Death of San Francisco

A new stage in the crisis of capitalism - Part One

2010-06-07T20:10:00.000-07:00

Written by Alan Woods
Monday, 07 June 2010
After talk of the so called "credit crunch" gave way to optimistic comments about the "green shoots" in the economy, events in Greece caught the bourgeois commentators unaware. Now the world economy has once again been plunged into chaos and uncertainty as the governments of Europe try to contain the fall-out from the near-default of Greece and it is the workers who will be presented with the bill.
“To the toiling masses of Europe it is becoming ever clearer that the bourgeoisie is incapable of solving the basic problems of restoring Europe’s economic life.” (Trotsky, On the United states of Europe, 1923)

The stock markets of the world are in turmoil. The falls on the stock exchanges are a warning that the economic revival is in danger. The extreme volatility of the market over the past fortnight reflects a fundamental lack of confidence. All the lights are now flashing red.

The immediate cause of the panic is the crisis of the euro. This is ironic. Not long ago they were talking about the euro as a rival to the U.S. dollar as a global reserve currency. Now the convulsions of the euro are driving the world's stock markets down and raising fears that the world is about to fall back into slump.

The once prosperous euro zone is now teetering on the edge of a terminal crisis. The markets believe that the weaker euro zone countries will not be able to take the necessary action to reduce their deficits. The fears over the Greek debt problems have rapidly turned into fears over Portugal and Spain. Only by injecting huge funds from an emergency fund can the European bourgeoisie shore up the shaky edifice.

The global financial crisis of 2008 was related to sub-prime mortgages, but now the crisis is related to what one might call sub-prime government debt. In the past, the bonds of European countries were considered to carry virtually zero risk. But now sovereign default in one of the world's core economic areas has become a serious threat. The Economist put it like this: 2008 will be remembered as the year when the banks defaulted; 2010 will be remembered as the year when governments defaulted.

Europe’s troubles can lead to a general crisis of world capitalism. On Monday May 24, Washington Post carried a very interesting headline: “One false move in Europe could set off global chain reaction”. That adequately sums up the situation. The situation is so fragile that any small incident: a missed budget projection by the Spanish government, the failure of Greece to hit a deficit-reduction target, a drop in Ireland's economic output – could set off a chain reaction that could lead to a global slump.

The conclusion of the article is striking: “the future of the U.S. economic recovery in the hands of politicians in an assortment of European capitals”. This is most revealing. It shows the extremely fragile and unstable nature of the economic recovery, which finds its reflection in the extreme nervousness of global markets. Almost anything can cause a sudden collapse of “confidence”. Credit markets worldwide could suffer gridlock, throwing the world economy back into recession. The euro crisis is only the tip of a very large iceberg, and as with a real iceberg, the part you see is frightening enough, but the hidden part is what is really deadly.

In a distorted way, the nervousness of the markets is a reflection of the growing awareness of the bourgeois that the economic crisis will lead to a sharp revival of the class struggle everywhere. The question is simply stated: will governments be able to force the workers to accept huge cuts in the public sector budgets in the interests of saving capitalism? The spectacle of workers taking to the streets in Greece, Portugal and Spain has already given them an answer that they did not want to hear.

The crisis in Greece is only the accident through which necessity reveals itself. In Greece, the chain of European capitalism has broken at its weakest link. But there are several other very weak links. Even if they find a temporary solution to the problems of Greece, the fear that the contagion will spread to Portugal, Spain, Ireland and Italy. And Britain, though not part of the Euro Zone, will not be far behind.

Effects of globalization

At bottom the crisis is a manifestation of the fact that the productive forces on a world scale are coming into contradiction with the narrow limits of private ownership and the nation state. Like the Sorcerer’s Apprentice, the bourgeoisie has conjured up forces it cannot control.

In a sense, the bourgeoisie is the victim of its success. The capitalists attempted to overcome the limitations of the nation state by increased exploitation of the world market. After the collapse of the USSR, two billion people joined the capitalist world market. The entry of China, Russia, Eastern Europe, and the increased participation of India, provided them with vast new sources of markets, investments and raw materials.

However, dialectically, everything is turning into its opposite. The process has reached its limit. Globalization now manifests itself as a global crisis of capitalism. The factors that previously served to push the world economy up are now combining to push it onto a vicious downward spiral. We saw something similar in 1997 and 1998 when the East Asian financial crisis spread rapidly through Thailand, Indonesia, South Korea and other nations. Now Europe is facing the same prospect.

It may be argued that Greece, Spain, Portugal and Ireland represent only about four percent of world economic activity. But once the dominoes start to fall, the effect can pass rapidly from Greece to Portugal and Spain, then to Ireland and Italy, then Britain. Confidence in the euro would collapse, causing chaos in world money markets that would end in a new crisis in Wall Street. In the words of Cornell University economist Eswar Prasad: "the debt crisis and its ripple effects are bad news for all corners of the world".

The Washington Post continues:

“Inside the euro zone, banks are intimately linked, with a web of investments and cross-country bond holdings that could be a main vector for financial ‘contagion,’ with a default in one country weakening banks elsewhere.”

Europe in crisis

Drawing by Latuff.

The crisis is pushing Europe, and its nation states, into dangerous and uncharted waters. There were growing fears about the exposure of banks to European governments and private borrowers. If nothing was done, European governments would have been faced by the same fate that was suffered by Lehman Brothers. Greece could be on an inexorable path towards default.
By May 7th, yields on the weaker euro-area countries’ government bonds rose sharply, as the markets showed their muscle. There is a real threat that foreign financing for these countries would cease altogether. The bond markets’ nervousness indicates that the investors are quite prepared to see whole nation states go under. They are firm believers on the old Chinese proverb: “What do you do when you see a man falling? – Give him a shove!”

It is true that all euro-area countries have an interest in avoiding a default. If Greece goes under, the markets’ attention would immediately pounce on Portugal, Spain, Ireland and Italy. Confidence in the euro would plunge. Yet the German bourgeois do not like the idea of paying the debts of “profligate” countries.

On May 2nd euro-zone governments and the IMF set out the terms of a €110 billion ($145 billion) rescue for Greece. That was far more than had previously been promised but it was not enough to settle investors’ nerves. Stockmarkets in Europe and America slumped on May 4th and fell again the next day. Greek bonds continued to trade at the level of junk bonds.

Caught on the horns of a dilemma, the European bourgeoisie did not know what to do. The policymakers have been accused of doing too little, too late. But in reality, whatever they did would be wrong. In the end Germany and the European Union were forced to act to save the euro zone. In the early hours of May 10th finance ministers, meeting in Brussels, agreed on an emergency plan to prop up the euro zone. The main element is a “stabilization fund”, worth up to €500 billion ($635 billion). Of this, €60 billion is to be financed by the sale of EU bonds.

The fund is to be supplemented by up to €250 billion more from the IMF. In addition, the European Central Bank (ECB) said it would purchase government bonds to restore calm to “dysfunctional” markets. It will offer banks unlimited loans at a fixed interest rate. Yet again the governments are handing out billions to the banks to prevent a collapse. But in the first place, there is no guarantee that there will not be such a collapse, and in the second, who will pay the bill for these huge sums?

The financial markets’ initial reaction was naturally euphoric. How could the sharks not be euphoric at the prospect of further billions of taxpayers’ money being shoveled down their greedy gullets? Germany’s stock market closed more than 5% higher on May 10th. France’s main index went up by almost 10%: big French banks are heavily exposed to Greece, so they also stand to benefit handsomely.

However, this euphoria soon gave way to a more somber view. The market knows that the whole thing has been hastily cobbled together, and there is no guarantee that it will work for long. The package, despite its impressive scale, only buys time for Greece and other vulnerable troubled governments to cut their budget deficits and to improve their lost export competitiveness. If that is not done, there will be an even worse crisis in the euro zone in a few months.

National conflicts

A strained relationship. Photo by the office fo the Prime Minister of Greece.

