29 Oct 2010

It’s the Stupidity, Stupid

By David Sirota

Redistributionist—as epithets go, the moniker is so mild, so ... 2008. Today, we’re hammered by screeds against Democrats’ alleged socialism and President Barack Obama’s supposed Marxism. The class war is clearly on—the paranoids and royalists of the world have united, seizing the means of propaganda production in these waning days of this year’s election campaign.

The onslaught, of course, is predictable. After all, this is an election season—which inevitably evokes Red-baiting crusades by the plutocrats. Less predictable is this crusade’s traction. As Wall Street executives make bank off bailouts, as millions of Americans see paychecks slashed and as our economic Darwinism sends more wealth up the income ladder—it’s surprising that appeals to capitalist piggery carry more electoral agency than ever.

What could cause this intensifying politics of free-market fundamentalism at the very historical moment that proves the failure of such an ideology? Two new academic studies suggest all roads lead to ignorance.

The first, by Harvard’s Michael Norton and Duke’s Dan Ariely, finds that Americans grossly underestimate how much inequality our economy produces. Among the survey respondents, the vast majority said they believe the richest 20 percent own 59 percent of the wealth, when, in fact, that quintile owns 84 percent of the wealth. In other words, in spite of the data, many believe our system produces the moderate equality we desire, which means many see efforts to better spread wealth as a confiscatory overreach.

That, however, is not the full story of 2010. Because this now-ascendant economic view relies on misperceptions about inequality, we are still left to wonder: What accounts for those misperceptions?

Some of it undoubtedly stems from debt’s illusions. In a country of overused MasterCards, we are surrounded by luxury cars, McMansions and flat-screen TVs purchased on credit. Such ubiquitous bling feigns a widespread prosperity that doesn’t really exist.

Some of it is also televisual iconography. In the media’s fun-house mirror we see a news world populated exclusively by six- and seven-figure salaried journalists—as if that wealth is a societal norm. Meanwhile, on the entertainment side, our beloved sitcom families trick us into thinking our nation is less stratified than it is: We were led to believe the super-rich Huxtables epitomized the middle class just as we are now asked to regard “Modern Family’s” affluence in the same way.

But, as insidious as artificial aesthetics are, the most powerful factor in our economic illiteracy is found in the other new academic report—the one examining our innate denial reflex.

As Northwestern University’s David Gal and Derek Rucker recently documented in a paper titled “When in Doubt, Shout!” many Americans respond to convention-challenging facts not by re-evaluating their worldview. Shaken by an assault on their assumptions, many become more adamant in defense of wrongheaded ideas.

So, for instance, we may be aware that our broken economy is creating destructive inequality; we may know the neighbor’s opulence is underwritten by loans; we may understand that Brian Williams’ multimillion-dollar NBC salary is uncommon; and we may appreciate that seemingly average “30 Rock” characters make above-average salaries. We may get all this, and we may even see the connection between our personal financial struggles and census figures showing inequality at a record high. But many of us nonetheless react by more passionately insisting our economic system sows equality—and worse, by embracing a free-market-worshiping politics aimed at halting systemic change.

This means the current crisis is deeper than we imagine. In a past recession, we could all at least concede that the challenge was “the economy, stupid.” Now, though, we can’t even agree on that truism. Our problem is the stupidity, stupid —and solving that will take far more than an election.

David Sirota is the author of the best-selling books “Hostile Takeover” and “The Uprising.” He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.

© 2010 Creators.com

Welcome to the Urban Revolution

By Jeb Brugmann, Evan O'Neil

CREDIT: Meena Kadri (CC).

We must become "masters of a stable, just, and ecological urbanism" writes Jeb Brugmann in Welcome to the Urban Revolution: How Cities Are Changing the World (Bloomsbury Press, 2009). His book combines detailed street-level research in the style of Jane Jacobs with analysis of the city system on a planetary scale to explain the forces that are shaping our urban future. For Brugmann, urbanism is not some grand theory but rather the process by which a community taps into urban advantage to build a district of mutual benefit. He and I corresponded by email about these issues. –Evan O'Neil

Is globalization driving or displacing bottom-up urbanism? On the one hand we have the organic and productive industrial urbanism of slums like Dharavi, while master-planned projects aim to bring in the bulldozers and build sterile high-rises. Who will win this competition?

Globalization has been quite abstractly understood as processes, networks, technologies, and laws. But materially, globalization is the emergence of a new geography. Look at the Earth from space at night. You can see this extended, lighted urban geography that I've called the global City. This City is organized at many scales—from streets to districts to metro regions to urbanized continents.

At each scale, the production of urban space provides the human enterprise with two advantages. The first advantage is what I've called the "natural economies" of urban settlement—economies of density, scale, association, and network extension, which make the infrastructures that we associate with globalization, like the Internet and air travel, economically viable.

The reasons I call these economic advantages of cities "natural economies" is that they are accessible to all; they are a classic public good. Even the most repressive police state cannot fully control the poorest person's access to the economic potential created when so many diverse activities and so many diverse people are concentrated into a space, which is more time-, transport-, and cost-efficient than rural and suburban settlement.

The second advantage of urban space is its entirely plastic nature—its underlying economic potential can be designed, by anyone, in myriad ways to achieve specific industrial, criminal, social, or ecological objectives.

This brings us to the question of whether we build robust urbanisms that serve the strategic purposes of specific user communities, or whether we build generic, standard-issue urban "products" offering a basic utility to general, typically higher-income consumer segments. Both are fair game in the ever-plastic City. My argument is that if we want to achieve strategic purposes like poverty reduction, then we need to customize forms of urbanism that specifically create the economics that serve those purposes.

What we so often dismiss as "slums" are in fact specialized forms of urbanism that allow the world's poorest people to leverage the natural economies of an urban location to create impressive wealth on a cash-economy basis. I think we need to support the self-building process of those urbanisms, improve them with better materials and technology, and bring greater capital investment into them at their earlier stages of development.

Meanwhile, in response to the enormous demand to build new urban space for another 3 billion people, most of the formal property development industry and government planning agencies are focused on high-volume production of higher-end, single-purpose products—apartment buildings and condominiums, office towers, shopping malls—at basic standards. The self-organized production of urban space by migrant poor communities has conflicted with the scaled, institutional-industrial production of urban space for other segments of society. The result is often all-out conflict, which ends up being mediated by criminal organizations.

But because urban space is fundamentally plastic, we could also develop new forms of urban space production that ameliorate these tensions and serve the different strategic objectives of quantity, standards, and qualitative solutions to poverty.

What are zones of autonomy? Where do they form? Should they be encouraged?

Zones of autonomy develop when one form of urban space production, including its commercial life, is geographically marginalized or isolated from the dominant form and commercial life of the city. At one end of the spectrum we find large, informal, so-called slum districts, which establish their own legal, governance, financing, business, and social arrangements because they are intentionally isolated by conventional law, government investment, services, and police from the "mainstream" life of the city. At the other end of the zones of autonomy spectrum are industrially produced gated communities where the richest population segments pull back from the mainstream life of the city.

Zones of autonomy confound a city-region's strategic development because they represent user communities whose interests and modus operandi have been separated from the rest of society. This does not mean that they should be razed by bulldozers, because the real challenge is to forge new kinds of urbanism that better align the interests of these separated user communities with those of the mainstream city. If you just clear them and replace them with substantially inferior urban space, as we did in the U.S. era of "urban renewal," you get a worse outcome. That is why we are dynamiting the high-rise barracks slums of 1960s public housing today. Those developments neither served the strategies of their residents nor the interests of wider cities that hosted them.

Corporations and wealthy countries are experimenting with building cities from scratch, many designed along sustainable principles. What must they do to make these places interesting and not just empty green office parks?

The industrial production of urban space and facilities, with no matter how many bells and whistles, is not the same as the more self-built production of an urbanism by a city-building community. An urbanism, as I define it, is the ways that specific city-building communities design, build, govern, and co-locate activities in customized places to support their specialized forms of production and living. In other words, robust urbanism is user designed and often user built.

Think of our central business districts, port districts, university districts, entertainment districts; or of the bazaar districts of Asia. These are the true centers of commerce, culture, and often political power in our societies. There was no build-it-and-they-will-come aspect to them. They were built with purpose, and strategy, and with a honed sense of what makes them thrive and what undermines them. It is great to be a big company or big government and to have the capital and muscle to launch a big idea about some new kind of urban product on a piece of urban soil, but that does not often engender the formation of an urbanism, or what you might call a living, interesting place.

We're seeing the emergence of municipal foreign policies. Does this operate at some level other than attracting investment? Can cities advance international cooperation on problems like climate, rights, human trafficking?

