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Still too few jobs, still paltry wages, says ILO

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ILO-employment_trends_2014_key_factsAlthough the Global Employment Trends 2014 report has adopted a mild turn of phrase to describe the vicious and sustained attack on workers and labour around the world, the message from one of the key reports from the International Labour Organisation is that economic ‘recovery’ has done nothing to create jobs, in fact the reverse.

The report has called for “an urgent switch to more employment-friendly policies” – that is, in contrast to the policies that encourage criminalising workers who organise themselves, and policies that drive – in a race to the deadly bottom – wages ever lower in the face of rampaging inflation. The weak global economic recovery has “failed to lead to an improvement in global labour markets”, the ILO report has said, with global unemployment in 2013 reaching almost 202 million.

While this is a very large number, we should remember that the ILO, a United Nations agency, relies on official statistics given it by the countries themselves. Even with allowances made for the true nature and scale of unemployment and under-employment, recommended to the ILO by trade unionists and researchers who study labour trends and conditions, the numbers available in the report will be a fairly large under-estimate of actual conditions.

ILO-employment_trends_2014Nonetheless, the Global Employment Trends 2014 report said that employment growth remains weak, unemployment continues to rise as a trend in all the world’s geographic regions, and especially amongst young people, and that large numbers of discouraged potential workers are still outside the labour market. The report has also bluntly said that “profits are being made in many sectors, but those are mainly going into asset markets and not the real economy, damaging long-term employment prospects”.

In developing countries, informal employment remains widespread, and the pace of improvements in job quality is slowing down, the report said. That means fewer people are moving out of ‘working poverty’ – that is, those who have some work but that work is not enough to keep their households consistently above a given income and food calories poverty line. In 2013, the number of workers in extreme poverty – living on less than the (widely-criticised and altogether meaningless World Bank) US$ 1.25 a day – declined by only 2.7% globally, which is one of the lowest rates over the past decade, with the exception of the immediate crisis years.

Periods of unemployment for job seekers and those laid off have lengthened considerably, the report said; in some countries such as Spain and Greece, job seekers need twice as much time before landing a new job than before the crisis (with no assurance that the pay they will receive for the new job matching their last drawn salaries or wages). More and more of those potential workers are discouraged and remain outside the labour force, “leading to skills degradation and obsolescence, and rising long-term unemployment”.

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A tiring tale from the FAO that again ignores the global food industry

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Cheap processed food advertised in Chengdu, P R China.

Cheap processed food advertised in Chengdu, P R China.

Why has the Food and Agriculture Organisation (FAO) not stated what has become painfully obvious to households the world over – that the macro-economics which determines everything from what farmers grow and what city workers pay for food is utterly out of control?

This silence is why FAO’s ‘State of Food Insecurity in the World 2013’ – with its updated estimates of undernourishment and its diplomatic paragraphs about progress towards the Millennium Development Goals (MDG) and World Food Summit (WFS) hunger targets – remains conceptually crippled.

The roles of the food industry, its financiers, its commodities satraps, the marketers and their fixers in government, the networks that link legislators and food business investors in countries with growing processed foods businesses, all these shape food security at the community and household level. Yet none of these are considered critically by an FAO report that ought to be thoroughly non-partisan on the matter.

The FAO ‘State of Food Insecurity in the World 2013’ (condensed to SOFI 2013) has said that “further progress has been made towards the 2015 MDG target, which remains within reach for the developing regions as a whole, although marked differences across regions persist and considerable and immediate additional efforts will be needed”.

How many more food insecurity indicators are needed to tell governments what their working class households already know? The table of SOFI 2013 indicators.

How many more food insecurity indicators are needed to tell governments what their working class households already know? The table of SOFI 2013 indicators.

In the first place, let’s consider the 2015 Millennium Development Goals (MDG) target concerning hunger. This is to halve the proportion of hungry people in the total population. There is also the World Food Summit (WFS) target, which is to halve the number of hungry people. Both have 2015 as the target year. However, any hunger has no place in a world that today produces more than enough food to adequately feed every elder, child, woman and man.

But there is another aspect, and this is: who does the FAO think is paying attention to ‘global’ targets and placing these targets above any local needs or ambitions? Just as the MDGs are scarcely known and recognised outside the enormous development industry which perpetuates a growing mountain of studies and reports on the MDGs, nor are ‘global’ hunger reduction targets. When alleged leaders of the world gather together in the United Nations General Assemblies and other grand international fora and ask (in a tiresome and repetitive way) how we are going to feed 9 billion people, no individual smallholder farmer listens, because growing and feeding is done locally, and therefore ‘targets’ are also local, just as food insecurity or security is local.

This is why the SOFI 2013 approach – which is to say that “the estimated number of undernourished people has continued to decrease [but] the rate of progress appears insufficient to reach international goals for hunger reduction” – is utterly out of place and does not in any way reflect the numerous variety of problems concerning the provision of food, nor does it reflect the equally numerous variety of local approaches to fulfilling food provisioning.

Next, it is way past high time that FAO and the UN system in general jettison the “developing regions” label. It has no meaning and is an unacceptable legacy of the colonial view. Besides, as I point out a little later, food inadequacy (including insecurity and outright poverty) is becoming more and not less prevalent in the so-called developed regions. And moreover, I object to “considerable and immediate additional efforts will be needed” to reverse food insecurity, as the SOFI recommends, because this is the green signal to the global industrial agri-food industry to ram through its destructive prescriptions in the name of additional efforts.