The appearance of European unity was in reality an illusion. Behind the façade of unity and solidarity, all the nation states jealously guarded control over their national interests and their national banking systems. These divisions have been cruelly exposed by the present crisis.
The parsimonious spirit that lies behind all the talk of an “international rescue” is shown by the long delays in approving the plan, which even then was further delayed by failure to agree on details such as the interest rate to be charged for access to funds. And immediately after the deal was signed, the conflicts between the national governments began.

Germany is insisting that the money will be raised and controlled by governments, not bureaucrats in Brussels. They do not want huge amounts of money being handed out without close monitoring. In other words, the money will be given to Greece with the strictest monitoring and control. Britain said it will not sign up to it.

Jean-Claude Trichet, the central bank’s president, was accused of “caving in to political pressure to help out spendthrift governments”. Axel Weber, the head of the Bundesbank, Germany’s central bank, who may succeed Mr Trichet when he steps down next year, openly criticized the ECB’s conduct in the pages of Börsen-Zeitung, a German financial newspaper. In his defence, M. Trichet maintains that the central bank was “fiercely and totally independent”, a statement that not many people believe these days.

A speech made by Merkel during a rowdy session of the German federal parliament made matters worse. She said that "the current crisis facing the euro is the biggest test Europe has faced in decades," and: “If the euro fails, then Europe fails". The already panicky markets plunged again.

Germany took a unilateral decision to ban the short selling of EU government debt and banks. The move was taken because of the German Chancellor's increasing desperation ahead of last Friday's vote on the euro bailout. The opposition MPs and increasingly her own coalition members are becoming increasingly angry. Merkel had to do something to prove that Germany was not simply writing a multi-billion euro cheque from the taxpayer to bail out Greece and others. She was trying to show that Germany was taking steps to defend itself.

This was no more than a mild attempt to control speculation. It has no chance of success. But the markets want complete freedom to pursue their predatory activities. The move wiped billions of euros off the value of shares and drove the single currency down to a four year low. It infuriated Germany's European partners, who had not been consulted. There were unprecedented public recriminations from Christine Lagarde, the French finance minister. There were naturally loud protests from London (both Labour and Tories were agreed), reflecting the completely parasitic character of British capitalism's reliance on finance capital.

Hypocrisy of German capitalists

The underlying sickness of European capitalism is reflected by the feverish movements of the stock exchanges. The financial world is being shaken by rumors of the possible collapse of the euro zone. All the official denials have not helped to calm the jittery nerves the markets. In this mood of panic, the bourgeois seek to find someone to blame. The Germans blame the Greeks. The Greeks blame the speculators. The French blame the Germans.

Increasingly, the finger is being pointed at Berlin. Germany, which was the engine of growth for the whole EU, its banker and de facto leader, is now the target of all the pent-up anger and frustration of its partners. Why are the Germans so stingy? Why did Merkel not do more to help Greece earlier? At a recent meeting of European leaders it is said that President Sarkozy threatened to leave the euro zone if Berlin did not help Greece

The criticisms of her neighbours do not go down well in with Berlin. The prostitute press in Germany and other countries are trying to portray the situation as “Europe helping lazy Greek workers.” That is a lie. This crisis was not brought about by the workers of Greece or any other country. It was created by the voracious and reckless actions of the bankers and capitalists of both Greece and the rest of Europe. And the present “rescue plan” is a plan to rescue, not Greek workers, but the bankers of Germany, France and other countries who own most of the debts of Greek capitalism.

The public displays of moral outrage in Germany reek of hypocrisy. German capitalism benefited more than any other from the introduction of the Euro. The German capitalists enjoyed a privileged position in the years of boom. Their exports invaded every market, taking advantage of the fact that weaker economies like Greece, Spain and Portugal, could no longer devalue the currency to protect their national market. German banks were happy to make profits out of lending to Greece, Spain and Eastern Europe. They made a lot of money then, but they are not prepared to accept losses now.

Germany’s dilemma

The problem is that, in the end, somebody has to pay the bills. Merkel managed to push through the euro zone-wide bail-out mechanism on May 21. But opposition among German voters is growing and it is spreading to Merkel’s coalition partners and political allies. “Once again, we’re Europe’s fools” was how Bild, the influential German newspaper, greeted news of the euro rescue plan. In the latest polls, 47 percent of Germans are in favor of returning to the deutschmark. In a crucial state-level election May 9 Merkel’s governing coalition was heavily defeated. This is a sign of mounting dissatisfaction with her Christian Democratic Union and its coalition ally, the Free Democratic Party.

The weaker members of the rich man’s club, known as the “Club Med” economies, currently have a 3 trillion euro mountain of debt and their ability to service it is in doubt. The “markets” are nervous about this. That is to say, the bankers are nervous, because they fear that they may not get their pound of flesh. That means, in the first place, the German bankers. Exposure of German banks to Club Med debt may be as much as 500 billion euros. Thus, despite all the huffing and puffing in Berlin, what is being discussed here is not aid to Greece, but aid to the German bankers and their European partners in crime.

From the point of view of German capitalism it was a case of “damned if you do, and damned if you don’t.” If they provided Greece (and other weak euro zone economies) with money, they would have trouble at home, and anyway there is no guarantee it will succeed. If they refused, a Greek default would have a domino effect throughout Europe and on a world scale, which would pull Germany down with everyone else. Therefore, Merkel was forced to swallow hard and approve a huge bailout.

At some point, Germany may conclude that further bailouts are just throwing money into a bottomless pit. At that point, Germany may decide to cut its losses. Germany may decide that the ECB should ignore its rules and purchase the debt of the weak euro zone governments by the simple device of printing money (“quantitative easing”). The euro zone, including Germany, would be paying for it this with the weakening of the euro and higher inflation.

The Germans complain a lot, but they overlook the fact that the euro zone provided Germany with considerable economic benefits. Since the euro was adopted, unit labor costs in Club Med have increased relative to Germany’s by approximately 25 percent, further improving Germany’s competitive advantage. Its neighbors are unable to undercut German exports with currency depreciation, and German exports have benefited. The result has been a massive €110 billion (2007) current account surplus for Germany towards the rest of the Euro-zone. That means that Germany exports €110 billion more to the Euro-zone than it imports, which is paid for by massive lending from German banks. For German capitalists this was of tremendous benefit in the short-run but in the long-run it is completely unsustainable.

In order to revive the deutschmark, Germany would have to reinstate the Bundesbank, withdraw its reserves from the ECB, print its own currency and then re-denominate the country’s assets and liabilities in deutschmarks. This would be difficult, but not impossible. The other members of the euro zone would face far greater difficulties if they wished to return to their old currencies.

However, since German banks own much of the debt issued by Club Med, the losses caused to Germany by a break with the euro zone would be far greater than remaining within the euro zone and financially supporting it, at least for the time being.

Greece – the sick man of Europe

Greece joined the Euro in 2001. At that time German capitalism was puffed up with its own importance following reunification. The moving of its political centre to Berlin in the heart of Europe symbolized its unlimited ambition to become the Master of Europe. Under these conditions the Imperial Master graciously accepted the accession of Greece as a further step towards consolidation of German domination of the Balkans, which began with the German-inspired intrigue to break up Yugoslavia.

However, Greek capitalism is the weakest of several weak links in European capitalism. The Greek bourgeoisie – one of the most corrupt and reactionary in Europe – thought that it was being very clever when it joined the European rich man’s club. Like the frog in Aesop’s fable, it blew itself up to an enormous size, and then it exploded.

Even in 2001, the real weakness of Greek capitalism ought to have been clear to a blind man. It was graphically expressed in the huge deficits in the current account, budget and public debt. As long as the boom continued, Karamanlis could comfortably maintain himself in power for four-and-a-half years. He easily won two elections. The Greek economy appeared to be healthy, with growth averaging over 4% a year up to 2007.

The tourists were streaming in, construction was booming as a result of the 2004 Olympics. Greek ship-owners were making record profits from China’s export boom; Russian oligarchs were buying expensive land on Aegean Islands. There were subsidies from the European Union. Last but not least, Greek membership of the Euro seemed a guarantee of future prosperity.

