Michael Roberts: Joseph Stiglitz and ‘progressive capitalism’

Michael Roberts

The liberal leftist economist and Nobel (Riksbank) prize winner Joseph Stiglitz has another book out to proclaim the benefits of what he calls ‘progressive capitalism’.  The Road to Freedom is a play on the title of Friedrich Hayek’s infamous book, The Road to Serfdom, published in 1944, which claimed that government intervention into the ‘freedom of markets’ would cause shortages and misallocations of resources and eventually to the end of democracy and freedom in a dictatorship a la Stalinist Soviet Union.  John Maynard Keynes expressed his agreement with Hayek after reading his book. He wrote to Hayek that: “morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but in a deeply moved agreement.”

But Stiglitz certainly does not.  For him, Hayek’s claim that ‘free markets’ mean freedom for the individual really means ‘freedom for the wolves and death to the sheep’ (Isaiah Berlin). Free markets are designed to make profits not to meet the social needs of the many. “Externalities are everywhere,” Stiglitz writes. “The biggest and most famous negative externalities are air pollution and climate change, which derive from the freedom of businesses and individuals to take actions that create harmful emissions.” The argument for restricting this freedom, Stiglitz points out, is that doing so will “expand the freedom of people in later generations to exist on a livable planet without having to spend a huge amount of money to adapt to massive changes in climate and sea levels.”

For Stiglitz, the enemy of human freedom is not capitalism as such, but ‘neoliberalism’ which has bred soaring inequality, environmental degradation, the entrenchment of corporate monopolies, the 2008 financial crisis, and the rise of dangerous right-wing populists like Donald Trump. These baleful outcomes weren’t ordained by any laws of nature or laws of economics, he says. Rather, they were “a matter of choice, a result of the rules and regulations that had governed our economy. They had been shaped by decades of neoliberalism, and it was neoliberalism that was at fault.”

Stiglitz has argued before in previous books that it is not capitalism that is at fault but the decisions of governments and their corporate backers to ‘change the rules of the game’ that had existed in the post-war period of managed capitalism.  The rules were changed to deregulate; to privatise; to crush labour unions etc.  But Stiglitz never explains why the ruling elite felt it necessary to change the rules of the game.  What happened to swing the post-war rules into the neoliberal ones?

Anyway, Stigliz reiterates his call for the creation of a “progressive capitalism”.  Under the rules of this form of capitalism, the government would employ a full range of tax, spending, and regulatory policies to reduce inequality, rein in corporate power,and develop the sorts of capital for social needs not profits like ‘human capital’ (education), ‘social capital’ (cooperatives), and ‘natural capital’ (environmental resources).

Stiglitz does not want to get rid of capitalism but to regulate it, so it works for the many (sheep) over the few (wolves). “We need environmental regulations, traffic regulations, zoning regulation, financial regulations, we need regulations in all the constituents of our economy,” he writes. But Stiglitz is either naïve or applying sophistry here.  The history of regulation is a history of failure in controlling capitalism or making banks and corporations apply policies and investment in the interests of people over profit.

How can anyone not see that, after the global financial crash of 2008, or the subsequent financial scandals galore; or the failure to stop or regulate fossil fuel production and finance?  Regulation has not stopped regular and recurring crises of production under capitalism, whether in the imagined ‘progressive era’ of 1945-75 or in the neoliberal era since.  Stiglitz has nothing to say on this.

Indeed, he almost recognizes that his policy proposals of taxing the rich, regulating finance and the environment and increasing public spending to achieve progressive capitalism are not likely to be adopted by governments and big business.  But when asked that, maybe, the only real alternative to achieve human freedom is a revolutionary transformation of the economy and society, he replied at a LSE presentation of his book, that revolutions are violent and risky and so should be avoided in favour of gradualist change.

His answer reminds me of John Mann’s comment in his excellent book, In the Long Run We are all Dead,  “the Left wants democracy without populism, it wants transformational politics without the risks of transformation; it wants revolution without revolutionaries”. (p21).  Stiglitz really echoes Keynes who once said, “For the most part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.”

How would regulation and more equality deal with the impending disaster that is global warming as capitalism accumulates rapaciously without any regard for the planet’s resources and viability?  Programmes of redistribution will do little for this.  And if an economy is made more equal, would it stop future slumps under capitalism or future Great Recessions?  More equal economies in the past did not avoid these slumps. Progressive capitalism is an oxymoron in the 21^st century.  And even Stiglitz doubts that it is possible to achieve.

East Palestine: Senate Democrats Are Concerned (Not and SNL Skit)

Richard Mellor
Afscme Local 444, retired
GED/HEO
2-27-23

Congress demands answers on Ohio toxic train derailment

Good morning, US politics blog readers. East Palestine, Ohio, became America’s latest political battleground earlier this month when a train carrying toxic chemicals derailed in the small community, sparking fears of life-changing pollution for its nearly 4,800 residents. Congress is now poised to get involved, with lawmakers of both parties pledging to hold hearings into the incident. For Democrats in the Senate, the focus looks to be on whether government deregulation and corporate malfeasance contributed to the accident. House Republicans, meanwhile, may see it as another opportunity to turn the public against the Biden administration.US Guardian

4h ago13.57 GMT

The statement above from the US online edition of the Guardian, caught my eye. I was about to have a good laugh as I thought it was a Saturday Night Live (SNL) skit. But unfortunately, no. I am not an investigative journalist and don’t even consider myself a writer. I think of myself as a retired blue collar worker with an opinion. Like most workers, I have questions about the world around me and seek answers to them. I am grateful to Bertolt Brecht for his poem on that subject: Questions From a Worker Who Reads

The Guardian comment is pretty lame, covering as usual for the Democratic Party suggesting that Senate Democrats are genuinely concerned that “government deregulation and corporate malfeasance contributed to the accident.” Of course it was both, they are intertwined. This is the game the two parties of capital have played in their dictatorship over US economic and political life.

I stressed in my comments and do so again today, that East Palestine is no different than the fertilizer explosion in West, Texas which was, according to the New York Times, a result of “bureaucratic cracks at the federal, state and local levels” Texas Fertilizer Plant Fell Through Regulatory Cracks NYT 3-24-2013 Those damn bureaucratic cracks again.

That’s a handy excuse for the consequences of conscious legislative actions taken by real human beings in the US Congress and state legislatures dominated by the millionaires and billionaires, representatives of global capitalism in the Republican and Democratic parties.

The legislation aimed at preventing railroad workers from exercising their right to strike in the interests of safety for themselves and the working public never fell through any cracks; this union busting antisocial legislation was on fast track indeed a few months ago. Profits demanded it.