SOFI 2013 also “presents a broader suite of indicators that aim to capture the multi-dimensional nature of food insecurity, its determinants and outcomes”. Once again, it is way past high time that the FAO ceased encouraging a proliferation of indicators of every description (and then some) that do next to nothing to ensure low external input and organic agriculture supported by communities and local in scale and scope, and in which the saving of seed and the preservation of crop and plant diversity is enshrined. There is not one – not a single indicator from FAO (and not one from any of its major partners, the World Food Programme (WFP) and the International Fund for Agricultural Development (IFAD) – for this need that is at the core of the myriad wonderful expressions of human civilisation.

Oxfam has made graphic the growing poverty in the European Union.

Oxfam has made graphic the growing poverty in the European Union.

SOFI 2013 also said that “recent global and national food consumer price indices suggest that changes in consumer prices were generally much more muted than those recorded by international price indices, often influenced by greatly increased speculation in spot, futures and options markets”. This unfortunately is completely untrue, for even FAO’s own database on national consumer price indexes (supplied by FAO member countries themselves) suggests that the CPI follows international price indices (this blog has pointed out the correlation a number of times in the last two years). And it is the same macro-economics that rewards speculators in “in spot, futures and options markets” which also deepens food insecurity every year.

Now, to return to the question of who is “developing” and who is not. The European Union (28 countries) has a population of 503 million (the early 2012 estimate). The USA has a population of 313 million (mid-2012 estimate). How large a group in both the European Union and the USA are hovering around the poverty lines, or who are plain poor, and who cannot afford to buy enough food for themselves?

In a report released in September 2013, the Oxfam aid agency warned that the poverty trap in Europe, which already encompasses more than 120 million people, could swell by an additional 25 million with austerity policies continuing. The report, ‘A cautionary tale: Europe’s bitter crisis of austerity and inequality’, said that one in two working families has been directly affected by the loss of jobs or reduction of working hours.

The food insecurity problem has been growing in the non-“developing” world just as fast as it has been growing in sub-Saharan Africa, south Asia, south-east Asia and other “developing” regions that the FAO’s flagship reports habitually places in the foreground. In early 2012 news reports in European Union countries were mentioning regularly how “ever more people are threatened with poverty”. The European Commission’s office for Employment, Social Affairs and Inclusion said so too: “Household incomes have declined and the risk of poverty or exclusion is constantly growing.”

Across the Atlantic, a US Census Bureau report released in September 2013 titled ‘Income, Poverty and Health Insurance Coverage in the United States: 2012’, poverty was found to be “at a near-generation high of 15 percent, close to the high point since the 1965 War on Poverty, the 15.2 percent rate reached in 1983”. This report found that 46.5 million USA ctitzens (about 9.5 million families) live in poverty and that some 20.4 million people live on an income less than half of the official poverty line of the USA.

FAO’s ‘State of Food Insecurity in the World 2013’ will with its present methods, outlook and biases be useful neither to cultivating communities growing the food we eat, nor to administrators in districts and provinces who must plan and budget to encourage local action that brings about food security, nor to the member countries of the United Nations if it continues to ignore the very large and growing numbers of the poor in the European Union and USA – 170 million poor people, and therefore food insecure, is a population that is considerably larger than that of any country in sub-Saharan Africa which inevitably figures in these reports.

Here are the materials for FAO’s ‘State of Food Insecurity in the World 2013’: The FAO news story. A frequently asked questions document. The FAO page on State of Food Insecurity 2013. The executive summary. The full pdf file and chapters. The e-book. The food security indicators data.

An inequality chasm is fracturing Europe, warns the OECD

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April in Berlin, Germany. A homeless man sat begging for euros or food in the entrance of an S-Bahn station.

April in Berlin, Germany. A homeless man sat begging for euros or food in the entrance of an S-Bahn station.

Deepening inequalities in income between the richer and poorer families, greater relative income poverty in recent years compared with earlier, a greater burden borne by children and young people than before because of their being relatively poor – these are some of the stark conclusions contained in the OECD briefing, ‘New Results from the OECD Income Distribution Database’.

This is the picture of Europe today (and of the non-European members of the OECD). “Looking at the 17 OECD countries for which data are available over a long time period, market income inequality increased by more over the last three years than what was observed in the previous 12 years,” observed the new briefing, which is sub-titled ‘Crisis squeezes income and puts pressure on inequality and poverty’.

Annual percentage changes in household market income between 2007 and 2010, by income component. Chart: OECD

Annual percentage changes in household market income between 2007 and 2010, by income component. Chart: OECD

The figures and data show that many of the countries recording the most dramatic increases in inequality are European countries which have been subjected to punitive austerity measures by the European Union and International Monetary Fund. The OECD report singles out Spain and Italy, where the income of “the poorest 10 percent was much lower in 2010 than in 2007”.

Five percent falls in income (per year) amongst the poorest 10 percent were also recorded in Greece, Ireland, Estonia, and Iceland. The only non-European nation with a comparable level of income decline was Mexico. The report also stated that over the same period, poor families in the United States, Italy, France, Austria and Sweden all recorded income losses in excess of the OECD average.

Indeed the ‘New Results’ briefing has showed that across OECD countries, real household disposable income stagnated. Likewise, the average income of the top 10% in 2010 was similar to that in 2007. Meanwhile, the income of the bottom 10% in 2010 was lower than that in 2007 by 2% per year. Out of the 33 countries where data are available, the top 10% has done better than the poorest 10% in 21 countries.