Cities have been involved in foreign policy since they first came into existence. The urban economic process that I've described as extension—using the robust economics and commerce of a city to pursue worldwide strategic interests—is core to what cities are all about. Cities are vehicles of strategy in human enterprise. Think of the origin of Chicago. The Chicago project was always about, and continues to be about, a commercial-political community creating a hub of global commerce—whether involving the construction of a hub for the Great Lakes shipping system, for the American railroad system, or for global air travel.

What has changed is that city governments and other urban organizations are getting strategic together about their foreign policy ambitions in addition to their commercial ones. This activity, which started in the United States in the 1980s, when the term "municipal foreign policy" was coined, reflects the emergence of the global City as a highly connected self-aware system. "Think Global, Act Local" is another, popular expression of this awareness in highly urbanized societies. Cities are now connecting to achieve strategic political and social purposes.

This reflects our knowledge that the City is the system that needs to be changed. For instance, if you want to reduce global greenhouse gas emissions by 20 percent internationally, you'd better be working in coordinated fashion to change the City system that accounts for 60 to 70 percent of global energy end use. For legacy reasons, city governments are closer to the levers of the required change than the national governments that negotiate international climate policy, so city governments have been taking coordinated action together since 1989, before the UN-sponsored negotiations began, and long before the popular recognition of the problem in this decade.

Note that all this municipal foreign policy—cities creating policy-driven sister city relationships, divesting from Apartheid South Africa, developing local climate action plans—began before the Internet was a functioning system even in the United States. The story is similar in other areas of global strategic concern.

You note that authoritarianism can't survive the complexity of urban association, that cities are the world's strategic centers of social innovation. What is it about cities that makes them so revolutionary? What types of innovations should we expect from them?

One of the natural economies of urban settlement is what can be called "economies of association." At its most basic level, economies of association can be understood in terms of probability. If you have lots of diverse people socially organized in a way that they can interact intensively with one another, especially with high economic and service interdependencies on a day-to-day basis, then there is a high probability that like-minded people, or that people with different but synergistic interests or expertise, will find each other and common cause. The probability of this happening in dense settlement is so high, I've argued, that new forms of independent association will arise even under conditions of centralized police control.

This probability is further increased if central planners design urban space and commerce so as to concentrate anti-establishment people together. Think if the township areas of apartheid South Africa or the African-American ghettos of the mid-twentieth–century United States. Now add the factor of economies of extension—that the African National Congress or U.S. civil rights activists used urban infrastructure networks to create extended networks of activist communities, connecting the urban districts of their allies internationally. This makes for a revolutionary movement.

In terms of innovation, we can also understand these very place-based, connected civil rights communities as urban innovations in forms of collaboration, governance, political theory, and cultural expression. These highly recognized movements are just one of thousands of examples of how specific urban communities leverage the natural economies of association and extension, and the plasticity of urban space (including the development of zones of autonomy), to forge social, political, economic, and technical innovation.

The inventors of the Internet leveraged the particular urbanisms of Cambridge, Stanford, and other high-tech defense R&D districts in university towns. The origin and spread of rap music is another example. Another example is the spread of innovations in criminality, which originate in specific zones of autonomy in some cities and extend to receptive urban districts elsewhere, and then merge with criminal enterprise innovations introduced from other zones of autonomy in other parts of the world.

You say that China faces the conundrum of allowing its cities to flourish without toppling its tyranny. What will be the tipping point there?

Sticking with my first principles about natural economies and plasticity, there is every reason why China could innovate and support forms of true urbanism that serve the policy and developmental objectives of the non-pluralistic, centralized state. The fact is that they don't, because of a seeming belief that progress and development in the urban sphere involves reading from other countries' hymn books. So rather than forging regional Chinese urbanisms that empower resident-users in ways that are consistent with state policy and interests, they are doing their own forms of "urban renewal" and master-planned development à la modernist Europe and U.S urban renewal.

Of course, a major reason is expediency. First, the importation of foreign city-models is an expedient way to scale-up vast quantities of new urban space to serve the huge urban migrant population. Second, these city-models are also an expedient way for state-industrial elites to collect rents and secure windfalls.

The struggle in Gaza can also be understood in urban strategy terms. Israeli urban strategy towards Palestinian populations has effectively been to manufacture zones of autonomy. This prepared the way for Hamas, whose urban strategy, like that of other Islamic movements in the region, is based on providing services and infrastructure in these zones of autonomy—making them even more politically autonomous.

The alternative could have been to lead the development of robust, functioning urbanisms in Gaza and the West Bank—to create not only goodwill but also a viable functioning homeland that is integrated with Israeli and with the wider regional economic life even as it is politically independent. The City is plastic at all its scales. This is unique to urban geography. It can be designed to serve myriad strategies and strategic interests—including to align seemingly opposed interests.

You write that first generation urban migrants are a self-selected entrepreneurial breed, that migrants have no intention of returning to an unequal position in life, that they tap into and create what you call urban advantage. What is urban advantage and how does it work its magic?

Urban advantage is the strategic leverage that a city-building community creates when it develops customized urbanisms, putting unique form to the natural economies of a location, to achieve its purposes. I write at length about Dharavi in Mumbai as a "migrant city" because Dharavi represents scores of innovations in urban design, services, business models and logistics, and governance that provide urban advantage to its waves of poor migrant settlers from rural areas.

On the other end of the socioeconomic spectrum, industries today are increasingly trying to wrap their heads around the development of urban advantage, and what might otherwise be called "locational advantage" and "agglomeration economies." For instance, in Silicon Valley, a number of the major corporations anchored there are collaborating with each other and with municipal governments and developers to create urban spaces that support greater employee productivity.

One of the key issues is how to overcome the monoculture of employee technical bias and perspective, and to stimulate fresh thinking and collaboration between knowledge professionals with different expertise and perspectives, ultimately also fostering shared strategic (business) interests. By relocating offices from isolated single-company suburban campuses to vibrant, mixed-use, mixed-company "innovation hubs," there is some expectation that the productivity benefits could offset the labor cost advantages of emerging high-tech regions.

How might a city take advantage of this migrant energy without being overwhelmed? Do cities that grant migrants sanctuary accrue any strategic advantage?

Cities that create development pathways for their migrants achieve strategic advantage. We know this all too well in the United States, as one of the first true migrant nations. Most of those people passing through Ellis Island were not coming to board Conestoga wagons and to homestead out west. Most were coming to secure some urban advantage in an ethnic district in a manufacturing city. The rest is history.

It was a tough history in New York, Philadelphia, Baltimore, Boston, Detroit, and Chicago with plenty of conflict between ethnic neighborhoods over urban "turf"—streets, parks, jobs, intersections, etc.—but government enabled, invested in (and often politically exploited) a unique form of industrial city urbanism in which specialized manufacture, worker residences, and commercial/retail services were conveniently and efficiently co-located. In other words, a pathway was created for poor people to get off the boat, join an ethnic "slum," organize their commerce and socio-political institutions within that district, and then to become metropolitan specialists in certain trades and industries, secure political representation, and ultimately secure public investment in services and infrastructure for their district.

The question is, Can we reverse-engineer this often trial-and-error process and accelerate capital investment alongside the customized development of migrant districts across the world? I don't think it is rocket science, but it takes a very different approach to the production of urban space than the dominant, standardized, outside-in approach today.

You write that we need to become "masters of a stable, just, and ecological urbanism." Describe your ideal ecological city. What makes it just?

There is no truly ecological city in the traditional sense of the word city. This is because a city is largely an extractive system that by its concentrated, intensive nature demands more materials, resources, energy, and nutrients than can be produced internally within the urbanized area. The first step towards ecological urbanism is increasing the energy and nutrient productivity within the city, but the only way to move sufficiently from extractive mode to a sustainable productive mode is to think, design, and develop at the scale of the City. This is the topic of my next book.

In my mind the problem of justice is at least technically more straightforward. Justice, as I've indicated above, can become a self-organizing process when disadvantaged city-building communities are given support to develop customized urbanisms from which they can leverage improvements in their social and economic status. In the so-called slums around the world, particularly where they are allowed to mature and to grow into urban districts, migrant communities have demonstrated and continue to demonstrate the empowering way that the urbanism facilitates freer association and greater justice in the world.

A box of botched Con tricks

by Robert Skidelski

Defenders of George Osborne’s plans to hack back public spending cite the Geddes Axe of 1921 and the 1981 Budget as proof that rigour is what will pull us out of this recession. History shows they’re wrong and Keynes still right, argues Robert Skidelsky.

