Council of Trade Unions turning towards class struggle?

Could a column by Helen Kelly in last Monday's Dominion Post (below) signal a turning point for the union movement?

 

There's no doubt that the opinion piece by the Council of Trade Unions president is significant – both for what it says, and for what it doesn't say.
 

First of all, Helen Kelly's column connects three separate attacks on groups of workers and explains them in terms of wider economic and political forces.
 

Her analysis is correct. Of course the disputes at Telecom, at Open Country Cheese and on the Auckland buses are related.
 

But for decades now, it's been rare to hear union leaders to treat disputes this way.
 

Fundamentally, what Helen Kelly is talking about is a common cause shared by different groups of workers – and a common mindset among employers. She's talking, in other words, about a class struggle.
 

As she acknowledges, this is a shift in perspective from the leaders of the union movement. 
 

And yet, after announcing this shift in bold terms her concluding paragraph seems oddly out of place. It's an appeal for the employers (and the National-led government) to start "working cooperatively" with unions again.
 

The jarring inconsistency is because of what the column does not say. Having explained the forces leading employers to use bully boy tactics – forces which are not about to go away – the CTU president says nothing on what unions are going to do about it.
 

This much has not changed. For many years, the CTU has focused its energies on appeals to the government to solve the union movement's problems, rather than organising independent working class action to achieve the movement's goals through its own collective strength.
 

It might be argued that the business pages of a daily newspaper are not the place to lay out the strategy of the union movement, and that behind the scenes the CTU is doing a lot to organise opposition to bullying employers like Telecom, Open Country and NZ Bus.
 

But you can't rally workers, and the broader public, around a banner that's kept hidden behind the scenes. Class struggle demands mass organisation, which takes place out in the open.
 

Somewhere, sometime soon, union leaders will have to lead. The analysis contained in Helen Kelly's column calls for a strategy of coordinated, mass resistance by the union movement as a whole.

Employers quick to use bully tactics

Helen Kelly

BUSINESS FORUM

INDUSTRIAL relations in New Zealand seem to have taken a turn for the worse in recent months. Bus drivers and dairy workers find themselves locked out by their employers and Telecom engineers have been made redundant en masse and are refusing to buy back their jobs while the network rapidly crumbles.

Until recently the reaction to the global downturn in New Zealand was characterised by a willingness on the part of workers, unions and employers to work together to mitigate the worst effects of the recession.

The jobs summit and the nine day fortnight are examples of that. Is there some reason why it has all gone sour?

Each of these disputes has different origins. Only one is straightforward, about pay and conditions. Another is about every worker's right to bargain collectively, and the last is about an attempt to shift cost and risk on to a workforce at the expense of their job security, livelihoods and bargaining power under the cloak of "contracting out" through a third party.

On the face of it the global crisis has nothing to do with any of these disputes. Significantly, none of the three employers – Telecom, Talley's and NZ Bus – is in any way struggling financially. But there is little doubt that the recession is a factor in the way they are handling the disputes.

Although redundancies are not being forced on any of these employers, there is an implication that workers should feel damned lucky to have a job in the current economic climate and should accept whatever wages and conditions are tossed their way.

There's a recession on, don't you know? Belts must be tightened.

I don't know how many holes Telecom boss Paul Reynolds has on his $5 million belt but I don't see much tightening going on there.

That's not boardroom bonus jealousy. I think it's legitimate to ask why these companies are taking such a hard line against the workers who are delivering their respectable profits in tough times.

The truth is that they are looking at the unemployment figures and thinking that now would be a good time to stamp on wages, hours, and workers' bargaining power. Workers will not put up a fight, they think, while fear of the lengthening dole queues prevails.

Unfortunately, the employers got it wrong. Workers are perfectly capable of understanding the situation of their employer and acting accordingly. Hence the many settlements that have been reached in recent months where unions have acted reasonably and responsibly and employers have offered fair and realistic terms.

Unemployment is a real fear for many New Zealanders. But there are plenty who know that their companies are doing well enough, and they are not about to bow down to employers who throw their toys out of the pram at the first sign of resistance to their plans. Both of the current lockouts are gross over-reactions.

