A New Model for Managing International Trade and Development , Part I

This is the first part of a four-part series describing a new approach to the conundrum of manufacturing outsourcing. Sid Eschenbach is The Rag Blog‘s newest contributor. We welcome his participation in our growing effort. And we hope you, the readers of TRB, enjoy this proposal for changing the way globalization is taking place.

Richard Jehn / The Rag Blog

Click here for all the posts in the series.

In Development…
…only one road leads to Rome

By Sid Eschenbach / The Rag Blog / November 12, 2008

Introduction

The challenges facing President-Elect Barack Obama could not be clearer: in the U.S., he must reverse the hemorrhaging of high quality jobs and declining real wages, and set a course to restore real economic and wage growth. In particular, Obama’s policies must create real growth… that is, growth not founded on financial card shuffling or fiat spending, but on that growth of old founded upon simple work and production. Not on excess borrowing by American consumers, but earnings from jobs and investments in other than service and financial sector businesses.

The U.S., like most other nations, is finally going to be forced, once again, to make money, like that old Smith-Barney ad stated, the old fashioned way… by earning it… but industrial production is at its lowest level since 1942 as a percentage of the economy.

Over the past 40 years, the historic trade relationships between nations have been fundamentally changed by the introduction of massive, stateless global corporations into the traditional national trade and development equations. Because their interests are not necessarily congruent with those of any nation, the established development paradigm of protect, industrialize, consolidate and export has become distorted by their arguments and interests. I hope to show over the course of this paper that in spite of the self-serving arguments advanced by the global corporations, there is still only one road to generalized prosperity, and that is the traditional road.

It is the road that starts with protected national industrialization and ends with higher worker pay and the creation of a productive and entrepreneurial middle class, features that managed correctly then become self-perpetuating features of the national economy. However, without these precursor states of protection, industrialization and labor gains, the economic benefits generated by innovation and productivity will never be realized, and an otherwise achievable state of generalized and global economic well-being will be impossible to attain. I will further argue that the use of this paradigm does not, in fact, hurt the valid interests of the corporate trade entities, but will rather serve to spur their own prosperity.

However, to achieve this end, we will need to find a remedy to the problem that is at the heart of what currently drives manufacturing to migrate ‘off-shore’, the problem of global surplus labor and the natural and unavoidable exploitation of that resource by international businesses. This is not something that they do because they are inherently evil or abusive by nature, but rather something that they are obliged to do simply in order to survive within the capitalist system.

Fixing this labor problem and strengthening the traditional model of national development will allow us to return to a modified model of what has brought prosperity in the past, but with the added virtue of benefitting from the tremendous creative capacity of the new player in the arena, the international businesses.

The first indication that the above is likely true, that prosperity and well-being in large nations can only be created and sustained through industrialization, is the recognition of the fact that before the Industrial Revolution, no people, no nation and no empire on the planet achieved an economic level where the majority of their people were living above subsistence level.

Not the Greeks, not the Romans, not the Chinese or the Sumerians or the Aztecs or the Incas. Not in London, Rome, Angkor Wat, Baghdad, Cairo or Cuzco… no civilization anywhere achieved states of well-being remotely comparable to what has been achieved by hundreds of millions of people in the past two centuries since the industrial age swept out of England and changed the world. As we will see, it’s not a coincidence.

That being the case, Obama’s economic challenges, while bigger in scale than others, are the same as those faced by most national leaders on the planet… to improve the well-being of his or her people in real, sustainable ways. Amazingly, this is proving difficult to do, in spite of ample historical evidence as to what must be done. This paper will argue that there is one and only one road for any nation or region to successfully develop and achieve a sustainable economic state of comfortable well-being for its people, and that road that stands independent of national identity, cultural values or geographic peculiarity.

Over the last two centuries of competing economic theories, political and cultural policies and in a wide variety of geographic settings, it has been repeatedly shown that there is only one route to economic well-being, one that starts with industrialization and ends with organization of labor, higher worker productivity and innovation. Without them, you’re dead. With them, you are a success and your people are comfortable.

The idea, advanced by corporate interests intent on moving manufacturing to low-wage environments, that a large nation can generate and sustain prosperity through the economic activities of the service or finance sectors alone has finally collapsed, and the demise of this ideologically flawed model is as important to the worlds economic evolution as was the fall of the Berlin Wall in politics. However, unless this economic collapse is understood for what it is, the systemic failure of modern international corporate laissez faire economic ideology, and unless that recognition spurs a complete rethink and redesign of the past 50 years of economic development theory, there is absolutely no hope that that the new American president can, using Keynesian mechanics, rebuild within the United States and the rest of the world a system that by its nature generates and sustains prosperity.

Without overstating the case, this is a moment not unlike that faced by John Locke when he wrote his ‘Two Treatises of Government.’ In it, he first refutes the basis of the then-existing seventeenth-century political order (primogeniture), and then goes on to develop the arguments for an entirely new political system. First, however, he asked all the hard questions, the answers to which demanded a rethink of the political realities of the day… and it is just this type of analysis that is called for at this current time of economic crisis. The king is dead; long live the king.

The situation as it stands today

The current development mantra is the internationalized version of the U.S. domestic ‘trickle-down’ theory first popularized by Ronald Reagan. Its ‘developmental’ premise is that what is good for the top is also good for the bottom; that unrestricted and unregulated corporate ‘free-trade’, the unrestricted manufacture and exchange of goods, will by its nature lead all who participate in it to a developed economic state.

The adoption of this ‘strategy’ is, in historical terms, very recent, and is driven by the particular agenda of the new kid at the party… the powerful and essentially stateless multi-national corporations who, not surprisingly, have their own needs before them. That is because while trade agreements are signed between nations, they are in fact driven by particular business interests that may or may not be congruent with the national interests, and as such, are not necessarily made in their national interests.

Furthermore, the silent partners to these agreements, the multi-national corporate structures, do not share equitably in the true burden1 of the educational, legal, social and environmental services provided for the workers of the multi-nationals… but paid for by the nation-states. Thus, the so-called ‘free-trade’ agreements signed between nation states have invisible co-signatories, the corporate multi-nationals that will be the major beneficiaries of them.

Instead of seeing the outcome as a win/lose or a win/win contract between the national parties involved, the outcomes should more truly be considered to be shared between three parties… the two nations involved… and the corporate parties who will most likely be the real beneficiaries. It is the very nature of this new tripartite relationship that has dramatically changed the historic shape of national development and trade policy.

For many, the new and powerful groups of international corporations are the villains of the piece, a group whose interests are not national and whose goals are distinct from the historical processes used by nations to develop. To the degree that they are the authors and the proponents of the current ‘free-market’ development model, they are indeed the villains. However, in my opinion this is more coincidental than by design, as they simply grew, like nations and individuals, to act in their own best interests… something that should surprise no one.

The challenge is to design a trade and development strategy that joins the goals and the success of the multi-nationals to the goals and the success of the national interests they work between… a situation that we don’t currently enjoy.

Exactly what is different about modern international trade? Surely there has always been trade, and empires from the Venetians to the Dutch were built upon it. The answer is simple: the dominant power of statelessness corporate players. From the time of the Peloponnesians, through the Venetians to the Dutch and the English, all trading was done by national entities that, while acting privately, generally reflected national interests… a fact that is no longer the case.

There are now many companies that while headquartered in a particular nation, actually do the bulk of their business, have the bulk of their workforce and earn the bulk of their profits in other nations than their ‘own’. When they make decisions, then, whose interests do they represent… their own, or the nation where their headquarters is located, their manufacturing done, or their sales consummated?

It is due to the opaque answer to this question that the historical trade and development paradigm has been altered, and that reason is simply because, as stated above, national trade agreements are not any more necessarily in the best interests of the nation where either the manufacturing or the selling takes place, but in the best interests of the manufacturer or the seller… and that may be completely different than any of the nations involved.

As international trade and development policy currently exists, it is harder, not easier, for a nation to implement the policies that will actually lead to the goal line — an industrialized, unionized economic state where innovation and productivity are the engines of well-being. Why? Because as things stand now, international capital can shop production facilities between national sites that are reduced to underbidding; giving more generous tax holidays, forgiving labor and environmental regulations, even paying the potential investor to invest in their country.

This happens because of one simple, commanding and unavoidable reality; the world has a huge surplus of cheap labor. Therefore, under the ‘any job is better than no job’ scenario, for the citizens of most countries these policies constitute nothing less than a game of economic ‘limbo’… how low can you go? For labor, it is quite simply a race to the bottom.

For the corporate entities, it is also a race to the bottom, but their ‘bottom’ is the bottom line. This is the simple result of the inevitable capitalist struggle, their fight for survival among their peers, and their actions represent only what they must do to survive. Therefore, the country that offers the best combination of low labor costs and efficiency, all else being equal, will receive the production facility… which is why it is a race to the bottom.

The international negotiating record is rife with tax holidays, environmental sacrifices, payoffs to national leaders, labor exceptions, etc, tools and gifts employed by both the country and the company to get a ‘better’ deal. It is most often then not on what is best for the country or the people, but upon the argument that anything is better than nothing, even if workers rights, environmental protections and decent pay are sacrificed to get the ‘deal’.