But the global economic crisis cruelly exposed the underlying weakness of Greek capitalism. As a direct result of the adoption of the euro, the Greek economy has lost competitiveness. Many Greeks are underemployed. This affects the youth in particular, with a sharp rise in youth unemployment and a reduction of openings in education. The unemployment rate for young graduates in Greece is 21%, compared with 8% for the population as a whole.

The growing mood of discontent that was seething beneath the surface was shown by the violent youth protests after Alexandros Grigoropoulos, a 15-year-old schoolboy, was shot dead by a policeman in December 2008. The murder triggered five nights of riots. The protests quickly spilled into the main streets of Athens, and thence across the country. There were violent clashes with riot police and tear-gas filled Syntagma Square. Groups of youths burned cars, broke shop windows decorated for Christmas and tossed in petrol bombs.

These demonstrations were on an unprecedented scale, resembling an uprising of the youth. Demonstrators attacked police stations and public offices in a dozen cities, causing damage estimated at more than €100m ($130m). Hundreds of school students battled with police after the teenager’s funeral. Others threw stones at policemen on guard outside parliament, shouting “let parliament burn”. This was already a warning to the ruling class. It showed the pent-up anger of Greece’s youth, which was only an extreme expression of a general discontent in Greek society.

Throughout history, every revolution has been anticipated by a movement of the youth – particularly the students, who are a sensitive barometer that reflects the buildup of contradictions and tensions in society. This was the case in Russia in 1901 and in Spain in 1930. In both cases, the demonstrations of the student youth were a warning of the revolutions of 1905 and 1931.

Kostas Karamanlis. Photo by New Democracy.

The protests caused paralysis of the authorities. The right wing government of Costas Karamanlis, terrified of provoking an even bigger movement, was unable to impose a curfew or order mass arrests. The memory of the military dictatorship in the 1970s was too fresh in people’s minds. Attempts to arrive at a consensus between political leaders on how to quell the unrest quickly broke down. On December 10th there was a 24-hour strike by public-sector unions, despite Karamanlis’s appeal for it to be cancelled.
These events caused alarm among the international strategists of Capital. On 11th December The Economist commented:

“There is something weird and frightening about the sight of a modestly prosperous European country—assumed by most outsiders to have recovered from its rocky history of coups and civil strife—that is suddenly gripped by an urban uprising that the authorities cannot contain.”

The events of December 2008 led inexorably to the fall of the Karamanlis government. George Papandreou, the Pasok leader, called for a general election. “Effectively there is no government…we claim power,” he said. The Pasok gained in popularity as the support for the New Democracy melted away in a welter of financial scandals.

The Pasok government

The general election on October 4th 2009 resulted in a landslide victory for the Panhellenic Socialist Movement (Pasok) that surprised both the political observers and the Pasok leaders. This was a clear reflection of growing popular discontent. 43.9% of voters backing the party, giving it 160 seats in the 300-member parliament. The centre-right New Democracy party was shattered. It won only 33.5% and 91 seats—its worst-ever showing at the polls.

This was the biggest victory for Pasok since it first came to power in 1981. It goes against the trend Europe in the recent elections where social democratic parties have been defeated. It was a clear vote for change. The Communist Party (KKE) took 7.5% and 21 seats, while Syriza, a left-wing coalition that arose from a split from the CP, took 4.6% and 13 seats. Laos, a far-right party, increased its share of the vote to 5.6% and won 15 seats – at the cost of the ND.

Unlike his father, Andreas Papandreou, and like Blair in Britain, George Papandreou has worked to pull the party to the right. Brought up in Sweden, and educated in the USA, he enjoys friendly relations with Obama. Initially he promised stimulus of up to €3 billion ($4.4 billion) to accelerate economic recovery and above-inflation increases in wages and benefits for public-sector workers. He also promised real rises in wages and pensions to encourage Greeks to spend again. He talked of exporting renewable energy, harvested on sunny mountainsides and windy Aegean Islands, and persuading Greek software developers abroad to set up companies at home, and so on and so forth.

But these reformist dreams immediately evaporated like a drop of hot water on a hot stove. They came into conflict with the harsh reality of economic crisis, collapsing tax revenues and a soaring budget deficit. The Karamanlis government admitted that Greece had manipulated its figures to qualify for the euro in 2001. Papandreou admitted that this year’s budget deficit was not 6.7% but 12.7%.

George Papandreou. Photo by philippe grangeaud / solfé communications.

It is true that the Greek capitalists, with the mentality of a petty haggler in the marketplace who wishes to sell rotten fish by placing fresh ones on the top, tried to get round the problem by the simple expedient of falsifying the statistics to conceal the facts – something they are, incidentally, not alone in practicing. But sooner or later the facts become known. The source of the problem, however, was not in Athens and its faulty accounting.
The problem is precisely with the mechanism of the “free market economy”, which operates with the same rationality as a herd of antelopes in the veldt. As long as the market was heading upwards, they did not pay any attention to the niceties of economic and financial soundness. But once the markets head downwards panic sets in and a stampede begins. Now that the stampeded has begun, nothing can stop it. The speculators rush blindly from one market to another in search of a safe haven. In the process, they trample the crops, demolish houses and kill anyone who stands in their path.

The markets decide

There was an old saying: man proposes and God disposes. Nowadays it would be more correct to say: Man proposes but the Market disposes. With a budget deficit almost 13% and a public debt of 125% of GDP, international investors were not impressed with Papandreou’s promises, and sent him a little message to convey their opinion. Spreads on Greek government bonds over German Bunds began to widen, and have continued to widen ever since. This is the financial equivalent of laying hold of a man’s genitals and exerting a gentle squeeze.

Papandreou wants social peace with fiscal austerity. But the two things are incompatible. Papandreou wants to avoid direct confrontation with the trade unions, but he has only two alternatives: either he defends the interests of the workers or those of the capitalists. And he has made his choice. Papandreou is compelled to cut living standards in order to placate the almighty Market, just as Agamemnon was obliged to sacrifice his daughter Iphigenia in order to placate the Gods of Olympus. However, Agamemnon ended up very badly as a result of his actions, and his successor will not end up any better as a result of his.

The Greek premier is trying to hide behind the IMF and the anonymous “international speculators” that have brought Greece to its knees. But for the millions of Greek workers who are faced with savage cuts in their living standards, these arguments do not excuse the actions of the Pasok leaders. The Greek workers hate the speculators, the IMF and the bourgeois leaders of the EU. But they cannot forgive a government that, while calling itself socialist, has so readily bent the knee to the IMF and Brussels.

Immediately, Papandreou found himself ground between two millstones. The prime minister’s promises of fiscal austerity have not convinced the markets. For every step back the reformist leaders take, the bourgeois will demand ten more. The Economist remarked: “By Greek standards Mr Papandreou has been courageous, but he should have been braver still. Ireland set the pace on December 9th by producing a budget that sharply cut public-sector wages.” And it added: “Hard times, unfortunately, demand harsh measures.” Here is the real voice of the bourgeois: stony-faced, hard hearted, and completely impervious to human suffering. All must be sacrificed on the altar of Capital!

The austerity measures approved by the Athens government were too little for the bourgeoisie, but too much for the workers. The Greek workers, following their marvelous revolutionary traditions, immediately reacted with mass street demonstrations. Feeling themselves betrayed by the government they hoped would defend jobs and living standards, the workers of Greece have taken to the streets. For months, Athens and other cities have been rocked by mass protest demonstrations. One bourgeois commentator in Britain described the situation in the following terms: “Greek workers against European bankers.” That puts it very well.

Marx wrote that France was the country where the class struggle was always fought to the finish. The same can be said of Greece. The memories of the Civil War and the bitter divisions between Left and Right, and later of the Junta and the Polytechnic uprising of 1974 are burned on the consciousness of the masses. The divisions between the classes constitute a fault line running through Greek society that can explode at any time.