This is the OECD picture till 2010. Since then, recession has been the companion of inequality. With an average growth of -0.2 per cent in the first quarter (against -0.1 per cent in the EU as a whole) and hardly better prospects for the whole rest of the year (-0.7 per cent), according to Eurostat, the dreaded “double dip” has become a reality. The press attributes the result largely to the austerity policies.

Gini coefficient of household disposable income and gap between richest and poorest 10%, 2010: Chart: OECD

Gini coefficient of household disposable income and gap between richest and poorest 10%, 2010: Chart: OECD

“Eurozone sets bleak record of longest term in recession,” reported the Financial Times. The daily noted that “this latest dismal record came after unemployment hit 12.1 per cent in the bloc, its highest level,” and that this data “is likely to add to pressure on the European Central Bank to take further action after cutting interest rates this month, and to revise down its economic forecast predicting a recovery later in the year.”

Moreover, relative income poverty – the share of people having less income than half the national median income – affects around 11% of the population on average across OECD countries. Poverty rates range between 6% of the population in Denmark and the Czech Republic to between 18% and 21% in Chile, Turkey, Mexico and Israel. Over the two decades up to 2007, relative income poverty increased in most OECD countries, particularly in countries that had low levels of income poverty in the mid-1990s.

In Sweden, Finland, Luxembourg and the Czech Republic, the income poverty rate increased by 2 percentage points or more. In Sweden, the poverty rate in 2010 (9%) was more than twice what it was in 1995 (4%). Relative poverty also increased in some countries, such as Australia, Japan, Turkey and Israel, with middle and high levels of poverty.

The OECD briefing has stated bluntly: “Households with children were hit hard during the crisis. Since 2007, child poverty increased in 16 OECD countries, with increases exceeding 2 points in Turkey, Spain, Belgium, Slovenia and Hungary.” The ‘New Results’ briefing added: “Since 2007, youth poverty increased considerably in 19 OECD countries. In Estonia, Spain and Turkey, an additional 5% of young adults fell into poverty between 2007 and 2010. In the United Kingdom and Ireland, the increase was 4%, and in the Netherlands 3%.”

Annual percentage changes in household disposable income between 2007 and 2010, by income group. Chart: OECD

Annual percentage changes in household disposable income between 2007 and 2010, by income group. Chart: OECD

Between 2007 and 2010, average relative income poverty in the OECD countries rose from 12.8 to 13.4% among children and from 12.2 to 13.8% among youth. Meanwhile, relative income poverty fell from 15.1 to 12.5% among the elderly. This pattern confirms the trends described in previous OECD studies, with youth and children replacing the elderly as the group at greater risk of income poverty across the OECD countries.

These results only tell the beginning of the story about the consequences of austerity, growing unemployment, the burden on children and youth, and burden on immigrant wage labour. The OECD data describes the evolution of income inequality and relative poverty up to 2010. But “the economic recovery has been anaemic in a number of OECD countries and some have recently moved back into recession”, said the briefing.

Worse, since 2010, many people exhausted their rights to unemployment benefits. In such a situation, the briefing has warned, “the ability of the tax-benefit system to alleviate the high (and potentially increasing) levels of inequality and poverty of income from work and capital might be challenged”. These are unusually blunt words from the OECD and their use reflects the depth and persistence of the crisis of modern, reckless, destructive capitalism in Europe.

Across wintry Europe, the spectre of creeping poverty

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An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

Five years of economic crisis and the return of recession has pushed unemployment in Europe to new peaks not seen for almost twenty years. Household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Southern and Eastern Europe, according to the 2012 edition of the Employment and Social Developments in Europe Review.

This, the second edition of the Employment and Social Developments in Europe (ESDE), has been released by the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion. The 2012 Review builds on the integrated approach to employment and social analysis embarked upon in the first ESDE Review of 2011 which did very well to concentrate on cross-cutting themes covering employment, in-work poverty, wage polarisation and income inequalities.

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

The ESDE 2012 has said that “impact of the crisis on the social situation has now become more acute as the initial protective effects of lower tax receipts and higher levels of spending on social benefits (so-called ‘automatic stabilisers’) have weakened”.

This means, the ESDE has added, that a new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience. [The link to the full report [pdf 23 MB] is here.]

The situation has been described as “especially catastrophic in southern and eastern European countries” by the website of the International Committee of the Fourth International (ICFI). Previously, only wars have devastated national economies so thoroughly in such a short time as have the austerity measures of the European Union, the ICFI has observed.

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

Indeed the ESDE findings are a deep shade of gloom. The average EU unemployment rate climbed to almost 11%. The report confirms a new pattern of divergence, which is most striking between the North and the South of the eurozone. The unemployment rate gap between these two areas was 3.5 points in 2000, fell to zero in 2007 but then has widened fast to 7.5 points in 2011.

Despite the social catastrophe they have provoked with their austerity policies, European governments are intent on tightening the fiscal screws. They are no longer limiting themselves to the periphery of the euro zone, but are ever more ferociously attacking the working class in the core countries. In Greece and Spain, one in four is officially unemployed, and over half of all young people have no work.

Average household income has fallen by 17 percent in Greece over the past three years and by 8 percent in Spain. The health care, pension and social security systems face total collapse. And yet new, draconian austerity plans have been drawn up for Italy, France and Germany. In Britain, where almost a quarter of the population already lives in poverty, the Cameron government is systematically dismantling the National Health System, public education and social welfare.

A two-speed Europe, chronic unemployment and the Euro experiment

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Illustration: Presseurop / Chinese illustrator and cartoonist Luo Jie (William Luo) works for the Beijing English newspaper, China Daily.