Due to economies of scale and low costs of transportation, it is far better from the corporate and strictly economic point of view to manufacture any product in a low wage – low controls – low obligations environment and sell in the high cost environment. Due to worldwide surpluses of both labor and capital, and in combination with the information technology revolution, this ‘flat’ world phenomena can be expected to continue unhindered unless international trade and development policies change through national legislative actions.

While no one can foretell the future, if the past is any example, what this probably means is a continued decline in the manufacturing sectors in the national economies in the developed world, and very moderate increases in income for the undeveloped and developing world… a situation that is not beneficial for either … and is in fact politically untenable for both.

Because of this recent addition of the multi-nationals to the mix and their advancement of a ‘trade is development’ paradigm, a rethink of the entire situation is past due. The development argument advanced by corporate interests in support of their ‘free-trade’ and ‘out-sourcing’ policies is the following: that the consumer benefits through lower prices and that efficient capitalism (measured by cheap prices) is not only good, but historically inevitable (which, given the policy, becomes a self-fulfilling theory).

It also embodies the argument that trade and consumerism will create development and well-being automatically as a bi-product of the same. However, are there any facts to support this assertion? I would say no.

There is no doubt that the well-being of humanity as a whole has indeed improved, but this is unremarkable in itself: exclusive of short-term variations, human quality of life has always improved over time. The Sumerians lived better than early Homo sapiens, Rome better than Sumeria, etc. Therefore, general or specific cases of improved well-being cannot be used as a particularly compelling argument for the ‘free-trade as development’ model.

Indeed, the fact is that the only national economies that actually have graduated from ‘un’ or ‘under’ developed to developed status did so using the traditional methods of protecting national markets and industries while strengthening them in order to then export and prosper. The examples of the successful use of this historical model would be the Asian tigers, China, and to a lesser degree India. On the other side of the coin, we have all of Africa and South America who were forced to accept the neo-liberal model… and are still struggling to achieve both economic and political well-being.

A Step in the Right Direction

In my opinion the current model of international trade can actually be described in the following equation: abundant international capital + excess international labor + super efficient global communication and transportation systems = development.

It represents the neo-liberal argument that a ‘goods’ based system, the manufacture and trading of goods, will lift the standard of living of everyone. As stated above, the only examples of nations that have in the past 30 years achieved the levels of well-being enjoyed by the previously ‘developed’ world did so by creating a hybrid model, one that utilizes the proven methodology of the past while joining it to the creative and financial power of the international corporate trading and manufacturing entities.

First, they rejected the neo-liberal policies promoted by the IMF, World Bank and what is know as the Washington Consensus and, bucking strong opposition, went traditional: they protected their industry, protected their markets, and kept control over their own national priorities. However, that added a twist to that historical model by taking advantage of the multi-nationals, offering their countries as bases for export manufacturing and thereby gaining the benefits of their technological and financial capacity.

Compared to the regions that did not adopt this ‘amalgamated’ strategy and simply swallowed the neo-liberal philosophy and practices, those many countries that simply opened their borders to the ‘cheap’ consumer articles produced elsewhere, the difference is dramatic. This is not to say that over the past 40 years there has not been uniform and rising global prosperity even in the ‘free-trade’ countries. However, the difference between a star of the neo-liberal world, Chile, and one of the many stars of the modern ‘amalgamated’ world, South Korea, for example, is dramatic. It is not an argument that open-border trade is bad, but rather that real development is better.

And we should not be surprised that even just trade makes things better. After all, man is nothing if not creative and intelligent. Things have been getting better for the past 10,000 years, so we certainly would not expect to go backwards. However, using a ‘things are better’ argument against a ‘things could be much better yet’ argument makes no sense. I am not against trade, but I am against the proposition that trade is the best vehicle for development.

What then, is the best program? Have the Asian economies created a viable new model that combines the best of the past and the best of the modern? What should be at the heart of development? In contrast to the neo-liberal argument that cheap consumer prices are the standard by which success is measured, I believe that they should not the central part but one of the least relevant parts of a successful national development policy.

While price will always drive consumption and consumers behavior, the consumer can only consume if he/she has money to buy… and that must be earned. The question is, from where? How does one produce with one’s labor something that has enough value to purchase the goods produced elsewhere?

The truth is that ‘free’ trade, in the absence of global industrialization and collective bargaining is, as I said above, nothing less than a race to the bottom for the many, all for the benefit of a relative few international parties. When two nations sign a ‘free-trade’ agreement, the businesses that can move do move… from the high-wage nation to the low wage nation, as there is no longer a penalty to export back into that high wage market. Therefore, when that company ‘off-shores’ its manufacturing, the high wage laborers lose, the low wage laborers lose, and the company gains. This is no solution for the peoples of either country.

Note

1 In August, the U.S. Government Accountability Office reported that two-thirds of U.S. corporations paid no income taxes between 1998 and 2005.

Sidney Eschenbach, 60, lives and works in Guatemala, Central America. His thoughts regarding developmental economics and trade are based on decades of development work in Latin America at various levels, community and corporate.

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Questions About Who’s Getting the Bailout Bucks

Federal Reserve Chairman Ben Bernanke and Treasury Department Secretary Henry Paulson are central figures in the government’s efforts to rescue the country’s financial system — efforts that, thus far, have aroused the concerns of critics concerned with the transparency of the government’s plans.

Government Rescue Spending: Clear or Cloudy?
By Alice Gomstyn / November 11, 2008

Critics Question Transparency of the Treasury Dept., Federal Reserve on Rescue Effort Spending

How much will the AIG bailout ultimately cost? What are the banks applying for the government’s $250 billion capital purchase plan? Who is the Federal Reserve lending to and how can taxpayers be assured they’ll get their money back?

Questions about on how and how much the Federal Reserve and the Treasury Department are spending taxpayer money to help save the country’s financial system.

After weeks of sometimes frenzied efforts by the federal government to rescue the financial system, and on the heels of the government’s latest move — the announcement of a new $40 billion infusion to the ailing insurance giant American International Group — critics say there are many questions but few answers about the work performed by the Treasury Department and the Federal Reserve.

“The bailout, the Treasury, the Federal Reserve — it’s like a three-card monte game, you don’t know where the money’s coming from, you don’t know who it’s going to, and I think the public has every right to be outraged by this,” said Bill Allison, a senior fellow at the Sunlight Foundation, a government transparency watchdog group.

Gerald O’Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the government to provide more information about its rescue spending could signal corruption.

“Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.

Federal officials, however, have touted their commitment to transparency.

“We want to inform the public as much as possible about our operations, so we have posted an abundance of information on the Treasury Web site to allow everyone to have insight into our actions,” interim Assistant Treasury Secretary Neel Kashkari, the official in charge of the government’s $700 billion rescue package, said in remarks delivered at a securities summit Monday.

“Transparency will not only give the American people comfort in our execution, it will give the markets confidence in what form our action will take,” he said.

Federal Reserve Chairman Ben Bernanke last month noted the importance of transparency with respect to mortgage-backed securities, investment instruments that have played a key role in the country’s financial crisis.

Because of the complexity of mortgage-backed securities — swaths of mortgages bundled into single investments — “transparency about both the underlying assets and the mortgage-backed security itself is essential,” Bernanke said in a speech at the University of California at Berkley.

The Fed’s Mysterious Borrowers

But questions about transparency at the Federal Reserve, in particular, have prompted a lawsuit: Bloomberg L.P., which operates the news agency Bloomberg News, is suing the Fed for the release of information on its lending to private financial institutions.

The amount of money the Federal Reserve regularly lends to private institutions has increased exponentially since the start of the financial crisis and the creation of new Fed lending programs.

“We really don’t know anything,” Matthew Winkler, the editor-in-chief of Bloomberg News, told ABCNews.com. “All we know is something close to 2 trillion is being used and that money is the taxpayers’. … We don’t know whom it’s being lent to and for what purpose because we can’t see it because it isn’t disclosed.”

The Bloomberg lawsuit specifically requests information on what assets the Fed is taking as collateral in return for its loans. According to the Federal Reserve Web site, the Fed accepts collateral in the form of mortgage-backed securities along with other assets.

“Taxpayers are entitled to understand and assess the decisions by the Fed on the valuation of the collateral it accepts as security for public money being lent to private institutions,” the lawsuit states.

Supporters of the Fed’s work counter that it shouldn’t reveal the identities of the banks that borrow from it –- and, accordingly, what collateral they use -– because that could attach a stigma to borrowing from the Fed and could discourage the use of Fed lending facilities.

A Federal Reserve spokeswoman declined to offer comment on the suit.

While the Fed faces questions about its lending practices, the government as a whole is facing questions about whether its latest multibillion-dollar attempt to bolster AIG has even a remote chance for success.

Months earlier, the government had announced that the Federal Reserve would lend the troubled insurance company $85 billion. Later it announced it would lend an additional $37.8 billion.

The government said Monday that it was restructuring its AIG plan to include a total of $97.8 billion from the Federal Reserve and a $40 billion infusion from the Treasury Department. The Treasury Department would, in return, receive a stake in AIG in the form of preferred shares. The money for the government’s investment would come from the $700 billion financial rescue plan approved last month.

More Money for AIG?

The problem, critics say, is that it’s unclear exactly how much money AIG actually needs because there is no certainty about how much the insurance giant will ultimately lose as a result of its credit default swaps — insurance contracts that kick in when investments such as mortgage-backed securities fail.

