic industries, and investments in infrastructure...

Focusing on the 20th century, various forms of subsidies and preferential tax treatments were provided for agricultural producers, railroads, air carriers, as well as the automobile and housing industries. The Reconstruction Finance Corporation (RFC) was formed in 1932 by the Hoover Administration, as a means of providing subsidized credit for distressed businesses.

The enormous success of Pentagon-based industrial policy in the U.S. raises the basic question: can the only way U.S. policymakers manage industrial policies successfully is for the Pentagon to be in charge? As we have emphasized, the key factor of Pentagon-centered industrial policy is the combination, on a massive scale and over a sustained time period, of R&D investment spending plus the maintaining of a guaranteed market through procurements.

Here then, is the overarching challenge in trying to design industrial policies to advance clean energy, a reconfigured transportation system, and a renewed manufacturing sector. As a technical matter, we do already have the policy apparatus to successfully implement such policies. But we lack the experience and political will to advance this agenda outside of the Pentagon.

VI. Green Jobs Movement

The Committees of Correspondence for Democracy and Socialism Goals and Principles relates the “Crisis of Climate Change and Unsustainable Resources” to jobs:

The depth of the climate crisis demands an end to the exceptional waste of natural and human resources under capitalism. The crisis demands that billions be invested and tens of thousands employed replacing carbon-based fuels with energy drawn from the sun, wind, and geothermal sources. The country needs new energy grids, non-polluting mass transportation, and homes retrofitted to curb carbon emissions.

Blue-Green Alliance

Leo Gerard, President of the USW, the largest US industrial union, is calling for a new ‘green industrial revolution’ to reconstruct the U.S. manufacturing sector. This USW policy is a major effort in its program to rebuild the union’s base and the US industrial working class.

The USW and the Sierra Club have formed the “Blue-Green Alliance” of several hundred environmental, community, and trade union organizations. In Tough Battle Ahead on Green Jobs and Climate Crisis on, Carl Davidson described the May 2010 third gathering of the Blue-Green Alliance in Washington, D.C. Thirty five hundred labor and environmental activists heard speakers from the Obama administration and the trade unions address the issue of climate change and jobs.

The USW blog covered AFL-CIO President Rich Trumka’s remarks at the conference:

With the oil platform explosion that killed 11 workers now spilling millions of barrels of oil into the Gulf of Mexico as a sobering background, AFL-CIO President Richard Trumka told delegates to the 2010 Good Jobs, Green Jobs National Conference:

“Never before has the need been so urgent to produce clean energy, to use energy more efficiently, to prevent climate change and to protect our natural environment.

And not since the Great Depression have so many Americans needed new and better jobs with secure benefits and promising futures–jobs that can’t be off-shored, downsized or downgraded into temporary or part-time positions.”

A green jobs industrial policy must be based on restructuring the carbon energy base that drives the economy so that economic incentives reward energy-saving innovations. Central to this agenda is a tax on the carbon content of coal, oil, and gas that will rise in a planned escalation over a number of years. This will produce a growing revenue stream that can be used to fund capital investment and to raise personal income, stimulating new job-creating consumption of low-carbon products.

The green jobs agenda faces an uncertain future in a Congress dominated by the energy-military-financial complex. The American Power Act of 2010 is another giant give-away to the nuclear, oil, and gas corporations and the commodity traders on Wall Street with crumbs for green jobs. The Carbon Tax Center, which supports a tax on carbon at the source and carbon revenue sharing with US citizens, claims the bill is “worse than nothing.”

The Blue-Green Alliance statement on the American Power Act was more nuanced:

"The BlueGreen Alliance strongly believes that properly crafted comprehensive climate change legislation will achieve the critical goals of creating good jobs, reducing carbon emissions and increasing our nation's energy independence.

"While many provisions we believe essential to creating good clean energy jobs are addressed, we must strengthen critical areas of this legislation. By continuing to constructively work with the U.S. Senate, we can achieve a stronger American Power Act that achieves our goals of creating millions of clean energy jobs...

The Green Jobs movement is an important movement that addresses climate change, industrial policy, and the jobs crisis. As Davidson summarizes in his article:

…the ‘Good Jobs, Green Jobs’ conference and the Blue-Green Alliance behind it, is part of a new historic bloc against the GOP, Blue Dog Democrats, and the far right. Its core is a three-way alliance of trade unions, environmentalists, and advocates for inner city youth and the unemployed. It reaches up to include top officials of the Obama administration, Members of Congress, leaders of ‘high road’ green industries, and state and city government.

At the May 6, 2010 Steelworkers Rapid Response conference, USW members mobilized to lobby Congress to pass the “SEAM” Act, HR 5041. This act would provide $5 billion in credits to build and install solar or wind energy facilities using domestic steel and other materials, a first step in a green jobs industrial policy.

VII. The Full Employment ‘Public Option’

Unemployment Is a Necessary Feature of Capitalism

In his 2002 book After Capitalism, Loyola University Professor of Philosophy David Schweickart writes:

If aggregate demand declines, which it will if average wages decline, which they will if the search for low wages dominates the movement of capital, then production – and hence employment – will also decline. That is to say, if the search for lower wages comes to dominate the movement of capital, the result will be not only a lowering of worldwide wage disparities but also a lowering of total global income.

Unemployment is not an aberration of capitalism, indicating that it is somehow not working as it should. Unemployment is a necessary structural feature…Unemployment is the invisible hand – carrying a stick – that keeps the workforce in line.

Full Employment as Social Policy

To the extent that efforts to create jobs rely on stimulating private enterprise, the goal of full employment is unattainable. Today’s neo-liberal deficit hawks believe that full employment prevents monetary stability, and undermines bank profits. They are determined to sacrifice the stability of society for profit stability for the wealthy. Because of this, the green industrial policy proposals must be supplemented by an employer of last resort (ELR) program, so that no one is left jobless.

Our conception of employment must expand the personal, social, and economic frameworks to include the human rights framework. The right to work is a human right. The people, acting through the government as a last resort, can provide full employment to all willing to work. The US government should adopt a policy of full employment as a social and economic necessity. This principle should be the foundation of new full employment legislation that creates an ELR program.

An ELR program serves as the “public option” for those who cannot find private employment. It does not substitute for stimulus programs that incentivize private hiring. Because ELR programs put all the jobless to work, tax revenues and aggregate demand are increased. Social programs for the unemployed and poor are greatly reduced or eliminated. These factors make the cost of a model program approximately one half of 1% of US GDP.

In The Employer of Last Resort Programme a paper for the U.N. International Labor Organization (ILO), L. Randall Wray discusses the social and economic benefits of Government as employer of last resort. He draws on the experience of Argentina and other successful employer of last resort (ELR) programs.

One straightforward way of ensuring that any person who is able and willing to work can [work] is through an “Employer of Last Resort Programme” (ELR). An ELR is a direct job creation programme that provides employment at a basic wage for those who cannot otherwise find work. It is not meant to be an emergency programme or a substitute for private employment, but rather a permanent complement to private sector employment.

…an ELR programme is more effective and preferable than “Keynesian pump-priming”, which tries to stimulate full employment by raising aggregate demand through investment incentives, tax cuts, and government spending. With ELR unemployed workers are employed and their spending has multiplier effects on the economy which boost aggregate demand and facilitate their incorporation into the private sector labour market. Because ELR ensures that deficit spending is at the correct level to achieve full employment, there is no risk of inflation. Moreover, because it is an anti-cyclical policy, macroeconomic stability is improved.

…only government can guarantee the right to a job because no capitalist society has ever operated at anything approaching true, full, employment on a consistent basis without direct job creation on a large scale by government. Further, the burden of joblessness is borne unequally, always concentrated among groups that already face other disadvantages...Finally, only the government can offer an infinitely elastic demand for labour (offering to hire all who cannot otherwise find employment) because it does not need to heed narrow market efficiency concerns...Government can take a broader view to include promotion of the public interest, including the right to work. For these reasons, government should and must play a role in providing jobs to achieve social justice.

A universal ELR program—which takes anyone who is ready and willing to work—is the only type of program that can ensure that the human right to employment is continuously met. If the ELR program wage is a “living wage”, it also helps to ensure that other human rights are met—by providing sufficient income—at least for those who are ready and willing to work. A properly designed ELR program will not only produce socially useful goods and services, but it will also promote feelings of self-worth and accomplishment among program participants.

Wray’s paper continues with a study of the economic, monetary, and fiscal implications of ELR and a detailed analysis of the ELR program in Argentina.

VIII. Finance Capital

The enormous growth of finance capital and the globalization of production are the interdependent dynamic that threatens the survival of civil society and democracy in all countries. Financialization has radically diminished the historic role of industrial capital and industrial unions as a determinant of national industrial policy. This is especially true in the US where industrial unions are weak compared to those in the Eurozone and in the socialist market economies.

The above chart shows that finance capital represents almost 75% of the capital assets of the world’s 2000 largest corporations as of 2008.

Finance Capital

In his article, “Critical Globalization Studies: An Empirical and Theoretical Analysis of the New Imperialism,” published in the April 2010 issue of Science & Society, Christian Fuchs of the University of Salzburg discusses current data on the dominance of finance capital in the global economy. He finds that finance capital continues to control almost all of the money capital, which gives them huge economic power for controlling the economy. He writes:

Its assets are so large that it has the power to influence all other economic sectors. Since the beginning of the 1980s, finance capital has increased its influence, importance, and concentration ...The emergence of liberalized global financial markets has enabled these developments.

Fuchs explains that the liberalization of global finance increased short-term profits. At the same time it resulted in instability of most financial instruments, precipitating the current crisis.