The BP spill in the gulf was no accident. Take the time to mull this around in your head: Regulators in the George W Bush Administration allowed the energy companies to write their own rules for deep sea drilling in pencil.  This tragedy, the consequences of which will have a serious effect on the environment for centuries (if we have that long) and cost eleven workers their lives is best forgotten as far as the mass media is concerned. NY Times 5-4-2010

The poisoning of Flint Michigan’s water, the poisoning of water vital to Native Americans due to uranium mining, the chemical spill in West Virginia that leaked toxic water in to the water supply, these are disasters the politicians in both parties of capitals are responsible for. They are guilty and yet never pay the price for their conscious decisions that wreak havoc and death on working class communities and the environment.

I will try to keep brief comments about the disgusting spectacle of the degenerate Trump handing out bottles of water and blaming Biden for the East Palestine disaster. That and the neo fascists like JD Vance, Charlie Kirk, Tucker Carlson (all people of privilege and wealth) using this disaster to sow division between black and white workers claiming that white workers are being abandoned in favor of blacks (Trump opposed regulating the rail industry further).

But the Guardian like most liberal media outlets that try to counter this right wing nonsense will focus on showing data that proves them wrong, that blacks are more likely to suffer from these type of disasters, air pollution and such.  That’s fine, but the most important aspect is to explain it as a conscious divide and rule strategy to undermine working class unity and drive all of us in to poverty. Without a class approach they end up simply comparing one groups oppression to another, which is worse, especially as whiteness and white privilege has been taken up as the main problem in society. This after decades of assault on the white working class which has made it easier to unite workers along class lines and escape the race reductionist mantra of the liberals. I am sure the white, working class population of East Palestine are not feeling blessed by the white privilege fairy now.

US capitalism is in a political, economic and social crisis. Collapsed bridges, failing dams and nuclear facilities (remember the China Syndrome), broken roads and freeways are the norm. The market solution is to privatize everything. The freeways are now being farmed out to private corporations to maintain them, for a fee of course. Now workers and the middle class that use them and whose ancestors paid for them through taxes and built them through labor, are charged for using them. The rails that the trains run on and the freeways that allow capitalism to function and capitalists to profit were built and paid for by the workers of the US; generations of them.

The US Congress can’t fix these problems. The US Congress can’t provide homes for people. Health care for people, jobs for people; a national transportation system. It can’t stop big pharma from advertising drugs on TV for ailments many doctors have never heard of. The US Congress couldn’t stop the murder of over one million Iraqi’s. It spent three trillion in Afghanistan yet can’t provide dental care for its citizens. It is a body politic populated by lawyers, lobbyists and billionaires.

I’ll go on no longer, visit my previous piece here. 

Taking on the ‘fearsome foursome’ and ‘market power’

by Michael Roberts

Last Thursday, the US-based global tech giants reported their quarterly earnings simultaneously.  On the same day, the US economy recorded the biggest quarterly contraction in national output ever (-9.5% yoy or -32.9% annualised).

In contrast, the ‘fearsome foursome’: Alphabet (Google) – the world’s largest search engine; Amazon – the world’s largest online distributor; Apple – the world’s largest computer and mobile phone manufacturer; and Facebook – the world’s largest social media provider, posted double-digit revenue growth for the three months ended in June, raking in a combined $33.9 billion in profit in the second quarter alone. While the US and world economy have been plunged into the deepest slump since the 1930s by the lockdowns from the COVID-19 pandemic, the world’s most prominent tech companies have prospered.

Revenues are up across the tech board and the price of their shares (market cap) rose $178bn in the following day, taking their stock market value to $5trn, or 25% of US GDP.  Amazon CEO Jeff Bezos saw the largest single-day increase in wealth ever recorded for any individual. In just one day, his fortune increased by $13 billion. On current trends, he is on track to become the world’s first trillionaire by 2026.

At the same time as these results came out, the fearsome foursome were ‘grilled’ by a US Congressional Committee about their nefarious practices in dealing with competitors; and their increasing ‘market power’ and ever-growing monopoly position in the most profitable sector of the US economy.  The Judiciary Committee published 1300 documents that supposedly showed their attempts to crush competitors, buy them out or exclude them from markets.

Amazon’s Jeff Bezos, Apple’s Tim Cook, Google’s Sundar Pichai and Facebook’s Mark Zuckerberg

For example, Facebook chief Mark Zuckerberg mailed that he saw “acquisitions as an effective way to neutralise potential competitors”, and how many start-ups fear that if they reject a Facebook buyout he will go into “destroy mode” against them. Apparently, Google insiders worried about how to fend off competition on the way to erecting what critics called a “walled garden”. As one executive opined: “The open web we knew and loved is going away.” There is a mounting campaign to curb or break up these ‘super-star’ companies and end their monopoly market power.

But this is not new in the history of capitalism.  Successful companies in new expanding fields of capitalist accumulation have grown from small to large and eventually to ‘monopoly’ positions: railways, oil, motor vehicles, finance and telecoms.  In 1911, Standard Oil was broken up into 34 companies by Congress.  Rockefeller ran the company as its chairman until his retirement in 1897. He remained the major shareholder and after 1911, with the dissolution of the Standard Oil trust into 34 smaller companies, he stayed as the richest person in modern history, as the initial income of these individual enterprises proved to be much bigger than that of a single larger company. Its successors such as ExxonMobil, Marathon Petroleum, Amoco, and Chevron are still among the companies with the largest revenues in the world.

In 1984, AT&T was the main ‘monopoly’ telecoms provider and so was broken up into seven regional companies.  But AT&T continued to make huge profits as did its regional monopoly successors.  The break-up of ‘market power’ made little difference to improving competition or productivity or, most important, labour incomes.

The ending of monopoly ‘market power’ will not turn round the low productivity of the US economy and its current collapse into a deep slump, or for that matter, reduce inequality of incomes or wealth in the US.  Recent research by IMF economists found that the downward trend in the labour share of global income since the early 1990s was mainly due to ‘technological progress” as workers were replaced by labour-saving technology, particularly in so-called ‘routine occupations’. “The empirical analysis points to a dominant role of technology and global integration in this trend, although to different degrees between advanced and emerging market economies. Technological progress, reflected in the steep decline in the relative price of investment goods, has been the key driver in advanced economies, along with high exposure to routine occupations that could be automated, with global integration also playing a role, albeit a smaller one.”  Rising inequality is the result of ‘normal’ capitalist accumulation and the appropriation of profit through the exploitation of labour and labour-saving technology.