“Not only do people not understand what’s on the books, it’s impossible to put a fair valuation on them,” said Barry Ritholtz, the author of “Bailout Nation: How Easy Money Corrupted Wall Street and Shook the World Economy” and the CEO of the institutional research firm Fusion IQ.

Critics question whether the government will have to provide even more money to AIG.

Brookly McLaughlin, a spokeswoman for the Treasury Department, said she wouldn’t speculate on whether the recently-restructured AIG package was enough.

But, she said, “we think that the steps taken today are important to giving them a more sustainable capital structure and helping them to be better able to execute their asset disposition.”

Which Banks Get the Bucks

Under the government’s $700 billion rescue package, $250 billion is supposed to be allocated directly to banks.

By infusing banks with capital, the program aims “to increase the flow of financing to businesses and consumers to support our economy,” Kashkari said at the securities summit.

The Treasury last month named nine big banks that would receive funding through the program –- known as the Capital Purchase Program –- and how much money each would receive. (A list is available here.) Kashkari said Monday that hundreds of other financial institutions have applied for the funds and that “a number of them” had been granted preliminary approval.

But the Treasury isn’t revealing which banks have applied and which have received preliminary approval. McLaughlin said that the department would only provide information on banks that have already received money from the program.

When “everything is finalized, that’s when it’s appropriate to post that information,” she said.

Some say the Treasury should be disclosing the names of the institutions that have applied for its help.

“I think that any time you’re asking for money from the government, it should be a matter of public record,” Allison said.

Will the Government Lose Money?

Still, others, including O’Driscoll, say they understand why the Treasury would want to guard such information.

“It’s legitimate to say, ‘If we tell you everybody who needs money, all it’s going to do is cause a run on the banks, and that defeats the purpose,'” O’Driscoll said.

Deborah Lucas, a finance professor at Kellogg School of Management at Northwestern University, said her gripe about the Treasury Department’s disclosure practices revolved around the true value of the Treasury’s investments in banks participating in the Capital Purchase Program.

In return for its investments in banks, the Treasury is receiving preferred shares in the banks.

In a statement issued last month, Treasury Secretary Henry Paulsen said the program was “an investment, not an expenditure” and said there was “no reason to expect this program will cost taxpayers anything.”

But Lucas said that the market rate for the shares is lower than what the Treasury is paying for them.

Under fair value accounting principles, Lucas said, the Treasury should be reporting the actual value of its stakes in the bank –- but it’s not.

“I think that they were trying to do things very quickly because they felt there was a crisis so that was sort of an excuse to not look too closely at how much things are really costing,” she said.

Asked about Lucas’ concern, the Treasury Department did not immediately provide a response.

With reports from ABC News’ Charles Herman.

Source / ABC News

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Not Enough Political Competition in the US


A New Political Party is Needed: Too Little Political Competition in America
By Joel Hirschhorn / November 11, 2008

Set aside any Obama euphoria you feel. The other important news is that third-party presidential candidates had a miserable showing this year, totaling just over one percent of the grand total with 1.5 million votes nationwide, compared to some 123 million votes for Barack Obama and John McCain.

It couldn’t be clearer that Americans are not willing to voice their political discontent by voting for third-party presidential candidates. The two-party duopoly and plutocracy is completely dominant. The US lacks the political competition that exists in other western democracies.

A key problem is that for many years, third parties have not offered presidential candidates that capture the attention and commitment of even a modest fraction of Americans, unlike Ross Perot (8.4 percent in 1996 and 18.9 percent in 1992), and John Anderson (6.6 percent in 1980).

This year, among the four most significant third-party presidential candidates, Ralph Nader without a national party did the best with 685,426 votes or 0.54 percent of the grand total (a little better than in 2004 with 0.4 percent but much worse than in 2000 running as a Green Party candidate with 2.7 percent). He was followed by Bob Barr the Libertarian Party candidate with 503,981 votes or 0.4 percent of the total (typical of all Libertarian candidates in recent elections, including Ron Paul in 1988), followed by Chuck Baldwin of the Constitution Party with just 181,266 votes or 0.1 percent, and then Cynthia McKinney of the Green Party with only 148,546 votes or 0.1 percent.

Showing the problem of ballot access, engineered by the two major parties, is that there were only 15 states where all four were on the ballot. In all but one, Nader received more votes than the other three third-party candidates. In four states only one of the four candidates was on the ballot; in one state none of them were (Oklahoma).

Nader’s best state was California with 81,434 votes, as it was for McKinney’s with 28,624 votes. Baldwin was not on the ballot there. Alan Keyes received 30,787 votes in California. Barr’s best state was Texas with 56,398 votes. None of the other three were on the ballot there. In his home state of Georgia where he had been a Representative Barr received 28,420 votes (and none of the other three were on the ballot). Baldwin’s best state was Michigan with 14, 973 votes. Nader was not on the ballot there.

In round numbers, Barack Obama raised $639 million or about $10 per vote, and John McCain raised $360 million or $6 per vote, compared to Ralph Nader with $4 million and $6 per vote, Bob Barr with about $1 million or $2 per vote, and Cynthia McKinney with only about $118,000 or less than $1 per vote. Money matters, but the ability of the two-party duopoly to keep third-party presidential candidates out of nationally televised debates matters more for media attention, money and votes.

It must also be noted that there were countless congressional races with third-party and independent candidates, but none were able to win office, with only a very few reaching the 20 percent level. That third-party candidates can win local government offices means little because political party affiliation at that level is overshadowed by personal qualifications.

I say that current third-party activists should admit defeat, shut down their unsuccessful parties, and move on. Unlike so much of American history, current third-parties no longer play a significant role in American politics or even in affecting public policies. They have shown their inability to matter.

We need a new, vibrant political party that could bring many millions of American dissidents, progressives and conservatives, and especially chronic non-voters, together behind a relatively simple party platform focused on structural, government system reforms (not merely political change). Examples include: replacing the Electoral College with the popular vote for president, restoring the balance between Congress and the presidency, eliminating the corrupting influence of special interest money from politics, preventing the president to use signing statements to nullify laws passed by Congress.

What would unite people is a shared priority for revitalizing American democracy. It should position itself as a populist alternative and opponent to the two-party plutocracy. It should define itself as against the corporate and other special interests on the left and right that use money to corrupt our political system. Possible names: Patriotic Party, United Party or National Party. With Thomas Jefferson as its spiritual founder it should seek the political revolution he said was needed periodically.

Here is what helps. Despite considerable enthusiasm for Barack Obama, there is widespread unhappiness with both the Democratic and Republican Parties. One indication is that so voters register as independents. Plus there has always been a chorus of negative views about the two-party system. In one pragmatic sense this is the ideal time to create a new party. Why? Because of the incredible loss of stature of the Republican Party. Why not envision a new party that could replace the Republican Party on the national stage and provide a sharp alternative to the Democratic Party? In other words, we don’t need a new third party as much as we need a new major party.

[Joel S. Hirschhorn can be reached through www.delusionaldemocracy.com.]

Source / Associated Content

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Larry Ray : Post-Election Kibbles ‘n Bits


‘A presidential campaign produces a mother lode of ideas. One learns to keep a pad and pen handy.’
By Larry Ray
/ The Rag Blog / November 11, 2008

Every reporter or writer has story ideas and scrawled words left in their notebooks after extended major news events. The daily news focus is ever changing. Wars, global warming, killer hurricanes, and of course, politicians and political campaigns. A presidential campaign produces a mother lode of ideas. One learns to keep a pad and pen handy. It is not possible to use each idea you jot down as a central theme for an article. But it always seems a shame to let them just fade away because the hot theme du jour has changed from wayward politicians caught flagrante delicto, to deadly earthquakes in California.

So, here are some of my recent sketchy notes plumped out into mini-articles. We are in a recession, so best to use everything in the pantry.

America’s veterinarians are reportedly getting an income boost since the campaign is over. Sarah Palin cost them untold dollars in potential exam and treatment fees because, as one Vet observed, “Damn, that woman has a voice that would worm a dog at thirty yards!” And sure enough, soon as her nasal twang quit filling America’s living rooms, dogs again started dragging their butts across those same living room floors about a week after she packed up her designer duds and returned to Alaska. The dogs are reportedly lots happier having the vet worm them than the moose mom.

Continuing the pet theme . . . Billions of American taxpayer’s dollars have been shelled out to “rescue” huge Wall Street firms because of lax Federal oversight allowing greedy management to royally screw up. But there is no such thing as a Chagrined CEO. Soon as the cash was deposited in their depleted tills what did do they do? Go into the conference rooms of their posh high rise office digs and start planning how to get a grip and tighten things up? Oh, no. The almost-on-the-rocks mortgage and insurance moguls booked thousand dollar a night rooms at distant posh resorts and flew the whole management staffs there from Wall Street . . . first class. Poolside penitence. Between spa treatments, lobster niblets and lots of Dom Perignon they discussed how to best spend all the new money we just gave them. A TV news investigative team followed and caught them red-handed. That night America saw the AIG hotshots poolside, sipping drinks with little umbrellas in them. Outrage! Fire them all! (this call for their heads lasted for two, maybe three days)

Then, only a few weeks later, the Fed gives them another 80 billion or so of bailout money to keep their doors open, and guess what the top AIG managers did? A bit of conference room contrition? Not on your life. They kept the doors open at AIG so they could dash out of them again and fly off first class to yet another poolside executive “workshop.” Again they were caught by waiting cameras. We see them on the nightly news stonily walking away from a reporter’s microphone as they are asked why they are pissing away all our money.