The actions of Talley's-owned Open Country Cheese in particular, where a wholly disproportionate and illegal six-week lockout has been accompanied by intimidation of union members, use of strike breaking outside labour and misinformation, are reminiscent of the bad old days of industrial strife.

All this in response to the employees simply exercising their legal right to union representation and to bargain collectively. Someone is living in the past here, and it is not the Dairy Workers' Union.

The union has worked harmoniously with employers and has not been engaged in any serious industrial action for more than 20 years. It is sad and so unnecessary and you have to wonder why Open Country acted with such unwarranted ferocity.

Could last year's change of government be an influence? The Government wasted little time when it carne into office before forcing through its removal of unfair dismissal rights from new employees in small firms in the first 90 days of their contracts. There was no good economic reason for this move, but it immediately set a tone for its attitude to workers' rights. Cuts to public sector payrolls, moves to make the fourth week of annual leave sellable and other policies that have negative impacts on working people seem to confirm the impression of an administration more behind the cause of the employer than the employee.

None of these moves would have any positive effect on the country's productivity, its ability to pull out of recession or the length of the dole queues.

The Jobs Summit and support for the nine-day fortnight present a different face of the Government, albeit one which has had limited effect. We would all be better off if employers took their lead from this approach. What will be positive is employers dealing honestly and openly with unions and employees, working cooperatively in the best interests of each enterprise and not reaching for the factory keys as a negotiating tool.

Shorter working hours and government income compensation - a pro-worker stimulus plan?

by Auckland union activist Mainstream news editorialists are saying that we must spend to get the economy going again. Cutting workers wages and hours without compensation (which is the same as a wage cut) will only further decrease the spending power of working people, therefore making the recession worse. History shows that in the Great Depression unemployment only started to lessen when working people joined unions in mass numbers and won major wage increases. But the major employers will refuse this solution because it would mean cuts to their profits. I feel the Job Summit should be called the "Profit Summit". Falling profit rates, due to the recession, not job losses, will be the real concern of the majority of those attending the Job Summit. This is shown by the guest list which is overburdened with representitives of big business. So why have unions been invited? The NZ Herald has made it clear that employers and the government want a partnership agreement with unions for wage restraint, claiming that this will save jobs. The total opposite is the truth. Declining incomes for workers is more likely to result in job losses than declining incomes for shareholders. This is because for working people, particularly those near the bottom, all their income goes out straight away to buy the necessities of modern life. This creates a demand for goods and services, which creates jobs. Shareholders and investors on the other hand are more likely to sit on their earnings, particularly during a recession. As the NZ Herald on Saturday acknowledged in their lead editorial: it is the "lack of confidence" from investors that is fueling the credit crunch. Instead of wage restraint, Andrew Little's idea of a shortened work week, with government compensation for lost earnings is a better idea. In fact, done right it may not even cost the government that much. For instance, where I work, because of falling trade, workers have already agreed to the employer's demand to go to a 32 hour week, or else the employer said, he would start layoffs. The workers agreed to this drastic drop in their incomes, rather than see their mates thrown completely out of work. I think that these workers should be compensated for their lost income with a tax break on the four remaining days income, equal to their lost day's pay. While this will see a drop in the tax take from these workers, it is not the double tax loss caused by them not paying any income tax at all if they were unemployed and drawing down an unemployment benefit (a negative tax situation). The last government freed up $2 billion to prop up failing investment companies and banks. Will this work? I don't think so, because not only is this crisis caused by the credit crunch it has coincided with a commodity crisis (an overabundance of manufactured goods due to high productivity matched with low wage levels.) Investing in more productive capacity will never fix this. Instead of spending $20 billion in an effort to bolster falling profit rates in the private sector, the government should hold onto this money to pay for what it is supposed to be used for: healthcare, education pensions, necessary infrastructure – all of which is being starved of money, to protect the incomes of the rich.