The question can be put very simply: the bourgeoisie cannot afford to maintain the concessions that were forced from them in the past. But the working class cannot tolerate any further attacks on their living standards and conditions. The workers of Europe will not stand with their arms folded while the conquests of the last fifty years are systematically destroyed. The developments in Greece therefore show what will happen in every country in Europe as the crisis unfolds.

Nearly 20 percent of U.S. workers underemployed

2010-02-23T15:31:00.000-08:00

February 23, 2010

Nearly 20 percent of U.S. workers underemployed

WASHINGTON (Reuters) – Nearly 20 percent of the U.S. workforce lacked adequate employment in January and struggled to make ends meet with reduced resources and bleak job prospects, according to a Gallup poll released on Tuesday.

In findings that appear to paint a darker employment picture than official U.S. data, Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.

Underemployed people spent 36 percent less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month, the poll said.

Unemployed workforce: diminution of taxable income, diminution of social security contributions, diminution of sales taxes; expansion of demand on food stamps, school lunch programs, medicaid, other available social services.

Will there be further expansions in cooperative food purchasing and preparation? Local resource and knowledge sharing? Reclamations of abandoned buildings?

Do our suburbs and exurbs hinder these opportunities to benefit from cooperation? Do they encourage screen-based rather than face to face interactions? Will people abandon the suburbs for better modes of urban life (there was an interesting story in the NYT on Sunday about a couple that left retirement in Florida to return to Detroit where they became active in initiatives around resurgence).

And when and how do frustration and anger organize into opposition, opposition that cannot be displaced or ignored, opposition that changes the very contours of the possible?