This should be called the “Bad Dog” syndrome. These hedge fund hotshots are basically peeing on America’s rug, over and over just like the family’s pedigreed pooch, who despite threats and attempts to change his behavior, continues to pee the carpet. The pooch just won’t learn, but at least he displays a slinking, hang dog indication that he knows it is wrong. Ever see a hang-dog sub-prime hotshot? When they talk about having a leg up on everyone else, we now know what that really means.

Finally, I was playing with the idea of the nation’s self-service gas stations all of a sudden feeling the pinch of the recession with gasoline dropping from four bucks to less than two bucks. Regular gas at the Exxon station near my house has always been lots higher than the big discount station across the street from it. Now they’re having a gas-war with just pennies difference in their prices. Today the discounter had regular for $1.95 and Exxon had it for $1.97. Lots of readers are too young to remember, but when Exxon was Esso, all the stations had a gimmick to get you to buy gas at their pumps. You stayed in the car while an attendant came out, asked you how much and what grade of gas he could put in your tank. Then he checked the oil and cleaned the windshield while the gas was pumping. If you got a fill up, you got a free dinner plate or coffee cup. The idea was to get you to return and eventually get a service for six of dinnerware. Wonder if Exxon and Chevron will be forced to actually compete for business in the coming couple years of recession? There would be no trouble filling the station attendant jobs. But I wonder if folks will have any use for the dinner plates?

[Retired journalist Larry Ray is a Texas native and former Austin news anchor. He also posts at The iHandbill.]

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Republicans Still Accusing Obama of Treachery

These guys just won’t quit, eh? Republicans surely are the most insecure, fucked-up group of people on Earth. Mr. Broun’s remarks say much more about him than they do about Barack Obama or the President-Elect’s policies.

Richard Jehn / The Rag Blog

Rep. Paul Broun, left, says President-elect Obama’s idea for a civilian force is “exactly what Hitler did in Nazi Germany and it’s exactly what the Soviet Union did.”
Photo: AP /Getty Images.

Republican Compares Obama to Hitler
By Ben Evans / November 11, 2008

WASHINGTON – A Republican congressman from Georgia said Monday he fears that President-elect Obama will establish a Gestapo-like security force to impose a Marxist dictatorship.

“It may sound a bit crazy and off base, but the thing is, he’s the one who proposed this national security force,” Rep. Paul Broun said of Obama in an interview Monday with The Associated Press. “I’m just trying to bring attention to the fact that we may — may not, I hope not — but we may have a problem with that type of philosophy of radical socialism or Marxism.”

Broun cited a July speech by Obama that has circulated on the Internet in which the then-Democratic presidential candidate called for a civilian force to take some of the national security burden off the military.

“That’s exactly what Hitler did in Nazi Germany and it’s exactly what the Soviet Union did,” Broun said. “When he’s proposing to have a national security force that’s answering to him, that is as strong as the U.S. military, he’s showing me signs of being Marxist.”

Obama’s comments about a national security force came during a speech in Colorado in which he called for expanding the nation’s foreign service.

“We cannot continue to rely only on our military in order to achieve the national security objectives that we’ve set,” Obama said in July. “We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.”

The Obama transition team declined to comment on Broun’s remarks. But spokesman Tommy Vietor said Obama was referring in the speech to a proposal for a civilian reserve corps that could handle postwar reconstruction efforts such as rebuilding infrastructure — an idea endorsed by the Bush administration.

Broun said he believes Obama would move to ban gun ownership if he does build a national security force.

Obama has said he respects the Second Amendment right to bear arms and favors “common sense” gun laws. Gun rights advocates interpret that as meaning he’ll at least enact curbs on ownership of assault weapons and concealed weapons. As an Illinois state lawmaker, Obama supported a ban on semiautomatic weapons and tighter restrictions on firearms generally.

“We can’t be lulled into complacency,” Broun said. “You have to remember that Adolf Hitler was elected in a democratic Germany. I’m not comparing him to Adolf Hitler. What I’m saying is there is the potential of going down that road.”

Copyright 2008 The Associated Press.

Source / America On Line

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Changing the Treatment of Veterans by the US Government


Veterans Day, 2008 : Tasks for the Obama Administration
By Aaron Glantz / November 11, 2008

On Veterans Day, we as a nation pause to honor those who have served their country. Problem is the Bush Administration doesn’t want us to know about their sacrifice. From refusing to allow the press to photograph flag-draped coffins of the dead, to covering up the suicides of veterans after they come home, the officials in Washington who lead us to war have done everything they can to hide it’s terrible cost.

This must end in the new Administration of President Barack Obama. As President, he must send a message to the bureaucrats who crunch numbers at the Pentagon and the Department of Veterans Affairs that the American people deserve to hear the true costs of the war in Iraq.

This includes:

*High profile monthly Pentagon press conferences, where ALL casualty figures are announced to the public. Under President Bush, the Pentagon has only released these statistics in response to Freedom of Information Act requests from journalists and veterans groups. As a result, very few Americans realize that more than 75,000 US soldiers have been medically evacuated from Iraq and Afghanistan for treatment in Germany. (You can find these statistics online on an internal website of the Defense Manpower Data Center)

*High profile monthly press conferences from the Department of Veterans Affairs announcing how many Iraq and Afghanistan veterans have filed disability claims as a result of their service (over 300,000 as of October 2nd), and how many have gone to the VA to treat their war wounds (currently close to 350,000, about 150,000 of whom went to the VA for help with Post Traumatic Stress Disorder or other service-connected mental injuries). Like the Pentagon casualty statistics, these numbers only came to light because a veterans group, Veterans for Common Sense, demanded them under the Freedom of Information Act.

*An end to the culture of intimidation at the VA. Under President Bush, VA officials who have told the truth about the sorry state of veterans health care have been fired. In 2006, Dr. Frances Murphy was working as the under secretary for health policy coordination at the VA when she told the medical journal Psychiatric News that “veterans who are struggling with the aftermath of severe trauma but do not have equitable and timely access to quality mental healthcare.” When the services were available, Dr. Murphy asserted that, “waiting lists render that care virtually inaccessible.” Days later, Dr. Murphy was sent packing. This too must end. We need dedicated public servants like Frances Murphy to help returning veterans rebuild their lives.

*Finally, a new Obama Administration must end the era of obfuscating the number of innocent civilians killed in our occupations. Remember back it was back in 2002, shortly after the fall of the Taliban that General Tommy Franks first brushed off reporters questions with the curt statement “We don’t do body counts.” Six years later, researchers writing in the prestigious British medical journal, the Lancet, estimate as many as a million Iraqis have died in this war. Even if the truth is only half that number the catastrophe is tremendous. The American people deserve a President who’s not afraid to try to quantify the human toll among those we’ve “liberated.”

None of these changes would cost our country any money, and none of them would immediately end the war or make the world a safer place. But being open and honest with the American people would make us all more well informed and, hopefully snap us out of our collective apathy.

Regardless, each of the statistics above represent information we deserve to know as citizens. How can we even begin to honor our veterans, if we don’t even track their sacrifice?

Aaron Glantz reported extensively as an unembedded journalist in Iraq and has been covering the stories of American veterans since his return. He is author of the upcoming book The War Comes Home: Washington’s Battle Against America’s Veterans (UC Press).

Source / Informed Comment

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Preventing Criminals and Liars from Influencing the Opinions of the American Public

Three members of the White House Iraq Group (l. to r., Condaleeza Rice, Karen Hughes, and Andrew Card), the kindly folks who fabricated the case to attack Iraq, killing more than a million innocent Iraqis.

On November 4, 2008, the American people demanded change in Washington DC.

One of the most important changes must be removing criminals (h/t Juan Cole) and proven liars from serious national policy debates, including our commercial airwaves and opinion pages.

To: ABC, AP, CBS, Chicago Tribune, CNN, FOX, Los Angeles Times, McClatchy, MSNBC, NBC, Newsweek, NPR, New York Times, PBS, Time, USA Today, Washington Post, Wall Street Journal

On November 4, 2008, the American people demanded change in Washington DC.

One of the most important changes must be excluding felons and proven liars from serious national policy debates, including our commercial airwaves and and opinion pages.

This is not a First Amendment issue because we are not asking Congress or the White House to engage in censorship.

Rather, this is an editorial standards issue. We believe any credible news organization should adopt standards that exclude felons and proven liars.

Below is a list of individuals who have disqualified themselves from serious national policy debates.

1. Convicted criminals

Ted Stevens (2008)
Bob Ney (2006)
Duke Cunningham (2005)

2. Under indictment

William Jefferson (2007)
Tom DeLay (2005)

3. Proven Liars

a. Members of the White House Iraq Group (WHIG), who manufactured pre-war propaganda to defraud Congress and the American people into supporting an invasion of Iraq.