Gordon Campbell on "nice guy" Key and National's pitiful response to the global economic crisis

Political commentator Gordon Campbell has just posted an article on the National government's response to the global economic crisis. See Gordon Campbell on Friday’s job summit, and whether anyone has an end game for the recession Campbell has this to say of the global economic crisis and the National government’s response so far: How bad is it? Campbell: "…the latest economic news lends credibility to the feeling that the hole is getting deeper and darker than Treasury’s public estimates - too rosy, and hopelessly out of date – would indicate." "Could the meltdown and its effects really linger on for 18 months or more ? Unfortunately, yes." "As economist Paul Krugman pointed out last week, the US Federal Reserve has been talking lately to central bankers around the globe, and all of them have concluded that unemployment rates will stay at substantially high levels until 2011 at least. A few central bankers are picking it could take until 2015 before we see a recognizable recovery." "As Krugman says, it took an enormous world war to finally put an end to the Great Depression. Until then, the Depression had been resistant to desperate attempts to cut interest rates to near zero in order to stimulate growth - a tactic today’s central bankers are also finding just won’t re-start the engine." "The slump that followed Japan’s “bubble economy” also eventually ended, but only after a lost decade. And when Japan finally did start to experience some solid growth, it was thanks to an export boom, which was in turn made possible by vigorous growth in the rest of the world — not an experience anyone can repeat when the whole world is in a slump." Unemployment in NZ Campbell: "Will it be 7.5 % by 2011 as the briefing papers for the summit reportedly indicate, or 11.2 % as the horror estimate from the New Zealand Institute suggested on Sunday? Or somewhere in between, for quite a while ….maybe even for the next five or six years or so?" John Key and the National government Campbell: "Frankly, it is hard to see many links between the causes of the recession, and the actions taken so far by the Key government in response to it. In total, we have seen so far: a modest package to assist the cash flow problems of small to medium business. A construction package mainly made up of an old wishlist compiled by the Clark government. A programme of tax cuts already budgeted before the crisis began. This week, we have a talk shop convened by the government. Now, is a tax cut/construction programme a particularly good response – or even any response at all – to the economic problems at the heart of this crisis? Or merely a band-aid on its effects?" "You can bet that when and if our economy ‘recovers’ to anything like previous growth levels, nothing substantive will have been put in place to stop another housing bubble from surfacing." "Sadly, it seems that the Key government doesn’t have any co-ordinated plan to protect this country from the financial crisis. It has done the bare minimum required to look politically responsible, and is taking a huge punt that the colossal sums being spent by other countries will put our overseas markets back in working order again, in time to save us from the worst. If however, we are still in crisis mode 18 months from now – and that seems very likely – these enduring bad times are just as likely to curdle the current rosy perceptions of the new government. Nice guy, but out of his depth could easily become the public verdict on Key as this recession endures." Cutting the country’s “support net” Campbell: "Some state departments, such as the one managing welfare support, need to be bolstered, not cut. Yet as the Greens Sue Bradford pointed out last week, the government is planning to cut 500 jobs from the Ministry of Social Development. This seems incredibly stupid. Someone needs to tell Paula Bennett that with the long recession stretching before us, the safety net in society needs more strands, not fewer." Based on what Campbell is arguing the National governments "Job Summit" is likely to be a non-event for grassroots people fearful of the economic crisis and the impact on their jobs and welfare. The Labour party leadership – tied as it is to a similar mess of neo-liberal and newly popular neo-Keynesian ideas – is not offering anything significantly different to National. There's a political space opening up for the Left to put before worried New Zealanders a real plan for protecting them in this time of global economic turmoil. That's if we can build a credible broad left vehicle, which remains the crucial link in turning good ideas into a political force that can change society. See also:

• The New Depression: a global confrontation between grassroots people and the mega-rich
• Battle of the manifestos
• History will judge the left on how we rose to the crisis