via news.yahoo.com

Obama's human rights record thus far. See also pt.2

2010-01-26T10:29:00.000-08:00

Organizing for the Anti-Capitalist Transition

2009-12-16T13:33:00.000-08:00

Organizing for the Anti-Capitalist Transition
David Harvey
CUNY Graduate Center, New York.
The historical geography of capitalist development is at a key inflexion point in which the geographical configurations of power are rapidly shifting at the very moment when the temporal dynamic is facing very serious constraints. Three percent compound growth (generally considered the minimum satisfactory growth rate for a healthy capitalist economy) is becoming less and less feasible to sustain without resort to all manner of fictions (such as those that have characterized asset markets and financial affairs over the last two decades). There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy. If that is to be done in an equitable way, then there is no alternative to socialism or communism. Since the late 1990s, the World Social Forum became the center for articulating the theme “another world is possible.” It must now take up the task of defining how another socialism or communism is possible and how the transition to these alternatives are to be accomplished. The current crisis offers a window of opportunity to reflect on what might be involved.
The current crisis originated in the steps taken to resolve the crisis of the 1970s. These steps included:
(a) the successful assault upon organized labor and its political institutions while mobilizing global labor surpluses, instituting labor-saving technological changes and heightening competition. The result has been global wage repressions (a declining share of wages in total GDP almost everywhere) and the creation of an even vaster disposable labor reserve living under marginal conditions.
(b) undermining previous structures of monopoly power and displacing the previous stage of (nation state) monopoly capitalism by opening up capitalism to far fiercer international competition. Intensifying global competition translated into lower non-financial corporate profits. Uneven geographical development and inter-territorial competition became key features in capitalist development, opening the way towards the beginnings of a hegemonic shift of power particularly but not exclusively towards East Asia.
(c) utilizing and empowering the most fluid and highly mobile form of capital – money capital – to reallocate capital resources globally (eventually through electronic markets) thus sparking deindustrialization in traditional core regions and new forms of (ultra-oppressive) industrialization and natural resource and agricultural raw material extractions in emergent markets. The corollary was to enhance the profitability of financial corporations and to find new ways to globalize and supposedly absorb risks through the creation of fictitious capital markets.
(d) At the other end of the social scale, this meant heightened reliance on “accumulation by dispossession” as a means to augment capitalist class power. The new rounds of primitive accumulation against indigenous and peasant populations were augmented by asset losses of the lower classes in the core economies (as witnessed by the sub-prime housing market in the US which foisted a huge asset loss particularly upon African American populations.
(e) The augmentation of otherwise sagging effective demand by pushing the debt economy (governmental, corporate and household) to its limits (particularly in the USA and the UK but also in many other countries from Latvia to Dubai).
(f) Compensating for anemic rates of return in production by the construction of whole series of asset market bubbles, all of which had a Ponzi character, culminating in the property bubble that burst in 2007-8. These asset bubbles drew upon finance capital and were facilitated by extensive financial innovations such as derivatives and collateralized debt obligations.
The political forces that coalesced and mobilized behind these transitions had a distinctive class character and clothed themselves in the vestments of a distinctive ideology called neoliberal. The ideology rested upon the idea that free markets, free trade, personal initiative and entrepreneurialism were the best guarantors of individual liberty and freedom and that the “nanny state” should be dismantled for the benefit of all. But the practice entailed that the state must stand behind the integrity of financial institutions, thus introducing (beginning with the Mexican and developing countries debt crisis of 1982) “moral hazard” big time into the financial system. The state (local and national) also became increasingly committed to providing a “good business climate” to attract investments in a highly competitive environment. The interests of the people were secondary to the interests of capital and in the event of a conflict between them, the interests of the people had to be sacrificed (as became standard practice in IMF structural adjustments programs from the early 1980s onwards). The system that has been created amounts to a veritable form of communism for the capitalist class.
These conditions varied considerably, of course, depending upon what part of the world one inhabited, the class relations prevailing there, the political and cultural traditions and how the balance of political-economic power was shifting.
So how can the left negotiate the dynamics of this crisis? At times of crisis, the irrationality of capitalism becomes plain for all to see. Surplus capital and surplus labor exist side-by side with seemingly no way to put them back together in the midst of immense human suffering and unmet needs. In midsummer of 2009, one third of the capital equipment in the United States stood idle, while some 17 per cent of the workforce were either unemployed, enforced part-timers or “discouraged” workers. What could be more irrational than that!
Can capitalism survive the present trauma? Yes. But at what cost? This question masks another. Can the capitalist class reproduce its power in the face of the raft of economic, social, political and geopolitical and environmental difficulties? Again, the answer is a resounding “yes.” But the mass of the people will have to surrender the fruits of their labour to those in power, to surrender many of their rights and their hard-won asset values (in everything from housing to pension rights), and to suffer environmental degradations galore to say nothing of serial reductions in their living standards which means starvation for many of those already struggling to survive at rock bottom. Class inequalities will increase (as we already see happening). All of that may require more than a little political repression, police violence and militarized state control to stifle unrest.
Since much of this is unpredictable and since the spaces of the global economy are so variable, then uncertainties as to outcomes are heightened at times of crisis. All manner of localized possibilities arise for either nascent capitalists in some new space to seize opportunities to challenge older class and territorial hegemonies (as when Silicon Valley replaced Detroit from the mid-1970s onwards in the United States) or for radical movements to challenge the reproduction of an already destabilized class power. To say that the capitalist class and capitalism can survive is not to say that they are predestined to do so nor does it say that their future character is given. Crises are moments of paradox and possibilities.
So what will happen this time around? If we are to get back to three percent growth, then this means finding new and profitable global investment opportunities for $1.6 trillion in 2010 rising to closer to $3 trillion by 2030. This contrasts with the $0.15 trillion new investment needed in 1950 and the $0.42 trillion needed in 1973 (the dollar figures are inflation adjusted). Real problems of finding adequate outlets for surplus capital began to emerge after 1980, even with the opening up of China and the collapse of the Soviet Bloc. The difficulties were in part resolved by creation of fictitious markets where speculation in asset values could take off unhindered. Where will all this investment go now?
Leaving aside the undisputable constraints in the relation to nature (with global warming of paramount importance), the other potential barriers of effective demand in the market place, of technologies and of geographical/ geopolitical distributions are likely to be profound, even supposing, which is unlikely, that no serious active oppositions to continuous capital accumulation and further consolidation of class power materialize. What spaces are left in the global economy for new spatial fixes for capital surplus absorption? China and the ex-Soviet bloc have already been integrated. South and SouthEast Asia is filling up fast. Africa is not yet fully integrated but there is nowhere else with the capacity to absorb all this surplus capital. What new lines of production can be opened up to absorb growth? There may be no effective long-run capitalist solutions (apart from reversion to fictitious capital manipulations) to this crisis of capitalism. At some point quantitative changes lead to qualitative shifts and we need to take seriously the idea that we may be at exactly such an inflexion point in the history of capitalism. Questioning the future of capitalism itself as an adequate social system ought, therefore, to be in the forefront of current debate.
Yet there appears to be little appetite for such discussion, even among the left. Instead we continue to hear the usual conventional mantras regarding the perfectibility of humanity with the help of free markets and free trade, private property and personal responsibility, low taxes and minimalist state involvement in social provision, even though this all sounds increasingly hollow. A crisis of legitimacy looms. But legitimation crises typically unfold at a different pace and rhythm to that of stock markets. It took, for example, three or four years before the stock market crash of 1929 produced the massive social movements (both progressive and fascistic) after 1932 or so. The intensity of the current pursuit by political power of ways to exit the present crisis may have something to do with the political fear of looming illegitimacy.
The last thirty years, however, has seen the emergence of systems of governance that seem immune to legitimacy problems and unconcerned even with the creation of consent. The mix of authoritarianism, monetary corruption of representative democracy, surveillance, policing and militarization (particularly through the war on terror), media control and spin suggests a world in which the control of discontent through disinformation, fragmentations of oppositions and the shaping of oppositional cultures through the promotion of NGOs tends to prevail with plenty of coercive force to back it up if necessary.
The idea that the crisis had systemic origins is scarcely mooted in the mainstream media (even as a few mainstream economists like Stiglitz, Krugman and even Jeffrey Sachs attempt to steal some of the left’s historical thunder by confessing to an epiphany or two). Most of the governmental moves to contain the crisis in North America and Europe amount to the perpetuation of business as usual which translates into support for the capitalist class. The “moral hazard” that was the immediate trigger for the financial failures is being taken to new heights in the bank bail-outs. The actual practices of neoliberalism (as opposed to its utopian theory) always entailed blatant support for finance capital and capitalist elites (usually on the grounds that financial institutions must be protected at all costs and that it is the duty of state power to create a good business climate for solid profiteering). This has not fundamentally changed. Such practices are justified by appeal to the dubious proposition that a “rising tide” of capitalist endeavor will “lift all boats” or that the benefits of compound growth will magically “trickle down” (which it never does except in the form of a few crumbs from the rich folks’ table).
So how will the capitalist class exit the current crisis and how swift will the exit be? The rebound in stock market values from Shanghai and Tokyo to Frankfurt, London and New York is a good sign we are told even as unemployment pretty much everywhere continues to rise. But notice the class bias in that measure. We are enjoined to rejoice in the rebound in stock values for the capitalists because it always precedes, it is said, a rebound in the “real economy” where jobs for the workers are created and incomes earned. The fact that the last stock rebound in the United States after 2002 turned out to be a “jobless recovery” appears to have been forgotten already. The Anglo-Saxon public in particular appears to be seriously afflicted with amnesia. It too easily forgets and forgives the transgressions of the capitalist class and the periodic disasters its actions precipitate. The capitalist media are happy to promote such amnesia.