In economics, you cannot convict your opponents of error, only convince them. Economics is not like physics; you can't conduct controlled experiments to prove or disprove your theories. History provides a very partial way of overcoming this weakness. No event repeats itself exactly, but past events offer some kind of test of current theories about the economy. The main question of present interest is the effect of fiscal consolidation.

The programme of fiscal consolidation has just been unveiled by George Osborne. The claim behind it is that slashing the deficit - removing £123bn from the economy over the next five years, partly by raising taxes, mostly by cutting spending - will make the economy recover faster and more vigorously from the recession. This theory goes under the name of "expansionary fiscal contraction".

It became popular in the 1980s as a counter to Keynesian orthodoxy at a time when fiscal policy was in flux. President Ronald Reagan, while proclaiming strict fiscal rectitude, in fact ran unprecedented (for that era) peacetime budget deficits. For Keynesians, the US boom of the 1980s was the direct consequence of the huge volumes of extra demand being pumped into the US economy, mainly for military spending. Keynesian economists warned against premature curtailment of this stimulus. As Ralph Bryant, John Helliwell and Peter Hooper (in Bryant et al's Macroeconomic Policies in an Interdependent World, 1989) put it, "an unanticipated cut in US federal purchases could have a substantial negative impact on the level of US real output for several years". Yet two other economists, Gerhard Fels and Hans-Peter Fröhlich, writing in Economic Policy 4 (April 1987), studied a different episode, that of fiscal consolidation in the Federal Republic of Germany. They noted that the "anti-Keynesian" policy there had coincided with a rapid recovery of the economy from the 1981-82 recession, and attributed this "coincidence" largely to the favourable effect of consolidation on expectations in the private sector. A similar conclusion was drawn in Britain from Geoffrey Howe's 1981 Budget. Indeed, it became part of Thatcherite folklore that Howe's fiscal retrenchment was followed shortly by a resumption of rapid growth, despite dire warnings by hundreds of Keynesian economists.

The proposition that cuts in government spending can grow the economy relies on "Ricardian equivalence" - the oft-repeated claim, made by the likes of Osborne, that government borrowing is just deferred taxation. If households and investors factor in future levels of taxation when they are making spending decisions now, a stimulus would have no effect on economic growth: households will simply cut back on their consumption in anticipation of inevitable tax increases. So public spending "crowds out" private spending.

But now let's ask: what would households and firms do in response to a cut in government spending? Ricardian equivalence says that reduced borrowing will create an expec­tation of lower taxes in the future (even if in the short term the deficit reduction includes tax rises). Freed of the burden of future taxes, private agents will happily spend more now, providing the required boost to demand when the government steps back. Increased demand means more jobs created in the private sector. The resulting increase in spending may well be enough to outweigh the money taken out of the economy by the government, and thus it will increase output overall.

The effect on investor and consumer confidence is likely to be still greater if spending cuts are seen to prevent an even more painful re­adjustment in the future. This can happen if the national debt is believed to have reached an extreme level. Dispelling fears of a Greece-style debt crisis might contribute more to growth than the loss of public money propping it up.

The other way cutting the deficit can reverse "crowding out" is by leading to lower interest rates. According to this argument, government borrowing drives up interest rates, because at a fixed level of saving the government demand for borrowing increases the price that private borrowers will pay for access to finance. As a result, government spending "crowds out" private spending, substituting on a one-to-one basis. So, if government borrowing falls, interest rates will fall, allowing private firms to borrow more cheaply.

Thus, a reduction in the deficit today might be good for the economy tomorrow under three conditions: if the action is taken to signal lower taxes; if it leads to lower interest rates; and if it reduces the risk of "bad news" such as default, inflation and so on - that is, if it leads to greater confidence.

What does the historical record tell us? The Organisation for Economic Co-operation and Development claims that about half of the fiscal contractions in the European Union in the past 30 years were expansionary, having been followed by an acceleration in growth. There is no shortage of historical episodes offered as models for today's cuts - Canada, Denmark, Ireland - but here three examples from British economic history seem most relevant.

The last time public spending was cut on the scale proposed by Osborne was in 1921-22, with the "Geddes Axe", carried out under another Conservative-Liberal coalition government.

During the First World War, government spending, taxes and state involvement in the economy had expanded enormously. The war effort had been financed largely through borrowing, and the result was a sharp increase in government debt, which peaked in 1919 at 135 per cent of GDP - compare this to the projected peak of 70 per cent in 2013. The wartime scale of deficit spending brought with it an inflationary boom and fiscal surplus immediately after the war, while demobilisation and the sell-off of military assets brought fiscal surpluses. But there was a quickening current of middle-class discontent at the burden of taxation which manifested itself in the "anti-waste" movement.

The Anti-Waste League, founded by the 1st Viscount Rothermere, owner of the Daily Mail, campaigned against what was seen as wasteful government expenditure, winning three "safe" Conservative seats in by-elections in the first half of 1921. In the end, the political pressure on the government proved too great. David Lloyd George renounced his promises of "homes fit for heroes" and an independent committee of businessmen, led by Sir Eric Geddes, was asked to produce savings of £100m in addition to the £75m that the Treasury had already extracted from the departments. By cutting expenditure, the government argued, it would make room for tax cuts, and find money to pay down the debt.

In the end, Geddes proposed £87m of extra cuts, and while departments did not quite reach the Geddes Axe target, central government current spending fell by about £100bn at today's values over five years - a level not entirely unlike today's projected cuts. Although most of the savings were made in defence, the short-sighted focus on reducing waste damaged areas vital for long-term economic growth, notably secondary education for poorer children. The cuts in the Budget hit an economy already suffering from a huge fall in output. Monetary policy was not eased to offset fiscal contraction, because interest rates were kept high to help the pound regain its pre-war parity with the dollar: a tactical blunder that earned the wrath of John Maynard Keynes.

The result was eight years of ultra-anaemic growth, punctuated by the General Strike of 1926, with unemployment of insured workers never falling below 10 per cent. This situation was the origin of Keynes's later concept of "underemployment equilibrium". There is a further lesson for today. The shrinkage of the economy in 1921 and 1922 caused the national debt to grow from 135 per cent of GDP in 1919 to 180 per cent in 1923; and although it subsequently came down, it was still higher in 1929 than it had been at the end of the war.

Move forward to the Great Depression. The Wall Street crash of 1929 brought a global collapse in demand. By 1931 UK unemployment had reached almost 20 per cent. Concerns about the solvency of the Labour government's finances led the then chancellor, Philip Snowden, to set up an independent committee under Sir George May, formerly of the Prudential, to recommend cuts in public expenditure. Projecting a deficit of £120m for 1932-33, the committee demanded £96m of cuts, mostly to come from benefits and wages, and £24m of extra taxes. The hole in the government's Budget was 10 per cent of public spending, about the same size as today's, though it was to be closed in one year rather than five.

It needed a national government, formed by the Labour prime minister, Ramsay MacDonald, with the support of the Conservative and Liberal parties but against the opposition of his own, to deliver the cuts demanded by the May committee. But these measures failed to restore confidence, and in September 1931, a month after their enactment, Britain was forced off the gold standard following a "mutiny" at Invergordon of naval ratings facing a pay cut. Keynes wrote in the New Statesman at the time that the May committee cuts would add approximately 400,000 to the unemployed, diminishing tax receipts and reducing the "saving" on the Bud­get to just £50m. "At the present time all governments have large deficits," he wrote. "They are nature's remedy for preventing business losses from being . . . so great as to bring production altogether to a standstill."

One can point to four years of solid growth from 1933 to 1937, yet it is hard to argue that this had anything to do with an "expansionary fiscal contraction". Rather it was Britain's abandonment of the gold standard that was the decisive event. This had two expansionary effects: interest rates could come down to 2 per cent, where they stayed for the rest of the 1930s, and the pound lost 30 per cent of its value. The first enabled the Treasury to convert the national debt to lower interest rates, and sparked off a private housing boom; the second boosted exports for a year and a half until the United States devalued the dollar, too. The decline in GDP during the Depression years caused the national debt to rise from 160 per cent of GDP in 1929 to 180 per cent in 1933, higher than during the war. Despite the recovery, interrupted by a "double dip" in 1937, unemployment never fell below 12 per cent for the rest of the decade.

Osborne's think-tank acolytes often invoke the spirit of Geoffrey Howe's 1981 Budget. This savage programme of cuts - designed primarily to help bring down inflation - took £4bn, or 2 per cent, out of the economy when unemployment was already rising. Howe's plan ran up against the Keynesian orthodoxy of the day. In March 1981, 364 economists, including the present governor of the Bank of England, Mervyn King, wrote an open letter to the Times predicting that government policy would "deepen the depression, erode the industrial base of our economy and threaten its social and political stability". Almost before the ink on the letter was dry, the economy emerged from recession, growing by 3.3 per cent on average over the following five years. (Inflation also fell from 17.8 per cent in 1980 to 4.3 per cent in 1982.) A textbook example of an expansionary fiscal contraction?