Excellent examples are sub-prime lending and mortgage-backed securities, high-risk financial mechanisms that have been at the heart of the financial crisis that originated in the financialization of the US housing market and hit the world economy in 2008.

Fuchs concludes that “…the economic crisis [of 2008] did not undermine the inner-capitalist hegemony of financial capital.”

Financialization

The Committees of Correspondence for Democracy and Socialism analyzed financialization as the basis of the current economic crisis in Goals and Principles:

With the weakening of the industrial structure, financialization has become capitalism's cash cow. Reduced corporate taxes increased the after-tax rate of profit, financed by additional public debt. Investments in production of goods and services were increasingly shifted to shady financial instruments with money being created solely from debt, with no new value created from real production. The surplus value appropriated by capital no longer found outlet in material production and spilled into financial schemes and speculative bubbles, spreading pain and upheaval throughout the global economic system.

The banks intensified the crisis by withdrawing support from key productive sectors of the US economy, forcing them to radically downsize, suddenly terminating thousands of workers. The subservient media and Congress pilloried US auto manufacturing, while contracts with autoworkers and retirees were abandoned. US workers, homeowners, and taxpayers suffered the losses collectively and individually.

Make Wall Street Pay

The growth of the financial sector at the expense of productive industry is the single most important force behind the growth of income and wealth inequality over the past three decades. It has fueled growing unemployment, helped atomize the working class in the developed countries, marginalized trade unions, and consolidated power in the hands of the most reactionary political sectors.

Finance capital has the power to crash the economy, extort the wealth of the nation, and mobilize Congress to oppose the demands of the people for relief. It has the power to wage war across the globe and manufacture media consent. Full employment and social stability require the taxation, regulation, control, and eventual social ownership of finance.

Protesting Bonuses and Bailouts on Wall Street

The AFL-CIO is mobilizing its members to focus public opinion on this issue. “Make Wall Street Pay” protests were held across the nation from March through May 2010 at major banks demanding taxes on financial transactions and executive bonuses to pay for a new jobs program. The New York Times reported:

This month, the A.F.L.-C.I.O., the nation’s main labor federation, has organized 200 protests nationwide to publicly shame bankers, calling for new taxes on bankers’ bonuses and on speculative short-term financial transactions — in the hope of collecting tens of billions of dollars to finance a job creation program.

“They played Russian roulette with our economy, and while Wall Street cashed in, they left Main Street holding the bag,” Richard L. Trumka, the A.F.L.-C.I.O.’s president, said last Friday at a rally in Philadelphia. “They gorge themselves in a trough of taxpayers’ dollars, while we struggle to make ends meet.”

A key demand of the current AFL-CIO agitation is a financial transaction tax (FTT), originally called the ‘Tobin Tax’ after its author, and now popularly known as the ‘Robin Hood Tax.’ The FTT is a progressive way to fund a full employment program and is a powerful tool to combat the cancerous growth of finance capital.

An FTT of one quarter of one percent on all financial transactions in the U.S. would generate an income of $600 billion per year according to estimates of the Chicago Political Economy Group. These revenues would be sufficient for the government to transition to a green industrial economy and guarantee a job to all who are willing to work.

The FTT is currently a subject of debate in several European countries. It must be imposed by agreement of the countries with major financial centers to prevent the banks from moving their trading operations offshore to avoid the tax.

The National Union of General and Public Employees, one of Canada’s largest unions is urging passage of the financial transactions tax by Parliament.

Clancy says action to support a global tax on financial transactions is needed now, partly because the G8 and G20 meetings offer a serious opportunity to advance the issue and partly because the tax is badly needed to encourage economic recovery and to prevent another global financial meltdown from occurring.

"Considered from this perspective, we believe that a financial transactions tax (FTT) is an economic policy initiative that Canada must support," Clancy writes.

The proposed Robin Hood tax would exclude most consumer transactions but levy a small tax of one twentieth of 1% on all financial market transactions such as the trade of stocks, bonds, foreign exchange and derivatives.

Social Ownership of Finance

The most salient dynamic of the present economic crisis is the inability or unwillingness of the banks to finance productive industry or small business in the US in order to put revive the economy.

The neo-liberal Republican and Blue Dog Democrats in Congress oppose any use of the public treasury to stimulate demand. Congress failed to pass legislation before the 2010 Memorial Day recess that would extend unemployment benefits, subsidize COBRA healthcare benefits, maintain Medicare compensation, and subsidize school funding. But they did pass $53 billion for global war.

Finance capital stands as the political roadblock to progress both in the economy and in politics. A rational economic system with an industrial policy that supports manufacturing and full employment, health, and education of the people must have social ownership and control of finance. The ‘Robin Hood’ Tax is a key step to diminishing the power of these banks to block recovery.

The Banking “Public Option”

The experience of the Bank of North Dakota shows that social control of finance is both possible and healthy for the economy. Under state law the bank is the State of North Dakota doing business as the Bank of North Dakota. All state and local government agencies are required to place their funds in the bank. Previously, all public corporations in the state were also required to deposit their funds in the bank, but an initiated measure in 1919 eliminated that requirement.

In the general sense, the Bank of North Dakota is a socialist bank. As such it has contributed to the economic and social stability of the state. It plays the role of a central bank backed by the general fund of the State of North Dakota itself and the taxpayers of the State. The bank also guarantees student loans, business development loans, and state and municipal bonds.

The bank had almost $4 billion in assets and a $2.67 billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made $58.1 million in profits in 2009, setting a record for the sixth straight year. During the last decade, the bank funneled almost $300 million in profits to North Dakota's treasury.

An article recently named the bank “Banking’s Public Option.” A Mother Jones magazine article called it the envy of Wall Street. Public ownership of banks through state governments would cut the power of the Wall Street oligarchy and help secure the financing for an economic recovery with full employment.

IX. Problems of Globalization

Globalization not only means every nation faces an offshore assembly line under the command of global financiers. It also means a global unemployment crisis that causes a diaspora of thousands of displaced workers seeking employment in wealthier countries.

Global Unemployment

In a January 2010 press release from Geneva, Switzerland, the International Labour Organization (ILO) reported that global unemployment had reached 212 million in 2009, the highest level on record.

The report says that coordinated stimulus measures have averted a far greater social and economic catastrophe; yet millions of women and men around the world are still without a job, unemployment benefits or any viable form of social protection.

“As the World Economic Forum gathers at Davos, it is clear that avoiding a jobless recovery is the political priority of today” said ILO Director-General Juan Somavia. “We need the same policy decisiveness that saved banks now applied to save and create jobs and livelihoods of people. This can be done through strong convergence of public policies and private investment”.

Global Jobs Pact In 2009, upon adoption of the Global Jobs Pact the ILO Director stated: “Urgent action is required now to boost economic recovery and job creation whilst preparing for a greener, more balanced, fairer and sustainable global economy. This pact provides a path crafted together by all members of the ILO and based on tried and tested policies.”

The ILO will hold its annual International Labor Conference in June 2010 in Geneva at United Nations offices one year after the adoption of the Global Jobs Pact. A High Level Panel at the annual Conference will discuss the Pact with regard to achieving the ‘Millennium Development Goals.’

With only five years remaining to achieve the Millennium Development Goals, the UN Secretary General has called a special summit meeting in New York for September 20-22, 2010 to accelerate progress.

The global economic crisis also threatens to destabilize progress, as a better future for the world’s most vulnerable people could fall victim to contraction of trade, remittances, capital flows and donor support. At a time when investing in development is more vital than ever to ensure social stability, security and prosperity, donor governments are called upon to renew rather than revoke their commitment to reaching the Goals.

The United States is a signatory to the UN Millennium Development Goals, in which it pledges to slash poverty, hunger, disease, maternal and child deaths, and provide jobs to all. US workers should join workers around the world in demanding implementation of the goal of full employment by the UN member states in connection with this summit.

Global Assembly Line

In his 2002 book After Capitalism, Loyola University Professor of Philosophy David Schweickart predicted the crippling effect of globalization on the effectiveness of government stimulus spending to solve the problem of unemployment:

There is another problem with the Keynesian solution, which is more acute now than it used to be. Keynesian deficit spending depends on a “multiplier effect.”

However, if an economy is wide open to imports, which contemporary capitalist economies increasingly are, then the multiplier effect is attenuated…Hence to reinflate the economy, a government must go much deeper into debt than in the past. Since the costs of this debt must be borne by the nation’s citizenry, while the good effects spread globally, governments, not surprisingly, are now reluctant to apply the Keynesian remedy; when they do, it no longer works so well.

In November 2009 USW President Leo Gerard lambasted Congress and the Department of Energy for spending ARRA stimulus funds on wind power projects that used foreign manufacturers. It was reported in various internet news sources.

Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study by the Investigative Reporting Workshop found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

"Today, we are demanding the Obama administration suspend this program immediately," said Sen. Chuck Schumer, D-N.Y. The senators are especially alarmed about a project highlighted by ABC News in West Texas that uses turbines manufactured in China. The Texas wind farm is eligible for up to $450 million in stimulus funds.

The global assembly line means that US problems of employment and economic stability cannot be solved without measures that replace ‘free trade’ with fair trade policy based on cooperation.

Immigration and Unemployment

As part of its effort to build international solidarity, the USW is actively forming alliances with union organizations in other countries. It is using its resources to support industrial workers in South America who face harsh repression of their efforts to organize in the shops and mines of the global corporations.

Central to building a movement for full employment is unity in combating efforts of the right wing to divide the working class with appeals to xenophobia and racism. The right seeks to blame joblessness on immigrant workers from Latin America who have been driven from their own lands by NAFTA trade policies.