China and India are still growing, the former by leaps and bounds. But in China’s case, the cost is a huge expansion of bank lending on risky projects (the Chinese banks were not caught up in the global speculative frenzy but now are continuing it). The overaccumulation of productive capacity proceeds a-pace and long-term infrastructural investments whose productivity will not be known for several years, are booming (even in urban property markets). And China’s burgeoning demand is entraining those economies supplying raw materials, like Australia and Chile. The likelihood of a subsequent crash in China cannot be dismissed but it may take time to discern (a long-term version of Dubai). Meanwhile the global epicenter of capitalism accelerates its shift parimarily towards East Asia.
In the older financial centers, the young financial sharks have taken their bonuses of yesteryear, collectively started boutique financial institutions to circle Wall Street and the City of London to sift through the detritus of yesterdays financial giants to snaffle up the juicy bits and start all over again. The investment banks that remain in the US – Goldman Sachs and J.P.Morgan – though reincarnated as bank holding companies have gained exemption (thanks to the Federal Reserve) from regulatory requirements and are making huge profits (and setting aside moneys for huge bonuses to match) out of speculating dangerously using tax-payers money in unregulated and still booming derivative markets. The leveraging that got us into the crisis has resumed big time as if nothing has happened. Innovations in finance are on the march as new ways to package and sell fictitious capital debts are being pioneered and offered to institutions (such as pension funds) desperate to find new outlets for surplus capital. The fictions (as well as the bonuses) are back!
Consortia are buying up foreclosed properties, either waiting for the market to turn before making a killing or banking high value land for a future moment of active redevelopment. The regular banks are stashing away cash, much of it garnered from the public coffers, also with an eye to resuming bonus payments consistent with a former lifestyle while a whole host of entrepreneurs hover in the wings waiting to seize this moment of creative destruction backed by a flood of public moneys.
Meanwhile raw money power wielded by the few undermines all semblances of democratic governance. The pharmaceutical, health insurance and hospital lobbies, for example, spent more than $133 million in the first three months of 2009 to make sure they got their way on health care reform in the United States. Max Baucus, head of the key Senate finance committee that shaped the health care bill received $1.5 million for a bill that delivers a vast number of new clients to the insurance companies with few protections against ruthless exploitation and profiteering (Wall Street is delighted). Another electoral cycle, legally corrupted by immense money power, will soon be upon us. In the United States, the parties of “K Street” and of Wall Street will be duly re-elected as working Americans are exhorted to work their way out of the mess that the ruling class has created. We have been in such dire straits before, we are reminded, and each time working Americans have rolled up their sleeves, tightened their belts, and saved the system from some mysterious mechanics of auto-destruction for which the ruling class denies all responsibility. Personal responsibility is, after all, for the workers and not for the capitalists.
If this is the outline of the exit strategy then almost certainly we will be in another mess within five years. The faster we come out of this crisis and the less excess capital is destroyed now, the less room there will be for the revival of long-term active growth. The loss of asset values at this conjuncture (mid 2009) is, we are told by the IMF, at least $55 trillion, which is equivalent to almost exactly one year’s global output of goods and services. Already we are back to the output levels of 1989. We may be looking at losses of $400 trillion or more before we are through. Indeed, in a recent startling calculation, it was suggested that the US state alone was on the hook to guarantee more than $200 trillion in asset values. The likelihood that all of those assets would go bad is very minimal, but the thought that many of them could is sobering in the extreme. Just to take a concrete example: Fannie Mae and Freddie Mac, now taken over by the US Government, own or guarantee more than $5 trillion in home loans many of which are in deep trouble (losses of more than $150 billion were recorded in 2008 alone). So what, then, are the alternatives?
It has long been the dream of many in the world, that an alternative to capitalist (ir)rationality can be defined and rationally arrived at through the mobilization of human passions in the collective search for a better life for all. These alternatives – historically called socialism or communism – have, in various times and places been tried. In former times, such as the 1930s, the vision of one or other of them operated as a beacon of hope. But in recent times they have both lost their luster, been dismissed as wanting, not only because of the failure of historical experiments with communism to make good on their promises and the penchant for communist regimes to cover over their mistakes by repression, but also because of their supposedly flawed presuppositions concerning human nature and the potential perfectibility of the human personality and of human institutions.
The difference between socialism and communism is worth noting. Socialism aims to democratically manage and regulate capitalism in ways that calm its excesses and redistribute its benefits for the common good. It is about spreading the wealth around through progressive taxation arrangements while basic needs – such as education, health care and even housing – are provided by the state out of reach of market forces. Many of the key achievements of redistributive socialism in the period after 1945, not only in Europe but beyond, have become so socially embedded as to be immune from neoliberal assault. Even in the United States, Social Security and Medicare are extremely popular programs that right wing forces find it almost impossible to dislodge. The Thatcherites in Britain could not touch national health care except at the margins. Social provision in Scandinavia and most of Western Europe seems to be an unshakable bed-rock of the social order.
Communism, on the other hand, seeks to displace capitalism by creating an entirely different mode of both production and distribution of goods and services. In the history of actually existing communism, social control over production, exchange and distribution meant state control and systematic state planning. In the long-run this proved to be unsuccessful though, interestingly, its conversion in China (and its earlier adoption in places like Singapore) has proven far more successful than the pure neoliberal model in generating capitalist growth for reasons that cannot be elaborated upon here. Contemporary attempts to revive the communist hypothesis typically abjure state control and look to other forms of collective social organization to displace market forces and capital accumulation as the basis for organizing production and distribution. Horizontally networked as opposed to hierarchically commanded systems of coordination between autonomously organized and self-governing collectives of producers and consumers are envisaged as lying at the core of a new form of communism. Contemporary technologies of communication make such a system seem feasible. All manner of small-scale experiments around the world can be found in which such economic and political forms are being constructed. In this there is a convergence of some sort between the Marxist and anarchist traditions that harks back to the broadly collaborative situation between them in the 1860s in Europe.
While nothing is certain, it could be that 2009 marks the beginning of a prolonged shake out in which the question of grand and far-reaching alternatives to capitalism will step-by-step bubble up to the surface in one part of the world or another. The longer the uncertainty and the misery is prolonged, the more the legitimacy of the existing way of doing business will be questioned and the more the demand to build something different will escalate. Radical as opposed to band-aid reforms to patch up the financial system may seem more necessary.
The uneven development of capitalist practices throughout the world has produced, moreover, anti-capitalist movements all over the place. The state-centric economies of much of East Asia generate different discontents (as in Japan and China) compared to the churning anti-neoliberal struggles occurring throughout much of Latin America where the Bolivarian revolutionary movement of popular power exists in a peculiar relationship to capitalist class interests that have yet to be truly confronted. Differences over tactics and policies in response to the crisis among the states that make up the European Union are increasing even as a second attempt to come up with a unified EU constitution is under way. Revolutionary and resolutely anti-capitalist movements are also to be found, though not all of them are of a progressive sort, in many of the marginal zones of capitalism. Spaces have been opened up within which something radically different in terms of dominant social relations, ways of life, productive capacities and mental conceptions of the world can flourish. This applies as much to the Taliban and to communist rule in Nepal as to the Zapatistas in Chiapas and indigenous movements in Bolivia, the Maoist movements in rural India, even as they are world’s apart in objectives, strategies and tactics.
The central problem is that in aggregate there is no resolute and sufficiently unified anti-capitalist movement that can adequately challenge the reproduction of the capitalist class and the perpetuation of its power on the world stage. Neither is there any obvious way to attack the bastions of privilege for capitalist elites or to curb their inordinate money power and military might. While openings exist towards some alternative social order, no one really knows where or what it is. But just because there is no political force capable of articulating let alone mounting such a program, this is no reason to hold back on outlining alternatives.
Lenin’s famous question “what is to be done?” cannot be answered, to be sure, without some sense of who it is might do it where. But a global anti-capitalist movement is unlikely to emerge without some animating vision of what is to be done and why. A double blockage exists: the lack of an alternative vision prevents the formation of an oppositional movement, while the absence of such a movement precludes the articulation of an alternative. How, then, can this blockage be transcended? The relation between the vision of what is to be done and why, and the formation of a political movement across particular places to do it has to be turned into a spiral. Each has to reinforce the other if anything is actually to get done. Otherwise potential opposition will be forever locked down into a closed circle that frustrates all prospects for constructive change, leaving us vulnerable to perpetual future crises of capitalism with increasingly deadly results. Lenin’s question demands an answer.
The central problem to be addressed is clear enough. Compound growth for ever is not possible and the troubles that have beset the world these last thirty years signal that a limit is looming to continuous capital accumulation that cannot be transcended except by creating fictions that cannot last. Add to this the facts that so many people in the world live in conditions of abject poverty, that environmental degradations are spiraling out of control, that human dignities are everywhere being offended even as the rich are piling up more and more wealth (the number of billionaires in India doubled last year from 27 to 52) under their command and that the levers of political, institutional, judicial, military and media power are under such tight but dogmatic political control as to be incapable of doing much more than perpetuating the status quo and frustrating discontent.
A revolutionary politics that can grasp the nettle of endless compound capital accumulation and eventually shut it down as the prime motor of human history, requires a sophisticated understanding of how social change occurs. The failings of past endeavors to build a lasting socialism and communism have to be avoided and lessons from that immensely complicated history must be learned. Yet the absolute necessity for a coherent anti-capitalist revolutionary movement must also be recognized. The fundamental aim of that movement is to assume social command over both the production and distribution of surpluses.
We urgently need an explicit revolutionary theory suited to our times. I propose a “co-revolutionary theory” derived from an understanding of Marx’s account of how capitalism arose out of feudalism. Social change arises through the dialectical unfolding of relations between seven moments within the body politic of capitalism viewed as an ensemble or assemblage of activities and practices:
a) technological and organizational forms of production, exchange and consumption