Andrew Card (Founder), White House Chief of Staff
Karl Rove (Chair), Deputy White House Chief of Staff
Nick Calio, Assistant to the President for Legislative Affairs
Stephen Hadley, Deputy National Security Advisor
Karen Hughes, Counselor to the President
Scooter Libby, Vice President’s Chief of Staff
Mary Matalin, Counselor to the Vice President
Condi Rice, National Security Advisor
James Wilkinson, Deputy National Security Advisor

b. Former military officers who promoted Pentagon propaganda to invade Iraq while serving as paid consultants to military contractors who benefited from the invasion of Iraq.

Col. Ken Allard
Robert Bevelacqua
Gen. Wayne Downing
Timur Eads
Rick Francona
Lt. Col. Robert Maginnis
Jeffrey McCausland
Lt. Gen. Tom McInerney
Maj. Gen. Bob Scales
Gen. Montgomery Meigs
Maj. Gen. Don Sheppard
Paul Vallely

c. Politicians and journalists who knowingly lied about crimes or ethical violations, under oath or on camera.

Bill Clinton (Monica Lewinsky court testimony, 1998)
Robert Novak (Valerie Plame outing, 2003)
Sarah Palin (Alaska Ethics Violations statement to reporters, 2008)

4. Likely War Criminals

Senior members of the Bush Administration authorized or failed to stop torture and other war crimes.

Elliot Abrams
David Addington
John Ashcroft
John Bolton
Jay Bybee
George Bush
Dick Cheney
Douglas Feith
Alberto Gonzales
William Haynes
Donald Rumsfeld
George Tenet
Paul Wolfowitz
John Yoo

Go here to sign the petition. / Democrats.com

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Dr. S. R. Keister : An Aging Population Faces Financial Panic


‘I, as a member of a fading generation, have a few observations about the fate of the aging citizens of the United States in this time of impending economic crises.’
By Dr. S. R. Keister
/ The Rag Blog / November 11, 2008

As one who has experienced the panorama of our nation and culture since arriving in this world in 1921 I have a few observations that, I fear, will not make the way easier for President Elect Obama, who appears to be a gentleman of intelligence and compassion. To date I have seen little energy expended in addressing this possible impending serious problem.

Since I, as a young student, heard of the disposition of the un-well, elderly in the civilizations of the arctic regions, I have given thought to the ultimate nature of things. In medieval times, and even more recently, the care of the elderly was a function of the family. In the lack of family, orders of Sisters such as the Sisters of Charity and Sisters of Mercy provided care and succor to the infirm and the elderly. However, there has been a stark change in this area since approximately 1980, or perhaps a decade or so previously.

With the advent of the amoral entrepreneur a change has occurred. We have seen the introduction of the capitalist philosophy into the “care” of the aging. We now are faced with a multiplicity of “nursing homes,” “assisted care living facilities” and “retirement homes” in excess in this once caring nation. Before beginning the critique of this hypocrisy allow me to digress a bit.

Social Security and Medicare have made dollars available to the elderly, abetted by the industrial and academic pension plans, the IRA and 401K. We have also been blessed to a limited extent by the hospice movement and the death with dignity laws in Oregon and Washington State. The flip side of the coin is the prevalent, and misunderstood, “non-profit” institution that advertises care for the elderly. Non-profit? There are bona-fide charities which are “non-profit,” i.e. Salvation Army, Red-Cross, Doctors without Borders, etc; however, there is another face to this. There is the “non-profit” institution that personifies the retirement homes, and such, that dot the landscape today.

These are basically tax-exempt institutions, sans stock holders, run by directors, and executive staffs who are salaried as per the board’s discretion, and do not show “profit” in their statements, but instead report “excess income.” Many of these are merely money making machines (MMM) that utilize the “care” of the elderly as their source of profit. The sales departments find it very fruitful, playing on the fears, lack of security, and lack of understanding of the aged. Of course we have a careful check of the old person’s financial statement!

We now face an impending crises as many of these residents have been paying their way with a now rapidly diminishing IRA, supported frequently by their children’s now rapidly diminishing IRA. Let me illustrate with an example.

The Bountiful Retirement Home (I made up the name) is one of many “homes” owned by the X-corporation and has been hereabouts for 20 years. Business has been good, as there are many oldsters with first rate stock portfolios. Let us say, as of six years ago, grandma applies for admission with a stock portfolio worth $300,000. She is accepted with alacrity and praised for her wise choice. She is “sold” an apartment of 1000 square feet with kitchenette, for $120,000. The funds are held in escrow returnable to her estate. (The fact, as of six years ago, that she loses the 6% interest on the funds, and that X-corporation is now the beneficiary is not stressed). After her death the moneys go to her estate after the apartment is resold/rerented. Of course grandma can furnish the apartment as she desires.

What else are her entitlements? Electricity and heat are provided, although, there is no emergency generator service in case of power failure, and emergency egress is lacking in a three story building, in which 50% of residents use walking aids, in case of fire.(One pays for one’s own phone, TV, and computer connections.) But there are offsetting advantages. For $3000/month one is provided with breakfast and dinner, the latter in a dining room, though no credit is given if one misses a meal when eating out with family or friends 2-4 evenings per week (estimated costs of dinners, $17). A nurse is available who will fill one’s pill box for $10, give an insulin injection for $10, or weigh one for $3. One can get minor repairs in the apartment for a fee, one can have the snow brushed of one’s car for a fee, one can get transportation in the institution-owned van for a fee. One can even have the opportunity of donating escrow moneys to add an Alzheimers Unit to the institution. Entertainment designed for kindergartners is provided. The MOM grinds on.

Now we have the current economic collapse with an estimated loss of 50% in most IRAs. The MOM shows compassion. The management raises to monthly fee by 7%, i.e. $210. The management needs the increased income to cover “rising expenses.” There is a certain problem looming; however, many of the residents are not cognizant of the fact and the mainstream media is not apparently aware of the situation. Other oldsters are terrified but do not know where to turn.

I have indicated merely one example, but there are thousands of the elderly in nursing homes, assisted care homes, etc., facing an imminent disaster. One hopes that some agency of the Obama administration will begin addressing the problem. A problem largely created by the greed of uncontrolled capitalism that has been extant since the Reagan administration and certainly of no interest to the economically neo-liberal Bush administration. Happily many of the legitimate church related housing facilities are looking at the problem and will, I am sure, be privy to its solution.

I would hope that someone, somewhere, is listening.

[S. R. Keister, a retired physician, is a regular contributor to The Rag Blog.]

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Numbers of Homeless Iraq and Afghanistan Vets Are Growing

According to the Department of Veterans Affairs, there are about 195,000 homeless veterans on any given night. Photo: AP/World Wide Photos.

Iraq and Afghanistan war veterans join the homeless
By Anna Sussman / November 11, 2008

Ethan Kreutzer joined the Army at the age of 17 and fought with the 19th Airborne in Jalalabad, Afghanistan. When he retuned home, he had no money, no education and no civilian job experience. He soon became homeless. He slept in an alley off Haight Street, behind two trash cans.

June Moss drove from Kuwait to Iraq as an Army engineer in a truck convoy. When she returned to the United States, she lost her home, and drove her two young children from hotel to hotel across Northern California.

Sean McKeen, a hardy, broad-shouldered 21-year-old with a wide smile, went to Iraq to clear land mines, and to get money for college. When he returned home, he became homeless in less than a week. He found himself sleeping in a cot in a crowded homeless shelter in San Francisco.

They are all part of a growing trend of homelessness among returning war on terrorism veterans.

More than 2,000 military personnel return home to California each month. Most have no specialized job experience, education or an easy familiarity with civilian life. And many have post traumatic stress disorder (PTSD), making it difficult to get along with friends and family, and almost impossible to hold down a job.

“You feel like the whole world is against you when you get home,” said Kreutzer. “I was sleeping on the sidewalk, whereas I had been wearing a uniform less than a year before.” Soft- spoken and restless, Kreutzer was recruited in a 7-Eleven while still in high school. After five months in Afghanistan, he had a mental breakdown, diagnosed as PTSD. When he returned to the United States, he spent almost four years living on the streets.

Kreutzer said he’s met several veterans of the war in Iraq on the streets of San Francisco, or sleeping in Golden Gate Park. He also said he met several veterans of the war in Afghanistan, like himself, who were in similar situations.

Kreutzer now lives in a temporary housing facility for veterans on Treasure Island, run by the group Swords to Plowshares. He attends PTSD counseling with other war on terrorism veterans so that he can learn to maintain a job and house. “I was haunted by a lot of issues, a lot of things that I saw over there that were not good things. There are some times when I can wake up in a room and think I’m still there. I still remember what it tastes like, the air over there. I see all the rocks, I see the people,” said Kreutzer.

One of the symptoms of PTSD is isolation and withdrawal, according to Amy Fairweather, director of the Iraq Veterans project at Swords to Plowshares. “So that interferes with your ability to get a job. People sit in the dark by themselves,” she said.

Fairweather is seeing large numbers of homeless war on terrorism veterans come through her doors.

“Homelessness can happen very quickly, if they don’t get the help they need. Their mental health will get worse, they will become more depressed,” she said. “We are seeing Iraq and Afghanistan veterans, who are homeless, coming in very quickly. After Vietnam, it generally took about five to 10 years to end up on the streets. We’re seeing people on the streets three months after they come home.”