And yet the concept of ‘market power’ persists in left economics as the dominant explanation of what is wrong with American capitalism and globally. Take this recent article in Jacobin by rising star economic journalist, Grace Blakeley. “Many of the world’s largest tech companies have become global oligopolies and domestic monopolies. Globalization has played a role here, of course — many domestic firms simply can’t compete with global multinationals. But these firms also use their relative size to push down wages, avoid taxes, and gouge their suppliers, as well as lobbying governments to provide them with preferential treatment.”

Blakeley argues that Amazon has become America’s largest company through ‘anti-competitive practices’ that have landed it in trouble with the European Union’s competition authorities. The working practices in its warehouses are notoriously appalling. And a study from last year revealed Amazon to be one of the world’s most “aggressive tax avoiders.” Part of the reason Amazon has to work so hard to maintain its monopoly position is that its business model relies on network effects that only obtain at a certain scale, argues Blakeley. Tech companies like Amazon make money by monopolizing and then selling the data generated from the transactions on their sites.

And the rising market power of a small number of larger firms has actually reduced productivity. “This concentration has also constrained investment and wage growth as these firms simply don’t have to compete for labour, nor are they forced to innovate in order to outcompete their rivals.”

Much of what Blakeley says here is true.  Undoubtedly, much of the mega profits of the likes of Apple, Microsoft, Netflix, Amazon, Facebook are due to their control over patents, financial strength (cheap credit) and buying up potential competitors.  Indeed, take the latest case.  Microsoft is now in talks to purchase TikTok, which is owned by China’s ByteDance, with the aim of weakening this latest big rival to the super star companies. But the market power or monopoly explanation goes too far. Technological innovations also explain the success of these big companies.

Marx considered that there were two forms of rent that could appear in a capitalist economy.  The first was ‘absolute rent’ where the monopoly ownership of an asset (land) could mean the extraction of a share of surplus value from the capitalist process without investment in labour and machinery to produce commodities.  But the second form Marx called ‘differential rent’.  This arose from the ability of some capitalist producers to sell at a cost below that of more inefficient producers and so extract a surplus profit – as long as the low cost producers could stop others adopting even lower cost techniques by blocking entry to the market, employing large economies of scale in funding, controlling patents and making cartel deals.  This differential rent could be achieved in agriculture by better yielding land (nature) but in modern capitalism, it would be through a form of ‘technological rent’; ie monopolising technical innovation.

The history of capitalism is one where the concentration and centralisation of capital increases, but competition continues to bring about the movement of surplus value between capitals (within a national economy and globally). The substitution of new products for old ones will in the long run reduce or eliminate monopoly advantage.  The monopolistic world of GE and the motor manufacturers did not last once new technology bred new sectors for capital accumulation.  The oil giants are also now under threat from new technology. The world of Apple will not last forever.

Moreover, by its very nature, capitalism, based on ‘many capitals’ in competition, cannot tolerate any ‘eternal’ monopoly, a ‘permanent’ surplus profit deducted from the sum total of profits which is divided among the capitalist class as a whole.  The endless battle to increase profit and the share of the market means monopolies are continually under threat from new rivals, new technologies and international competitors.

It’s certainly true that accumulation of capital takes the form of increased concentration and centralisation of capital over time.  Monopolistic tendencies are inherent, as Marx argued in Volume One of Capital 150 years ago.  However, ‘market power’ may have delivered rental profits to some very large companies in the US, but rents to the few are a deduction from the profits of the many. Monopolies redistribute profit to themselves in the form of ‘rent’ but do not create profit.

Kathleen Kahle and Rene Stulz found that slightly more than 100 firms earned about half of the total profit made by US public firms in 1975. By 2015, just 30 did.  Now the top 100 firms have 84% of all earnings of these companies, 78% of all cash reserves and 66% of all assets. The top 200 companies by earnings raked in more than all listed firms, combined!  Indeed, the aggregate earnings of the 3,500 or so other listed companies is negative – so much for most US companies being awash with profits and cash.

Profits are not the result of the degree of monopoly or rent seeking, as neo-classical and Keynesian/Kalecki theories argue, but the result of the exploitation of labour.  Marx’s law of profitability is still central to a capitalist economy. Just before the COVID-19 pandemic hit the world economy, the major capitalist economies were already heading into a new recession, the first since the Great Recession of the 2008-9.  The profitability of capital was near all-time lows; up to 20% of US and European companies were making only enough profit to cover the interest on their debt, with none to spare for new investment.  Real GDP growth rates had dropped to their lowest rates since 2009 and business investment was stagnating.  A global recession was coming; and it had little to do with the ‘market power’ of the FAANGs sucking up all the profits; much more to do with the inability of capital to exploit labour enough.

But that is something mainstream economics (both neoclassical and Keynesian) never wants to consider.  For the mainstream, if profits are high, then it’s ‘monopoly power’ that does it, not the increased exploitation of labour.  And it’s monopoly power that is keeping investment growth low, not low overall profitability.  But if the ‘market power’ argument is accepted over a Marxian analysis of capital, then it implies that all that needs to be done is to weaken ‘market power’; or break up the monopolies and restore ‘competition’, not end the capitalist mode of production.

In her Jacobin article, Blakeley perceptively concludes that “The only real way to tackle these inequities is to democratize the ownership of the means of production, and begin to hand the key decisions in our economy back to the people.”  Yes, but I’m not sure what she means specifically: workers on the boards – German style?; shares for employees?; regulation? All those measures have failed in the past to ‘hand key decisions back to the people’.  In the article, Blakeley advocates a wealth tax. But such a tax would do little to ‘democratize ownership of the means of production’.

The real solution to the market power of the likes of Apple, Microsoft, Amazon, Facebook, Google, Netflix etc is to bring them into public ownership to be run by democratically elected boards and managers drawn from the workers in these companies, consumer bodies, trade unions and government.  The fearsome foursome’s rule would then be ended. The billions they ‘own’ through their shares would be lost to them overnight. The nefarious practices of these companies would then be stopped and the social media scandals ended.  And most important, the key services that these companies provide (as the pandemic has revealed only too well) can then be supplied (at low cost without adverts!) to meet social needs, not deliver mega profits.

Another capitalist Infrastructure crisis as Michigan Dams Fail.

10,000 displaced. Another catastrophe of the so called free market. Source

Richard Mellor

Afscme Local 444, retired

The pundits and politicians rarely, if ever, make an issue of the 100 million or so registered voters in the US who didn’t bother to vote in 2016. If they do bring this up it is generally to admonish the electoral absentees for their “apathy” or to shame them for their failure to take their democratic responsibilities seriously.  The real reason such a large section of the U.S. population have abandoned electoral politics is that they have decided it really accomplishes nothing of major significance. This situation has been maturing for a long time and a negative side affect is that there is a strong mood among the US population that nothing can be done short of revolution. They are not completely wrong.

