Week In Review
A Weekly Column by Bill Onasch
June 15, 2008
A happy Father’s Day to all those who deserve it.
We Can Only Speculate...
In the USA three simultaneous crises are causing alarm and hardship among the working class–home foreclosures, escalating food prices, and unprecedented hikes in fuel costs. The impact of this triple whammy has ramifications right across every sector of the economy and led to May producing the sharpest monthly rise in unemployment in twenty years.
These crises are interrelated on a global scale. While subprime mortgage defaults underlying housing foreclosures is mainly limited to the USA, the food and fuel price surge is being felt throughout the world.
What unites these diverse elements is global finance capital. Never has so much wealth been concentrated in such few hands. But, unlike individuals, the finance capitalists can never say “we’ve got enough, let’s kick back and spend some now.” The system requires them to make more, always seeking to increase the rate of profit.
After cherry picking opportunities in “emerging markets” of Asia and Latin America, they thought they had found a Golden Goose in their own backyard--real estate. The housing bubble created by the innovative subprime mortgage scams produced breathtaking profits for the nimble before leading to mind boggling losses for the slow-footed when the bubble finally burst. While still hoping for some tax-payer bailouts of their home lending failures, they have increasingly shifted their attention to speculation in commodity markets–such as food and fuel.
The German newsweekly Der Spiegel, has followed this trend from the beginning. Another excellent article in their current issue begins,
“After investing in high-tech stocks and real estate loans for years, legions of speculators have now discovered commodities like oil and gas, wheat and rice. Their billions are pushing prices up to astronomical levels -- with serious consequences for ordinary people's quality of life and the global economy.”
It’s essential to know what these murky forces are up to if we are to develop an adequate working class response. For now we’ll just look at fuel.
Many in North America and Europe–including hard pressed owner operator truck drivers--are calling for an end, or at least a moratorium on fuel taxes to ease the present crisis. Cynical politicians pretend to agree.
In the USA that would hardly be a drop in the bucket for the consumer. The national average of combined federal and state gasoline taxes is 47 ¢ per gallon (3.79 liters); diesel is 54¢. Complete elimination of taxes would still leave a national average pump price of 3.50 per gallon. Most of these taxes are dedicated to maintaining roads, with a little bit allocated to mass transit. Cutting off that revenue would have an immediate, unwelcome impact on transportation.
Others–including the White House--are urging lifting environmental restrictions on drilling for more oil offshore and in ANWR. They imply that oil shortage is the cause of pump pain. Most past oil shocks were largely the result of restricted supply because of marketing decisions by OPEC or loss of sources due to war.
But that’s not the case today. There has been no reduction in available oil throughout this hike and spike period. In any case, American refineries couldn’t handle any more crude without capital investment they have been unwilling to commit. The Saudis, concerned about oil shock, are refuting any talk of shortage by bringing a whole new field online early, offering to pump record amounts of oil.
Barrack Obama delivered a podcast a few weeks ago entitled “A Real Solution for High Gas Prices.” His major proposals centered on tax breaks and subsidies for auto and biofuel companies. First is
“So I've proposed what I call the ‘Healthcare for Hybrids’ bill, where we'd strike a grand bargain with U.S. auto-makers. We tell them we're going to pickup part of the tab for the retiree healthcare costs, a tab which, by the way, ran 6.7 billion dollars last year but, in exchange, you've got to use the money to invest in transitioning to fuel-efficient cars.”
His second “real solution” is expanding ethanol. His model is Brazil-- where the Amazon is being cleared for biofuel plantations.
“If we had taken all these steps decades ago, like Brazil did when the call for energy independence was first issued, we'd be immune right now to the whims of oil-rich dictators and surging gas prices.”
The presumptive Democrat nominee is a big supporter of E85 fuel, which does sell on average fifty cents per gallon cheaper than gasoline. However, E85 has a substantially lower energy content than unleaded regular. The MPG/BTU adjusted price, reflecting this deficiency, is actually 65¢ per gallon more than conventional gasoline. Obama’s “real solutions” would put more money in the pockets of the Big Three automakers, and agribusiness giants such as ADM, and would cost workers even more at the pump. And, since many oil speculators parlay their chances in commodities with corn as well, they too stand to gain from any additional food to fuel schemes.
Undoubtedly, the bubble of speculator driven artificially high oil prices will eventually contract. Whether this is done through a controlled deflation, leaving stable prices at a much higher plateau, as in the Seventies and Nineties, or whether the bubble bursts as it did with subprime mortgages, leaving chaotic disaster behind, remains to be seen. Either way will be bad news for workers.
There has been a hint of a silver lining in this gloomy picture. The price of fuel has reached a level causing people to drive less. There has been a hefty increase in usage of mass transit, and even Amtrak. That could be a good trend, urgently needed to combat the dire threat of global warming.
But the increased ridership comes to transit systems long neglected and now severely strained by heavier loads. We are far from having adequate alternative transportation as working people get priced out of access to fuel for cars–and there are no plans or funding in place to provide such alternatives. In fact major cities such as Chicago and Pittsburgh have been pursuing drastic cuts in transit service.
If we leave things up to the speculators and politicians the fuel and other crises will surely sink our living standards even further while environmental destruction continues unabated. It’s high time the labor movement started formulating an action plan response. I’ll offer some of my ideas of what such a plan needs to include next week.
This Thursday, June 19, the lobbyists for America’s health insurance robber barons will gather in San Francisco for their annual conclave. The California Nurses Association/National Nurse Organizing Committee are organizing a reception to greet them. Thousands of nurses and their allies are expected to be in front of the Moscone Center West, 4th & Howard, at Noon. They will be demonstrating in support of what CNA calls Guaranteed Healthcare, a Canadian-style single-payer system. Legislation for this plan has been introduced by Rep John Conyers of Michigan and is designated HR676. There will be simultaneous support rallies in Albany, Atlanta, Baltimore, Boston, Chicago, Jacksonville, Louisville, New York, Newark, Philadelphia, Pittsburgh, and San Antonio. If you’re in one of these areas I urge you to join them. For local details click here.
Out Of Afghanistan Now
No Canadian government has yet dared to directly support the U.S./British war and occupation in Iraq. But Canada has played a major role in assisting Washington and London in Afghanistan. The recent convention of the Canadian Labour Congress, representing over three million workers, voted overwhelmingly to demand that the Government of Canada immediately end its participation in the illegal war in Afghanistan.
Just after declaring himself victorious in his campaign for the Democrat nomination Senator Obama announced the appointment of Jason Furman, an NYU economist who held posts in the Clinton administration, as his economic policy advisor. This caused a stir among some Change to Win Obama supporters. Furman is author of a scholarly paper entitled, Wal-Mart: A Progressive Success Story. Said Jonathan Tasini,
“It’s hard to believe that during his community organizing work in the poorest neighborhoods of his own city he [Obama] didn’t have something sink into him about income inequality. There’s no way to read anything he has put out there as anything but rejection for the Wal-Mart model.” Apparently Furman, Andy Stern, and numerous campaign contributors didn’t get that message from Obama’s collected works.
That’s all for this week.
Unity For Mass Action Against