Hardly. In a retrospective debate on the merits of the 1981 Budget, published by the Institute of Economic Affairs as the report Were 364 Economists All Wrong? (2006), none of the contributors believes it was the Budget cuts themselves that produced recovery. Rather, it was the monetary loosening which accompanied them: interest rates were cut by 2 per cent and restrictions eased on banking lending. Tim Congdon, the most skilful defender of Howe's Budget strategy, argues: "The [presumably adverse] macroeconomic effects of the £4bn tax increase in the 1981 Budget were smothered by the much larger and more powerful effects of changes in monetary policy."

Stephen Nickell, formerly of the Monetary Policy Committee, and an unrepentant signatory of the letter, agrees. He does point out, however, that as unemployment continued rising and did not start falling for five years, the fiscal contraction widened the output gap and the economy failed to grow to trend. So the defence of the Howe Budget rests on the assertion that the cuts were needed to bring down long-term interest rates, with private spending being "crowded in" by the contraction of government spending. With large numbers of people unemployed, this is not very plausible.

Where cheaper money may have had a fav­ourable impact was on asset prices. It was the boom in house prices and financial assets which led the Thatcher recovery. Today, Osborne apparently puts his faith in monetary loosening to offset the effects of his fiscal ­consolidation.

Some conclusions can be drawn from these episodes. First, the fiscal contraction was never followed by economic growth strong enough to replace the output lost in the preceding slump. In all three cases it is likely that it made the slump worse than it would have been. Second, and because of the last factor, it failed to reduce the national debt. The national debt as a share of GDP rises in periods of stagnation and falls when times are prosperous. Third, in all cases it led to considerable social and political unrest: we have only to think of the 1926 General Strike, the hunger marches in the 1930s, and the miners' strike of 1984-85.

Two of the three episodes considered - those of 1931 and of 1981-82 - were followed shortly by economic revival. However, a correlation is not a cause. By general consent it was cheap money, and not the fiscal contraction, which brought about the recovery, and the deficit hawks have failed to establish that it was fiscal consolidation which caused the cheap money. Indeed, on a priori grounds, this is highly unlikely. To the extent that Budget retrenchment reduces the national income to less than what it would have been, it reduces saving and money supply, and thus leads to interest rates higher than they would otherwise have been.

So we are brought back to the question of confidence. One can imagine a set of circumstances in which fiscal consolidation will have a sufficiently invigorating effect to cause a recovery. I would suggest, however, that this can happen only in the context of extreme events. If a government is felt to have lost all control, if the size of the debt is so vast that it threatens imminent default, then a decisive change of policy can have a decisive effect. Britain was hardly in this position last April, despite all the efforts of Conservative spokesmen to play up the imminence of the danger facing the country under Labour rule.

This illustrates the point that one cannot, and should not, reduce all economic policy to matters of psychology. It leads to the view that fatuous expressions of confidence, provided they are repeated often enough, can overcome the effects of disturbing events. For this to be true, one has to assume a great deal of irrationality in the electorate. Some irrationality there is, but it is surely more reasonable to believe that if a businessman faces declining demand for his products, he will curtail his production rather than expand it.

So, what are the prospects for Osborne's cuts? They will directly worsen immediate growth prospects, as the Office for Budget Responsibility concedes, and they will not in themselves bring about offsetting reductions in long-term interest rates. For this, we need quantitative easing (printing money) and it is no secret that this is what the Chancellor relies on to vindicate his policy. Yet one would be wrong to think this is a cure-all. For one thing, it never brought about complete recovery in the past. Second, its main influence is on asset prices. Housing and construction benefit especially from low interest rates, but do we want to stimulate another housing boom fuelled by cheap credit? Moreover, most of an economy's investment is more sensitive to the level of demand than to the cost of capital, so that even large reductions in interest rates might have quite a small effect on activity.

Quantitative easing is Osborne's last throw. But the injection of £200bn of new money in 2009 failed to revive lending and borrowing on the scale needed for robust recovery, and it is not clear why the Chancellor and the governor of the Bank of England expect another monetary injection to do any better now. Demand is expected to fall further and new unsecured lending is priced at 10.5 per cent despite a 0.5 per cent bank rate.

Keynes spelled out the alternatives we face today in 1932, in the thick of the Great Depression: "It may still be the case that the lender, with his confidence shattered by his experience, will continue to ask for new enterprise rates of interest which the borrower cannot expect to earn . . . If this proves to be the case there will be no means of escape from prolonged and perhaps interminable depression except by direct state intervention to promote and subsidise new investment." George Osborne be warned.

Robert Skidelsky's "Keynes: the Return of the Master" is newly published in paperback by Penguin (£9.99)

The "Death of the Liberal Class"

by Chris Hedges

Book excerpt: From the book “Death of the Liberal Class,” by Chris Hedges. Excerpted by arrangement with Nation Books, a member of the Perseus Books Group. Copyright © 2010.

In a traditional democracy, the liberal class functions as a safety valve. It makes piecemeal and incremental reform possible. It offers hope for change and proposes gradual steps toward greater equality. It endows the state and the mechanisms of power with virtue. It also serves as an attack dog that discredits radical social movements, making the liberal class a useful component within the power elite.
But the assault by the corporate state on the democratic state has claimed the liberal class as one of its victims. Corporate power forgot that the liberal class, when it functions, gives legitimacy to the power elite. And reducing the liberal class to courtiers or mandarins, who have nothing to offer but empty rhetoric, shuts off this safety valve and forces discontent to find other outlets that often end in violence. The inability of the liberal class to acknowledge that corporations have wrested power from the hands of citizens, that the Constitution and its guarantees of personal liberty have become irrelevant, and that the phrase consent of the governed is meaningless, has left it speaking and acting in ways that no longer correspond to reality. It has lent its voice to hollow acts of political theater, and the pretense that democratic debate and choice continue to exist.

The liberal class refuses to recognize the obvious because it does not want to lose its comfortable and often well-paid perch. Churches and universities—in elite schools such as Princeton, professors can earn $180,000 a year—enjoy tax-exempt status as long as they refrain from overt political critiques. Labor leaders make lavish salaries and are considered junior partners within corporate capitalism as long as they do not speak in the language of class struggle. Politicians, like generals, are loyal to the demands of the corporate state in power and retire to become millionaires as lobbyists or corporate managers. Artists who use their talents to foster the myths and illusions that bombard our society live comfortably in the Hollywood Hills.

The media, the church, the university, the Democratic Party, the arts, and labor unions—the pillars of the liberal class—have been bought off with corporate money and promises of scraps tossed to them by the narrow circles of power. Journalists, who prize access to the powerful more than they prize truth, report lies and propaganda to propel us into a war in Iraq. Many of these same journalists assured us it was prudent to entrust our life savings to a financial system run by speculators and thieves. Those life savings were gutted. The media, catering to corporate advertisers and sponsors, at the same time renders invisible whole sections of the population whose misery, poverty, and grievances should be the principal focus of journalism.

In the name of tolerance—a word the Rev. Dr. Martin Luther King Jr., never used—the liberal church and the synagogue refuse to denounce Christian heretics who acculturate the Christian religion with the worst aspects of consumerism, nationalism, greed, imperial hubris, violence, and bigotry. These institutions accept globalization and unfettered capitalism as natural law. Liberal religious institutions, which should concern themselves with justice, embrace a cloying personal piety expressed in a how-is-it-with-me kind of spirituality and small, self-righteous acts of publicly conspicuous charity. Years spent in seminary or rabbinical schools, years devoted to the study of ethics, justice, and morality, prove useless when it comes time to stand up to corporate forces that usurp religious and moral language for financial and political gain.

Universities no longer train students to think critically, to examine and critique systems of power and cultural and political assumptions, to ask the broad questions of meaning and morality once sustained by the humanities. These institutions have transformed themselves into vocational schools. They have become breeding grounds for systems managers trained to serve the corporate state. In a Faustian bargain with corporate power, many of these universities have swelled their endowments and the budgets of many of their departments with billions in corporate and government dollars. College presidents, paid enormous salaries as if they were the heads of corporations, are judged almost solely on their ability to raise money. In return, these universities, like the media and religious institutions, not only remain silent about corporate power but also condemn as “political” all within their walls who question corporate malfeasance and the excesses of unfettered capitalism.