If we pay attention to events, the present mood among the US working class is easy to understand. It is a reflection of the objective situation, a response to the material world around us.

In 2017 we had a couple of major infrastructure scares. One of them was the near collapse of the 770 -foot Oroville dam, the tallest in the US. Due to heavy rains, the lake behind the dam was overflowing and the water began to erode a part of the hillside that was a natural (unpaved) spillway. Thousands had to be evacuated.  It turned out that twelve years prior, in 2005, environmental groups and some local government officials warned that the dam’s integrity could be jeopardized and “catastrophic flooding” could result if the natural hillside spillway wasn’t reinforced with concrete or huge boulders that we sometime see at these dam sites. Naturally this was ignored.

Seven years earlier in 2010, 11 workers died when a deep-water drilling rig in the Gulf of Mexico exploded spilling millions of gallons of oil in to the gulf. We will never know the effects of this catastrophe spilling so much poison in to the spawning grounds of Bluefin Tuna. After the fact, the New York Times reported that: “Federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed industry officials several years ago to fill in their own inspection reports in pencil — and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency, according to an inspector general’s report to be released this week.

Yes, this is not a joke. The inspection reports for safety and other aspects of drilling in the Gulf of Mexico were given by government regulators to the employees of the energy companies who wrote them in pencil.

And here we are a decade later, and a couple of years after the near miss with the Oroville dam and countless other market driven disasters and we have two dams in Michigan that have been overwhelmed by rising floodwaters. Both of these dams are privately operated by Boyce Hydro Power LLC.  

One of the dams, the Edenvale, was breached and its spillway capacity was not sufficient to handle the load. We know that the Federal Energy Regulatory Commission (FERC) revoked Edenvale’s license in 2018 because of Boyce Hydro’s refusal to “increase the projects spillway capacity to safely pass flood flows.”, and the failure to comply with regulations. This has led to the present situation where the dam has “outright eroded” and that water would, “continue to inundate the city” of Midland, according to the Wall Street Journal. The dam is in Midland County Michigan.

Another dam, the Sanford dam, was also breached with water flowing over it and some of this water, according to reports in the media, “affected” the village of Sanford and a Dow Chemical plant. Dow admitted that floodwaters were, “comingling with containment ponds” (what these ponds contain can be anyone’s guess but my guess is we can’t drink it) but, that there were no “reported product releases” and that the comingling was not “..a threat to residents and wouldn’t damage the environment.”.

Let that sink in for a minute folks. Dow Chemical Corp unchallenged by the Wall Street Journal owned by the Australian billionaire Rupert Murdoch who owns Fox News assures us all is well.

Meanwhile, after the little bit of history I touch on here reminding us of the complete failure of regulation when in the hands of agents of a capitalist state and a body politic dominated by two parties owned and controlled by the likes of Dow Chemical and Wall Street, the Federal Energy Regulatory Commission “directed” Boyce Hydro Power LLC to “…form an independent investigative team to analyze the cause of the damage to the Sanford facility.” The fox will save the chickens.  Knock me down with a feather.

I now have the answer as to why there is what some claim an apathy among millions of Americans in the US. An apathy reflected in the abandonment of the electoral process which amounts to a rejection of bourgeois (capitalist) democracy. It’s not because US workers are stupid, apathetic, uneducated, selfish and so on. It’s that the vast majority of US workers have been paying attention to the world around them, after all how could you not notice a collapsed dam, a leaking gas main that blows up a neighborhood, a poisoned river that kills every living thing in it for 60 miles and other happenings and not draw some conclusions.

Along with this, It has not passed people by that they can’t get medical care and if they do it bankrupts them. Millions just happen to notice that the public schools are failing their children and that they need two maybe three jobs to make ends meet. And while that’s bad enough, if the conditions that exist among the black working class and their communities prevailed among whites, the country would be said to be in a state of extreme depression outpacing the 1930’s.

The truth is that the material conditions among the European/white working class have also deteriorated over the past 40 years to the point that the life expectancy of white Americans has declined. This makes it harder for the white racist ruling class to convince this section of society that their interests and the white workers are the same. The positive aspect of this development is that it weakens this divide and rule strategy making working class unity easier.

The era of the dominance of the two parties of capitalism over US economic and political life is over. The “apathetic” are not apathetic at all. They just don’t see a way forward. This has delayed the mass movement and resistance to the savagery of the market and has caused more suffering than necessary. In addition, the lack of leadership, even a reformist one, has prolonged this process. Movements cannot be manufactured but the COVID-19 pandemic has changed everything and the revolutionary potential of the US working class will begin to lift its head from under the heel of the arrogant, violent and grossly overconfident US ruling class.    

Confessions of an Economic Hit Man. Read it.

In light of the US backed coup, actually a decades long attempt to reverse social policies that aided the poor and working  class of Venezuela, we share this short video based on the book Confessions of an Economic Hit Man. I have not watched the video and will do so later but read the book and I highly recommend it.

And this is just Latin America. Like British Colonialism, that considered Africa its own back yard, US capitalism has the same outlook with regards to Latin America. The book is a few years old and the video apparently from 2011 but as the author is part of the production I can guarantee it will be worth watching. But if you prefer to read, definitely get the book.
You can order this version here

The Modern Banking System: Regulation does not work

by Michael Roberts

There is one big lesson from the Danske Bank money laundering scandal.  Regulating the modern banking system does not work.  Modern banks are now primarily giant hedge fund managers speculating on financial assets or they are conduits for tax avoidance havens for the top 1% and the multi-nationals.

The Danske Bank scandal is the latest and largest example of these modern banking activities.  Over $235bn in ‘special transactions’ flowed through the bank’s tiny Estonian branch in just four years from 2012 – an amount that dwarfs the Baltic nation’s GDP.  And this was in the period when international bank regulation had been tightened up, according to the IMF and the Bank for International Settlements, after the ‘reckless’ behaviour before the global financial crash.

Indeed, it was probably not just Danske Bank, but according to the Estonian central bank, the supposed regulator, Estonian banks handled about 900 billion euros, or $1.04 trillion in cross-border transactions between 2008 and 2015. The notion that these foreign individuals and investors would choose to run such a large sum of their money through Estonia for explicitly legitimate purposes is difficult to swallow.  After all, this comes after the liquidation of ABLV, formerly the third largest bank in Latvia, after it was caught laundering money for North Korea.

John Horan, senior associate at Maze Investigation, Compliance and Training Ltd. in Belfast, says money laundering is a Europe-wide problem. “dark money will almost certainly continue to flow through the European banking system like sand through a sieve.”  It’s a never-ending story.