There is worry in Europe about the euro, its ten-year-old currency, and about unemployment, which has stayed persistently high throughout 2011. The Euro press has reflected the worries and concerns of the salaried and the informal workers of Europe, and is now talking about whether there is already a ‘two-speed’ Europe. Presseurop has provided some insight:

In ‘Eurozone crisis – Will the EU end up like Yugoslavia?’ Serbian daily Politika remarks on the similarities with the years preceding the break-up of the federation founded by Tito. The Politika opinion said: “Seen from Belgrade, Zagreb or Sarajevo, the economic and institutional crisis that has struck the European Union has a certain air of déjà-vu. Relatively speaking, the European Union (EU) is beginning in many ways to resemble Tito’s Yugoslavia. As At a time when the EU is attempting to reinforce centralised control of its periphery, its foundations are being threatened by excessive nationalism and accumulated incompatibilities between member states.”

The “democratic deficit” suggests yet another parallel, according to the Serbian paper: in the one-party system in Yugoslavia, leaders were not elected by universal suffrage, just like the highly placed civil servants that manage today’s EU – in spite of the fact that all of the members of the Union have multi-party systems. In both cases, the fear that the more populous states would have too much influence has prevented the introduction of the principle of ‘one citizen, one vote’.

The 'La Tribune' front page on a 'two-speed' Europe

Presseurop also invokes the ‘two-speed Europe’ meme in ‘Employment – A two-speed Europe’. Mentioning the front-page headline ‘Europe split in two by unemployment’ of La Tribune, Presseurop has quoted the paper’s reporting on the growing gap between Southern and Northern Europe: “The rate in Germany has declined to a level not seen since 1991 while soaring to new high in Spain, where it is now almost 23%.”

The Paris business daily continued: “This European dichotomy is first and foremost a reflection of the state of the continent’s economies. While some countries have sunk into recession (Greece, Portugal, Spain), others have succeeded in maintaining growth, albeit modest.” Citing reforms undertaken before the crisis as one of the reasons for the healthier economies in the North, The Financial Times remarked that changes to labour legislation in Luxembourg, the Netherlands, Austria and Germany “have helped make the workers of these countries internationally competitive – a factor which is sorely lacking in the eurozone periphery”. Typically arrogant and dismissive opinionating from the British paper, which is notorious for kowtowing shamelessly before industry and American foreign policy dictates.

The Berlin leftish newspaper Tageszeitung (Taz) takes issue with this argument, and notes that the reforms undertaken by Berlin have not created new jobs, but simply redistributed them to a larger number of workers – a process that has resulted in the creation of a new low-pay sector. Reporting that 8.4 million Germans are ‘under-employed’, the Taz recalls that economic inequality in Germany has grown more rapidly than in other industrialised countries. Finally, the Berlin newspaper notes that to ‘celebrate’ the record of 41 million wage earners, the German government has spent 330,000 euros on a poster campaign ‘Danke Deutschland – Wirtschaft. Wachstum. Wohlstand.’ [“Thank you Germany – Economy. Growth. Prosperity”].

Taz is close to the truth, quite the opposite of what the feckless Financial Times, a speechwriter for predatory capitalism, would have us believe. Almost one in four people in the European Union was threatened with poverty or social deprivation in 2010. This is the conclusion of an official report by the European Commission presented in December. According to the report, 115 million people, or 23 percent of the EU population, were designated as poor or socially deprived. The main causes are unemployment, old age and low wages, with more than 8 percent of all employees in Europe now belonging to the “working poor”.

Single parents, immigrants and young people are worst affected. Among young people, unemployment is more than twice as high as among adults. Some 21.4 percent of all young people in the EU had no work in September 2011. Spain leads all other EU countries with a youth unemployment rate of 48 percent. In Greece, Italy, Ireland, Lithuania, Latvia and Slovakia youth unemployment is between 25 percent and 45 percent.

In countries such as Germany, the Netherlands and Austria, youth unemployment rates are lower only because training takes longer and many unemployed young people are ‘parked’ in all sorts of schemes that exclude them from the official statistics – so much for the crafty and misleading ‘Danke Deutschland’ campaign. But even in these countries the chance of getting a decent-paying job is diminishing. Some 50 percent of all new employment contracts in the EU are temporary work contracts. For workers aged 20 to 24, the proportion is 60 percent.

Written by makanaka

January 8, 2012 at 14:47

Tottenham and beyond, when the disadvantaged got angry

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A firefighter sprays water on the furniture store set on fire by rioters last night in Croydon, south London, Tuesday, Aug. 9, 2011.A wave of violence and looting raged across London and spread to three other major British cities Tuesday, as authorities struggled to contain the country's worst unrest since race riots set the capital ablaze in the 1980s. Photo: Sang Tan

Some very straight talk from the country of straight talkers, superior essayists and lambent poetry. The Irish Left Review explains what the supine and corporatists British mainline media will not, that the Tottenham riots is, in large measure, the angry reaction of those from whom much has been taken away, year after year, by the state and its industrial-financial sponsors, in the name of neo-liberal ‘reform’. Here are a few paras from a bristling, sobering commentary:

“So capitalism is looting the public sphere. Services that citizens have for a hundred or more years considered to be public goods and not to be exploited for the profit of a few – health care, care of the elderly, education, unemployment benefit, old-age pensions, fresh water, sewers, waste disposal, roads and footpaths, urban and rural planning, the postal service, the telephone service, the police, and so on –  are subject to systematic and sustained pressure aimed at breaking the link between the citizen and the service. No longer should we think of these things as ‘ours’, except in the sense that we can say a bank is ours. These things are provided to us as goods and services by companies which exercise their right to make a profit out of them – out of us really, out of our pain, our parent’s old age, our children’s childhood, our money troubles, our environment. Citizens are to be redefined as consumers of services. The sole function of the state is to regulate the activities of companies so that monopolies do not develop.”