Unions, organizations formerly steeped in the doctrine of class struggle and filled with members who sought broad social and political rights for the working class, have been transformed into domesticated negotiators with the capitalist class. Cars rolling off the Ford plants in Michigan were said to be made by UAW Ford. But where unions still exist, they have been reduced to simple bartering tools, if that. The social demands of unions in the early twentieth century that gave the working class weekends off, the right to strike, the eight-hour workday, and Social Security, have been abandoned. Universities, especially in political science and economics departments, parrot the discredited ideology of unregulated capitalism and have no new ideas. The arts, just as hungry as the media or the academy for corporate money and sponsorship, refuse to address the social and economic disparities that create suffering for tens of millions of citizens. Commercial artists peddle the mythical narrative, one propagated by corporations, self-help gurus, Oprah and the Christian Right, that if we dig deep enough within ourselves, focus on happiness, find our inner strength, or believe in miracles, we can have everything we desire.

Such magical thinking, a staple of the entertainment industry, blinds citizens to corporate structures that have made it impossible for families to lift themselves out of poverty or live with dignity. But perhaps the worst offender within the liberal class is the Democratic Party.

The party consciously sold out the working class for corporate money. Bill Clinton, who argued that labor had nowhere else to go, in 1994 passed the North American Free Trade Agreement (NAFTA), which betrayed the working class. He went on to destroy welfare and in 1999 ripped down the firewalls between commercial and investment banks to turn the banking system over to speculators. Barack Obama, who raised more than $600 million to run for president, most of it from corporations, has served corporate interests as assiduously as his party. He has continued the looting of the U.S. Treasury by corporations, refused to help the millions of Americans who have lost their homes because of bank repossessions or foreclosures, and has failed to address the misery of our permanent class of unemployed.

Populations will endure the repression of tyrants, as long as these rulers continue to manage and wield power effectively. But human history has demonstrated that once those in positions of power become redundant and impotent, yet insist on retaining the trappings and privileges of power, their subject populations will brutally discard them. Such a fate awaits the liberal class, which insists on clinging to its positions of privilege while at the same time refusing to play its traditional role within the democratic state. The liberal class has become a useless and despised appendage of corporate power. And as corporate power pollutes and poisons the ecosystem and propels us into a world where there will be only masters and serfs, the liberal class, which serves no purpose in the new configuration, is being abandoned and discarded. The death of the liberal class means there is no check to a corporate apparatus designed to enrich a tiny elite and plunder the nation. An ineffectual liberal class means there is no hope, however remote, of a correction or a reversal. It ensures that the frustration and anger among the working and middle classes will find expression outside the confines of democratic institutions and the civilities of a liberal democracy.

BREAKING NEWS: Election 2010 Outside Political Spending Officially Eclipses Such Expenditures From 2004 Cycle

By Michael Beckel and Megan R. Wilson on October 28, 2010 1:43 PM

Special interests have today passed a major milepost in influencing U.S. political elections.
Groups have thrown more money into the 2010 midterm elections than they did during the 2004 election cycle -- when, on top of congressional contests, Republican President George W. Bush and Democrat John Kerry battled for the presidency.

During the 2004 election cycle, all outside groups spent $448 million on independent expenditures, electioneering communications and other communication costs to influence the election and aid their preferred candidates, according to an analysis by the Center for Responsive Politics. As of this morning, the Center’s research indicates, all outside groups have spent $455 million on such expenses -- a number that will continue to rise as Election Day nears.

Outside groups would have to spend another $130 million during this election cycle to match the 2008 election cycle, when such groups spent $585 million among congressional contests, as well as the presidential race.

Overall this cycle, outside groups, including the national party committees, unions, trade associations, nonprofits and “super PACs” such as American Crossroads, have so far favored Republicans. Conservative-oriented groups have spent $1.34 for every $1 liberal-affiliated groups have spent, the Center’s data show.

Some of the biggest outside spenders are the national party committees -- the Democratic Congressional Campaign Committee, the National Republican Congressional Committee and their ilk. Excluding these groups, independent non-party-committee organizations have also spent more this cycle than they did six years ago: $280 million this cycle versus $200 million in 2004.

And the Republican outside spending advantage is even more pronounced: Republican-aligned and conservative groups so far this election season have spent $2.12 for every $1 that Democratic-aligned and liberal groups have spent, according to the Center’s analysis.

Party committees and many of the other groups spending money this cycle are bound by contribution limits.

However, in the wake of the Supreme Court’s Citizens United v. Federal Election Commission ruling earlier this year, corporations, trade associations, unions and nonprofits have been able to raise unlimited contributions for political messages -- and numerous corporations and wealthy individuals have invested millions to fund advertisements this year. Funding political advertisements with such high-dollar donations was previously illegal.

Crossing Wall Street

By Lindsay Renick Mayer, Michael Beckel & Dave Levinthal on November 16, 2009 11:45 AM
(N.B.: For the most up-to-date charts and downloadable spreadsheets that go with this series, check out our finance policy tools page.)

As the United States continues digging itself out of a recession, the nation is poised to re-emerge in a dramatically altered financial climate. And after years of enjoying relatively little regulation, commercial banks, credit companies, hedge funds and securities and investment companies are facing the most extensive overhaul by the federal government since the Great Depression.

That could spell retribution for those who are jobless, broke and have lost their homes to predatory lending, albeit 14 months after headlines announced the onslaught of an economic recession and one year after voters elected a new president to lead them out of the gloom.

But if a lack of money is the crux of the economy's troubles right now, the abundance of money pouring into the political sphere may, in part, mean that sweeping change doesn't look so...sweeping. There's no doubt about it: Despite a moribund economy, the financial industries that have enjoyed relatively little regulation over the years continue pouring big money into ensuring the government's control over them remains limited.

"You've got all these industries protecting their turf," said Lawrence Baxter, a law professor at Duke University whose research focuses on regulation of financial services. Baxter previously held senior positions at Wachovia Corp. "It's amazing how some industries can stay in the game when common sense says they clearly need to be regulated. But then you look at their campaign contributions and you understand why. Campaign contributions are very effective at slowing down reforms that need to be done from a public interest perspective."

Case in point: The finance, insurance and real estate sector has given $2.3 billion to candidates, leadership PACs and party committees since 1989, which eclipses every other sector. Nineteen percent of total contributions from the employees and political action committees across all sectors came from the financial sector.

The overriding question today? Whether Washington lawmakers are willing to cross Wall Street, which has bankrolled their campaigns for so long, in the name of reform.

Wall Street, for its part, continues to woo lawmakers, while simultaneously girding for battle.

Even with a number of large financial institutions folding or merging since last fall, the sector has still given more to federal candidates and party committees than any other sector this year at $78.2 million. Current lawmakers have brought in $661.6 million from the sector through their candidate committees and leadership PACs, with Democrats collecting 53 percent of that.

The financial sector has also been a voracious lobbying force, spending an unprecedented $3.8 billion since 1998, while sending an army of lobbyists to Capitol Hill to make its case. That's more money than any other sector has spent on influence peddling. Not even the health care sector, which spun up a lobbying frenzy this year over health reform, has spent more.
All of these efforts have seemingly paid off. Over the years, Congress hasn't seriously considered regulation intended to protect consumers.
"I'd say for the first time that I can remember, we are talking about a real challenge to the myth that financial markets can regulate themselves," said David Min, associate director for financial markets policy at the liberal think tank Center for American Progress. "Why did people start accepting this [myth]? I think it was because that particular ideology had a lot of backers with deep pockets who were pushing their agenda. At the same time, financial markets really did seem to be working."

Financial regulation ranks among the Obama administration's top priorities, and it's encouraging Congress to act swiftly, seven months after it released its own map to reform. As lawmakers consider ways to prevent the economy from again faltering, they've concocted a complex stew of regulation and oversight proposals that the finance industries don't find particularly appetizing.

The debate that has gained the most attention so far seems to be over the Consumer Financial Protection Agency, a consumer watchdog agency that would have the power to regulate a number of financial products, including credit cards, insurance, hedge funds, mortgages and the financial instruments known as derivatives.

"One of the problems that's developed is our national regulatory system mirrors the industry 20 and 50 years ago. There is a wide variety of new types of financial products that are out there that were never imagined the last time regulatory reform was looked at," said David John, senior research fellow at the conservative Heritage Foundation. "We would like to see a financial regulatory system that better reflects the products that exist today, but we are also very hesitant about proposals that could micromanage parts of the industry."

The House Financial Services Committee has already passed the measure that would establish the executive branch agency. But lawmakers face obstacles in determining the new agency's scope of power and whether states could override the agency's standards.