Indeed, that’s not all.  The very latest scandal concerns the siphoning of over $2bn of Danish tax revenues through a scam involving claiming back tax paid by foreigners on Danish shares.  It appears that these foreigners never owned any shares or paid tax on them and yet they were able to get ‘refunds’ through the connivance or negligence of Danish government employees and small European banks shifted the money – and nobody has been charged or resigned over this massive loss of taxpayer money – equivalent to $110bn in US tax revenues.

The regulators have been useless in stopping these criminal tax avoidance schemes by the banks.  For example, Carol Sergeant was a regulator at the UK Financial Supervisory Authority and headed up supervision of the banks at the Bank of England.  She got an honour from the Queen for “services to financial regulation”.  She joined Lloyds Bank in 2010 and received bonuses which Lloyds are now asking back as she (among others) presided over the payment protection insurance (PPI) scandal for which Lloyds must pay now £18bn in compensation.  But guess where she works now?  Yes, it’s as non-executive director of Danske Bank, where her responsibilities include making sure that the bank operated under regulations!

Nevertheless, in its latest Global Financial Stability report, the IMF claims that “a decade after the global financial crisis, much progress has been made in reforming the global financial rulebook. The broad agenda set by the international community has given rise to new standards that have contributed to a more resilient financial system—one that is less leveraged, more liquid, and better supervised.”

Well, it may be true that international banks are better capitalised and less leveraged with bad debts after the gradual implementation of the Basel III capital and liquidity accords and the widespread adoption of ‘stress testing’, but even that can be disputed.  In 85% of those 24 countries that experienced the banking crisis in 2007-8, national output growth today remains below its pre-crisis trend.  And the IMF admits that “in many countries, systemic risks associated with new forms of shadow banking and market-based finance outside the prudential regulatory perimeter, such as asset managers, may be accumulating and could lead to renewed spillover effects on banks”.

The ‘official’ view that regulation is the only way to control the banks is accepted by most Keynesians or those who see the financial sector as the only enemy of labour.  Take Nick Shaxson.  Shaxson wrote a compelling book Treasure Islands, tax havens and the men who stole the world, that exposed the workings of all the global tax avoidance schemes and how banks promoted tax havens and tax avoidance for their rich clients.

And more recently, he has done a new piece of research that argues that not only does the City of London and the UK financial sector operate to help tax avoidance and money laundering, it does not provide credit for productive investment. Indeed, “research increasingly shows that all the money swirling around our oversized financial sector may actually be making us collectively poorer. As Britain’s economy has steadily become re-engineered towards serving finance, other parts of the economy have struggled to survive in its shadow.”

Shaxson goes on: “Long ago, our oversized financial sector began turning away from supporting the creation of wealth, and towards extracting it from other parts of the economy. To achieve this, it shapes laws, rules, thinktanks and even our culture so that they support it. The outcomes include lower economic growth, steeper inequality, distorted markets, spreading crime, deeper corruption, the hollowing-out of alternative economic sectors and more.” So what are we to about these criminals at the centre of our economies, according to Shaxson? “We can tax, regulate and police our financial sector as we ought to.” So it’s regulation again – a policy that Danske and other scandals have proven not to work.

Then take Joseph Stiglitz, Nobel prize winner in economics, tireless campaigner against the finance sector and its iniquitous role, and (once again) adviser to the British Labour Party.  Just after the global financial crash, Stiglitz wrote a book, Freefall, about the bursting of the housing bubble and the ensuing massive defaults on mortgages that triggered the financial meltdown of 2008–09.  It was based on his study he had done for the UN, published as The Stiglitz Report, on the financial crisis, which declared: “Governments, deluded by market fundamentalism, forgot the lessons of both economic theory and historical experience which note that if the financial sector is to perform its critical role, there must be adequate regulation.”  

Stiglitz proposed that future meltdowns could be prevented by empowering incorruptible regulators, who are smart enough to do the right thing. “[E]ffective regulation requires regulators who believe in it,” he wrote. “They should be chosen from among those who might be hurt by a failure of regulation, not from those who benefit from it.” Where can these impartial advisors be found? His answer: “Unions, nongovernmental organizations (NGOs), and universities.” But all the regulatory agencies that failed in 2008 and are failing now are already well staffed with economists boasting credentials of just this sort, yet they still managed to get things wrong.

In a 2011 book, Engineering the Financial Crisis: Systemic Risk and the Failure of Regulation, Jeffrey Friedman and Wladimir Kraus contested Stiglitz’s claim that regulations could have prevented the disaster, if implemented by the right people. Friedman and Kraus observe: “Virtually all decision-making personnel at the Federal Reserve, the FDIC, and so on, are . . . university-trained economists.” The authors argue that Stiglitz’s mistake is “consistently to downplay the possibility of human error—that is, to deny that human beings (or at least uncorrupt human beings such as himself) are fallible.”  But note that Friedman and Kraus were no better in coming up with a solution.  They argued for less regulation – free market style!

More recently, David Kane at the New Institute for Economic Thinking has shown that banks have managed to avoid most attempts to regulate them since the global crash as “the instruments assigned to this task are too weak to work for long. With the connivance of regulators, US megabanks are already re-establishing their ability to use dividends and stock buybacks to rebuild their leverage back to dangerous levels.”

Kane notes that “top regulators seem to believe that an important part of their job is to convince taxpayers that the next crash can be contained within the financial sector and won’t be allowed to hurt ordinary citizens in the ways that previous crises have.”  But “these rosy claims are bullsh*t.”  Kane wants criminal bankers locked up, not the banks just fined.

Regulatory reform since the global financial meltdown has not brought under control the criminal and reckless unproductive activities of modern banking.  Even the IMF quietly admits this in its latest GFS report: “As the financial system continues to evolve and new threats to financial stability emerge, regulators and supervisors should remain attentive to risks… no regulatory framework can reduce the probability of a crisis to zero, so regulators need to remain humble. Recent developments documented in the chapter show that risks can migrate to new areas, and regulators and supervisors must remain vigilant to this evolution.”

Indeed!  As Gabriel Zucman  and Thomas Wright have shown in a meticulous and in-depth analysis of the size and extent of tax havens and tax avoidance, far from them being reduced or controlled, on the contrary, such schemes are an increasing part of US corporate profits, organised and transacted by the banks.

About half of all the foreign profits of US multinationals are booked in tax havens with Ireland topping the charts as the favourite (Irish tax rate just 5.7%). And the benefits for the increase in profits have gone to shareholders, the Zucman and Wright showed. “Ireland solidifies its position as the #1 tax haven,” Zucman said on Twitter. “US firms book more profits in Ireland than in China, Japan, Germany, France & Mexico combined.” 