Moss spent 12 years with the military and had purchased a house with a VA home loan, but she fell behind on payments.

“When I got back from Iraq, I knew something was wrong,” she said. Diagnosed with PTSD, she found herself awake at night devising ways to keep her family safe. “I decided to move the refrigerator in front of the door to bunker us in,” she said. “Then I would stay up all night baking cookies because I didn’t want to go to sleep. Eventually, I stopped leaving the house altogether.”

Moss lost her job and her income, and the bank foreclosed on her home.

She moved her two kids between temporary housing units and hotels until her PTSD was under control. Now, she has a temporary house for her family, and a full-time job at the VA. “It’s because of my kids that I go to therapy and take my medication. If it wasn’t for them, I don’t know what would happen,” she said.

Other veterans are not so lucky. McKeen was exposed to more than 300 bomb blasts in Iraq. He suffers from traumatic brain injury as well as PTSD. When he returned home, he slept on couches at friends’ houses, and in his car while looking for a job. He spent many nights wandering the streets before he ended up in a shelter.

“It’s like a culture shock returning home, but you are supposed to be used to it,” he said. “Unless you are in war, nobody can understand what it’s like. And they expect you to just function normally by yourself after that?”

The Department of Veterans Affairs estimates about 2,000 war on terrorism veterans have become homeless upon returning to the United States. It’s still a small number, when compared to the staggering numbers of homeless Vietnam War-era veterans, but one that could balloon in the coming months.

At the Palo Alto VA, the inpatient programs for PTSD and TBI are crowded with war on terrorism veterans – an indication that a large number are at risk for homelessness, according to director of homeless programs Keith Harris.

“Before it gets to the point where someone is living on the street, what they are typically doing is struggling with a mental health disorder, burning their bridges with the people around them, family, employers, spouses,” he said. ” I don’t believe there is a large chunk of returnees literally homeless without a roof over their heads, but I think a large chunk of them are at risk for it.”

The homeless shelter at the Palo Alto VA is full. And many veterans still complain that the VA is unprepared and overly bureaucratic. Most have to wait six to eight months for claims to be addressed.

But by all accounts, the VA is far better prepared this time than it ever has been in the past. With an understanding that the looming homeless crisis is best treated as a mental health issue, it has hired 17,000 mental health workers, making it the largest mental health program in the country.

But with some 2 million active service members still fighting and undergoing the trauma of war, Moss wonders if any amount of preparation by the VA can address the fundamental problem of readjustment.

“I think the problem is war itself,” she said. “War changes a person. I talk to all vets. The same experiences we had coming home from Iraq are the same experience World War II (vets) saw, Vietnam saw, Korean War saw, so it hasn’t changed. I think the real problem is probably just war itself.”

Anna Sussman is a journalist who has reported from the United States, Africa and Asia. To comment, e-mail forum@sfchronicle.com.

Source / San Francisco Chronicle

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IMAGE / The Great Blue Hope

Photo by Stephanie Chernikowski / The Rag Blog.

I was born by the river in a little tent
Oh and just like the river I’ve been running ever since
It’s been a long, a long time coming
But I know a change gonna come, oh yes it will

It’s been too hard living but I’m afraid to die
Cause I don’t know what’s up there beyond the sky
It’s been a long, a long time coming
But I know a change gonna come, oh yes it will

I go to the movie and I go downtown
Somebody keep telling me don’t hang around
It’s been a long, a long time coming
But I know a change gonna come, oh yes it will

Then I go to my brother
And I say brother help me please
But he winds up knocking me
Back down on my knees

Ohhhhhhhhh…..

There been times that I thought I couldn’t last for long
But now I think I’m able to carry on
It’s been a long, a long time coming
But I know a change gonna come, oh yes it will

Sam Cooke

this song has been running thru my head all day, as sung by sam cooke, and the image of the soaring heron as well.

stephanie chernikowski / The Rag Blog
new york city
11.4.08 8:42 am

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Bush’s Toxic Legacy : The EPA’s ‘Stalin Era’


‘It’s absolutely shocking what’s going on,’ say insiders. ‘Secretive changes have diluted science and jeopardized public health.’
By Rebecca Clarren / November 11, 2008

This may sound like just another Erin Brockovich-style tear-jerker. Enter stage right: Poor people exposed to toxic chemicals who worry that the government is ignoring their plight.

But the story of the hundreds of sick people who live near the former Kelly Air Force Base illuminates an entirely new manner in which the Bush administration has diluted science and put public health at risk. This year, largely in obeisance to the Pentagon, the nation’s biggest polluter, the White House diminished a little-known but critical process at the Environmental Protection Agency for assessing toxic chemicals that impacts thousands of Americans.

As a coalition of more than 40 national and local environmental organizations put it in a letter to EPA administrators this past April: “EPA, under pressure from the Bush White House, has given the foxes the keys to the environmental protection henhouse.”

So meet lifelong San Antonio residents Robert and Lupe Alvarado. For decades, the Alvarados, whose modest home sits around two miles from Kelly, have lived with toxic chemicals underfoot. This is the poor part of town, adorned with chain-link fences and black metal bars concealing the windows. Many houses lack a proper foundation and rest on simple concrete slabs.

Beneath the Alvarados’ house and those of their neighbors are shallow pools of groundwater that are polluted with tetrachloroethylene, or PCE, a chemical associated with cancer, liver and kidney disease. Before the Kelly base closed in 2001, mechanics used PCE to degrease parts on airplanes and fighter jets. For decades, they chronically dumped the solvent into poorly sealed or unsealed waste pits on the base, where it seeped underground, forming a plume that sprawls over four square miles under 23,000 homes and businesses. Locals refer to the area as “the toxic triangle.”

On cool or rainy days, when the Alvarados close the windows and shut off the air conditioning, a sweet chemical smell floods the house. When they eat dinner during these times, says Robert, 66, it’s like tasting something acrid. “We drink bottled water but there’s nothing we can do about the air except go outside and wait,” says Lupe, 64.

Robert, a handsome man with almond skin, limps across his cramped living room with a black metal cane. He shows me a letter that recently arrived from the local hospital, congratulating him; he’d qualified for a kidney transplant. A few years ago he suffered a brain aneurysm, causing him to become nearly blind. His wife and one of his daughters both have battled thyroid cancer. “We know at least 15 people on this street alone who have some sort of cancer,” says Robert, a former labor relations employee at Delta Air Lines. “We call ourselves the living dead.”

In the Alvarados’ front yard, a purple cross sticks out of a cluster of banana trees. The crosses, distributed by a local community group, punctuate front yards throughout the neighborhood. They mark homes where people are battling cancer or other illnesses, an estimated 25 percent of households, according to local activists.

Surveys conducted by the federal Agency for Toxic Substances and Disease Registry have found elevated levels of kidney, liver and cervical cancer, leukemia and low birth weights in the neighborhoods that surround Kelly Air Force Base. A survey by the University of Texas found that 91 percent of adults in the area experienced multiple illnesses, including chronic sinus infections, nausea, heart and lung disease. Based on these studies, the area qualifies as a cancer cluster (with a higher rate of terminal illness, per capita, than areas of a similar size), says Wilma Subra, a chemist and environmental health activist based in Louisiana, who has consulted with Kelly community activists.

Although it has conducted limited testing, the EPA acknowledges that it’s possible for PCE vapor to rise from groundwater into people’s living rooms and kitchens. Yet it says the Alvarados and their neighbors have nothing to fear. Based on EPA air quality tests inside five area homes, the nation’s environmental guardian claims that it’s safe for residents to live above the plume for the next 40 to 100 years, or the amount of time it will take for the chemicals to naturally dissipate.

The fact is, EPA scientists haven’t completed an updated scientific assessment of PCE, including its health risks, for a decade. Worse, a comprehensive review of the carcinogenic chemical may never be coming. Anti-regulatory crusaders inside the Bush White House have peopled the EPA with top officials apparently more concerned with limiting government spending than public health. According to critics within and outside the EPA, the agency has stifled independent research and compromised scientific assessments of all manner of toxins and carcinogens that Americans breathe, drink and touch.

“It feels like Stalin-era Russia, like the administration set themselves up to decide what’s allowable science and what isn’t,” says a high-ranking staff scientist at the EPA, who spoke on condition of anonymity. “Until the recent economic crash, this has been such an anti-regulatory administration. One of the ways to undermine regulations is to undermine the science behind them. It’s absolutely shocking what’s going on.”

Public health officials say this attempt to derail the scientific evaluation of toxins is one of the most damning legacies of the Bush administration. In late September, the Government Accountability Office issued a scathing critique of the EPA’s new toxic-assessment procedures. It concluded that the secretive procedures compromise scientific credibility and sacrifice the public’s trust in government. Despite such hefty criticism, public officials fear that because the new procedures have been instituted at the EPA so far below the public radar, their harmful impact will survive long after Bush leaves office. It will take a bold and expedient move by Barack Obama or the next Congress to curtail the influence of the Pentagon and other government agencies on the EPA.

It sounds like just another mind-numbing acronym: IRIS. Although not widely known, the Integrated Risk Information System is a database that houses the scientific analyses of toxic chemicals. It’s the foundation for most environmental regulations in the U.S. and beyond. Created in 1985 to be the final word on how specific chemicals impact human health, IRIS assessments are subject to review by both EPA scientists and independent experts. EPA regional offices, states and governments worldwide use this data to set standards for drinking water, air emissions and cleanup of chemical spills by both industry and agencies such as the Department of Defense, the National Air and Space Administration and the Department of Energy.