b) relations to nature
c) social relations between people
d) mental conceptions of the world, embracing knowledges and cultural understandings and beliefs
e) labor processes and production of specific goods, geographies, services or affects
f ) institutional, legal and governmental arrangements
g) the conduct of daily life that underpins social reproduction.
Each one of these moments is internally dynamic and internally marked by tensions and contradictions (just think of mental conceptions of the world) but all of them are co-dependent and co-evolve in relation to each other. The transition to capitalism entailed a mutually supporting movement across all seven moments. New technologies could not be identified and practices without new mental conceptions of the world (including that of the relation to nature and social relations). Social theorists have the habit of taking just one of the these moments and viewing it as the “silver bullet” that causes all change. We have technological determinists (Tom Friedman), environmental determinists (Jarad Diamond), daily life determinists (Paul Hawkin), labor process determinists (the autonomistas), institutionalists, and so on and so forth. They are all wrong. It is the dialectical motion across all of these moments that really counts even as there is uneven development in that motion.
When capitalism itself undergoes one of its phases of renewal, it does so precisely by co-evolving all moments, obviously not without tensions, struggles, fights and contradictions. But consider how these seven moments were configured around 1970 before the neoliberal surge and consider how they look now and you will see they have all changed in ways that re-define the operative characteristics of capitalism viewed as a non-Hegelian totality.
An anti-capitalist political movement can start anywhere (in labor processes, around mental conceptions, in the relation to nature, in social relations, in the design of revolutionary technologies and organizational forms, out of daily life or through attempts to reform institutional and administrative structures including the reconfiguration of state powers). The trick is to keep the political movement moving from one moment to another in mutually reinforcing ways. This was how capitalism arose out of feudalism and this is how something radically different called communism, socialism or whatever must arise out of capitalism. Previous attempts to create a communist or socialist alternative fatally failed to keep the dialectic between the different moments in motion and failed to embrace the unpredictabilities and uncertainties in the dialectical movement between them. Capitalism has survived precisely by keeping the dialectical movement between the moments going and constructively embracing the inevitable tensions, including crises, that result.
Change arises, of course, out of an existing state of affairs and it has to harness the possibilities immanent within an existing situation. Since the existing situation varies enormously from Nepal, to the Pacific regions of Bolivia, to the deindustrializing cities of Michigan and the still booming cities of Mumbai and Shanghai and the shaken but by no means destroyed financial centers of New York and London, so all manner of experiments in social change in different places and at different geographical scales are both likely and potentially illuminating as ways to make (or not make) another world possible. And in each instance it may seem as if one or other aspect of the existing situation holds the key to a different political future. But the first rule for a global anti-capitalist movement must be: never rely on the unfolding dynamics of one moment without carefully calibrating how relations with all the others are adapting and reverberating.
Feasible future possibilities arise out of the existing state of relations between the different moments. Strategic political interventions within and across the spheres can gradually move the social order onto a different developmental path. This is what wise leaders and forward looking institutions do all the time in local situations, so there is no reason to think there is anything particularly fantastic or utopian about acting in this way. The left has to look to build alliances between and across those working in the distinctive spheres. An anti-capitalist movement has to be far broader than groups mobilizing around social relations or over questions of daily life in themselves. Traditional hostilities between, for example, those with technical, scientific and administrative expertise and those animating social movements on the ground have to be addressed and overcome. We now have to hand, in the example of the climate change movement, a significant example of how such alliances can begin to work.
In this instance the relation to nature is the beginning point, but everyone realizes that something has to give on all the other moments and while there is a wishful politics that wants to see the solution as purely technological, it becomes clearer by the day that daily life, mental conceptions, institutional arrangements, production processes and social relations have to be involved. And all of that means a movement to restructure capitalist society as a whole and to confront the growth logic that underlies the problem in the first place.
There have, however, to be, some loosely agreed upon common objectives in any transitional movement. Some general guiding norms can be set down. These might include (and I just float these norms here for discussion) respect for nature, radical egalitarianism in social relations, institutional arrangements based in some sense of common interests and common property, democratic administrative procedures (as opposed to the monetized shams that now exist), labor processes organized by the direct producers, daily life as the free exploration of new kinds of social relations and living arrangements, mental conceptions that focus on self-realization in service to others and technological and organizational innovations oriented to the pursuit of the common good rather than to supporting militarized power, surveillance and corporate greed. These could be the co-revolutionary points around which social action could converge and rotate. Of course this is utopian! But so what! We cannot afford not to be.
Let me detail one particular aspect of the problem which arise in the place where I work. Ideas have consequences and false ideas can have devastating consequences. Policy failures based on erroneous economic thinking played a crucial role in both the run-up to the debacle of the 1930s and in the seeming inability to find an adequate way out. Though there is no agreement among historians and economists as to exactly what policies failed, it is agreed that the knowledge structure through which the crisis was understood needed to be revolutionized. Keynes and his colleagues accomplished that task. But by the mid-1970s, it became clear that the Keynesian policy tools were no longer working at least in the way they were being applied and it was in this context that monetarism, supply-side theory and the (beautiful) mathematical modelling of micro-economic market behaviors supplanted broad-brush macro-economic Keynesian thinking. The monetarist and narrower neoliberal theoretical frame that dominated after 1980 is now in question. In fact it has disastrously failed.
We need new mental conceptions to understand the world. What might these be and who will produce them, given both the sociological and intellectual malaise that hangs over knowledge production and (equally important) dissemination more generally? The deeply entrenched mental conceptions associated with neoliberal theories and the neoliberalization and corporatization of the universities and the media has played more than a trivial role in the production of the present crisis. For example, the whole question of what to do about the financial system, the banking sector, the state-finance nexus and the power of private property rights, cannot be broached without going outside of the box of conventional thinking. For this to happen will require a revolution in thinking, in places as diverse as the universities, the media and government as well as within the financial institutions themselves.
Karl Marx, while not in any way inclined to embrace philosophical idealism, held that ideas are a material force in history. Mental conceptions constitute, after all, one of the seven moments in his general theory of co-revolutionary change. Autonomous developments and inner conflicts over what mental conceptions shall become hegemonic therefore have an important historical role to play. It was for this reason that Marx (along with Engels) wrote The Communist Manifesto, Capital and innumerable other works. These works provide a systematic critique, albeit incomplete, of capitalism and its crisis tendencies. But as Marx also insisted, it was only when these critical ideas carried over into the fields of institutional arrangements, organizational forms, production systems, daily life, social relations, technologies and relations to nature that the world would truly change.
Since Marx’s goal was to change the world and not merely to understand it, ideas had to be formulated with a certain revolutionary intent. This inevitably meant a conflict with modes of thought more convivial to and useful for the ruling class. The fact that Marx’s oppositional ideas, particularly in recent years, have been the target of repeated repressions and exclusions (to say nothing of bowdlerizations and misrepresentations galore) suggests that his ideas may be too dangerous for the ruling classes to tolerate. While Keynes repeatedly avowed that he had never read Marx, he was surrounded and influenced in the 1930s by many people (like his economist colleague Joan Robinson) who had. While many of them objected vociferously to Marx’s foundational concepts and his dialectical mode of reasoning, they were acutely aware of and deeply affected by some of his more prescient conclusions. It is fair to say, I think, that the Keynesian theory revolution could not have been accomplished without the subversive presence of Marx lurking in the wings.
The trouble in these times is that most people have no idea who Keynes was and what he really stood for while the knowledge of Marx is negligible. The repression of critical and radical currents of thought, or to be more exact the corralling of radicalism within the bounds of multiculturalism, identity politics and cultural choice, creates a lamentable situation within the academy and beyond, no different in principle to having to ask the bankers who made the mess to clean it up with exactly the same tools as they used to get into it. Broad adhesion to post-modern and post-structuralist ideas which celebrate the particular at the expense of big-picture thinking does not help. To be sure, the local and the particular are vitally important and theories that cannot embrace, for example, geographical difference, are worse than useless. But when that fact is used to exclude anything larger than parish politics then the betrayal of the intellectuals and abrogation of their traditional role become complete.
The current populations of academicians, intellectuals and experts in the social sciences and humanities are by and large ill-equipped to undertake the collective task of revolutionizing our knowledge structures. They have, in fact, been deeply implicated in the construction of the new systems of neoliberal governmentality that evade questions of legitimacy and democracy and foster a technocratic authoritarian politics. Few seem predisposed to engage in self-critical reflection. Universities continue to promote the same useless courses on neo classical economic or rational choice political theory as if nothing has happened and the vaunted business schools simply add a course or two on business ethics or how to make money out of other people’s bankruptcies. After all, the crisis arose out of human greed and there is nothing that can be done about that!
The current knowledge structure is clearly dysfunctional and equally clearly illegitimate. The only hope is that a new generation of perceptive students (in the broad sense of all those who seek to know the world) will clearly see it so and insist upon changing it. This happened in the 1960s. At various other critical points in history student inspired movements, recognizing the disjunction between what is happening in the world and what they are being taught and fed by the media, were prepared to do something about it. There are signs, from Tehran to Athens and onto many European university campuses of such a movement. How the new generation of students in China will act must surely be of deep concern in the corridors of political power in Beijing.
A student-led and youthful revolutionary movement, with all of its evident uncertainties and problems, is a necessary but not sufficient condition to produce that revolution in mental conceptions that can lead us to a more rational solution to the current problems of endless growth.