Zucman and Wright also show that the rate of return (or profit) on US multi-national investments abroad has not risen, indeed the rate has slipped.  But thanks to favourable tax regimes (including the latest Trump measures) and the availability of tax havens like Ireland, after-tax profitability has jumped.

So those who think that ‘regulating’ the banks and tax evasion using ‘regulators’ will work are expecting pigs to rev up their jet engines for flight.

I have posted before on Stiglitz’s views as expressed in his book, http://www.amazon.com/Rewriting-Rules-American-Economy-Prosperity/dp/0393254054.  “We can’t leave to market forces to solve the problems by themselves”, concluded Stiglitz, so we must rewrite the rules of the game.  But he admitted that his rule changes were unlikely to see the light of day. Changing the rules or regulation of the banks won’t work; we need ownership and control.

Why Taxing the Rich is a Temporary Tactic

This is a perfect example of why you can't make capitalism humane by taxing the rich, or regulating it in to decency. Not that democratic workers' ownership and control of the means of food production would produce something like Coca Cola. This does not mean in the struggle to make the lives of people better in the capitalist mode of production that we can't shift the share of the wealth we create from them to us; we can.   If the market doesn't take this price rise and folks go buy more Pepsi's or drink less soda, the owners of capital that have invested it in Coca Cola may suffer a loss.

Socialists support the fight for such reforms like taxing the rich because we believe we should struggle to improve the material conditions of the workers of the world and defend the natural world in which we live.   But we must recognize that as long as a tiny minority do own the means of production (including the production of ideas through their universities and other such institutions) any victory is a very temporary one. Not only that, but in this epoch, victories are harder to come by and shorter lived.  It is also through the struggle for reforms that we learn lessons about the nature of society. Socialists fight for them not because we think they are a gateway to socialism, we fight for them as part of our struggle to overthrow capitalism and build a democratic socialist society and world.  Richard Mellor

Reprinted from the Independent UK

Coca-Cola blames sugar tax as it cuts coke bottle size and puts prices up

A 1.75l bottle of Coke will shrink to 1.5l as price goes up 20p

The price of a 500ml bottle will also go up from £1.09 to £1.25, Coca-Cola confirmed on Monday Getty / Scott Olson

Coca-Cola said it will cut the size of its 1.75l bottle of Coke to 1.5l while putting up the price by 20p in the UK.

The price of a 500ml bottle will also go up from £1.09 to £1.25, Coca-Cola confirmed on Monday.
The global drinks maker said the changes were in response to Britain’s sugar tax which comes into force in April.

The levy will be set at 18p on drinks containing 5g of sugar or more per 100ml and a higher 24p rate on those with more than 8g per 100ml.

Coke contains more than 10g of sugar per 100ml with a 1.75l bottle containing 186g.

“We have no plans to change the recipe of Coca-Cola Classic so it will be impacted by the government’s soft drinks tax,” said a spokesperson for Coca-Cola European Partners.
The Soft Drinks Industry Levy, or sugar tax, was announced by former Chancellor George Osborne in 2016 as an attempt to combat spiralling levels of type 2 diabetes and childhood obesity.
The Treasury estimates the tax will raise £520m a year – money that it says will go towards funding sport in primary schools.

The tax has prompted some drinks makers to replace sugar in their recipes with artificial sweeteners such as aspartame.

An online petition titled “Hands off our Irn Bru” attracted thousands of signatures this month. It called on the soft drink’s maker, AG Barr, to rethink its decision to change the ingredients of the Scottish “national treasure”.

AG Barr earlier announced plans to cut Irn Bru’s sugar content by more than half

Houston, Racism, Climate Change and Class Unity

Here's what a working class woman in Houston had to say:

“This has been bad but it’s not going to get better, it’ll only get worse. We all talk about how close we are to the refineries but for us there is no hope, we will die with this poisonous air … I’ve been around for a few years and no one has listened to us. We are just the little people.”

I didn't watch the video of the five former presidents telling US workers to send money for victims of the Hurricanes.  The horrendous consequences that will follow due to pollution, disease and the destruction made worse by the conscious placing of profit ahead of human safety and the environment by politicians legislators and the corporate bosses is what they are covering up.

The former presidents, all smiling and laughing together, joined through Twitterland by the Predator in Chief Trump, don't put a face on those responsible for the disaster being worse that it should be because they too are responsible. They cannot blame the system because they defend the system, it is "their" system and no ruling class commits class suicide. They must convince us we are all in this together, they afraid things could get out of hand. And when we see we can rely on ourselves our neighbors to help us in these times then we might go too far, recognize that we can govern society too. This is why the five presidents, united in their aims, spoke to the nation at the NFL game.  Bush lives in Texas. Does he know about this you think:

"Last year the National Association of Home Builders boasted of its prowess at stopping codes for 2018 that it didn’t like. “Only 6 percent of the proposals that NAHB opposed made it through the committee hearings intact,” the association wrote on its blog. The homebuilders demonstrated their power again this year, when President Donald Trump reversed an Obama initiative restricting federally funded building projects in flood plains. “This is a huge victory for NAHB and its members,” the association blogged."
 

Liars and con men: All having a good time.

None of these presidents made announcements at nationally televised sports venues telling us we're all one and should unite against measures like those above and that we have to confront the forces promoting them. Of course not, they never opposed them themselves. They are they forces at the national level. Now they want us to pay.

There is potential at times like these for anger among the millions of ordinary working people to manifest itself through a united movement in opposition to the class oppression that is felt every day in one way or another, housing, work, health care education basic social needs.

As I mention in the video  there are faces to the guilty in the case of Texas, the heads of an organization that has bribed cajoled and done whatever they could to ensure that no curbs, no regulation was placed on the right of capitalists to go anywhere, do whatever they want build whatever they want  unhindered, free from regulations, unions, anything that curbs their rapacious appetites for profit.

Here's a few more posts about this that we had up on here lately:

 

Houston Catastrophe Market Driven. But Let's Not Talk About That.

Harvey-Texas-Louisiana: Capitalism's Addiction to Profit is to Blame! 

Harvey - The Trade Unions must Act. The Arsonists Must Pay.

Grenfell Tower tragedy: why?

Angry protestors descend on Downing St. demanding justice

By Mick Brooks

First we must offer our condolences to the friends and relatives of the victims of this terrible event. We don’t know what caused the fire. We don’t know what the final victim count will be.  We do know that this should never have happened and must never happen again.

First we need to spell out the positives. The work emergency services, particularly the firefighters were tireless and heroic. The response from the local community to support those made homeless was brilliant. Volunteers have been working all the hours.

Unfortunately the official reaction from Kensington and Chelsea Council and the Tory government has been at best dilatory and at worst an attitude of stony indifference.