British police officers arrest a man as rioters gathered in Croydon, south London, Monday, Aug. 8, 2011. Violence and looting spread across some of London's most impoverished neighborhoods on Monday, with youths setting fire to shops and vehicles, during a third day of rioting in the city that will host next summer's Olympic Games. Photo: Sang Tan

“The police function as the guarantor of profit. The police are ‘ours’ only in the way the taxman is ours. The police thus find themselves increasingly (for it was ever thus) with their backs to the corporate wall facing a disinherited citizenry for whom the state is a hostile force. This makes the police political for it is a mistake to think that the looting of the public sphere by corporations and individuals is not political. Of course, nobody on the corporation side wants to call it that. They want it to be understood as common sense. The state is ‘broken’, they say, or it has ‘failed’. Only profit-making companies can do the job efficiently and give good value for money to the consumer. What they really mean is ‘We’re going to take the money and run’. When you’re down and out, feeling low, check your credit rating.”

“All the talk from Cameron and his cohorts is of crime and punishment and ‘the full force of the law‘ – as if these young people did not encounter the full force of the law on a daily basis. We are told variously that there is no political context, no political motive, no political enemy – it is ‘criminality pure and simple‘. This is because violence against the police (and therefore the state) is not considered in itself to be political. It is because the envy of, the desire for and the acquisition of luxury goods such as plasma TVs and jewellery is not considered political. The political class and the commentariat cannot conceive of themselves as enemies of the people who live in areas like Tottenham where Tory cuts are closing youth centres, which suffer massive unemployment even while the City is booming, and which are the objects of legislation designed to disadvantage them even further.”

Written by makanaka

August 13, 2011 at 15:21

The IMF, its directeur général, and a New York hotel maid

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Friday afternoon, South Asia

"Do you really think I've nothing better to do?"

The business zine ‘Emerging Markets’ has reported that French finance minister Christine Lagarde “has emerged as the frontrunner to succeed Dominique Strauss-Kahn as IMF chief as the chances of former Turkish politician Kemal Dervis receded”. Apparently, there were hopes that Kemal Dervis would become the first emerging market politician to head the IMF, but these have faded Lagarde emerged as frontrunner to succeed DSK.

The zine has said that “senior policy officials” consulted by it said they were backing the French finance minister (pic left) in the wake of Strauss-Kahn’s dramatic resignation. A key ally of former Turkish economy minister Kemal Dervis, a leading contender for the role, acknowledged that his chances of clinching the top job had receded.

Asked whether Dervis woud become managing director Homi Kharas, a deputy to the former Turkish finance minister now at the Brookings Institution in Washington, told Emerging Markets: “Unfortunately I think it’s unlikely.” He said Lagarde’s appointment could undermine the IMF’s legitimacy if her candidacy is secured solely through a political deal among rich nations. “Major countries at the end of the day are prepared to forgo the principle of technocratic appointments for the short term expediency of having a politically trusted friend and that seems to be the way that the world is currently governed.”

The result will be a revolt against the Fund by developing countries, he added. “What we will see from the emerging nations is that they will vote with their feet. “Developing nations can make [international financial institutions] less relevant as global institutions and restrict them to being essentially institutions that play in the arena of the spheres of influence of the rich countries. That is what is happening more and more.”

Wednesday evening, South Asia

The IMF is obviously very slow to learn, or chooses not to, or has jettisoned Strauss-Kahn. Following its first bland, utterly non-committal and quite unconcerned statement about l’affaire DSK, it has come out with a second which, if possible, bests the first at idiocy in the face of a massive loss of moral face.

Here is the statement:

The IMF logo seen during a news conference in Bucharest, March 2009. Photo: Reuters/Bogdan Cristel/Files

“The following can be attributed to William Murray, an IMF spokesman, in response to questions regarding contact with the Managing Director and on speculation in media about his status: ‘We have not had contact with the Managing Director since his arrest in New York. Obviously, it will be important to be in contact with him in due course. We are aware of widespread speculation about the Managing Director’s status. We have no comment on this speculation, other than to note, as we did earlier this week, that the Executive Board was briefed informally on developments regarding his arrest in New York. We continue to monitor developments. Meanwhile, Mr. John Lipsky remains acting Managing Director, and the Fund continues its normal work’.”

This sounds a lot like the IMF is saying – “well it’s just one of those things, let’s just say not very much out of the ordinary is happening and let’s assure you that we’re still doing what we do best, which is wreck the lives of people in developing countries”.

Under Francois Mitterrand, Strauss-Kahn served as a minister, then became a corporate lobbyist in the 1990s. As finance minister in the 1997-2002 Jospin “Plural Left” government, Strauss-Kahn privatized several public firms—France Télécom, Crédit Lyonnais bank, and defense firm Thomson-CSF. After resigning as minister in 1999 in a bribery scandal, he remained a major figure inside the PS and corporate circles, taking the IMF post after being nominated by Sarkozy in 2007.

As IMF chief, he has overseen deep social cuts impoverishing workers in many indebted countries—Greece, Ireland, Latvia, Hungary, Romania, and Pakistan—in exchange for IMF loans. He recently oversaw financial negotiations with the military dictatorship in Egypt, as it tries to combat the resistance of the working class following the departure of Hosni Mubarak.