At least that’s how the process used to work before Bush administration appointees arrived in Washington, determined to snap shut the government’s wallet. Chief among them was John Graham, appointed in 2001 as administrator of the Office of Information and Regulatory Affairs, a powerful but little-known division within the Office of Management and Budget, an agency that controls the White House purse strings.

Before arriving at OMB, Graham headed the industry-funded Harvard Center for Risk Analysis, a conservative think tank known for proposing legislative reforms to limit government. Upon arrival in Washington, Graham demanded that agencies make greater use of cost-benefit analyses in formulating regulations. In his first six months on the job, Graham rejected 17 proposed rules submitted to OMB for review, due to the overriding costs of such regulation to industry and the economy.

Graham’s anti-regulatory sentiment found an ally at the EPA. George Gray, a former director of the Harvard Center, became assistant administrator for the Office of Research and Development, a position that gave him direct management power over the EPA’s chemical assessment program, in 2006. Inside the bags he packed for his new job was a staunch determination to expose uncertainty in scientific studies. At the top of his agenda, Gray told the journal Environmental Science & Technology in 2006, was an overhaul of IRIS assessments.

Historically, EPA scientists would apply a single number to the toxicity of a compound. That number reflected how much exposure a person could take before getting sick. But, explained Gray, because the human population is so diverse, there’s always an inherent uncertainty of how one person may react to low levels of exposure versus his neighbor. “I think recognizing uncertainty is sort of a sign of this kind of humility,” Gray told the journal.

Instead, he added, the agency would categorize the toxicity of a compound in a range. “We are going to recognize that the levels of exposure that we are [expecting] in the environment are usually hundreds to thousands of times lower than what we know about now.”

This line of thinking is not humble but concerning, says Adam Finkel, a professor of public health at the University of Medicine and Dentistry of New Jersey, and an expert in the field of risk assessment. “The problem with creating a range is that you can home in on the middle of the range or the low end of the range — that’s been George’s hobbyhorse for a long time,” says Finkel. “But why would you want to be only in the middle range? The reason for the range is that people are diverse. Homing in on the middle only protects half the people and leaves the other half unprotected.”

Not incidentally, under Gray’s tenure at the EPA, the agency has lowered the economic value of human life by nearly $1 million, or 11 percent. A human life is now worth just under $7 million. Such calculations are critical when government determines whether a proposed regulation is financially cost-effective to enforce.

For the Pentagon, the arrival of Gray and Graham couldn’t have been better timed. Since the early 1990s, the EPA has been conducting a toxic assessment of perchlorate, a major component in rocket fuel, used by the military and its contractors in bases throughout the country.

The chemical is incredibly widespread. It shows up in the groundwater of 35 states from New England to California; it has contaminated 153 public water systems in 26 states. Between 17 million and 40 million Americans are exposed to perchlorate at a level many scientists consider unsafe. According to a 2006 CDC study, 36 percent of American women are iodine deficient, putting them at risk for perchlorate-related thyroid problems. Due in part to perchlorate-contaminated irrigation water, most Americans who eat lettuce in the winter ingest the chemical. It has also appeared in melons, spinach and milk, according to 2005 and 2006 studies by the Food and Drug Administration.

A 2002 IRIS assessment led the EPA to call for a safe exposure dose of one part per billion — roughly the equivalent of a drop of water in a home swimming pool. That finding was expected to propel a stringent cleanup policy, one that could cost the Department of Defense billions of dollars.

But when the Pentagon and OMB saw the IRIS assessment, they were furious, says Kevin Mayer, a California-based EPA Superfund manager, who had been involved with the perchlorate review. “The Defense Department was openly upset, not only with the conclusions the scientists at EPA had drawn, but with the external peer review,” says Mayer. “I don’t think the Defense Department was hiding any motives. Anyone can see they have a lot at stake. They’re already spending millions of dollars a year on Superfund sites in California, and groundwater is really hard to clean.”

Concurrently, a preliminary EPA review of trichloroethylene (TCE), used by the military to degrease jets and metal parts, found that the chemical was up to 40 times more likely to cause cancer than was previously believed. Military activities have contaminated some 1,400 sites nationwide with TCE. Again, the Pentagon was staring down a hefty price tag for cleanup.

Fortunately for the Pentagon, it had a sympathetic ear in Graham and Gray. In 2005, the EPA distributed a proposal to revise the chemical assessment process; officials at the Office of Management and Budget sat down with the IRIS blueprint and pulled out a red pen.

The plan that emerged calls for expanding the role of other federal agencies in determining which chemicals are assessed each year. It allows agencies like the Pentagon, Department of Energy and NASA to identify “mission critical” chemicals to the agency’s operations.

Significantly, the new process affords OMB more oversight and involvement in what critics say should be a purely scientific assessment. Now OMB and other non-health agencies have three additional opportunities to comment. Such comments are off-limits to public scrutiny and not available to congressional review unless subpoenaed. If OMB doesn’t agree with certain scientific findings, it can effectively block EPA from moving forward with the assessment.

Longtime EPA officials were astounded by OMB’s audacity. Implementing such a plan is “like industry selecting its own cleanup standards,” an EPA scientist told Inside OSHA in August 2005.

Regardless, this spring, EPA officials and OMB adopted the Pentagon’s suggestions for the new IRIS process. The new plan, says Gray, results in higher-quality risk assessments. This sets up a process that “allows others to bring in scientific information and expertise,” Gray writes in an e-mail. “We’ve heard the criticisms that this is somehow allowing a backdoor, but it should be noted that all draft IRIS assessments are peer reviewed by outside experts. If it doesn’t pass scientific muster, we won’t accept it, and all final decisions on IRIS content remain with EPA.”

Paul Yaroschak, an official with the Department of Defense’s Emerging Contaminants initiative, says it’s important for the Pentagon to be involved. “We wouldn’t be serving the public very well if we didn’t bring studies to bear on this,” he says. He and others within the Office of Management and Budget underscore that they are not interfering with the EPA’s assessment but providing valuable information.

“All we do is provide them with written comments and scientific studies,” says Yaroschak. “We have no influence on the decisions that the EPA makes. EPA makes the judgment, EPA controls the process.” Graham, now dean of the Indiana University School of Public and Environmental Affairs, says that participation by other federal agencies is crucial to ensuring that the IRIS process has “scientific quality and credibility.”

However, even after peer reviews, the OMB and other federal agencies have one last opportunity to review the document. If the agencies don’t like the scientific findings, they can convene with the EPA, again in private, and reject the findings. These secretive meetings undercut the scientific credibility of IRIS assessments, says Lynn Goldman, an EPA administrator under Clinton, who now teaches environmental health at Johns Hopkins University.

“The new process is an open invitation for interested parties to meddle with IRIS in secret,” Goldman told members of the Senate Committee on Environment and Public Works last spring. “Their involvement in the IRIS interagency process gives the appearance — if not the reality — of providing a back door through which industry groups can exert pressure to modify EPA’s conclusions or to subject the process to endless delays.”

Such manipulation and delays aren’t a possibility, they’re already happening, says an EPA staff scientist who agreed to speak on a condition of anonymity. “OMB has created de facto vetoes all over the place,” the scientist says. “If we don’t make the changes they want, the assessment doesn’t go any further. They’re trying to take our assessments and change the science so that a chemical looks much less risky.”

The EPA scientist asserts that the OMB modifies language in EPA reports to put qualifiers on the science. “Every time there’s a dispute with OMB, the debate comes to the desk of George Gray, and he of course always agrees with OMB, so we end up doing a lot of things we feel are incorrect, but that George Gray directed us to do.”

Already, say critics, it’s possible to determine how the influence of the Pentagon and other agencies will play out. In the past two years, since Gray has been at the agency, the EPA has produced more than 40 chemical assessments. Yet only four evaluations met OMB approval and were finalized. The EPA, which should be completing 50 per year to stay current, faces a backlog of 70 chemical assessments in need of updating.

TCE, the solvent used to degrease airplanes, still lacks a finalized assessment, despite the conclusions of a 2006 National Academy of Sciences review of EPA’s assessment, which found a strong connection between the chemical and cancer, and urged the EPA to finalize the analysis so that comprehensive exposure standards could be complete.

In the case of perchlorate, after six years of political thrashing back and forth between the EPA and OMB, the environmental agency announced in early October that it wouldn’t regulate perchlorate in the drinking water. Instead, the agency issued a “health advisory,” which is non-mandatory, due to be finalized by Dec. 1. The advisory is 15 times less strict than the agency’s original proposal in 2002.

OMB heavily edited the perchlorate proposal, eliminated key passages and requested that the EPA use a computer modeling approach to calculate the chemicals risks, rather than the broad scientific data available, reported Juliet Eilperin of the Washington Post. Among the studies deleted by OMB officials was one conducted by the CDC, which describes the impact of the chemical on infants, the most sensitive population.

“If you look at the body of literature [about perchlorate], it would lead to a different conclusion than EPA is making,” says Tom Zoeller, a University of Massachusetts endocrinologist, specializing in thyroid hormone and brain development. “They’re not using all of the information that they have available to them to derive a number. The effect of it is to set a standard that isn’t as strict.”