The Immigration Policy Center, the research and policy arm of the American Immigration Council, issued a series of reports, “Untying the Knot: Unemployment and Immigration.”

Opponents of immigration reform frequently argue that immigrants “take” jobs away from many native-born workers, especially during economic hard times. Yet an analysis of data from the U.S. Census Bureau clearly reveals that… recent immigrants comprise 3.1 percent of the population in counties with the highest unemployment rates (over 13.4 percent). But recent immigrants account for a higher share of the population (4.6 percent) in counties with the lowest unemployment rates (below 4.8 percent).

One of the most contentious issues…is whether or not the presence of immigrants in the U.S. labor force has a major adverse impact on the employment prospects of African Americans. However, data from the U.S. Census Bureau reveal that…in the 10 states with the highest shares of recent immigrants in the labor force, the average unemployment rate for native-born blacks is about 4 percentage points less than in the 10 states with the lowest shares of recent immigrants.

…unemployed natives and employed recent immigrants cannot simply be “swapped” for one another since unemployed natives and employed immigrants tend to have different levels of education, live in different parts of the country, and have experience in different occupations and different levels of work experience.

The fight to defend our society and improve our living conditions will be a complex global battle. Workers must expand cooperation across borders to solve common problems that result from unfair trade policies. US workers can defend their own jobs by recruiting undocumented workers into their unions and defending their rights as workers.

Trade with China

US trade with China has the greatest impact on US manufacturers and industrial workers and it is a focus of efforts by the USW. The USW has won two major disputes with China over subsidies that are illegal under WTO rules. As a result of the disputes, tariffs were imposed on steel pipe and rubber tires imported from China.

In a Spring 2010 article in the business magazine Capacity, USW President Leo Gerard wrote:

In a victory for the domestic steel industry and its workers in the Ohio Valley, the U.S. government has levied duties of up to 16 percent on imported Chinese pipe used in the oil and natural gas industries.

China’s massive manipulation of its currency and illegal subsidies has continued for years, giving it an unfair advantage against U.S. manufacturers. Its labor and environmental protections are grossly inadequate. We need to insist that China abide by the rules they agreed to after joining the World Trade Organization (WTO) in 2000...

We should do business with China, but we will not be pushed around or talked to death while they continue to steal our markets.

The United States must confront the challenges of globalization. But we cannot do so by ignoring the deleterious impact that our current international trade and economic policies are having on our nation’s productive capacities, and on the standard of living of the vast majority of our citizens.

The USW has formed a political alliance with some US manufacturing corporations called the Alliance for American Manufacturing. The AAM seeks to overturn NAFTA and punish China for unfair trade. In the Fall of 2008 three hundred retired steelworkers, union activists, and community leaders attended a AAM sponsored town hall meeting in Aliquippa, PA. The attendees were welcomed by USW officials and offered a Keep It Made in America program that centered on China’s unfair trade policies.

But the essential problem is the policy of global finance capital and its control of US trade policy and the World Trade Organization. The ability of the trade unions to build a progressive majority to confront finance capital over trade policy will depend on their ability to convince US workers to support fair trade and international solidarity. This will cause tension with the manufacturers in the AAM. They will not bite the hand that feeds them by opposing the neo-liberal ‘free trade’ policy of the bankers.

Border Tax Equity

Under the rules of the World Trade Organization (WTO), direct taxes, such as corporate income taxes, if rebated or refunded upon the export of goods, are viewed as export subsidies and prohibited. However, indirect taxes, such as sales taxes and Value Added Taxes (VAT), may be rebated or refunded upon the export of goods and such rebate is not defined as constituting a subsidy.

The disparate treatment of taxes at the border detrimentally affects United States agricultural producers, manufacturers, and service providers, thus depressing employment. US exporters are subject to double taxation by paying both direct US taxes on domestic production and an indirect border tax on their exported product or service to the importing country. Foreign exporters are refunded the indirect VAT taxes which effectively subsidizes their exports.

The top twelve countries exporting goods to the U.S. with a VAT as part of their taxation and trade policy constitute 70% of total U.S. imports. The National Textile Association points out that foreign export to the US encounters minimal tariffs averaging 1.3% and no VAT, while US exports face tariffs averaging 40% plus VATs averaging 15.7%.

US manufacturers represented by the American Manufacturing Trade Action Coalition (AMTAC) supports HR2927, the Border Tax Equity Act, to stem the flow of manufacturing jobs offshore.

Manufacturers in the United States are at a great competitive disadvantage to foreign manufacturers as a result of the disparate treatment of tax systems under the World Trade Organization (WTO) rules. With the exception of the US, nearly every developed nation in the world employs some type of border-adjusted consumption tax, also known as value added tax (VAT) on manufactured goods…VAT taxes rebated on exports and assessed on imports resulted in an estimated $474 billion “border tax” disadvantage to US producers and service providers in 2007 alone.

AMTAC believes the border tax disadvantage is the greatest contributing factor to the more than $4.7 trillion in US foreign trade deficits racked up from 2001 to 2008.

The neo-liberal Republican leadership is enforcing discipline on Congresspersons who initially endorsed the Border Tax Equity Act according to a May 2010 article carried by several financial publications.

Facing withering and unfounded criticism from the right, a trio of Republican lawmakers have removed their names from a bill that is a key piece of trade legislation that would have gone a long way toward remedying the border tax inequities that hamper the U.S. due to the fact that the value-added tax (VAT) is utilized by most of America’s trading partners.

The bill “appeared to be one such solution to protect American jobs by ensuring American manufacturers received rebates to neutralize the discriminatory effects they face by border taxes,” the three Republicans said in a joint statement. “While the main intent of the bill is to protect American jobs, we have withdrawn our support after further examination revealed the legislation could be at odds with our conservative principles.”

The glaring contradiction between the interests of global finance capital versus US industrial workers and small businesses is most evident in US trade policy. This contradiction also illuminates the narrow financial interest that controls the Blue Dog Democrat and Republican majority in the United States Congress.

X. Structural Reform

The regular succession of jobs crises, the depth of the current crisis, and the likelihood of another crisis before a full recovery, are symptoms of an unstable system. The Committees of Correspondence for Democracy and Socialism describe “capitalism today” in Goals and Principles published in July 2009:

Today, capitalism is a mature system that is unable to utilize the powerful creative forces it has developed to serve human progress. As technological developments increase the ability of the productive forces to meet all human needs, capitalism’s implacable quest for ever higher profits renders it unable to place these productive forces at the service of society.

Fewer and fewer workers are needed to produce the necessities of life. This results in higher unemployment instead of fewer hours of work. Production is increasingly socialized while the wealth created by that production is privatized into fewer hands. That is the core contradiction of a system whose relations of production can no longer accommodate advances in its productive forces without impoverishing working people in growing numbers

'New Vision of Capitalism'

Ending the chapter on the social costs of deindustrialization to U.S. workers, the AAM’s Manufacturing a Better Future for America concludes:

Unfortunately, public policy toward globalization, outsourcing, technological change and unemployment has largely remained wedded to discredited neo-liberal economic concepts.

We should advocate a new vision of capitalism that takes social and human capital every bit as seriously as it does materials and money. And we should advocate policies that encourage forms of economic development that build strong communities as well as strong companies.

The Obama administration is a transitional phase overseeing conflicting forces, on one hand trying to return to the past, on the other seeking change from the past. The exhausted neo-liberal regime of capitalism is attempting to rescue itself from the disaster it has created. As capitalism tries to reinvent itself, sustainable alternatives to capitalism can take root if the seeds of structural reforms are planted now.

Whether the future is a “new vision of capitalism” or a vision of “after capitalism” the struggle for full employment is the way ahead. A more secure future can be achieved by working for structural reforms that empower workers and their communities in the global economy.

The Six-Hour Work Day

The movement for an eight-hour day originated among Chicago workers in 1864. It eventually became a global movement, winning legislative sanction in the U.S. with the 1938 Fair Labor Standards Act.

In his book Kellogg’s Six-Hour Day, Benjamin Hunnicutt describes the innovative response to the jobs crisis of the Great Depression by W.K. Kellogg at his Battle Creek, Michigan cereal plant. While workers were losing their jobs across the nation, on December 1, 1930, Kellogg cut the workday from eight to six hours and added a fourth shift. He raised wages over the next two years by 25%.

During World War II, Kellogg followed the government mandate for longer hours but promised to return to the six-hour day. By the end of the war, bankers had gained control of the Kellogg Company and opposed returning to the six-hour day.

The workers, mostly women, fought to keep their six-hour shifts until 1985, and preserved the century-old vision of "progressive shortening of the hours of labor." The book describes the economic, health, and social benefits enjoyed by those working a six-hour day.

The 30-hour workweek was raised at least as early as 1922 during a national strike of coal miners. In 1932 the Black-Connery bill was introduced in the U.S. Senate. It would have required employers to pay time and a half after 30 hours; it also established a minimum wage and set limits on child labor.

In 1934 both the San Francisco longshore workers’ strike and the national textile strike kept the 30-hour week demand alive. Other workers during the 1930s struck for a 35-hour week.

The Cold War attack on the New Deal gains of workers was codified when President Truman signed NSC-68. This document outlined the Cold War military and economic buildup, which encompassed the control of the US workforce and effectively countered the growing demands of US workers for a six hour workday. In his 1951 message to Congress, Truman stated:

In terms of manpower, our present defense targets will require an increase of nearly one million men and women in the armed forces within a few months, and probably not less than four million more in defense production by the end of the year. This means that an additional 8 percent of our labor force, and possibly much more, will be required by direct defense needs by the end of the year. These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries.