The horrifying pictures of the flames leaping up the tower block show that Grenfell Tower was not properly fireproofed. Yet there had been a refurbishment last year. The visual evidence in the photos is that the cladding actually fed the flames.

The type of cladding used can have a plastic or a fire retardant mineral core. Plastic cladding is banned in the USA, but plastic is cheaper. A fire retardant core in the cladding for the whole of Grenfell Tower would only have cost an extra £500, but someone thought saving a little money was more important than saving the lives of working class people.

Likewise the tenants have been complaining that the gas pipes recently installed were not boxed in with fireproof materials. The fire alarm installed during the refurbishment was inaudible. The emergency instruction to stay in your flat in the event of a fire may have led to the death of tenants of the tower.

Labour MP Jim Fitzpatrick, a former firefighter, has queried why sprinklers were not installed as a safety measure. Former Tory Housing Minister Brandon Lewis admitted automatic sprinklers save lives, but said it was not the government’s responsibility to encourage developers to fit them. Apparently they are expensive, so the decision should be left to the builders.

The ‘Guardian’ has accused, “a government in hock to a grasping building industry running a policy of austerity that has starved local councils of cash”. Cuts kill.

The refurbishment was carried out by a firm called Rydon. As usual these days much of the work was subcontracted out. So we have a chain of subcontractors, none of whom are responsible for the success and safety of the project as a whole. Each can blame the others for any faults. Rydon has responded curtly to questions and deadbatted to the effect that existing building regulations were adhered to. So that’s good enough, then.

In 2009 there was a fire at Lakanal House, South London, in which six people died. The coroner made a number of recommendations in order that no such tragedy should ever happen again. His recommendations were ignored. It was quite clear then that existing building regulations were inadequate for fire prevention. The government has since dithered and dithered. No new regulations have been drawn up.

Grenfell Tower was social housing. Management of the block was handed over by the Council to Kensington and Chelsea Tenant Management Organisation. KCTMO has relentlessly brushed aside complaints from the Grenfell Action Group for years. The tenants seemingly have no way of making their concerns and fears known. The Grenfell Action Group commented in 2016:

“It is a truly terrifying thought but the Grenfell Action Group firmly believe that only a catastrophic event will expose the ineptitude and incompetence of our landlord, the KCTMO, and bring an end to the dangerous living conditions and neglect of health and safety legislation that they inflict upon their tenants and leaseholders. ..Unfortunately, the Grenfell Action Group have reached the conclusion that only an incident that results in serious loss of life of KCTMO residents will allow the external scrutiny to occur that will shine a light on the practices that characterise the malign governance of this non-functioning organisation.”

KCTMO’s bureaucratic arrogance is part of a wider problem. Kensington and Chelsea is one of the richest boroughs in one of the richest cities in one of the richest countries in the world. Yet the area around Grenfell Tower is desperately poor and has been treated by the Council, Tory since the year dot, like part of the third world. Volunteers and donations flooded in after the disaster, yet those people desperate to offer their help complain of a lack of co-ordination that should have been led by the Council.

Boris Johnson as Mayor of London closed three fire stations close to the area. Paul Embury, the Regional Secretary of the Fire Brigades Union, predicted at the time that he would have “blood on his hands. It will be only a matter of time before someone dies because a fire engine did not get to them in time. You cannot close 10 fire stations and slash nearly 600 firefighter jobs without compromising public safety.” When questioned about the closure of frontline services in London at the London Assembly, Johnson told his critics to “get stuffed”.

The Grenfell Tower tragedy has unleashed widespread and justified anger. The incident shows that, to the Tory establishment, working class lives just don’t matter. It shows all that is wrong and rotten in Tory Britain. The government is offering an enquiry. The fear is that this will just kick all the problems raised into the long grass.

There is understandable panic among high rise residents all over the country about their own safety. They deserve better than bland assurances from the likes of KCTMO. We need proper answers and we need them now. If plastic cladding is a fire hazard, then it must go, no matter how much it costs. Austerity is all too often penny wise and pound foolish.

In the meantime the plight of those made homeless must be urgently addressed. Residents of Grenfell Tower fled in their pyjamas and lost everything. They have to be urgently rehoused. They must be housed nearby with their families and friends in support, and their children’s access to their local school maintained.

That is why Jeremy Corbyn’s call for empty houses in the Borough to be requisitioned is correct and necessary. There are almost 20,000 empty homes in London, more than a thousand in Kensington and Chelsea alone. Many of these are owned by shady trusts operating out of tax havens such as the British Virgin Islands, as what even Boris Johnson described as “gold bullion in the sky”.

It is grotesque that, in the face of desperate human need, these houses remain empty. Hopefully the Grenfell Tower tragedy will be a wake-up call, leading to a major reversal of the priorities in Tory Britain where profit is more important than people.

This article was first published by the Labour Representation Committee

State of Emergency in Socal?

Where's their sense of patriotism? We're at war and their worried about a little gas leak.

By Richard Mellor

Afscme Local 444, retired

There’s lots of good news coming out of California.  The Golden State Warriors, the state’s basketball team is on top of the world and even the Oakland Raiders are beginning to show some promise for next year anyway. Then there’s Hollywood, lots happening there.

The state of emergency that has been declared in the Porter Ranch area just outside Los Angeles doesn’t seem to be of major interest though. How can it be? It’s not due to a “terrorist” attack not as defined by the FBI anyway.  Yet 1600 residents have been “displaced” due to a natural gas leak that’s been going on for almost two months.

It’s no small matter; at least the FAA thinks not as its instituted what is basically a no-fly zone over the area around the 3600- acre danger zone, an old oil field being used to store natural gas. Flights are banned from flying below 2000ft.

Authorities have ensured residents that there’s absolutely nothing to worry about or more accurately told them the leak doesn’t “pose a significant health risk.”, after all the site is a mile away.  People who don’t live in the path of market driven disasters, --------Fukushima, West Texas and scores more----are experts in determining the safety of those who do.

Apparently 1600 more people have been moved and a thousand or so more have made requests to do so, 1800 students have also been relocated.   There’s no need to worry though, it may stink like rotten eggs residents are told and the increased visits to the school nurse by the young ones is just those pesky kids and their lively imaginations.

The utility that owns the site, Southern California Gas, is part of Sempra Energy. They have what they call, Holding Companies that are a way of obscuring who the actual owners and beneficiaries of profit driven corporations are. It has been included in the list of best 100 corporate citizens I see. Let’s not lose sight of the fact that corporations are people and have the same rights as people, or more. I mean, we’ve all heard the news, “GM said it had no knowledge of the defect”  “Chevron said that the oil leak wasn’t its fault.” Corporations can speak for themselves.