Zhu Min, Group Executive Vice-President, Bank of China, speaks during a session at the World Economic Forum Annual Meeting of the New Champions in Tianjin, China 28 September 2008. Photo: World Economic Forum

The ‘Letter from China’ blog in The New Yorker points to some of the turmoil over leadership of the IMF, and what is slowly being seen as Asian pressure over what has so far been Western dominance of the Fund and Bank senior positions.

As pressure builds on Strauss-Kahn, said the blog, today’s Huanqiu Shibao is decidedly less cautious: “If a Chinese person takes the post”—of managing director—“it will greatly promote economic exchange between China—the country with the largest trade volume and holdings of foreign reserves—and the international community.” Another Huanqiu article referred to speculation in the Western press that China’s top official at the IMF, Zhu Min, a Johns Hopkins-and-Princeton-trained economist, is among the oft-mentioned candidates. The story concluded gloomily that Western reports generally see Zhu as insufficiently experienced, and likely to reach only a deputy managing director “this time, in part because “Europe and America will oppose the appointment of a Chinese person to lead the IMF.”

Monday evening, South Asia

Dominique Strauss-Kahn, head of the International Monetary Fund, is lead from a police station Sunday, May 15, 2011 in New York where he was being held. Photo: AP

In Europe and in the multilateral financial institutions, positions are cautiously being taken over the Strauss-Kahn case. So far, the Euromedia has focused a great deal on the effect l’affaire DSK is having on the French presidential election and the challenge to Sarkozy. But what about the IMF and World Bank? Silence. What about the men and women who run these enormously powerful and influential organisations – what do they have to say about this case and its reflection on their collective values? More silence.

We have heard from The Economist, which has long been a staunch ally of the Fund and the Bank. “Whatever the fall-out on French politics, Mr Strauss-Kahn’s arrest has left the IMF reeling. One insider called it a ‘disaster’,” the commentary noted. “Although he had been expected to leave within a couple of months, Mr Strauss-Kahn, unless quickly exonerated, will now presumably be forced out far sooner. That leaves the fund without a political heavyweight at the top in the midst of important negotiations with European policymakers over Greece’s debt crisis.”

What is noteworthy is the ways in which these institutions are discussed by the biggies of global and international economics. Only 10 days ago, Joseph E Stiglitz is University Professor at Columbia University, a Nobel laureate in Economics, and the author of ‘Freefall: Free Markets and the Sinking of the Global Economy’, had this to say about the IMF and DSK.

“For progressives, these abysmal facts [growing inequality, recession, unemployment] are part of the standard litany of frustration and justified outrage,” wrote Stiglitz. “What is new is that the IMF has joined the chorus. As Strauss-Kahn concluded in his speech to the Brookings Institution shortly before the Fund’s recent meeting: ‘Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF’s mandate. It must be placed at the heart of the policy agenda.’ Strauss-Kahn is proving himself a sagacious leader of the IMF. We can only hope that governments and financial markets heed his words.”

I really wonder what Prof Stiglitz thinks of his encomiums now. Reality outside the cozy models of macroeconomics can be startlingly, starkly different.

Sunday evening, South Asia

Le Nouvel Observateur's website on Sunday was entirely Strauss-Kahn.

The Sunday lurched on about L’affaire DSK and in my view the most confused reactions have come from the media in France. They seem confused about what they ought to feel and say. There are some responses concerning the blow to the honour and prestige of France dealt by the sordid allegations, but there is also a sense of bemoaning the end of a challenger to Sarkozy, and quite a few mutterings that this is a dreadful plot to trap Strauss-Kahn.

Here is a selection of the reaction and early views on the impact of L’affaire DSK.

Euronews has reported that lawyers for Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Sunday that their client will plead not guilty to accusations of trying to rape a maid at a New York hotel. “A spokesman for the New York Police Department said Strauss-Kahn faces charges of a criminal sexual act, attempted rape and unlawful imprisonment. The IMF chief does not have diplomatic immunity and was set to appear in court later on Sunday.”

Business Insider has quite bluntly said that ‘IMF Throws Dominique Strauss-Kahn Under The Bus’. “The IMF is not exactly standing up for the man,” they wrote, referring to the bland and shifty IMF statement issued today. “The IMF has already had to investigate and apologize for one Strauss-Kahn sex scandal (an affair with a subordinate). Strauss-Kahn survived that one, after apologizing publicly to the IMF and his wife. His surviving this one, at least with his job intact, seems unlikely.”

The New York Times has pronounced in a headline, ‘Arrest Throws French Politics Into Disarray’. This is hardly so. What has thrown France and its suffering workers into disarray is not such conduct, but the imperial ambitions of Sarkozy in Africa and his government’s ramshackle social spending at home. “For months, France has been buzzing with speculation that Dominique Strauss-Kahn, the popular chief of the International Monetary Fund, would quit his job in Washington to take on President Nicolas Sarkozy in next year’s presidential elections,” the NYT said. “On Sunday, French politicians and media met news of his arrest in New York for alleged sexual aggression with stunned disbelief and expressions of national humiliation. The incident threw Mr. Strauss-Kahn’s political party, the Socialists, into confusion and set the stage for a new political calculus that could allow the National Front, the far-right party led by its founder’s daughter, Marine Le Pen, to become a more dominant force during the election campaign.”