Since the 1970’s, the U.S. workday has lengthened and productivity of workers has skyrocketed. Instead of shorter hours, workers are faced with growing unemployment and part-time work that threatens the fabric of society while 35% of production capacity lies idle. Workers on the job are stressed due to intensification of the labor process. Research by Paul Landsbergis at State University of New York showed that workers in privatized sectors experienced a 45% increase in heart disease, and the health disparity gap is growing between low and high income workers.

Several nations have imposed limits on working time in an effort to combat unemployment. This has been done both on a national level, as in France's 35-hour workweek, and on the company level, as in the agreement between Volkswagen and the German Metalworkers Union to temporarily reduce the workweek to 29 hours to preserve jobs. As of 2004, the OECD reports that US workers average 1777 hours per year, British workers 1652, German workers 1362, and French workers 1346.

National Health Insurance

In January 2009, the California Nurses Association released an econometric study of the US health care industry and the impact of converting to a national single payer healthcare system. “Single Payer/Medicare for All: An Economic Stimulus Plan for the Nation” by the Institute for Health and Socio-Economic Policy analyzed data published by the Center for Medicare and Medicaid Services and the US Department of Health Medical Expenditure Panel Survey using the IMPLAN input-output model that is widely used by government planning bodies.

The study showed that a Medicare for All system covering all US residents, as embodied in the Conyers Bill – HR 676, would create 2.6 million permanent new jobs. It would stimulate $317 billion in new business revenue, over $100 billion in wages, and $44 billion in new tax revenues. The net cost of this stimulus to the US government is $63 billion, only 10% of the cost of the Obama administration’s ARRA. Overall, every direct healthcare dollar creates nearly three additional dollars in the U.S. economy.

This stimulus plan was endorsed by 93 members of the US Congress and, according to several polls, has the support of from 59% to 65% of US residents. Once Congress took up the task of writing healthcare legislation both President Obama and Congressional leaders stated that Medicare for All was “off the table.”

National health insurance as proposed in HR 676 currently enjoys widespread acceptance among the U.S. populace. Enacting this program would deprive the health insurance industry, one of the most consistent profit centers for the financial oligarchy, of $113 billion of capital assets returning a profit margin of 15.6%. This value would be transferred to working families as low cost healthcare, and it would relieve U.S. manufacturers of the competitive cost disadvantage of employer-financed healthcare.

Worker Owned Production

Cleveland is breaking new ground with worker owned service industries. The worker owned cooperatives are new innovations in the structure of capital ownership that avoid the historic pitfalls of cooperatives. Each worker owns an equal voting share in the company. These shares can only be sold back to the company. The banks cannot gain control of these cooperatives.

The Evergreen Cooperative Laundry and Ohio Cooperative Solar were established in the heart of the mostly African-American community hard hit by long-term unemployment. Local businesses granted loans to the cooperative and local institutions agreed to buy laundry services or solar panel installations from the cooperatives. Unemployed workers were selected, trained, and educated to become worker-owners of the new enterprises. As well as their dividends from operations, the workers are building wealth through their ownership interest in the cooperative.

Worker owners on the job at new Cleveland cooperatives

The structure is modeled on the Mondragon Cooperative Corporation in Spain, an innovative form of worker ownership of commodity producing enterprises, born in the Basque region of Spain in a period of economic devastation under the dictator Francisco Franco. From a small cooperative producing paraffin heaters it has grown into the seventh largest enterprise in Spain with 120,000 worker owners.

Based on the wealth accumulated from commodity production, the workers were able to fund second level cooperative service enterprises, retail businesses, banks, hospitals, and colleges. The colleges are incubators for high tech innovation in products and the production process.

In 2009 the USW signed a cooperation agreement with the Mondragon Cooperative Corporation to undertake the establishment of worker owned manufacturing enterprises in the United States. “We see today’s agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada,” said USW International President Leo W. Gerard.  “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants.  We need a new business model that invests in workers and invests in communities.”

The Employer of Last Resort program in Argentina has been an incubator for worker-owned coops. Workers in the Argentine ELR program are paid for only four hours labor per day. Many began working longer to produce and sell their goods or services cooperatively and start their own enterprises.

XI. Political Realignment

Jobs or Income Now!

The battles in the 101^st Congress around the economic stimulus, health care reform, expanded rights of workers to organize unions, reform of financial institutions, for a humane immigration policy, and for extension of unemployment benefits all represent the first wave of reform efforts following on the election of President Obama.

The social forces now arrayed around the agitation and proposals for jobs can be the basis for a national campaign in support of new full employment legislation that carries forward the demand originated by Dr. Martin Luther King, Jr. in the 1960s for “Jobs or Income Now.”

In 1978 Congress passed the Humphrey-Hawkins Full Employment and Balanced Growth Act establishing a maximum unemployment rate of 4%. This bill was the last gasp of the New Deal generation’s struggle for economic justice. Its passage occurred at the beginning of the neo-liberal campaign to reverse the New Deal policies.

Thus, finance capital began the neo-liberal era by shuttering the major steel producing centers in the US. By 1985 the Chicago Save Our Jobs committee and the National Congress of Unemployed Organizations responded to the decimation of the US steel industry by presenting a petition for a jobs bill to Congressman Charles Hayes.

Hayes introduced the Income and Jobs Action Act of 1985, which required the President to submit a plan to Congress for federally funded public works jobs. The bill provided for an equivalent income for unemployed workers. Hayes gathered sixty-six cosponsors and proceeded to hold hearings across the country including at the Croatian Club in Aliquippa, PA in April 1986, that was supported by the Beaver County Labor Council and the Beaver County Fight Back Coalition.

Political Realignment

Most current proposals for a new industrial policy seem to overlook the reality that unemployment and crisis are a means of expanding economic control and increasing profits by finance capital. They don’t address the conflicting class interests of our society or come to grips with the question of how these eminently logical programs will come to be implemented without a political realignment.

A movement for full employment is a key element to developing a mass base for a political realignment in Congress. New legislation is needed modeled on the Income and Jobs Action Act of 1985 that makes government the employer of last resort. This new bill should be expanded or packaged with legislation to include a shorter workday, support for manufacturing jobs, preference to worker-owned enterprises, national health insurance, and fair trade, funded by a tax on financial transactions.

A key political goal of the movement for full employment is the removal of the ‘tax cut’ and ‘deficit fetish’ Republicans and Blue Dog Democrats from Congress. These politicians oppose jobs legislation and aid to the jobless. Their objectives are to slash social security and Medicare benefits and raise taxes.

This goal requires new thinking about the two-party system that still traps many in the progressive majority. Progressive Democrats and progressive independent candidates need the financial and shoe-leather support of the trade unions and the jobs movement to break the grip of the neo-liberal majority in the House and Senate.

Youth Shape the Future

The head of the ILO, Juan Somavia commenting on the jobs crisis said: “Each year, the global labour market has expanded by 45 million people, therefore recovery measures must target job creation for young men and women entering the labour market for the first time.”

In his paper on Employer of Last Resort, L. Randall Wray states: “young people have more difficulty in labor markets than adults…labor force participation rates have actually fallen over the past decade, especially for youth.”

In July 2009, the Bureau of Labor Statistics (BLS) reported that the youth unemployment rate in the United States was 18.5%, which is the highest ever rate on record. The youth unemployment rate includes people aged 16-24, and was first tracked in 1948.
The number of young people employed in the month of July 2009 was just 51.4%, the lowest July rate on record. July is traditionally the peak month for youth employment, due to the fact that many youths are off from school and looking to earn money.

Millions of young people are now entering the workforce annually with poor prospects for finding a job. This prevents the young generation from integrating with the older generations that are employed and heightens social tensions. The AFL-CIO reports:

Since the current recession began in December 2007, some 1.3 million young workers have left the workforce, while the participation rate of workers ages 55 and older increased, according to a new report by the Economic Policy Institute (EPI).

This means many older workers are not retiring or are re-entering the labor force because they have suffered a sharp decline in retirement security, say authors Kathryn Edwards and Heidi Shierholz. 

At the same time, workers ages 16 to 24—who face an unemployment rate of 18.9 percent, compared with 6.8 percent for workers ages 55 and older—are having a hard time finding jobs. Many who do find work end up in low-paying jobs with few or no benefits.

A militant movement for full employment must be based on the young generation, which has the most at stake in finding a job and building for a future.

The AFL-CIO has recognized the need to organize young workers and is holding an AFL-CIO Youth Summit in Washington, DC in June 2010. The Young Worker Summit advertises the opportunity for young workers to socialize, share ideas, learn from experts, and network with the progressive movement.

The key to building this effort into a long term success is engaging local labor councils in building youth activity within the unions and relating to the vast army of young unemployed.

Social support networks of young unemployed like the 405 Clubs can become venues for engaging the unemployed around the policy and political issues of unemployment in addition to their self-help and networking functions.

The Young and Unemployed blogspot asks the question for all unemployed youth:

So once again, what is a young unemployed guy to do? Being that most my ideas involve comical and at times illegal means of generating revenue I thought I'd just leave it up to your opinions.

Maybe someone out there has a good idea for me to bring in some cash? Let me know your ideas and if there's a chance I'll live through it I'll give it a go!

The jobs “public option” or employer of last resort is an important program that assures young workers that a job is waiting to give them the opportunity to learn the skills needed to advance to private employment.

XII. Conclusion

A 2007 UNICEF study shows that the United States has the highest child poverty rate among industrialized nations. A report issued by the Organization for Economic Co-operation and Development (OECD) in 2008 revealed the United States has the third worst level of income inequality and poverty among the group’s 30 member states, ranking above Mexico and Turkey.