In this case, Jimmie Cho, a company CEO does say that the well passed an inspection within the past year and to back him up, “the company believes it was in compliance with all regulation.”, the Wall Street Journal reports.  That does it, with “The Company” backing him up, all will be well, no pun intended. 

The standard defense in these situations is that the culprit was “in compliance” with all laws and regulations.  They all say that. The problem is that a private for-profit corporation is not a democracy.  And we only have to go back to the catastrophic BP spill in the Gulf of Mexico to see how ineffective  regulatory agencies can be. The government agency responsible for deep sea drilling rules and regulations allowed the energy companies engaged in the business to write the rules themselves.  Give a corporation and inch and it takes a mile.

This is not this corporation’s first leak of this nature. Less than two months ago it found a leak in its Aliso Canyon storage facility, one of the largest in the country. There's no blow by blow, minute by minute coverage of these incidents. No in depth interviews with residents, children, people affected. Perhaps locally, for a minute.  No deep scrutiny of the corporation and its connected parts throughout the globe, its internal e mails, phone conversations, individuals it does business with throughout the world.

There is no such thing as regulatory security when it comes to private industry owning the dominant sectors of the economy. It is not that we should oppose regulation but recognize its limits within the framework of the capitalist mode of production. We can’t begin to protect the population and the environment until industries like energy are taken in to public ownership and their operations determined in a planned rational way.   

The real dangers, the real threats we face come from internal enemies, not external ones.

Republican Debate: A distraction from what really matters.

People at GM could have prevented this but put profits over people. Source

By Richard Mellor

Afscme Local 444, retired

9-16-15

I had to retreat from the Republican debate last night after a mere 45 minutes or so. I just couldn’t stand it anymore, watching a bunch of rich business people, real estate speculators and other millionaire representatives of the capitalist class squabble about who is best qualified to rid the country of immigrants, protect us from the Iranian hordes chomping at the bit in anticipation of nuking us and destroying our precious way of life and generally waging war against the forces of evil. It was like a Klingon convention.

If there wasn’t any reference to the crimes “illegals” commit I would be surprised as this is another thing “real” Americans must concern ourselves with and it is why we must build that wall to keep them out. Here in the bay area a Latino immigrant has murdered a woman, tragic indeed as it could have been prevented, but it’s gotten plenty of mass media coverage, more fuel for the xenophobes.

Cruz and Rubio supporters don’t fret, they’re not Mexicans OK. Cruz is an immigrant but from the north and he’s Spanish and Irish/Italian, from a solid oil drilling family. Rubio is also of Spanish descent and from a landowning family. Both have Cuban ties.

I can bet there’s one sort of criminal behavior that wasn’t on the agenda last night and that’s corporate crime and the winding down of the GM ignition switch issue.  Perhaps people have been following this case although it has not yet been able to dislodge Trump’s immigrant bashing from the top billing.  More than 100 people were murdered and more than 200 injured due to a conscious decision by individuals at General Motors to ignore a defect in the switch that led to these deaths. 

After many hours of talks the legal arm of the capitalist state is charging GM, one of its major manufacturing outfits, with “Wire Fraud” and these two capitalist institutions have almost sealed the deal. A company or corporation in our society is classed as a person endowed with the same legal rights as a person which is why we read in the news that “BP” said this about the Gulf spill or “Apple” said that about the discrimination suit. It’s in order to protect the humans whose decisions resulted in catastrophic loss of life or environmental damage or any other misfortune.

Along with the criminal wire fraud charge, GM is expected to fork over $900 million for its transgressions. The deal is what is called a “deferred-prosecution agreement” where the state will dismiss the case as long as the company abides by the deal’s terms according to the Wall Street Journal. 

What occurred here is that people at GM were aware that there was a defect in the ignition switch that led to these deaths but covered it up. The 1%’s media describes this sort of thing as making “misleading statements” or “concealing information” much nicer than “lying” or “covering up”. These deaths could have been avoided but the people responsible refused to initiate a recall for more than a decade. They did this “…despite signs of a deadly problem.”, the Journal reports.  Perhaps part of the reluctance was the huge profits, some $25 billion, GM has made since the company went through bankruptcy proceedings in 2009 after the Great Recession.

No individual has been prosecuted even though the US Justice Dept. issued a memo last week stressing policies that were written in 2014 calling for investigations of this sort to prioritize the prosecuting of individuals at these corporations before a financial settlement is agreed upon.  The prosecutors have not been successful in this case as there are  “roadblocks” the Wall Street Journal adds.  What sort of roadblock could that be the reader asks?  Well, magically, by accident, by an act of god or gods perhaps, there are “….limitations with federal law that calls for civil fines but forecloses criminal penalties when an auto maker fails to alert regulators to a safety defect in a timely manner…”.

Interesting, but this is not magic.  Lobbyists spend a lot of money bribing legislators to write laws in this way. It’s called freedom, or free market capitalism.

GM, in actuality, the auto bosses, were bailed out to the tune of $50 billion when public money dragged the capitalist system from the edge of the abyss after the Great Recession hit.  The industry was nationalized but not under the democratic ownership, control and management of the working class but of the capitalist state. Their media described it as “conservatorship” to avoid using the dreaded N word. Marx was not wrong when he described the state apparatus in the capitalist mode of production as the executive board of the bourgeois class as a whole.

There was an attempt to include further charges of bankruptcy fraud, that GM lied to “concealed from” the bankruptcy court in 2009 that there was a safety defect at all. But that didn’t fly; the prosecutors couldn’t prove it. It doesn’t matter really------- this is all a sham. We must all recall how GM and other auto related manufacturers shut down the highly efficient and environmentally friendly electric tram system.  It got away with that though it was fined $5,000 and its then treasurer H.C. Grossman, was fined $1. The automobile is not the most efficient form of mass transit but it has made many investors very wealthy.

A number of lawyers and engineers have been fired due to these deaths and injuries but no one has been named the culprit and no one ended up in jail. As for regulators, let’s not forget the energy industry and the regulations for deep water drilling prior to the deaths of 11 workers and the catastrophic oil spill in the Gulf of Mexico.  The government regulators in this instance, the Minerals Management Service, an agency of the Interior Department, was supposed to regulate deep water drilling but left the regulation up to the industry itself.  

The 100 deaths from this GM episode are just the tip of the iceberg. There are literally hundreds of thousands of US deaths each year from a lack of health care, housing, poverty and just the stress of living in a system which glorifies individualism and self promotion. As James Conolly, the Irish socialist executed by the British, pointed out, It is an economic system that promotes an ideology of the strong devouring the weak. “ Its theory of the world of men and women”, he wrote, “…. is that of a glorified pig-trough where the biggest swine gets the most swill."

There were a lot of pigs looking to get their snouts in the trough last night.