The Guardian has got to the point. “The allegations threaten to severely damage the standing of the IMF, where Strauss-Kahn was leading the response to the global financial crisis.” The newspaper reported that Strauss-Kahn had been on his way to Europe to discuss the worsening European debt crisis. A meeting in Berlin with Angela Merkel scheduled for Sunday has been cancelled. He was also scheduled to meet European financial ministers on Monday and Tuesday and was to have discussed how best to tackle Greece’s debt crisis and finalise Portugal’s €78bn bailout package. The British newspaper also provided the information that the Sofitel hotel in New York where Strauss-Kahn was staying is in the heart of the theatre district, and he had a US$3,000 (£1,850) a night suite.

In Paris, France Soir asked in disbelief: “Accusé d’agression sexuelle, DSK est-il victime d’un complot? DSK est-il victime d’un complot, d’une manipulation? Quelques heures après le coup de tonnerre et l’annonce de l’arrestation du patron du FMI, les déclarations en ce sens sont de plus en plus nombreuses.” Melodrama apart, what this means is that France Soir has said that Strauss-Kahn could well be the ‘victim of a conspiracy’ and the ‘target of manipulation’.

A more bizarre response has come from Liberation, which usually seems to have its finger on the pulse of things. “Pour 2012, DSK semblait le mieux armé pour répondre au désarroi des Français, épuisés par la crise et désorientés par le règne foutraque de Sarkozy: l’expérience internationale, la crédibilité de l’économiste, la fibre sociale, le savoir-faire d’un négociateur hors pair leur laissaient penser qu’il saurait mieux que tout autre défendre leurs intérêts et ceux de la France.”

Roughly translated, this means: “For 2012, DSK seemed best equipped to respond to the distress of the French, who are exhausted by the financial and social crisis and disoriented in the reign of Sarkozy. With his international experience, the credibility of being an economist, his knowledge of the social fabric and negotiating skills left them thinking that he would defend their interests and those of France.” What exactly is Liberation talking about? Perhaps it’s not a good idea to get their writers to consider anything serious on a Sunday morning.

The New York Daily News on the IMF head

[Earlier post] It’s too early to tell the whys and wherefores, but here’s a small selection of reportage about the astounding Strauss-Kahn incident. The French media have lots to say too, since the IMF head is/was expected to run for president of France.

Update: The IMF has released a very short statement on the bizarre affair. Here is the text from the IMF website:

Ms. Caroline Atkinson, Director of External Relations at the International Monetary Fund (IMF), issued the following statement today: “IMF Managing Director Strauss-Kahn was arrested in New York City. Mr. Strauss-Kahn has retained legal counsel, and the IMF has no comment on the case; all inquiries will be referred to his personal lawyer and to the local authorities. The IMF remains fully functioning and operational.”

The Boston GlobeThe head of the International Monetary Fund was taken into custody and accused of a sexual assault yesterday, just before he was to fly to Paris from John F. Kennedy International Airport, authorities said. Dominique Strauss-Kahn was accused of attacking a maid earlier in the day at a Times Square hotel, authorities said.

WNYC News Blog – NYPD Deputy Commissioner Paul Browne confirmed that Strauss-Kahn, the 62-year-old managing director of the International Monetary Fund, was being questioned by detectives from Manhattan’s Special Victims unit about an alleged sexual assault said to have taken place around 1 p.m. Saturday at the Sofitel Hotel. “The 32-year-old maid reported that Strauss-Kahn emerged from the bathroom naked and sexually assaulted her,” said Browne.

Update: Al Jazeera has carried a brief and generally unflattering profile of the IMF head. It has called him an architect of France’s economic recovery in the late 1990s, Strauss-Kahn, popularly known in France as “DSK”, served in a Socialist government as finance minister between 1997 and 1999. He cut the public deficit to qualify France for the euro and took steps that led to the privatisation of some state firms.

The profile has said that Strauss-Kahn, 62, was forced to resign from Socialist prime minister Lionel Jospin’s government in 1999, after he was caught up in a corruption scandal, but a court later cleared him. A former professor of economics at the Institut d’Etudes Politiques de Paris, Strauss-Kahn has come in for criticism over his luxurious style, seen by some as inappropriate for someone who wants to become the leader of the French left. Despite being based in Washington, he has continued to spend a lot of time in France, and the New York Post newspaper reported that he had a deal with Air France to get on any flight. New York police pulled him off a Paris-bound flight on Sunday night.

Some early reactions from the press in France:

Dominique Strauss-Kahn, popularly known in France as 'DSK', served in a Socialist government as finance minister between 1997 and 1999. He cut the public deficit to qualify France for the euro and took steps that led to the privatisation of some state firms. Photo: Al Jazeera/AFP

Le Parisien – En Direct.  DSK arrêté à New York pour “tentative de viol” présumée – Dominique Strauss-Kahn était venu au siège du Parisien-Aujourd’hui en France pour y rencontrer des lecteurs. Le patron du FMI et favori des sondages pour la présidentielle 2012 en France.

Le Monde – Le directeur général du Fonds monétaire international (FMI), Dominique Strauss-Kahn, a été arrêté samedi 14 mai à l’aéroport JFK de New York et placé en garde à vue pour une agression sexuelle présumée dans un hôtel de la ville.

RTL.fr – Le mot utilisé et qui fait parler tout Internet est “sodomy”, qui signifie avant tout “agression sexuelle”. Le directeur général du FMI, Dominique Strauss-Kahn, 62 ans, a été placé en garde à vue samedi à l’aéroport JFK, à New York, où il est interrogé.

nouvelobs.com – Le directeur général de l’institution avait fait l’objet d’une enquête concernant une liaison qu’il avait eu avec une subordonnée. Le directeur général du FMI Dominique Strauss-Kahn, arrêté samedi à New York suite à des accusations d’agression sexuelle.