Millions of new workers face economic instability, lower wages, joblessness, home foreclosures, unaffordable healthcare, and hunger. A broad social movement must respond with the demand for full employment and economic democracy as the centerpiece of a progressive agenda that can united the progressive majority to defeat neo-liberalism and challenge the dominance of finance capital.

Full Employment The US government must guarantee the human right to a job as the employer of last resort. Legislation for full employment must be at the top of the progressive agenda. A new bill that funds a full employment program and reduces working hours should be introduced in the 112^th Congress. The labor movement can build a strong allied social movement by organizing the unemployed, especially young workers, to fight for full employment legislation.

Industrial Policy Rebuilding a substantial manufacturing sector must replace currency manipulation and debt as a basis for consumption. A successful industrial policy must include reduction of carbon fuel consumption and conversion of military to civilian production. The neo-liberal regime of “free trade” must be replaced with a “fair trade” policy that protects the jobs of US workers with equitable trade rules. Fair trade supports environmentally sustainable global growth and respects the human rights of all workers.

Socialize Finance Every nation must gain sovereignty over finance capital, the source of speculation, economic chaos, political reaction, inequality, and international tension. The financial transaction tax can be a first step in reducing their power and transferring wealth to the people by funding a full employment program. Public investment should target worker-owned enterprises. Federal policy should support state-owned banks. The vast socially produced wealth controlled by a handful of unscrupulous banks must become the social property of the people. The accumulated wealth of society must be invested to benefit society with full employment as a primary goal.

Peace and Prosperity The never-ending war begun in the 1950’s has always been a war against democracy that represses the aspirations of American workers. The austerity imposed by our war economy is a major roadblock to social progress and full employment. Peaceful relations with other nations are essential to national and global prosperity. Slashing military spending and ending the policy of force abroad is the keystone to a full employment economy.

Review: Shadow Elite

by Janine Wedel

The New 'Flexian'

Transnational Elites

By Ariana Huffington

Huffington Post

My first HuffPost Book Club selection of 2010 is Janine Wedel's Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market. It's a gripping, disquieting book that exposes and explains why it's been so hard to bring about any real change in our country -- why Washington no longer seems capable of addressing the problems our nation faces. Fingers have been pointed at everything from gerrymandering to partisan polarization to the misuse of the filibuster. But, according to Wedel, the real problem is much deeper -- and more disturbing -- than any of these.

As she writes in Shadow Elite, a new "transnational" class of elites has taken over our country: "The mover and shaker who serves at one and the same time as business consultant, think-tanker, TV pundit, and government adviser glides in and around the organizations that enlist his services. It is not just his time that is divided. His loyalties, too, are often flexible."

Wedel dubs this new class of influencers "flexians," and the closed system they've created for themselves the "flex net." She attributes their power, among other factors, to the "embrace of 'truthiness,' which allows people to play with how they present themselves to the world, regardless of fact or track record."

2010-01-06-wedel.jpgWedel cites retired Gen. Barry McCaffrey as one example of this new international super-class -- a member of the shadow elite that serves in government posts, moves to the private sector, goes on TV, and collects a healthy paycheck from companies that benefit when the power broker's advice is taken. McCaffrey was one of the Pentagon-pundits-for-pay exposed by two Pulitzer-winning front-page stories in the New York Times last year. Yet even as I write this, he's on TV giving us his wisdom on how to fight terrorism. Because, as Wedel points out again and again, members of the shadow elite keep morphing into their next incarnation no matter how often their conflicts of interest and their undermining of the public interest are revealed.

Another key flexian, former Treasury Secretary Robert Rubin, is on full display right now in Newsweek's special "Issues 2010" edition, in which he pens a lengthy essay on "Getting the Economy Back on Track," failing, in a very flexian way, to explain or acknowledge -- let alone apologize for -- the key role he played in getting the economy off track in the first place.

Rubin's resume is the personification of the flex net in action, as he seamlessly moved between political positions (Director of the National Economic Council, Treasury Secretary), private positions (as a board member and senior counselor at Citigroup, he received over $126 million in cash and stock), advisory positions (including serving on the President's Advisory Committee for Trade Negotiations and the SEC's Market Oversight and Financial Services Advisory Committee), and stints on a World Bank task force on Growth and Development, work as an unofficial economic advisor to President Obama, and his current position as co-chairman of the Council on Foreign Relations.

You can read Rubin's 2,500+ word Newsweek piece here. But I was much more interested in the 28-word bio at the end of it: "Rubin is a former secretary of the Treasury (1995-99). He now serves as co-chairman of the Council on Foreign Relations and is a fellow of the Harvard Corporation." Given that the piece is about the economic meltdown, it's telling that the bio doesn't include his nearly ten years at Citibank -- during the very time that ended with the bank having to be saved by the American taxpayers.

But that's how the flex net works: you are able to wreak destruction, bank a tidy profit, then go along your merry way, pontificating about how "markets have an inherent and inevitable tendency -- probably rooted in human nature -- to go to excess, both on the upside and the downside." And how many people remember key details in Rubin's career like his vociferous opposition, during the Clinton years, to the regulation of derivatives -- a key factor in the meltdown? Or his lobbying the Treasury during the Bush years to prevent the downgrading of the credit rating of Enron -- a debtor of Citigroup?

Last month, Janine Wedel came to HuffPost's D.C. office to talk about her book. Our team was riveted as she painted a portrait of our political culture not from the perspective of a political scientist but from that of a social anthropologist. As a professor of public policy and social anthropology at George Mason, Wedel spent years studying what happened in Eastern Europe after the fall of communism, and sees a similar co-mingling of state power and private power at work here.

Take the health care fight. Though Wedel completed her book before the most recent twists and turns in the legislative process, reading Shadow Elite you get the feeling you are being given a peek at the how-to manual the insurance and drug companies -- and their water-carriers in Congress -- used to ensure that what may well have started out as a push for real reform ended up as an industry windfall.

After all, the final Senate bill (which looks like it will be the base for the final bill sent to Obama), is essentially the same bill that was drawn up months ago in Max Baucus' office by Baucus staffers who used to be health care executives, and by health care lobbyists who used to be Baucus staffers.

The shadow elite clearly knew that the months and months of so-called debate over the issue was nothing more than a charade -- the ultimate outcome never in doubt. The bill was created in the shadows. The public process since then has essentially been like a Hollywood adaptation -- complete with the requisite third act happy ending (or, in the words of our elected officials, a "historic" ending).

"The new breed of players," writes Wedel, "who operate at the nexus of official and private power, cannot only co-opt public policy agendas, crafting policy with their own purposes in mind. They test the time-honored principles of both the canons of accountability of the modern state and the codes of competition of the free market. In so doing, they reorganize relations between bureaucracy and business to their advantage, and challenge the walls erected to separate them. As these walls erode, players are better able to use official power and resources without public oversight."

That's a spot-on description of what happened with health care -- as well as a spot-on description of the totally-lacking-in-transparency bailout of the financial system. Remember how the bailout was supposed to take care of not just Wall Street but Main Street? Well, the former ended up with record profits and bonuses while the latter is looking at double-digit unemployment -- and millions of foreclosures and bankruptcies -- for the rest of the year.

As for the "embrace of truthiness" Wedel writes about, witness this exchange from This Week between Jake Tapper and White House spokesman Robert Gibbs. Tapper asked Gibbs about Obama's broken promise to televise health care negotiations on C-SPAN and whether Obama will at least push for transparency for the final reconciliation process. Gibbs' response:

Well, Jake, first of all, let's take a step back and understand that this is a process legislatively that has played out over the course of nine months. There have been a countless number of public hearings. The Senate did a lot of their voting at 1:00 and 2:00 in the morning on C-SPAN. A lot of this debate -- I think what the president promised and pledged was so that you could see who was fighting for their constituents and who was fighting for drug and insurance companies...

Talk about being flexible -- Gibbs is a world-class rhetorical yogi. So all that talk during the campaign about transparency now just comes down to Congressional votes being shown on C-SPAN -- as they've always been?

The worst part is that Gibbs' posturing about being on the side of constituents rather than the drug and insurance industries sounds so normal. Gibbs knows all too well that he's supposed to shake his fist at the insurance companies, just as Larry Summers and Tim Geithner -- who both feature prominently in Shadow Elite -- know they're supposed to talk tough to the banks and vow to end "too-big-to-fail." But, as Wedel writes, they've rigged the system so they can "institutionalize their subversion of it."

And in the same way that our regulatory structure was outmoded and unable to deal with the complex new financial instruments devised by Wall Street, the rhetoric we use today to describe what's happening to our system is not up to the task. According to Wedel, terms like "lobbyist," "interest group," "corruption," and "conflict of interest" no longer suffice.

The new flexians are, as HuffPost's Arthur Delaney dubbed them, "influence launderers." That's why a flexian like Tom Daschle never needed to bother registering as a lobbyist. He could do the same things, selling off the public trust to the highest bidder, and then go around bragging about how he's never sullied himself with actual lobbying.

With our capitalist version of what Wedel describes as the "merging of state and private power that characterized both communism and postcommunism," we're getting to the point where the only difference between senior congressional staffers and the lobbyists and influence launderers whose ranks they'll soon join is the size of their paychecks. They just have to do a few years in Congress before joining their former bosses. It's a kind of grad school: put in a few semesters getting your Masters of Influence and you won't have to worry about paying off those school loans.

So how can we wrest control of our government from the Shadow Elite?

As Wedel says, the first step is to understand. "Merely exposing certain activities is not enough," she writes, "framing them is essential." We need to reframe how we look at and think about and respond to what is being done in our name and with our resources.