'This is the worst recession for over 100 years'

by Nigel Morris, Deputy Political Editor, and Sean O'Grady, Economics Editor from The Independent 10 February 2009 In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies. Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out." He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible". The minister stunned his audience at a Labour conference in Yorkshire by forecasting that times could be tougher than in the depression of the 1930s, when male unemployment in some cities reached 70 per cent. He also appeared to hint that the recession could play into the hands of the far right. "The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years," Mr Balls said. "These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy." Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls's predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown's closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade ¬ far longer than Treasury forecasts predict." The minister's comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today's Independent, Mr Darling said his plans for shoring up Britain's finances included "measures to insure against extreme losses" as well as separating out impaired assets into a "parallel financial vehicle". Unemployment figures out tomorrow are expected to show the number of people out of work has passed two million. The Bank of England's quarterly inflation report, also released tomorrow, is expected to include a gloomy forecast for economic growth. Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years". Speaking to Labour activists in Sheffield, Mr Balls conceded that the Government must share some of the blame because it had failed properly to control the banks. But he accused the Tories of blocking Labour's attempts to tighten financial rules. He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks of the dangers being run in our financial institutions ¬ absolutely right." The other great depressions: Long Depression, 1873¬96 Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz's first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In Britain, it was the rural south rather than the rich cities of the north that suffered. The UK ceased to be a nation that relied in any way on farming for its livelihood. Great Depression, 1930s The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.

Economic crisis is beyond the reach of traditional solutions

by Paul Craig Roberts from Vdare.com 14 November 2008 By most accounts the US economy is in serious trouble. Robert Reich, an adviser to President-elect Obama, calls it a "mini-depression," and that designation might be optimistic. The Russian economist, Mikhail Khazin says that the "U.S. will soon face a second “Great Depression” It is possible that even Khazin is optimistic.

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What union response to job losses?

Some good ideas by Aussie unionist, Tim Gooden, Secretary of Geelong & Region Trades & Labour Council, on how the union movement in Australia needs to respond to the economic crisis.

There are concrete proposals here that the union movement in New Zealand should consider. -UNITYblog editor.

The global financial crisis isn’t just clipping the wings of grossly overpaid bank executives and speculators in shonky “financial instruments”. It’s going to hit ordinary working people hard.

Even if the trillions being injected into the bloodstream of the world financial system manage to restore its heartbeat, growth rates will fall and unemployment will rise. A whole generation of workers, who since 1991 have only known economic growth, will find out what it means to lose a job and not find another.

Continue

Big capital wants profits guaranteed, or they'll pull plug on NZ economy

by Peter de Waal The fact that the NZ Reserve Bank is being forced to cut it's interest rates from 7.5% to 6.5% shows the folly of years of wage-growth restraint and it's destruction of the savings potential of New Zealand's workforce. The Reserve Bank has kept interest rates high to attract foreign "hot capital", just to keep the lights on. This has had a punitive effect on business investment and has lowered productivity. Home owners also pay through the nose for the privilege of mortgage borrowing. In 1987 the rich were able to soak the workers through user-pays as most families owned a home. This time most families under the age of 50 rent – despite the cooked figures the government likes to advance showing around 60% home ownership – there is no spare cash to be mopped up (a reminder to Maurice Williamson, National’s road-toll extraordinaire). Once people are laid off in droves and defaults on mortgages begin in earnest (likely to be shortly after the election) it will start a free-fall in prices, particularly housing, as the money to lend out dries up and mortgages come up for renewal. The fall in returns for farm products and the end of tourism will severely limit the ability of NZ to offer high interest rates to foreign lenders. Hence the call from the right for government guarantees of inter-bank lending. Without guaranteed profits the world’s big banks may just pull the plug on the NZ economy. [Like National, Labour has announced it will guarantee inter-bank lending (see Banks: We will help struggling borrowers, NZ Herald 3 Oct 2008). The Australian owned banks have in turn made some weaselly promises about supporting mortgage borrowers in trouble as a result of the floundering economy. These same banks have made billions of dollars in profits in recent years. Will the banks look to maintain their high profit margins by putting a slow squeeze on New Zealanders mortgaged to the hilt? - UNITYblog editor]