Lawmakers are also trying to determine how to handle financial institutions that fail, thereby endangering the country's economic well-being.

Some lawmakers want to use taxpayer money to bail these companies out at the time of their collapse, much as the government did last fall for firms such as American International Group (AIG) and Citigroup. Taxpayers would bear the initial burden, but the companies would be expected to return that cash over a certain period of time. Other legislators would rather have companies with more than $10 billion in assets pay fees into an insurance-like fund, creating a safety net for faltering outfits.

Some of these discussions pit Republicans versus Democrats. Others divide members of the same party. The financial sector, therefore, appears to be playing it safe, at least as far as its political contributions are concerned.
During each election cycle since 1994, the sector has, on balance, always given a greater percentage of its political cash to Republicans. But the PACs and employees of the financial sector gave 51 percent of their total $475.4 million to Democrats in 2008 and have given 58 percent of their total $78.2 million to Democrats so far this cycle, including candidate committees, leadership PACs and party committees.

Although the economy rapidly declined throughout 2008, the finance sector contributed more than it ever had to federal candidates, parties and leadership PACs in the 2008 election cycle. President Barack Obama pulled in $39.5 million from the sector, which is 30 percent of the total funds the sector gave to all presidential candidates in that time, and makes the sector his third most generous backer.
The debates over the financial crisis aren't just about regulating the sector and protecting consumers. Lawmakers are also mulling how to best bolster the economy, or at least nurse it back to health.
Will that effort materialize in the form of a second stimulus bill? Funds for infrastructure? Tax breaks for businesses that create jobs?
And even as lawmakers look to the future, they're also engaged in a venomous reminiscence, pointing fingers and trying to decide which companies, industries, agencies and laws set up the framework for the recession in the first place. Among the questions they're asking: What role did the Federal Reserve play, and should it have more -- or less -- power? Are the executives at big commercial banks and securities and investment companies responsible? Should they be taking lavish bonuses on top of taxpayer money? Did the deregulation enacted as part of the 1999 Financial Services Modernization Act set up this crisis?
Over the next seven days, Capital Eye will be following the special interest money as both the House and Senate tackle these issues. Follow along as our "Crossing Wall Street" series explores:

•The high-profile industries with a stake in the debate's outcome, and their politicking strategies.

•Where the primary lawmakers shaping the debate are getting their campaign cash and how they view the various proposals.

•American International Group's (AIG) extensive attempts to influence lawmakers before the company accepted billions from the Federal Reserve to stay afloat -- and the lawmakers financially bound to the company.

•The financial industries filling the campaign coffers of the moderate Blue Dog Democrats and members of the New Democrat Coalition who are breaking ranks with their party.

•The former congressional staffers now lobbying their former bosses on financial regulation for commercial banks, hedge funds, insurers and the like.

•Which lawmakers dumped personal investments ahead of the announcement that certain companies were folding or accepting taxpayer funds.

•The campaign contributions and lobbying expenditures by companies that have received billions of dollars over the last year from the Toxic Asset Relief Program.

CRP Senior Researcher Douglas Weber and Lobbying Researcher Matthias Jaime contributed to this report.

Looking for further links to the "Crossing Wall Street" blog posts and analysis? Check the original article as per the link provided in the title...

The Right to Food: Corporate, Foreign Gov’t Land Grab Causing Hunger in Poor Countries

The United Nations Special Rapporteur on the Right to Food, Olivier De Schutter, joins us to discuss his recent warning that some 500 million small farmers in poor countries are suffering from hunger, partly because foreign countries and corporations have bought up large tracts of land. We’re also joined by Smita Narula, author of a new study suggesting that many of the land deals in Africa and South Asia lack transparency and could threaten local communities with eviction, undermine their livelihoods, and endanger their access to food. [includes rush transcript]

* Olivier De Schutter, United Nations Special Rapporteur on the Right to Food.
* Smita Narula, faculty director of the Center for Human Rights and Global Justice at New York University Law School.

JUAN GONZALEZ: Some 500 million small farmers in poor countries are suffering from hunger partly because of large-scale land purchases by foreign investors and the growing use of biofuels. That’s the message that the United Nations Special Rapporteur on the Right to Food had for the General Assembly last week. Olivier De Schutter added that the practice of so-called land grabs is taking place in a context where the world is already losing 75 million acres of farmland a year to environmental degradation, industrial expansion and urbanization.

AMY GOODMAN: Well, a new report being released here in New York today suggest that many of the land deals recently concluded in Africa and South Asia lack transparency. Based on a year-long study of four particular deals in Sudan, Pakistan, Mali and Tanzania, the report notes that the so-called land grabs could threaten local communities with eviction, undermine their livelihoods, and endanger their access to food.

For more, we’re joined here in New York by the report’s lead author Smita Narula, who’s the faculty director of the Center for Human Rights and Global Justice at NYU Law School. We’re also joined by Olivier De Schutter, the UN Special Rapporteur on the Right to Food.

We welcome you both to Democracy Now! Oliver De Schutter, let’s start with you. Give us the scope of this issue. I don’t think people are at all aware of what’s happening in the rest of the world when it comes to, well, what you’re calling land grabs.

OLIVIER DE SCHUTTER: Well, the pace at which this is developing is really impressive. Over the past couple of years, we’ve seen about 40 million hectares of land exchanged subject to such deals, which represents about twice the farmland of France, for example. So it is going very fast, and it’s driven by a lack of confidence that now investors have in international markets. And they seek to secure supply of food by outsourcing food production at the expense of the small farmers in developing countries who already have too little land to cultivate. Every generation, the plots they cultivate grow smaller. And they are now facing this competition from foreign investors and are basically priced off the market.

JUAN GONZALEZ: Are there particular crises that have sort of sparked this land grab in recent years? I’m thinking, for instance, of the financial crisis in Asia several years back. Or anything in particular that is driving this?

OLIVIER DE SCHUTTER: Well, I think there are four factors, essentially, which explain this. First, the prices on international markets are increasingly volatile and unpredictable. And so, countries understand that to ensure their food in the future, they need to buy land in order to secure stable supplies of food by outsourcing food production. They don’t trust the international markets anymore. And the global food price crisis of 2008 was, in that sense, a wake-up call for them.

Secondly, there is a push towards the production of biofuels, which is one of the main drivers behind this race for farmland.

Thirdly, we are losing every year some 30 million hectares of land to industrial projects, urbanization, and the land is shrinking. The land that is available to produce food is shrinking.

And fourthly, many countries are now lacking water. This is the case for China, for example, which has to feed 22 percent of the world’s population with eight percent of farmland, but which has not enough resources of fresh water. And they try to buy land abroad, because they know that in the future they will need this to feed the population.

AMY GOODMAN: Wall Street banks. Can you talk about the Wall Street banks that are doing this?

OLIVIER DE SCHUTTER: Well, absolutely. I think we have to realize that although much of the media attention has gone to countries purchasing land of broad, in fact the main actors here are private investors, and mostly investment funds, who use land as an asset, as a speculative asset, and they know that the price of farmland will continue to rise in the future. And so, they buy this without necessarily having a very clearly defined project, but they buy this because they know that the price of land will continue to rise. And it is, for them, a means to basically hedge the risk from other investments they make. They know that it’s a relatively safe way to invest their money. And it is, indeed, increasing the pressure on many populations.

AMY GOODMAN: Can you name names?

OLIVIER DE SCHUTTER: Unfortunately, it is sometimes very difficult to identify those—the main actors behind this. The reason is that many of these deals lack transparency. They are discussed in public, not presented to parliaments. They don’t lead to negotiations with the local communities concerned. And for everybody, it is very difficult to identify who are the actors behind this.

JUAN GONZALEZ: Well, Smita Narula, you’ve tried to track some of these deals, especially in countries that people would not expect this is going on—in Pakistan, in Tanzania, two countries that are experiencing huge domestic problems, obviously. Could you talk about the specifics of what you found?

SMITA NARULA: Sure. The report that the Center for Human Rights and Global Justice is releasing today actually looks at this—hones in on four case studies, that tries to put a little bit more detail to the broader phenomenon that Olivier was speaking of, in the context of over one billion people going hungry today and over 40 million hectares of land transferring hands, particularly agricultural land. We tried to see who these investors are, the kinds of investments that are taking place. And our major findings, as well, speak to the lack of transparency that Olivier mentioned.