Reading -- and talking about -- Shadow Elite is a great first step in that reframing process. And don't miss Janine Wedel's blog post about her book, coming tomorrow. Let's get the conversation going.

Get your copy of Janine Wedel's Shadow Elite at Amazon.com Posted: January 6, 2010

Nautilus Solar Energy and

SunDurance Energy to Build

Solar Power Facility at

William Paterson University

WAYNE, N.J., Jan. 11 /PRNewswire/ -- William Paterson University ("WPU"), Nautilus Solar Energy, LLC ("Nautilus Solar") and SunDurance Energy, LLC ("SunDurance") announced today an agreement to build the largest solar energy facility at a university in the United States. The 3.5 MW solar energy project ("Project") will comprise of rooftop and parking lot solar installations on the WPU campus in Wayne, New Jersey. The first 3 MW phase is expected to go on-line during the summer of 2010; the remaining 500 kW is expected to go on-line in early 2011.

"Nautilus Solar is proud to support WPU's leadership in sustainability by supplying low cost clean solar power," said Nautilus Solar CEO James M. Rice.

Nautilus Solar will finance, own and operate the solar facility under a 15-year Power Purchase Agreement ("PPA"), through which WPU will purchase a renewable energy source at a reduced rate without any upfront costs. The solar power system is expected to reduce WPU's energy costs by $4.3 million over the 15-year term. The Project will be designed and constructed by SunDurance Energy, a leading NJ based solar system installer. Nautilus Solar will fund the installation in part through a loan provided by New Jersey Economic Development Authority.

Stephen Bolyai, WPUNJ's Vice President for Administration and Finance, states, "This project will be a landmark project for the University. In addition to reducing our energy costs and carbon footprint, the solar facility will provide excellent learning opportunities to our students."

The elevated arrays covering the parking areas allow economically attractive deployment of solar power without the challenges that often accompany such projects in urban and suburban environments. "By creatively using its parking areas to maximize productive space, William Paterson University is expanding the potential for solar energy in New Jersey," said Al Bucknam, CEO of SunDurance Energy. "SunDurance Energy is thrilled to be designing and building this innovative project in collaboration with our financing partner, Nautilus Solar Energy."

"The project will contribute to a reduction of air pollution and improve the air quality in New Jersey, while creating green jobs in the region. We are looking forward to installing similar solar facilities at other schools and universities," said Laura Stern, President of Nautilus Solar.

Based on the standards set by the U.S. Environmental Protection Agency, by generating over 3,392,000 kWh of solar energy annually, the WPU solar system will annually displace the equivalent of over 5,369,000 pounds of CO2 emissions, keep over 465 cars off the road, displace the equivalent of over 5,600 barrels of oil, satisfy electricity demand for over 300 households, or reap the benefits of planting over 63,000 trees.

About Nautilus Solar Energy:

Founded in 2006, Nautilus Solar Energy, LLC ("Nautilus Solar") is a leading independent solar power producer headquartered in Summit, New Jersey. Nautilus Solar develops, constructs, finances, owns and operates distributed generation and utility-scale solar electric systems. The company sells its generated electricity through long term power purchase agreements. Nautilus Solar is majority-owned by an investment affiliate of Starwood Energy Group Global, LLC, based in Greenwich, CT.

Nautilus Solar was named a winner of the NJ BPU Clean Energy Award, as Trade Ally of the Year in 2009. For more information, please visit the website at www.nautilussolar.com.

About SunDurance:

SunDurance Energy, LLC ("SunDurance") develops, designs, builds and operates megawatt-scale solar power solutions for forward-thinking corporations, utilities and government entities. SunDurance offers full in-house design and project execution capability, deep experience, $200 million per project bonding capacity, and rigorous value engineering processes. SunDurance Energy is an affiliate of The Conti Group, a century-old, nationwide leader in civil and industrial infrastructure, conventional and renewable power, homeland security and environmental remediation. For more information, please visit the website at www.SunDuranceEnergy.com.

About William Paterson University:

William Paterson University, one of the nine state colleges and universities in New Jersey, offers 43 undergraduate and 20 graduate programs through five colleges: Arts and Communication, Cotsakos College of Business, Education, Humanities and Social Sciences, and Science and Health. Located on 370 hilltop acres in Wayne, the University enrolls approximately 11,000 students and provides housing for nearly 2,300 students. The institution has made a strong commitment to energy conservation. As of June 2007, the University is a charter signatory in the American College & University Presidents Climate Commitment (ACUPCC), a national initiative with a goal of carbon neutrality at member institutions. The University is also certified under the NJDEP Environmental Stewardship program, became an EPA Waste Wise Partner, and was recognized by the New Jersey Higher Ed Partnership for Sustainability with an Energy and Climate Action Award for meritorious achievement.

A Left Role, Renewed Identity,

and How-To, in Campaigns for

National Service Jobs Programs

By John Case

Socialist-Economics Group

Does the current crisis justify an expanded role for government as an employer of last result?

Consider the following facts from EPI research:

Number unemployed: 15.4 million (up from 7.5 million in December 2007) Portion of official unemployed considered structural: 3.9 million Portion of unemployed who have been jobless more than six months: 38.3% Total jobs lost during the recession: 8.0 million Jobs needed to return to pre-recession unemployment rate: 10.9 million Number of job-seekers per job opening: 6.1 Unemployment rate: 10.0% Underemployment rate: 17.2%; Share of workers un- or underemployed: more than 1 in 6 States with double-digit unemployment in October, 2009: 15 White unemployment: 9.3%; African-American unemployment: 15.6%; Hispanic unemployment:12.7% Manufacturing jobs lost since the start of the recession: 2.1 million (15.5% of sector's jobs) Construction jobs lost in the recession: 1.6 million (20.8%, nearly one in five construction jobs) Mass layoffs (50 or more people by a single employer) in October 2009: 2,127; jobs lost:217,182 Under- and unemployed, marginally attached and involuntary part-time workers: 26.9 million

Americans with no health insurance in 2008: 46.3 million Annual Social Security benefit for average retiree: $13,922; Share of older Americans receiving all their income from Social Security: more than 1 out of 4 Number of children in poverty in 2008: 14.1 million (over one-third) Drop in real median income from 2007 to 2008: 3.6% (largest one-year drop since 1967) Growth rate of nominal, hourly wages of production workers over the last three months:1.7% Additional people covered by Medicaid/SCHIP in 2008: 3 million

Not since the Great Depression has structural unemployment been so intense or sustained. Despite faster and smarter liquidity and fiscal efforts by government than occurred then, employment decline has merely decelerated 24 months into what is now dubbed 'The Great Recession'. It is not yet near enough to avert 5-10 years of unemployment rates above 6% (the level at which the 'Great Recession' started). The foundation of New Deal anti-depression actions, and one of the most successful and long lasting in its effects, was directly putting men to work in public works projects that became associated with several national service programs. The economist Hyman Minsky coined the term 'Employer of Last Resort' to describe government full employment efforts, which were part of his economic prescription, discussed more below, for countering capitalism's inherent vulnerability to financial instability.

This article explores the appropriateness, precedents and how-to's of national service programs (the chief US version of employer of last resort). in responding to the current crisis. The moral and social virtues of putting the unemployed to work in the creation of useful and meaningful public goods, instead of subjecting them to sustained idleness, should be self-evident.

The path to national service

1933 was the worst year of the Great Depression with unemployment peaking at 25.2%. Adolf Hitler became the chancellor of Germany and opened the first concentration camp at Dachau. Tens of thousands traveled the road and rail in America looking for work, and the US banking system which was under great strain was propped up by the US banking act of 1933 to try and stop the panic of people withdrawing their money from the banks. The continuing drought in the Midwest cursed even more of the land into dust bowls.

Franklin Delano Roosevelt was inaugurated as the 32nd US President on March 6, 1933. A bill known as the Emergency Work Progress Bill was introduced in Congress on March 21, enacted into law March 31. This bill spawned numerous federal agencies, such as the Public Works Administration (PWA), its successor the Works Progress Administration (WPA) and the Civil Works Administration (CWA) and its successor, the Civilian Conservation Corps (CCC). There were approximately 5,000 camps of 200 enrollees set up in all states, plus the American Territories. The enrollees enlisted for periods of six months at a time and were paid $1.00 per day, of which $25.00 per month was sent directly to their families. The CCC was made up of approximately 3.5 million men, 225,000 World War I veterans, the balance young American boys, unmarried, between the ages of 17 and 28 years. The CCC existed for over nine years until June 30, 1942, at which time it was absorbed into America's Armed Forces. General George C Marshall, Army Chief of Staff under Roosevelt, testified before Congress at the end of World War II that the early training given to the men of the CCC was a major factor in America winning that war.

Direct government employment is the most practical and realizable path to capping unemployment, and adding credibility to the much needed stimulus efforts. This is especially true in a major economic crisis -- but also should be a permanent feature of government intervention to address structural unemployment -- lost jobs that are never coming back. Various programs to provide tax incentives and sub-contracts to private contractors do not work nearly as well -- witness the poor response of hard-pressed homeowners to recent winterizing incentives, and the lengthy delays common with contracting. Picture the thankful and very direct response to the alternative: neighbors contacting neighbors to do energy audits, perform the winterization work, making the personal connection, making a difference.

President Obama's jobs programs need less PWA and more CWA!

The PWA was the Public Works Administration, led by Harold Ickes Sr. The CWA was the Civil Works Administration, led by Harry Hopkins. Both were New Deal agencies created in 1933 to get Americans quickly back to work at a time when unemployment reached 25 percent, its highest point in US history.