Le Monde – L’arrestation samedi 14 mai à New York de Dominique Strauss-Kahn, accusé d’agression sexuelle, pourrait donner un coup d’arrêt à la potentielle candidature à la primaire socialiste pour la présidentielle de 2012 du directeur général du FMI.

It looks very like prescience for, on 6 April, Bretton Woods Project published an article titled, ‘Heading for the right choice? A professional approach to selecting the IMF boss’. This said: “In 2009, the IMF agreed to ‘adopt an open, merit-based and transparent process for the selection of IMF management’. It was a commitment that was long overdue. The informal ‘gentlemen’s agreement’ made at the end of World War II that European governments could select the head of the IMF so long as the US got to choose the World Bank boss had long been regarded as outdated and illegitimate.”

The impression that the rich governments which have run the IMF have dragged their heels on this enormously important issue is hard to avoid. “It matters who the head of the IMF is, and it matters how they are chosen. It matters for the legitimacy of an organisation that, through the stringent conditions often attached to its loans, has a powerful hand in economic policy making – and hence politics – in many countries, particularly poorer ones.”

I am sure that those who have long been calling for IMF reform will be wondering about this week-end’s events concerning Strauss-Kahn. They are: ActionAid, Afrodad, Bond, Bretton Woods Project, Cafod, CRBM, Christian Aid, CIDSE, 11.11.11. Halifax Initiative, Eurodad, Jubilee Debt Campaign, Forum Syd, New Rules for Global Finance, The Norwegian Forum for Environment and Development, Oxfam, The Social Justice Committee of Montreal, SLUG, WDM, TWN and Weed.

US Census poverty data: more poor today than 50 years ago

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Outside a community centre, Los Angeles

Outside a community centre, Los Angeles

A finding of great importance was released this week, of the number of people living in poverty in the United States of America (USA). The data was released by the US Census Bureau, which is carrying out the 2010 census of the USA.

The message is a stark indicator of the acute ill-health of the current global economic system and needs to be treated as such. The number of people living in poverty in the USA rose to 43.6 million in 2009 – this is the largest number since the agency began making such estimates 50 years ago and represents an increase of 3.8 million compared to 2008. As of last year, one in every seven Americans was poor, according to the government’s definition of poverty. The official poverty rate of 14.3% is the highest since 1994.

Handicapped man begging at a traffic light, Los Angeles

Handicapped man begging at a traffic light, Los Angeles

The poverty rate jumped more than a full percentage point, from 13.2% in 2008. There were 8.8 million families living in poverty in 2009, including one child in every five. This is the same rate of child poverty that existed nearly five decades ago, when President Lyndon Johnson announced his “War on Poverty”. With this data, the government of the USA is advised to cease and call off all the other wars it is waging and renew the war on poverty within its own boundaries.

Reflecting the impact of the economic slump and mass layoffs and wage-cutting, the increase in poverty was concentrated among working-age adults and their children – the poverty rate for working-age adults rose from 11.9% to 12.7% percent, for children the poverty rate rose from 19.4% to 20.7%, and the poverty rate for those 65 and older fell from 9.7% to 8.9%.

The new figures on poverty in the USA have powerfully shown that what passes for contemporary economic theory, such as the efficient markets hypothesis, has nothing whatsoever to do with human development. The ‘efficiency’ of markets are a direct expression of the needs of finance capital which has assumed such a powerful role in the world economy over the past three decades.

Food stamps in USAWhy has such devious and destructive theory been turned into policy for so long? Because it serves definite financial interests. Because, without such hypotheses and the support given them by the system we call ‘globalisation’, most of the trading and risk models used by major financial institutions would have to be thrown out.. These figures from the USA – amplified a thousand times in the figures from less industrialised countries – show why the system is choking every species on the planet including our own.

For readers from the USA, there is an objective commentary of the new poverty data here. The actual US Census Bureau data, analysis and supporting information is available here.

The Economic Policy Institute commented: “For the first time on record, the nominal (non-inflation adjusted) income of the median, or typical, household actually fell, from $50,303 in 2008 to $49,777 in 2009. Inflation was negative from 2008 to 2009, dropping by 0.4%, so real (inflation-adjusted) income did slightly better. Real median income declined by $335 from $50,112 in 2008 to $49,777 in 2009, a decline of 0.7%. The real median income of working-age households declined even more, falling by $754 from $56,575 to $55,821. African Americans were hit particularly hard in 2009, with the median African American household income dropping by 4.4%.”

The retail price of fuel advertised at a petrol pump (gas station)

The retail price of fuel advertised at a petrol pump (gas station)

The EPI said the 4.7 million drop in the number of earners working full-time, full-year, was “particularly astonishing”. A disproportionate amount of this decline was among men — the number of men working full-time, full-year dropped by 3.8 million, while there was a 900,000 drop in the number of women working full-time, full-year. The job loss and hours reductions of 2009 meant there was a 3.7 million drop in the number of workers with any earnings at all in 2009, and a 1.1 million increase in the number of workers working part-time and/or part-year.

That’s not all, said the Urban Institute. “This 15-year high still understates the dire straits of many Americans today.” The current recession began in December 2007, and the unemployment rate doubled (from 5 to 10%) between December 2007 and December 2009. The Census poverty estimates are based on family income received during the 2009 calendar year. Since the unemployment rate rose during the year, the 2009 poverty rate understates deprivation at the end of the year.