The report looks at investments in agriculture, in biofuels and in timber production in several countries and is led by investors from Europe and the Middle East. Our general findings are that these investments, by and large, are taking place with an extreme lack of transparency with sufficient detail to be able to effectively scrutinize the investments. They are taking place in an environment where there is a lack of regulation from the host countries themselves, either a lack of ability or willingness to effectively regulate the investments. And there’s also—the result of both of these is that the potential impacts on the rights of host communities is great. We are concerned, in particular, about food security, about water shortages, and about depriving millions of people to access to the very land that they depend upon for their livelihood and resources.

JUAN GONZALEZ: Well, when you say "lack of transparency," I would think that in most countries, when you—when land passes hands, there has to be a deed, and there has to be a registration of that deed, so that there has to be a way to find out who owns the land, right?

SMITA NARULA: So, in a number of the countries concerned, the rights of the communities that are occupying the land are actually very unclear. Their use of the land is very clear, and the dependence on the land is clear, but there isn’t formal registration of those lands. There is also a lack of a regulatory framework in how the land actually gets used, gets transferred. And in the agreements that we have been able to see, the commitments to host communities are written in remarkably vague terms for deals effecting a ninety-nine-year lease and thousands upon thousands of hectares of land. And we’re concerned that this lack of regulation and the vagueness attached to these are going to have severe impacts on the rights of communities.

AMY GOODMAN: Very quickly, give us the example of Pakistan.

SMITA NARULA: And Pakisan is a great example of non-transparency. There, the Pakistani government last year announced that it would make over 2.4 million hectares of land available to foreign corporate investment in agriculture. One farmers’ movement has noted that at least 25,000 villages threaten to be displaced by investments from Gulf state investors alone. Yet there is an enormous lack of transparency related to what these deals are, who’s driving them. And as far as we can tell, in most of these, the host communities have rarely been consulted about what their rights are. And, of course, their own agency over resources has not been respected in these deals.

AMY GOODMAN: Olivier De Schutter, talk about the remedies here.

OLIVIER DE SCHUTTER: Well, there are a number of proposals which are on the table. Particularly, the World Bank, with other organizations, has put forward a number of principles to regulate the lendings, to make them more acceptable. I think, however, that the main point is not just how to make them more disciplined, because the real question is, who will benefit most from the land? And it is not enough to say that the deals should be respecting a number of conditions, which investors should take into account. It’s important to ask the question, how is the land best used?

And my view is that, in many cases, it would be much better used by the local communities, if small farmers are supported and given more land to cultivate. It can be extremely useful for the raising of their incomes, for rural development, for the better preservation of the ecosystems. It has, in other terms, a number of social and environmental externalities which are positive and which, I think, we should take into account. The alternative, if you wish, today is either to develop further these large-scale plantations, which are not creating lots of employment, which are depleting the soils and destroying the climate, or supporting small-scale farming by distributing land and by ensuring more equitable access to land for those small holders. And that is where we have to focus our efforts, to support small-scale farmers and raise their incomes at the same time that we improve production.

JUAN GONZALEZ: And you mentioned earlier the impact of the search for biofuels on this. Any particular cases or examples where these land transfers are more a result of folks seeking land for biofuel purposes?

AMY GOODMAN: And what do you mean by biofuels?

OLIVIER DE SCHUTTER: Well, it is one major driver. In a study which the World Bank has not released, but which it presented in April this year, it scrutinized 389 projects. And 35 percent of these large-scale investments in land were for the production of agro-energy—biodiesel, ethanol—on the basis of a variety of plants. So it’s a very important driver, the production of energy crops. And one of the cases, indeed, that they studied, by the NYU report, concerns the production of biofuels, and it is just one of many examples. This is one major driver in this process.

AMY GOODMAN: Smita, who gets the money? I mean, when you talk about in Mali, in Pakistan, in Tanzania, who is being paid? And what happens? Are people just told, "Get off the land now"?

SMITA NARULA: So, there’s a variety of practices. And the example in Mali is actually an example of a good practice, where a company has come in, has made local farmers shareholders in the process, has not transferred land, and has actually tried to ensure that the benefits of the investment go straight back to the community. We include that as an example of a good practice in a sea of negative practices. In other examples—

JUAN GONZALEZ: And which is that company? Just to—

SMITA NARULA: Mali Biocarburant SA, and it’s a Dutch-financed firm. Other companies are in—another example that we look at taking place in Tanzania, where Swedish companies are investing in biofuels, a number of questions have been raised regarding how those investments may threaten local water supply, and also questions have been raised regarding community consent. On the question of where the money goes, right now the sums of money that are being offered in exchange for leasing large swaths of land are really token sums and very little, and there’s no evidence that it’s going back to the communities who may be displaced from the land.

AMY GOODMAN: We want to thank you both for being with us, Smita Narula at the Center for Human Rights and Global Justice at NYU Law School, and we also want to thank Olivier De Schutter, the UN Special Rapporteur on the Right to Food.

28 Oct 2010

Kosovo: Europe Returning Roma to Face Hardship

Western Europe Should Halt Deportations and Assist Roma Forced Back to Kosovo

Human Rights' Watch: October 28, 2010

(Pristina) - Roma and related minority groups deported from Western Europe to Kosovo face discrimination and severe deprivation amounting to human rights abuse, Human Rights Watch said in a report released today.

The 77-page report, "Rights Displaced: Forced Returns of Roma, Ashkali and Egyptians from Western Europe to Kosovo," documents the serious human rights problems faced by those who left Kosovo for Western Europe but were subsequently sent back. They experience problems getting identity documents as well as regaining possession of any property they own. They also have difficulties accessing housing, health care, employment, and social welfare services. Many end up in places where they are separated from family members. The deportations are especially hard on children, few of whom stay in school due to the lack of language skills, curriculum differences, and poverty.

"Europe is sending Kosovo's most vulnerable people back to discrimination, exclusion, poverty, and displacement," said Wanda Troszczynska-van Genderen, Western Balkans researcher at Human Rights Watch. "If Europe's leaders are serious about improving the plight of Roma, Ashkali, and Egyptians, they should suspend the deportations to Kosovo and ensure adequate support to those who have already been sent back."

About 50,000 Roma, most of them Serbian-speaking, and two Albanian-speaking minorities - Ashkali and Egyptians, who claim origins in ancient Egypt - have been deported to Kosovo since 1999. The numbers look set to rise, with as many as 12,000 people facing deportation from Germany alone. Lack of assistance from international donors and the Kosovo government to those who are deported means that the burden of helping them once they arrive in Kosovo falls on the Kosovo communities of Roma, Ashkali, and Egyptians, the majority of whom live in acute poverty.

Kosovo's Roma, Ashkali, and Egyptians are historically its poorest and its most economically, politically, and socially marginalized minority. In recent years, many have been displaced because of the war, ethnic conflict, extreme poverty, and political instability. Their numbers decreased from more than 200,000 before the war in 1999 to 38,000 today. The Roma have often been the targets of violent attacks, spurned by some Kosovo Albanians - the largest ethnic group in Kosovo - as "collaborators" with the minority Serb population.

Some of them have obtained refugee status abroad, while others remain under temporary protection mechanisms. While living in Western Europe, Roma, Ashkali, and Egyptians experience living conditions that are incomparably better than those in Kosovo. Their children, often born abroad, learn the language and adopt the culture and lifestyle of the host Western European countries. They often grow up not speaking their parents' mother tongues.

Nevertheless, some who go to other countries fail to obtain asylum or their temporary protection expires, exposing them to deportation. Some of the forced returnees are unable to obtain Kosovo identity documents and have no Yugoslav or Serbian identity documents establishing prior residence in Kosovo, which makes them de facto stateless, often for prolonged periods.

In April, United Nations Secretary-General Ban Ki-moon criticized the deportations, saying they destabilize Kosovo's security situation and exacerbate the problems faced by these minority groups in Kosovo. The Council of Europe's human rights commissioner Thomas Hammarberg and the European Parliament also have called this year for suspending the returns until conditions improve.

UN refugee agency guidelines call on countries not to deport Roma and say that Ashkali and Egyptians should only be returned after an individual risk assessment and in a phased manner, taking into account Kosovo's limited capacity to absorb them.

"There is a growing consensus that these deportations are putting Roma, Ashkali, and Egyptians at risk and making life worse for those already in Kosovo," Troszczynska-van Genderen said. "EU governments' responsibilities don't end at their own borders. They and other donors need to focus on improving conditions on the ground rather than sending people back to face despair."

Since 2009, the Kosovo government has signed readmission agreements with Germany, Belgium, France, Switzerland, and Norway, with further agreements being negotiated. Kosovo is keen to strengthen its ties with EU and other European countries. These agreements, and the absence of screening by Kosovo prior to the forced returns, open the door to ever greater numbers of deportations, create a real risk of human rights abuse, and escalate crisis conditions for deportees, their families, and the broader Kosovo community.