The PWA tackled unemployment indirectly by spending money largely through private contractors. Only $110 million of the program's authorized $3.3 billion was spent during the program's crucial first year. Frustrated by PWA's slow progress, Roosevelt yielded to the pleas of his relief administrator, Harry Hopkins, to help get unemployed workers through the coming winter by putting them directly onto the federal payroll. Roosevelt had been reluctant to create a federal work program for fear of alienating Bill Green, the president of the American Federation of Labor, who believed such programs would undermine the private labor market where the average wage was about $1.35 per hour. Hopkins argued that Samuel Gompers, founder of the American Federation of Labor, had in 1898 proposed essentially the same idea, and that the program could be kept from getting large enough to undermine private labor rates.

Roosevelt diverted not quite one-third of the PWA budget to CWA with the goal of putting to work 4 million people. As a percentage of the population, that would be the equivalent of putting 10 million people to work today. Under Hopkins leadership the CWA got this done in 2 months time. The current economic downturn has yet to bring us near the depths of the Great Depression, but the situation is dire. The official unemployment rate now stands at 10+ %, a figure that rises to more than 17 percent when you add in people who've given up looking for work and people working part-time only because they can't find full-time work. Further analysts calculate that at least 2.5% of the official unemployment rate is structural -- that is, jobs that are never coming back under market conditions. The economy shed more jobs last year than in any single year since 1945. The outlook for recovery -- given current stimulus efforts -- sees no return to pre-recession employment for at least 4 years.

The CWA benefited from Harry Hopkins noted adaptive leadership and organizational style. But the CWA was also structurally better able than the PWA to mobilize quickly because it could avoid the cumbersome -- and often corrupt, political --- process of putting contracts out to bid and all the other obstacles to swift action that arise with public-private partnerships. CWA enjoyed immediate carte blanche to apply directly the apparatus of the federal government. Hopkins shifted staff from the federal relief program he'd headed up, seized tools and equipment from Army warehouses, and cut checks through the Veterans Administration's vast disbursement system. The CWA laid 12 million feet of sewer pipe and built or made substantial improvements to 255,000 miles of roads, 40,000 schools, 3,700 playgrounds, and nearly 1,000 airports (not to mention 250,000 outhouses still badly needed in rural America). Most of the jobs involved manual labor, to which most of the population, having been raised on the farm, was far more accustomed than it would be today. But the CWA also provided considerable white-collar work, employing, among others, statisticians, bookbinders, architects, 50,000 teachers, and 3,000 writers and artists. This was achieved with a remarkable minimum of overhead. Of the nearly $1 billion—the equivalent today of nearly $16 billion—that Hopkins spent during the CWA's five-month existence, 80 percent went directly into workers' pockets and thence stimulated the economy by going into the cash registers of grocers and shop owners. Most of the rest went to equipment costs. Less than 2 percent was paid for administration. The Peoples Weekly World editorial board article on 'New Deal 2.0' has more extensive detail on the achievements of the CWA-CCC.  (http://www.google.com/reader/view/?tab=my#stream/feed%2Fhttp%3A%2F%2F...).

The only serious obstacle the CWA encountered is the same one that President Obama would face today: right wing politics. Republicans and conservative Democrats in Congress screamed bloody murder about Roosevelt's dalliance with what they termed "state socialism"—Republicans like Landon who were willing to admit a government program might actually work were as rare then as they are today—and the segregationist Georgia Gov. Eugene Talmadge was apoplectic to learn that black laborers were being paid as much as white ones. Once winter had passed, Roosevelt, worried that the controversy would cost him Democratic seats in the coming midterm congressional elections, ordered Hopkins to shut the CWA down. A year later, though, with huge numbers still unemployed, Roosevelt put Hopkins in charge of the Works Progress Administration. Over its life, the WPA would create, on the model of the CWA, more than 8 million jobs, which today would be equivalent to creating more than 20 million.

The Kennedy and Clinton administrations (the latter to a lesser extent and with lesser success) also promoted National Service. The Peace Corp, VISTA, AmeriCorp were prominent initiatives.

A new national service provision incorporated into the first Obama stimulus package has nearly been drowned out by its vicious enemies on the right wing, who like to compare folks repairing the Appalachian Trail, or winterizing homes, to fascist Hitler brown-shirts brigades. In addition it has been made nearly invisible in the pressures of the immediate struggle to pass health care reform. But I believe it is a critical component in the economic recovery from this crisis. The debate over the shape and size and funding sources of the needed second stimulus is officially underway since the recent Obama Jobs Summit .

It is a good time to reintroduce an "employer-of-last-resort" proposal, which is the economic role that national service programs perform. Without the government stepping in as the employer-of-last-resort for all those whose jobs are not coming back -- an unsustainable level of long-term unemployment will ensue (for many this is already the case). To have 10-20% of the workforce idle can become a very corrosive and dangerous force. It puts continuous, punishing downward pressure on working people's incomes.  It inevitably provokes sharp divisions, including persistent anti-immigrant, racist outbursts and panics. Such pressures can bring down the best laid recovery plans, and presidents, including progressive ones.  Nowhere are the defects of advanced multinational corporate society more exposed than in a great depression. Only more socialist like measures, such as direct government employment, will work. In such crises, markets will not fix themselves, nor the social damage done, on their own. Free market apologists frequently counter that "in the long run" markets will return to "equilibrium". But, as JM Keynes famously observed: "in the long run, we are all dead".

In the struggle to compel the government to assume the "employer-of-last-resort" role, finally putting a cap on the unemployment rate, all progressive and democratic forces have a big stake in the outcome.

The values of both the public goods national service produces, as well as the social and moral values that progressive service projects nourish in both the participants and those whom are served, are as close to those envisioned and cherished by the founders of both socialist and radical democratic visions of social relations as one is likely to find in this era. To labor directly in service to the working people of the United States -- is a high calling to us. And with the exception of the word "working" this sentence and its intended spirit quotes the current president of the United States, on the purpose of national service -- a circumstance not seen since at least Kennedy. Distinct from some other political forces, we on the Left focus our understanding of service with a class bias. We see the expansion of the programs to include all who are structurally unemployed, including youth and seniors. And distinct from the 1930's we also envision self-organization of these workers as the bulwark that can best prevent their being turned toward reactionary purposes when the President may not be at all progressive, and at all times we champion the progressive goals and ideals of the service. But this is hardly a sectarian tendency, since public goods serving the working people of our country serve all the people as well.

None other than the Communist Manifesto identified as "communists" those who, among few other qualifications, distinguish themselves as follows: "in the various stages of development which the struggle of the working class against the bourgeoisie has to pass through, they always and everywhere represent the interests of the movement as a whole." Progressive-led national service is not the only means by which advanced social qualities can be realized. But its timeliness and its potential to reconnect socialist and progressive ideals to tangible initiatives, demonstrable integrity and a better way of both working and living -- make it shine as a service and growth opportunity for the Left not seen in the US in many decades.

What socialist values are promoted in progressive national service?

1. National service represents, or can represent, a move toward full employment in an economy which is predominantly -- although not exclusively -- still capitalist and dominated by private property relations. It is a move which can do more to stabilize capitalism's inherent instability than any other reform. Economic development under any economic system must have an efficient means to allocate -- and reallocate -- people toward productive labor. Productivity and efficiency are in constant flux under the pressures of supply, demand, level of workforce culture and skills, technological change and many other factors. A government employer-of-last-resort program that is permanently targeted at structural unemployment effectively removes poverty, ruin and death as the consequences of capitalism's raw means of effecting structural change.

2. National service is dedicated to the production of public goods. The expansion of wealth in public goods, as contrasted commodities, is a key feature of the advance of a much less unequal society.

3. Since Paul Samuelson "public goods" have acquired a specific economic definition, independent of the range of goods and services already supplied by public enterprise. They are either "non-rival" [there is no scarcity] or non-exclusive [use by non-buyers cannot be prohibited]), or both. Their scope is much enlarged since the 1930's. This is evident in two ways: first, the proportion of government GDP to private GDP has steadily increased, stimulated by both market failures (health, education, etc) in various areas or externalities (environmental, security, etc); second, the proportion of intangible goods to physical commodities has dramatically increased. Intangible goods are considered very poor commodities by many economists and, barring certain monopoly conditions (eg Microsoft) have many qualities of public goods. In addition the average skills of the labor force today are much advanced since that time. To traditional public works such as roads, schools, hospitals, security, must be added (in degrees) health care, too-big-to-fail enterprises, more rental housing, and many educational, public health and environmental initiatives. In many ways the economic transition from capitalism to a more advanced society can be measured in the proportion of wealth in public goods relative to commodities.

4. As production of commodities becomes more and more automated, services (both public and private) gradually become the dominant form of work. The provision of services, with often very low capital accumulation thresholds for firms by comparison to industrial firms in the past, is more amenable to cooperative, non-profit, or shared-profit models of enterprise---if stability and growth can be sustained. Employer-of-last-resort programs focus exclusively on public goods and service.

5. From each according to his ability, to each according to their needs -- this was the slogan of the Communist Manifesto reflecting the ideal principle upon which an economy freed of commodity production and its inevitable divisions of labor, including the division between labor and capital, could be constructed. National service in its progressive vision models exactly this principle. It is even more advanced than the principle of socialism which merely envisions the fulfillment of bourgeois right -- the ideals of the enlightenment, and of the declaration of Independence, for all who labor -- from each according to his ability, to each according to his work. Equal pay for equal work + investment in people's abilities == socialism. Abolition of the division of labor in commodities == the foundation of the communist ideal.