The Alvarados and their neighbors in San Antonio, who want to know whether the PCE in their groundwater is making them sick, must wait several years for an answer from the EPA. The IRIS database currently contains PCE data that’s 20 years old. Although the EPA completed an updated assessment three years ago that found that low doses could cause cancer, Gray directed his staff to reanalyze the cancer risk, using an unvetted risk analysis computer model, which staff scientists say would lead to a less-protective assessment. According to the GAO, since 2006, EPA staff have gone back and forth with Gray; the assessment remains unfinalized.

With a flick of a pen, Obama could reinstate the old IRIS process. Whether this will happen remains to be seen. His transition office didn’t return calls and e-mails asking if it would be likely to reverse the Bush administration changes to the IRIS process.

“If the Obama administration is serious about protecting poisoned communities, fixing the IRIS program is the place to start,” says Jennifer Sass, a toxicologist at Natural Resources Defense Council. “This should be the top priority at EPA. It’s really fundamental.”

Rep. Brad Miller, D-S.C., chairman of the House Committee on Science and Technology, has taken matters into his own hands. In September, he introduced legislation that would make EPA solely responsible for the IRIS process. The agency would be barred from consulting with any agency, including OMB, that had a conflict of interest in the scientific review.

“This bill gets the process back on track and in the sole hands of EPA where it belongs, so scientists can make important decisions for public health and ultimately help save lives,” says Miller. “The current system is fundamentally broken and cried out for this reform.”

Yet because IRIS is so obscure, it’s doubtful there will be a national clamor demanding restoration of EPA control. And that makes it easy for politicians to maintain the status quo, says David Michaels, a professor at the George Washington University School of Public Health, and author of “Doubt Is Their Product: How Industry’s Assault on Science Threatens Your Health.”

“Power usually wants to hold on to power,” says Michaels. “The Defense Department will fight like crazy to maintain their ability to influence EPA’s deliberations. I believe these changes were made to limit EPA’s independence long after the defense industry-friendly Bush administration leaves office.”

In the meantime, the Alvarados continue to sit in their living room, breathing contaminated air. “How many more people are going to die because they don’t want to release this information?” asks Lupe Alvarado, referring to the EPA. Several of her friends have died recently of cancer. She struggles to stop crying as she talks, but it’s a losing battle. The brown napkin she presses to her eyes darkens with tears. “We’re all casualties of war,” she says. “We’re dying out here, one by one.”

[Thanks to David Armstrong, bureau chief of the National Security News Service in Washington, D.C. Support for this article was provided by the Fund for Investigative Journalism.]

Source / salon.com

The Rag Blog

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Varieties of State Capitalism : China’s Plan to Kickstart its Economy

An elevated highway site near Hangzhou, the sort of project that would be financed in a new economic stimulus package. Photo by Qilai Shen / European Pressphoto Agency.

‘China has a more efficient kind of state-nourished capitalism; they can mandate that the government spend a lot on intelligent infrastructure.’
By Roger Baker
/ The Rag Blog / November 11, 2008

See ‘China Unveils Sweeping Plan for Economy’ by David Barboza, Below.

Both the United States and China have state capitalism wherein the governments try to nourish the capitalist sector to keep it expanding fast enough to pay off all its economic obligations/debts with interest.

China has a somewhat different and more efficient kind of state-nourished capitalism; they can mandate that the government (the fiscal sector) spend a lot on intelligent infrastructure, but we have a much more contentious process.

Our government is propping up capitalism by bailing out the investment banking sector that made all the risky bets on eternal high growth, assuming some of the excess cash will trickle out into the rest of the economy. We have a deeply imbedded habit over a long period of using treasury debt to finance consumer stuff from China; we have a bank-based economy and they have our transplanted industrial economy.

A visionary and progressive industrial policy is apparently beyond the understanding and abilities of the US political system as currently configured. Over decades we have gotten financially clogged arteries, a bad staff infection of lobbyists who run Washington, and a hollowed out economy based with its remaining industry largely based on auto-addiction to cheap oil.

To be brief, almost all industrial economies from Sweden to Brazil have some variety of mixed system, de facto state capitalism; almost no countries without a taxing government sector or without a market sector at the opposite end.

But in the US, the capitalist class has gradually hijacked the government to siphon off all the money on behalf of ruling class interests. The economist Mancur Olson died before he could get a Nobel Prize in economics for writing penetratingly about this universal tendency toward the expansion of bureaucracy in government over time.

China Unveils Sweeping Plan for Economy
By David Barboza / November 10, 2008

SHANGHAI — China announced a huge economic stimulus plan on Sunday aimed at bolstering its weakening economy, a sweeping move that could also help fight the effects of the global slowdown.

At a time when major infrastructure projects are being put off around the world, China said it would spend an estimated $586 billion over the next two years — roughly 7 percent of its gross domestic product each year — to construct new railways, subways and airports and to rebuild communities devastated by an earthquake in the southwest in May.

The package, announced Sunday evening by the State Council, or cabinet, is the largest economic stimulus effort ever undertaken by the Chinese government.

“Over the past two months, the global financial crisis has been intensifying daily,” the State Council said in a statement. “In expanding investment, we must be fast and heavy-handed.”

The plan was unveiled as finance ministers from the Group of 20 nations met in São Paulo, Brazil, over the weekend.

It came less than a week before President Hu Jintao was scheduled to travel to Washington for a global economic summit meeting hosted by President Bush.

On Saturday, Mr. Hu spoke by telephone with President-elect Barack Obama about a variety of issues, including the global financial crisis and how their countries might cooperate to help resolve economic problems.

Asian markets welcomed news of the stimulus plan. The Japanese Nikkei index rose 5.6 percent in trading early Monday. Stocks in Hong Kong and Shanghai rallied strongly, jumping over 5 percent and lifting share prices that have been depressed for much of the year.

Although Beijing has indicated that it will focus on keeping its own economy on track, it is difficult to insulate any economy from a global downturn. After five years of growth in excess of 10 percent, China’s economy is beginning to weaken. Growth in exports and investment is slowing, consumer confidence is waning and stock and property markets are severely depressed.

The stimulus plan, though driven by domestic concerns, represents a fresh commitment by China to keep from adding to the economic and financial woes of the United States and Europe. It is also likely to cheer foreign investors in China’s economy by ensuring that the country remains a source of growth.

China’s package is not comparable to fiscal stimulus measures that are being discussed in Washington. In China, much of the capital for infrastructure improvements comes not from central and local governments but from state banks and state-owned companies that are encouraged to expand more rapidly.

The plan also differs from the $700 billion financial rescue package approved by Congress, which has helped strengthen bank balance sheets but did not directly mandate new lending or support specific investment projects in the United States.

China’s overall government spending remains relatively low as a percentage of economic output compared with the United States and Europe. Yet Beijing maintains far more control over investment trends than Washington does, so it has greater flexibility to increase investment to counter a sharp downturn.

It was unclear how Chinese officials arrived at the $586 billion figure or how much of the stimulus would be spending above what Beijing normally earmarks for infrastructure projects. Beijing said it was loosening credit and encouraging state-owned banks to lend as part of a more “proactive fiscal policy.”

The government said the stimulus would cover 10 areas, including low-income housing, electricity, water, rural infrastructure and projects aimed at environmental protection and technological innovation — all of which could incite consumer spending and bolster the economy. The State Council said the new spending would begin immediately, with $18 billion scheduled for the last quarter of this year.

State-driven investment projects of this kind have been a major impetus to Chinese growth throughout the 30 years of market-oriented reforms, a strong legacy of central planning.

The biggest players in many major Chinese industries — like steel, automobiles and energy — are state-owned companies, and government officials locally and nationally have a hand in deciding how much bank lending is steered to those sectors.

The investment numbers announced by China’s central government often include projects financed by a variety of sources, including state-backed entities and even foreign investors.

Beijing is struggling to cope with rapidly slowing economic growth. A downturn in investment and exports has led to factory closings in southern China, resulting in mass layoffs and even setting off sporadic protests by workers who have complained that owners disappeared without paying them their wages.

With many economists in China now projecting that growth in the fourth quarter of this year could be as low as 5.8 percent, and amid worries that the country’s economy could be walloped by the global financial crisis, Beijing is moving aggressively.

Analysts were expecting China to announce a big stimulus package, but they said they were surprised at its size. “That is much more aggressive than I expected,” said Frank Gong, an economist at J. P. Morgan who is based in Hong Kong. “That’s a lot of money to spend.”

Mr. Gong said that after the Asian financial crisis in 1997, Beijing undertook a similar, but much smaller, stimulus package, earmarking huge sums to build the country’s highway and toll-road system, projects that helped keep the economy growing.

Arthur Kroeber, managing director at Dragonomics, a Beijing-based economic research firm, said the government was concerned because people in China had suddenly pulled back on spending as a precautionary move because of worries about China’s suffering with the global economy.

“The government is sending a signal saying: ‘We’re going to spend in a big way,’ ” Mr. Kroeber said Sunday in a telephone interview. “This is designed to say to the market that people should not panic.”

Source / New York Times

Thanks to Jim Retherford / The Rag Blog

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