Economic crisis is beyond the reach of traditional solutions

by Paul Craig Roberts from Vdare.com 14 November 2008 By most accounts the US economy is in serious trouble. Robert Reich, an adviser to President-elect Obama, calls it a "mini-depression," and that designation might be optimistic. The Russian economist, Mikhail Khazin says that the "U.S. will soon face a second “Great Depression” It is possible that even Khazin is optimistic. I cannot predict the future. However, I can explain what the problems are, how they differ from past times of troubles, and why traditional remedies, such as the public works programs that Reich proposes, are unlikely to succeed in reviving the U.S. economy. Khazin points out, as have others, such as University of Maryland economist Herman Daly and myself, that consumer debt expansion is the fuel that kept the U.S. economy alive. The growth of debt has outstripped the growth of income to such an extent that an increase in consumer credit and bank lending is not possible. Consumers are overburdened with debt. This fact takes monetary policy out of the picture. Americans can no longer afford to borrow more in order to consume more. This leaves economists with fiscal policy, which, as Reich realizes, also has problems. Reich is correct that neither a reduction in marginal tax rates nor a tax rebate is likely to be very effective. Reich, a Keynesian, has an uncertain grasp of supply-side economics, but as one who has a firm grasp, I can attest that marginal tax rates today are not the stifling influence they were prior to John F. Kennedy and Ronald Reagan. As Art Laffer said, there are two tax rates, high and low, that will produce the same tax revenues by expanding or contracting economic activity. Marginal tax rates are no longer in the higher ranges. As for a tax rebate, Reich is correct that in the present situation a tax rebate would be dissipated in paying off creditors. Reich sees the problem as a lack of aggregate demand sufficient to maintain full employment. His solution is for the government to spend "a lot" more on infrastructure projects on top of a trillion dollar budget deficit – "repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy." This spending would boost employment, wages, and aggregate demand. I have no opposition to infrastructure projects, but who will finance the baseline trillion dollar US budget deficit plus the additional red ink spending on infrastructure? Not Americans. The US savings rate is zero or negative. Home mortgage foreclosures are in the millions. Officially, US unemployment is 10 million, but if measured by pre-Clinton era standards unemployment is much higher. Statistician John Williams, who measures the unemployment rate by the pre-Clinton standards concludes that the rate of US unemployment is about 15 percent. President Clinton "reformed" the unemployment statistics by ceasing to count discouraged workers as unemployed. For years, the US government’s budget has been dependent on foreigners financing the red ink. Countries such as Japan and China and OPEC suppliers of oil to the US have huge export surpluses with the US. They recycle the dollars by buying US Treasury bonds, thus financing the US government's red ink budgets. The open question is: how much longer will they do so? Foreign portfolios are overweighed in dollar assets. Currently the dollar’s value is benefitting from the financial crisis, as investors flee to the reserve currency. However, sooner or later the huge outpourings of dollar debts will cause foreign creditors to draw back. Already China, America's largest creditor, has sent a signal that that time might be drawing near. Recently the Chinese government asked, as they do indirectly through third parties, "Why should China help the US to issue debt without end in the belief that the national credit of the US can expand without limit?" Is the rest of the world, which has demanded a financial summit to work toward a new financial order, going to permanently allocate the world's supply of capital to covering American mistakes? If not, the bailout and the stimulus package will have to be financed by printing money. And the bailout needs are growing. Car loans and credit card debt were also securitized and sold. As the economy worsens, credit card and car loan defaults are rising. Moreover, AIG needs more money from the government. Fannie Mae's loss has widened to $29 billion despite the $200 billion bailout. General Motors and Ford need taxpayer money to survive. General Motors says that its GMAÇ mortgage unit "may not survive." Deutsche Bank sees General Motors shares "as likely worthless." Shades of the Weimar Republic What Reich and the American economic establishment do not understand is that the recession paradigm does not apply. There are no jobs waiting at US manufacturers for a demand stimulus to pull Americans back into work. The problem is not a liquidity problem. To the contrary, there have been many years of too much liquidity. Credit has grown far more than production. Indeed, US production has been moved offshore. Jobs that used to support the growth of American incomes and the tax bases of cities and states have moved, along with US GDP, to China and elsewhere. The work is gone. All that are left are credit card and mortgage debts. Anyone who thinks that America still has a vibrant economy needs