Steps to take

Current status of national service, employer-of-last-resort, programs

Of course the biggest current national service program is the US military.  And in many ways the terms and benefits of military service will have a strong influence on terms, standards and benefits of national non-military service, if it truly evolves into an employer-of-last-resort alternative.

In his inaugural address, President Obama said, "The question we ask today is not whether our government is too big or too small but whether it works."

That stands in contrast to the Republican orthodoxy, which says "government is the problem", or various Democratic accommodations to Republican orthodoxy, which say: "the era of big government is over".

If government can do the job best, let it.

On April 27th of this year President Barack Obama signed the Edward M.  Kennedy Serve America Act later today as part of his pledge to expand programs and funding for community and civil service opportunities across the nation. The legislation was named for longtime services supporter Sen.  Edward Kennedy, and authorizes nearly $6 billion, a 25% increase, through 2014 to benefit existing programs, including AmeriCorps and the Peace Corp, as well as new service programs. There are 75,000 active AmeriCorps volunteers today, and the law intends to expand that number to 250,000 by 2017.

Melody Barnes, the director of the White House Domestic Policy Council said: “We really believe that this is just the beginning.” The Corporation for National and Community Service oversees AmeriCorps and other service programs,has received more than 40,000 online AmeriCorps applications were received in March—six times the number from a year earlier.

The CNCS is a federal agency created in 1993 by President Clinton and is overseen by a bipartisan board appointed by the president. Since it began, more than 570,000 have volunteered 718 million hours and received $1.6 billion in education awards to pay for college.

Counting youth, first time job seekers, seniors forced on fixed incomes, workers laid off whose entire occupations will not return -- upwards of 8 million workers could fully benefit from direct employment programs -- and do so without causing dangerous inflation in private or other public labor markets so long as the average size of the programs remains targeting structural unemployment, and so long as the pay in the programs corresponds to the original service principles -- less than the prevailing wage, but more than unemployment and not less than the minimum compensation.

Having Government play the role of the employer-of-last-resort, through programs like those in the national service tradition and spirit, cannot be the only component in a full recovery, full employment strategy. It may not even the most important component of broader public employment in the overall economy. Most Infrastructure development, for example, will require long-term capital investments and permanent jobs in the millions.  Employer-of-last-resort programs address specifically the structurally unemployed faction of the unemployed population: workers for whom there will be no recall, and whose occupation, in fact, is in long term decline.  In addition to compensation, participants must receive in exchange educational and retraining opportunities. We are, in a sense, investing in losers in the restructuring to ensure their successful re-entry into the overall labor market. And we are also helping create better citizens and more conscious forces who have helped lead efforts to materially and spiritually strengthen communities. By substituting service for unemployment benefits for these folks, we simultaneously place a cap on unemployment beyond which the employer-of-last-resort alternative kicks in.

Hyman Minsky

The late Post-Keynesian economist Hyman Minsky gave national service, employer-of-last-resort, projects like the WPA a key role in his strategies for countering (not eliminating, just balancing) capitalism's inherent tendency toward instability. His classic work, Stabilizing an Unstable Economy, is -- now enjoying a celebrated revival in the post-monetarist age -- He favored, in a word, a "more socialist" capitalism, with lower investment and higher consumption; one that maintains full employment; one that fosters smaller organizations, especially in the private sector. He was highly skeptical that capitalism could ever achieve full employment without direct job creation by government. He argued only government can provide an infinitely elastic demand for labor, which a full employment program requires, and that such a comprehensive program would not exceed 1.25% of GDP. Experience in India, Argentina, China and Vietnam -- all of which embrace Minsky like employment philosophies -- validate this estimate. In addition, Minsky argued that, unlike welfare or unemployment, in which income is increased without an increase in supply of goods or services, employer of last resort programs are not inflationary.

Labor Ambivalence

The resistance to the WPA programs of the 1930's from the American Federation of Labor President William Green is mirrored today in the lukewarm at best support of national service in either of Labor's major federations, and for the same reason. Fear of competition with the private labor market. Yet the history of wage patterns in the years following the WPA launch in 1934 did not justify Mr Green's fears. In the first place the programs mirrored exactly advocated by Mr Green's predecessor, Samuel Gompers, and endorsed by Eugene debs. The effect of the programs were to tighten overall labor markets and reduce and in some cases reverse the dramatic fall in wages that occurred following the crash of 1929. The nearly 8 million men who passed through the WPA era programs were actually counted as part of the unemployed. The proportion of union wages to service compensation did not change throughout the era so there was no harm the service programs caused to average wages -- especially as the tightened labor markets gave strength to the great CIO organizing drives underway that would soon double the size of organized labor. Some have argued the tighter immigration laws in the 30's also tightened labor markets as well, but, in any event, national service played a positive, not a negative role in the union upsurge of the late 1930's.

In the new era the fight for full employment, including in the employer-of-last-resort efforts, could use a labor lead this time, to in fact preserve the base for the progressive interpretation of "in service to the people of the United States".

How Can the Left Make a Difference?

Below is an example "home audit" project scenario, adapted from the serve.gov website, exploring the mechanics of forming a progressive service project, and transforming it into a base for public direct green employment funding and management.

General suggestions for getting started on any project:

Create a team with your friends and neighbors to share the effort; Give a mission and name to your project that reflects the shared values of your team. Mission: Invoke themes that strengthen the project's ultimate political visibility. Set outcome-based goals and track your progress to those goals; Celebrate your successes together.

An environmental "Home Audit" project to audit potential saved charges and efficiency for all renters and homeowners for known energy investments.

Audit Facts

Every year, more than $13 billion worth of energy leaks from houses through small holes and cracks. That's more than $150 per family! A compact fluorescent light bulb uses 75 percent less energy than a regular bulb – and it can last up to four years. Across America, home refrigerators use the electricity of 25 large power plants every year. Some new refrigerators are so energy-smart they use less electricity than a light bulb! A hot water faucet that leaks one drop per second can add up to 165 gallons a month. That's more than one person uses in two weeks. An energy-smart clothes washer can save more water in one year than one person drinks in an entire lifetime! A crack as small as 1/16th of an inch around a window frame can let in as much cold air as leaving the window open three inches! An automatic dishwasher uses less hot water than doing dishes by hand - an average of six gallons less, or more than 2,000 gallons per year. This summer, commit yourself and a team of your friends, family, and neighbors to help save energy in your home and to help others do so, too.  Join United We Serve. This tool kit will give you the basics to start reducing our carbon footprint, recruit a team, organize your group, and make an impact this summer.

The Challenge: Many community-based organizations do not have enough capacity to manage a large number of volunteers, so they need people who can organize themselves in coordination with them. As an organized group you can either organize a group to be a positive addition to a community-based organization, or, if such an organization does not exist, to be a well-organized independently-run group that fills a needed gap in the community.

Step One: Identify Local Partners

Check out the organizations already doing good work in your area. Many existing service groups have identified community needs and built the expertise to provide solutions. Call or visit the websites of national and local energy and environmental groups and ask how volunteers can contribute. Examples could be your state's energy office, your local utility company, The Alliance to Save Energy, The Department of Energy, and the Sierra Club. If no environmental organizations exist in your community, you have all the tools needed to start an auditing team. Information on how to perform an audit can be found at the Department of Energy's website. If you want to learn more about saving energy, a simple Internet search on energy efficiency will bring tons of resources and information on how you can save energy. You can also contact your local home improvement store like Home Depot, Lowe's, etc. to find out about information and products they offer to help you save money in your home. Energy challenges vary in different parts of the country.

Step Two: Build a Team to share the work, motivate members and hold each other accountable.

Build community. Ask your family, comrades, friends, colleagues, faith group members, book club devotees -- you have a book group, right??? --to serve with you. Labor and other organizations that serve the unemployed can be important sponsors and partners. Tip -- serve good food at house meetings whenever possible. Encourage participation that reflects the racial, national, ethnic, age and sexual diversity within the working people of your community -- but do not let imperfections slow getting started.

Step Three: Set a Goal, including dates, and hold yourself accountable.

Commit as individuals and as a team to reducing carbon emissions by a certain amount and audit a certain number of homes. focus on communities who most need and would benefit by a public effort at energy efficiency. Set your goals high to stretch yourself. Keep track of how you are doing and designate someone to be responsible for updating the group on how you are progressing toward your goals. Commit, focus, and follow through.

Step Four: Serve Your Community --do the audits, reach out to your neighbors and colleagues, and reduce carbon footprints. Step Five: Report and Celebrate Successes and develop a campaign to implement the conclusions of the audit.

Your team members, your community, your city councils, Mayors, legislators and Congressional representatives, and the President want to know about your results and hear your stories. Share your accomplishments by reporting your results as widely as possible, including on the President's service blog: www.serve.gov. From recent efforts, it is almost certain the result of audits reveal many families who qualify for already existing winterization programs who either do not know they exist, or who found applying for them, arranging for contractors, equipment, etc too daunting to take advantage of in a recession, if at all. If the state will not intervene and serve as middlemen for the consumers, the winterization funds in the first stimulus will remain largely un-deployed. Ergo -- a strong argument for government directly using stimulus funds to hire the work done. Yet it will also show substantial saving that would accrue to families if relatively modest energy saving investments could be made. Using a national service program for such work gives a very large return for dollar invested, and a political foundation for expanding public work and putting people back to work directly through a funded winterization project, or other energy saving measures that will vary by area climate, resources and season. Demonstrating a strong, green job creating investment that also saves consumers money is a stronger issue than many successful candidates for public office have been afforded.

The president's serve.gov site has other examples and tool-kits to assist groups form and initiate their own service projects that reflect their particular concerns and interests, whether the domain of the effort is the environment, conflict resolution, education, health, or other issues.

Yes We Can!