The report finds that the Kosovo government contributes to the problems for the returned Roma and others by failing to insist that the deporting governments help create adequate conditions in Kosovo for those forced to return. Kosovo also has not taken adequate steps to regulate the returns and to assist those who return to reintegrate into society.

A strategy created in 2007 for reintegrating forced and other returnees has not been carried out, and the Kosovo government has made little progress on its wider strategy, also designed in 2007, to improve the rights of the Roma, Ashkali, and Egyptian communities as a whole.

The report recommends:
•An immediate moratorium on forced returns until conditions improve;

•Urgent steps to provide assistance to those who have been returned;

•Full implementation of the Kosovo government's strategies for integrating forced returnees and the Roma, Ashkali, and Egyptian communities as a whole.

Deportations from Germany have proved particularly controversial, with a recent hearing in the German Bundestag leading to condemnation of the policy by opposition parties and nongovernmental organizations.

A recent policy shift on deportations to Kosovo by the German state of North Rhine-Westphalia, where almost 40 percent of Kosovo Roma, Ashkali, and Egyptians in Germany are living, suggests that reform is possible. In September, the state's Interior Ministry issued a decree, which, while stopping short of suspending deportations entirely, recognizes the need for special protection of the Kosovo groups, requires individual screenings prior to return, and recommends not deporting school-age children.

Democracy Now: Headlines for October 27, 2010

UN Calls for US Torture Probe Following WikiLeaks Revelations

Another top UN official is calling on the Obama administration to investigate the role of US forces in human rights abuses in Iraq. On Tuesday, Navi Pillay, the United Nations High Commissioner for Human Rights, said the latest documents released by WikiLeaks raise new questions about "serious breaches of international human rights law in Iraq." The 400,000 classified US military documents detail how US forces did nothing to stop reports of abuse, torture, rape and even murder by Iraqi police and soldiers. In addition, the WikiLeaks war logs show at least 15,000 more Iraqi civilians have died in Iraq than previously thought. Pillay’s call follows a similar statement from the United Nations chief investigator on torture, Manfred Nowak. After delivering his final report to the UN General Assembly before his term ends this month, Nowak said the US has knowingly allowed the torture of Iraqi prisoners.

Manfred Nowak: "In relation to what now has been revealed by WikiLeaks, it confirms what we knew, what we have heard, many allegations about the brutality and the torture that were systematically practiced by Iraqi security forces and also irregular militias. And I think what it shows very clearly is that the Bush and also the Obama administration knew and do know when they are handing over detainees under US custody to Iraqi security forces, that there is a serious risk of being subjected to torture."

Death Toll in Cholera Outbreak Hits 284

The death toll from a cholera outbreak in Haiti continues to rise, but health workers and government officials say the disease is being contained. On Tuesday, twenty-five new deaths were confirmed, bringing the total dead to 284. Another 420 new cases were reported, bringing the total number infected to nearly 3,800. Most of the deaths have occurred in the rural Artibonite region, and efforts are underway to ensure the disease doesn’t spread to the crowded camps around the capital Port-au-Prince. On Tuesday, the musician and former Haitian presidential candidate Wyclef Jean said the epidemic is worse than what’s been disclosed.

Wyclef Jean: "The only way we’re going to get results is to tell people the truth, and the truth is this: our country, at this time while I’m speaking to you, OK, has an epidemic of cholera that is spreading like wildfire through the whole country, and unless we intervene within the international community, bringing all of our resources so that we can prevent this, we’re going to have more people dead than we just had on the earthquake on January 12th."

UN: Over 1,500 Dead from Cholera in Nigeria

Nigeria is also dealing with its worst cholera outbreak in recent years. On Tuesday, the United Nations said over 1,500 people have died this year, three times the number from 2009.

150 Dead in Indonesian Tsunami

In Indonesia, over 150 people have been killed after an earthquake set off a tsunami off the coast of west Sumatra. Rescue teams are trying to reach an estimated 400 missing people.

Right-Wing March Sparks Clashes Between Palestinians, Israeli Police

Clashes have erupted between Palestinian citizens of Israel and Israeli police today in a northern Israeli town. Israeli police fired tear gas at Palestinian demonstrators protesting a right-wing Israeli march through the town of Umm al-Fahm. Some of the Israeli marchers carried signs reading that Israel will be "cleansed" of its Arab residents. The march follows a number of Israeli settler attacks on Palestinian olive groves in the occupied West Bank. On Tuesday, the UN coordinator for the Middle East peace process, Robert Serry, and Palestinian Authority Prime Minister Salam Fayyad condemned the attacks.

Robert Serry: "The urgency of ending the occupation and establishing the state is plain from the ugly facts apparent here in Tormos Ayya. In recent weeks in this village alone, settler extremists have destroyed hundreds of trees by poison or by knocking them down."

Palestinian Authority Prime Minister Salam Fayyad: "The youngest of those olive trees is more deeply rooted in this land than the largest settlement in this neighborhood or any area in the country. It’s more deeply and firmly rooted than that wall, which will come down."

Israeli Documents Outline Gaza Blockade Restrictions

The Israeli government has been forced to release documents outlining its policies for determining restrictions on basic goods into the Gaza Strip. The documents outline a formula for what’s described as "breathing space"—the number of days before a given supply completely runs out in Gaza. It also speaks of a "deliberate reduction" of a number of goods and includes the "sensitivities of the international community" as a factor in whether the flow of goods should be increased. The Israeli human rights group Gisha won the disclosure after the Israeli government long denied the documents’ existence.

UN Votes 187-2 for End to US Embargo of Cuba

The UN General Assembly has voted to call for an end to the US embargo on Cuba for the nineteenth consecutive year. The non-binding measure drew support from 187 countries, with the US joined only by Israel in opposition. The US Ambassador for Western Hemispheric Affairs, Ronald Godard, defended the US embargo before the vote.

Ronald Godard: "It is the view of the United States that a new era in US-Cuban relations cannot be fully realized until the Cuban people enjoy the internationally recognized political and economic freedoms that this body has done so much to defend in other countries around the world. Mr. President, my delegation will vote against this resolution. Indeed the United States believes that it is high time for this body to focus its energies on supporting the Cuban people in their quest to freely decide their own future and move beyond the rhetorical posturing that this resolution represents."

The two "no" votes marked a decline from last year, when the US and Israel were also joined by the tiny island nation of Palau. Cuban Foreign Affairs Minister Bruno Rodríguez Parrilla criticized the Obama administration for extending the embargo.

Bruno Rodríguez Parrilla: "The policy of the United States against Cuba is devoid of any legal or ethical ground, nor does it have any credibility or support. This has been evidenced by over 180 votes in the General Assembly, which for the past years have been calling for an end to the economic, commercial and financial blockade."

GOP Candidate Killed 2 Unarmed Iraqis

A Tea Party-backed congressional candidate in North Carolina is facing scrutiny for having killed two unarmed Iraqis while serving in Iraq. The candidate, Ilario Pantano, has said he has no regrets about fatally shooting the two at point blank range after detaining them near Fallujah in April 2004. Prosecutors later alleged that Pantano intended to make an example of the men by shooting them sixty times and hanging a sign over their corpses that read "No better friend, no worse enemy." Pantano did not deny hanging the sign or shooting the men repeatedly after stopping their vehicle at a checkpoint. He admitted to emptying one magazine of bullets into the Iraqis, then reloading and firing thirty more rounds. Despite his admission, the military cleared Pantano of wrongdoing in 2005. He’s now in a tight race with Democrat Mike McIntyre in North Carolina’s 7th Congressional District.

Paul Campaign Volunteer Assaults Protester

The campaign of the Tea Party-backed Republican Senate candidate Rand Paul, meanwhile, is facing criticism after a volunteer was videotaped physically assaulting a protester. Lauren Valle of the group MoveOn.org was thrown to the ground by a group of Paul supporters before Paul’s debate with Democrat Jack Conway Monday night. As Valle lay on the ground, Tim Profitt, a coordinator for Paul’s campaign in central Kentucky, stomped on her head. She suffered a concussion and multiple sprains as a result. Paul’s campaign says it’s cuts ties with Profitt, who’s been charged with fourth degree assault.

Arizona Law Requiring Citizenship Proof Overturned

And a federal appeals court has struck down an Arizona law requiring proof of citizenship in order to register to vote. Arizona voters approved the measure in a 2004 referendum. In its ruling, the Ninth Circuit Court of Appeals overturned the law’s identification requirement for voter registration but upheld it for voting at polling stations.