to log onto http://www.economyincrisis.org/ and face the facts. Economists associate economic depression with price deflation. However, traditionally, debts that are beyond an economy's ability to service are inflated away. This suggests that the coming depression will be an inflationary depression. Instead of falling prices mitigating the effects of falling employment, higher prices will go hand in hand with rising unemployment – a situation worse than the Great Depression. The incompetent Clinton and Dubya administrations, unregulated banksters and Wall St criminals, greedy CEOs, and a no-think economics profession have destroyed America's economy. What is the remedy for simultaneous inflation and unemployment? Three decades ago the solution was supply-side economics. Easy monetary policy had pushed up consumer demand, but high tax rates had curtailed output. It was more profitable for firms to allow prices to rise than for them to invest and increase output. Supply-side economics changed the policy mix. Monetary policy was tightened and marginal tax rates were reduced, thus stimulating output instead of inflation. Today the problem is different. The US has abused the reserve currency role, thus endangering its credit worthiness and the exchange value of the dollar. Jobs have moved offshore. The budget deficit is huge and growing. If foreigners will not finance the widening gap, the printing presses will be employed or the government will not be able to pay its bills. The bailout funds have been wasted. The expensive bailout does not address the problem of falling employment and rising mortgage defaults. Treasury Secretary Hank Paulson could not see beyond saving Goldman Sachs and his bankster friends. The Paulson bailout does nothing except take troubled assets off banks’ books and put them on the overburdened taxpayers’ books, thus endangering the US Treasury’s credit rating. What the Bush Regime has done is to stick the taxpayers with the banks’ mistakes. An intelligent government would have used the money to refinance the troubled mortgages and stop the defaults. By saving the mortgages from default, the banks’ balance sheets would have been made secure. By failing to deal with the subprime crisis, Bush and Congress have added a financial crisis to the exhaustion of consumer demand and the problems of financing huge trade and budget deficits. Belatedly, Paulson has realized his mistake. On November 12, Paulson announced, "We have continued to examine the relative benefits of purchasing illiquid mortgage-related assets. Our assessment at this time is that this is not the most effective way to use [bailout] funds." The financial crisis has cost taxpayers far more than the amount of the bailout. Americans' savings and pension funds have been devastated. Americans in investment partnerships, who have been required by IRS rules to pay income taxes on gains in the partnerships' portfolios, have had the accumulated multi-year gains wiped out. They have paid taxes on years of "capital gains" that have disappeared, thus doubling their losses. America’s economic troubles will rapidly accumulate if the dollar loses its reserve currency role. To protect the dollar and the Treasury’s credit standing, the US needs to curtail its foreign borrowing by reducing its budget deficit. It can do this by halting its gratuitous wars and slashing its unnecessary military spending which exceeds that of the rest of the world combined. The empire has run out of resources, and the 700 overseas bases must be closed. Can Americans afford massive infrastructure spending when they cannot afford health care? In Florida a Blue Cross Blue Shield group policy for a 60-year old woman costs $14,100 annually, and this is a policy with deductibles and co-payments. Supplementary policies from AARP to fill some of the gaps in Medicare can cost retirees $3,300 annually. When one looks at the economic situation of the vast majority of Americans, it is astonishing that the Bush regime regards wars in the Middle East and taxpayer bailouts of Wall Street criminals as a good use of scarce resources. US corporations, which have moved their production for US markets offshore in order to drive up their share prices and provide their CEOs with multi-million dollar bonuses, can be provided with a different set of incentives that encourage the corporations to bring employment back to the US. For example, the corporate income tax can be restructured to tax corporations according to the value-added in the US. The higher the value-added in the US, the lower the tax rate; the lower the value-added, the higher the tax rate. Cutting the budget deficit by halting pointless wars and unnecessary military spending and reducing the trade deficit by bringing jobs back to America are simple tasks compared to confronting inflationary depression. The world has had enough of American irresponsibility and is taking away the reins. At the November 15 economic summit, the world will begin the process of imposing a new financial order on the US in exchange for continued lending to the bankrupt "superpower." With bailouts eating up the world’s supply of capital, continued foreign financing for Washington’s wars of aggression is out of the picture. Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan's first term. He was Associate Editor of the Wall Street Journal.

What union response to job losses?

by Tim Gooden Secretary of Geelong & Region Trades & Labour Council Geelong, Australia The global financial crisis isn’t just clipping the wings of grossly overpaid bank executives and speculators in shonky “financial instruments”. It’s going to hit ordinary working people hard. Even if the trillions being injected into the bloodstream of the world financial system manage to restore its heartbeat, growth rates will fall and unemployment will rise. A whole generation of workers, who since 1991 have only known economic growth, will find out what it means to lose a job and not find another. Areas where unemployment rates are higher than the national average will be worse hit. And it won’t be just blue collar workers in traditional manufacturing, like the several hundreds at Ford Geelong. Victoria University in Melbourne’s West recently announced the biggest job cuts in Australian university history: 250 staff (19% of teaching and general staff). You can tell how serious the threat is by the speed with which the government dropped its May budget fight-inflation-first line and decided to inject $10.4 billion into economy via one-off payments to pensioners and parents. But how much we will spend and save out of the pre-Christmas handout is just a guess by Treasury: what if most people use their payments to reduce debt instead of blowing them in Harvey Norman and Bunnings? Then the economy will continue its nosedive into recession as consumption stagnates. What if – as seems probable – the capitalists become pessimistic and reduce their investments? Recession will come faster and be deeper. The stakes for our living standards are so serious that the unions simply can¹t afford to entrust everything to the Labor government and twiddle their thumbs on the sidelines, hoping that things don’t turn out as badly as everyone fears. Prime Minister Kevin Rudd and treasurer Wayne Swan show no signs of wanting to tackle those responsible for the mess: the corporate (especially financial) elite. Rudd has unveiled a line of rhetoric against “extreme capitalism” and “excessive executive compensation”, but where is Labor’s action? After just a couple of grumbles from senior bankers about Rudd’s idea of linking senior finance sector salaries to the security level of their financial institutions, the PM backed off. This was after the Reserve Bank had already sent billions the way of the financial institutions and the government accepted the banks keeping 20% of the last interest rate cut. Some of Rudd’s emergency package is just plain counterproductive. Home buyers get a doubling or tripling of their grant, but building companies will no doubt use the extra rebate to temporarily keep up house prices that are already seriously inflated. The International Monetary Fund warned this year that Australia’s house prices are overvalued by at least 25%. University of Western Sydney associate professor of economics and finance, Steve Keen, says Labor’s move will suck new home buyers into borrowing $70,000 more than their homes will soon be worth! So what should the union movement be fighting for? A serious union policy against the crisis has four key points: 1. Give pensioners and the unemployed a living wage now, at the very least 35% of average weekly earnings. That’s the only way to ensure a sustained boost to consumption. 2. Speed up public spending on sorely needed infrastructure, particularly that which underpins the transition to environmental sustainability. Invest the Infrastructure Australia and Future Fund money, and the federal budget surplus, in rail, renewable energy, and decent public housing, health and education; 3. Nationalise the banks and run them in the community interest, beginning with the re-nationalisation of the Commonwealth Bank. This might seem an “extreme” policy to some, but let’s remember that the US and UK governments have already conducted crisis nationalisations and that the ALP has supported this policy in the past. 4. Really tear up Work Choices and all other anti-union laws. The coming recession will drive employers to sack workers and try to cut wages and conditions. Under the present industrial regime the union movement is fighting with one-and-a-half arms tied behind its back. If working people and their communities – the vast majority of the Australian population – are to defeat the dragon of recession, they will need their unions to be as strong and as organised as possible.