What, more broadly, would happen if an anti-capitalist movement were constituted out of a broad alliance of the alienated, the discontented, the deprived and the dispossessed? The image of all such people everywhere rising up and demanding and achieving their proper place in economic, social and political life, is stirring indeed. It also helps focus on the question of what it is they might demand and what it is that needs to be done.
Revolutionary transformations cannot be accomplished without at the very minimum changing our ideas, abandoning cherished beliefs and prejudices, giving up various daily comforts and rights, submitting to some new daily life regimen, changing our social and political roles, reassigning our rights, duties and responsibilities and altering our behaviors to better conform to collective needs and a common will. The world around us – our geographies – must be radically re-shaped as must our social relations, the relation to nature and all of the other moments in the co-revolutionary process. It is understandable, to some degree, that many prefer a politics of denial to a politics of active confrontation with all of this.
It would also be comforting to think that all of this could be accomplished pacifically and voluntarily, that we would dispossess ourselves, strip ourselves bare, as it were, of all that we now possess that stands in the way of the creation of a more socially just, steady-state social order. But it would be disingenuous to imagine that this could be so, that no active struggle will be involved, including some degree of violence. Capitalism came into the world, as Marx once put it, bathed in blood and fire. Although it might be possible to do a better job of getting out from under it than getting into it, the odds are heavily against any purely pacific passage to the promised land.
There are various broad fractious currents of thought on the left as to how to address the problems that now confront us. There is, first of all, the usual sectarianism stemming from the history of radical action and the articulations of left political theory. Curiously, the one place where amnesia is not so prevalent is within the left (the splits between anarchists and Marxists that occurred back in the 1870s, between Trotskyists, Maoists and orthodox Communists, between the centralizers who want to command the state and the anti-statist autonomists and anarchists). The arguments are so bitter and so fractious, as to sometimes make one think that more amnesia might be a good thing. But beyond these traditional revolutionary sects and political factions, the whole field of political action has undergone a radical transformation since the mid-1970s. The terrain of political struggle and of political possibilities has shifted, both geographically and organizationally.
There are now vast numbers of non-governmental organizations (NGO’s) that play a political role that was scarcely visible before the mid-1970s. Funded by both state and private interests, populated often by idealist thinkers and organizers (they constitute a vast employment program), and for the most part dedicated to single-issue questions (environment, poverty, women’s rights, anti-slavery and trafficking work, etc) they refrain from straight anti-capitalist politics even as they espouse progressive ideas and causes. In some instances, however, they are actively neoliberal, engaging in privatization of state welfare functions or fostering institutional reforms to facilitate market integration of marginalized populations (microcredit and microfinance schemes for low income populations are a classic example of this).
While there are many radical and dedicated practitioners in this NGO world, their work is at best ameliorative. Collectively, they have a spotty record of progressive achievements, although in certain arenas, such as women’s rights, health care and environmental preservation, they can reasonably claim to have made major contributions to human betterment. But revolutionary change by NGO is impossible. They are too constrained by the political and policy stances of their donors. So even though, in supporting local empowerment, they help open up spaces where anti-capitalist alternatives become possible and even support experimentation with such alternatives, they do nothing to prevent the re-absorption of these alternatives into the dominant capitalist practice: they even encourage it. The collective power of NGOs in these times is reflected in the dominant role they play in the World Social Forum, where attempts to forge a global justice movement, a global alternative to neoliberalism, have been concentrated over the last ten years.
The second broad wing of opposition arises out of anarchist, autonomist and grass roots organizations (GROs) which refuse outside funding even as some of them do rely upon some alternative institutional base (such as the Catholic Church with its “base community” initiatives in Latin America or broader church sponsorship of political mobilization in the inner cities of the United States). This group is far from homogeneous (indeed there are bitter disputes among them pitting, for example, social anarchists against those they scathingly refer to as mere “lifestyle” anarchists). There is, however, a common antipathy to negotiation with state power and an emphasis upon civil society as the sphere where change can be accomplished.. The self-organizing powers of people in the daily situations in which they live has to be the basis for any anti-capitalist alternative. Horizontal networking is their preferred organizing model. So-called “solidarity economies” based on bartering, collectives and local production systems is their preferred political economic form. They typically oppose the idea that any central direction might be necessary and reject hierarchical social relations or hierarchical political power structures along with conventional political parties. Organizations of this sort can be found everywhere and in some places have achieved a high degree of political prominence. Some of them are radically anti-capitalist in their stance and espouse revolutionary objectives and in some instances are prepared to advocate sabotage and other forms of disruption (shades of the Red Brigades in Italy, the Baader Meinhoff in Germany and the Weather Underground in the United States in the 1970s). But the effectiveness of all these movements (leaving aside their more violent fringes) is limited by their reluctance and inability to scale up their activism into large-scale organizational forms capable of confronting global problems. The presumption that local action is the only meaningful level of change and that anything that smacks of hierarchy is anti-revolutionary is self-defeating when it comes to larger questions. Yet these movements are unquestionably providing a widespread base for experimentation with anti-capitalist politics.
The third broad trend is given by the transformation that has been occurring in traditional labor organizing and left political parties, varying from social democratic traditions to more radical Trotskyist and Communist forms of political party organization. This trend is not hostile to the conquest of state power or hierarchical forms of organization. Indeed, it regards the latter as necessary to the integration of political organization across a variety of political scales. In the years when social democracy was hegemonic in Europe and even influential in the United States, state control over the distribution of the surplus became a crucial tool to diminish inequalities. The failure to take social control over the production of surpluses and thereby really challenge the power of the capitalist class was the Achilles heel of this political system, but we should not forget the advances that it made even if it is now clearly insufficient to go back to such a political model with its social welfarism and Keynesian economics. The Bolivarian movement in Latin America and the ascent to state power of progressive social democratic governments is one of the most hopeful signs of a resuscitation of a new form of left statism.
Both organized labor and left political parties have taken some hard hits in the advanced capitalist world over the last thirty years. Both have either been convinced or coerced into broad support for neoliberalization, albeit with a somewhat more human face. One way to look upon neoliberalism, as was earlier noted, is as a grand and quite revolutionary movement (led by that self-proclaimed revolutionary figure, Margaret Thatcher) to privatize the surpluses or at least prevent their further socialization.
While there are some signs of recovery of both labor organizing and left politics (as opposed to the “third way” celebrated by New Labor in Britain under Tony Blair and disastrously copied by many social democratic parties in Europe) along with signs of the emergence of more radical political parties in different parts of the world, the exclusive reliance upon a vanguard of workers is now in question as is the ability of those leftist parties that gain some access to political power to have a substantive impact upon the development of capitalism and to cope with the troubled dynamics of crisis-prone accumulation. The performance of the German Green Party in power has hardly been stellar relative to their political stance out of power and social democratic parties have lost their way entirely as a true political force. But left political parties and labor unions are significant still and their takeover of aspects of state power, as with the workers party in Brazil or the Bolivarian movement in Venezuela has had a clear impact on left thinking, not only in Latin America. The complicated problem of how to interpret the role of the Communist Party in China, with its exclusive control over political power, and what its future policies might be about is not easily resolved either.
The co-revolutionary theory earlier laid out would suggest that there is no way that an anti-capitalist social order can be constructed without seizing state power, radically transforming it and re-working the constitutional and institutional framework that currently supports private property, the market system and endless capital accumulation. Inter-state competition and geoconomic and geopolitical struggles over everything from trade and money to questions of hegemony are also far too significant to be left to local social movements or cast aside as too big to contemplate. How the architecture of the state-finance nexus is to be re-worked along with the pressing question of the common measure of value given by money cannot be ignored in the quest to construct alternatives to capitalist political economy. To ignore the state and the dynamics of the inter-state system is therefore a ridiculous idea for any anti-capitalist revolutionary movement to accept.
The fourth broad trend is constituted by all the social movements that are not so much guided by any particular political philosophy or leanings but by the pragmatic need to resist displacement and dispossession (through gentrification, industrial development, dam construction, water privatization, the dismantling of social services and public educational opportunities, or whatever). In this instance the focus on daily life in the city, town, village or wherever provides a material base for political organizing against the threats that state policies and capitalist interests invariably pose to vulnerable populations. These forms of protest politics are massive.
Again, there is a vast array of social movements of this sort, some of which can become radicalized over time as they more and more realize that the problems are systemic rather than particular and local. The bringing together of such social movements into alliances on the land (like the Via Campesina, the landless peasant movement in Brazil or peasants mobilizing against land and resource grabs by capitalist corporations in India) or in urban contexts (the right to the city and take back the land movements in Brazil and now the United States) suggest the way may be open to create broader alliances to discuss and confront the systemic forces that underpin the particularities of gentrification, dam construction, privatization or whatever. More pragmatic rather than driven by ideological preconceptions, these movements nevertheless can arrive at systemic understandings out of their own experience. To the degree that many of them exist in the same space, such as within the metropolis, they can (as supposedly happened with the factory workers in the early stages of the industrial revolution) make common cause and begin to forge, on the basis of their own experience, a consciousness of how capitalism works and what it is that might collectively be done. This is the terrain where the figure of the “organic intellectual” leader, made so much of in Antonio Gramsci’s work, the autodidact who comes to understand the world first hand through bitter experiences, but shapes his or her understanding of capitalism more generally, has a great deal to say. To listen to peasant leaders of the MST in Brazil or the leaders of the anti-corporate land grab movement in India is a privileged education. In this instance the task of the educated alienated and discontented is to magnify the subaltern voice so that attention can be paid to the circumstances of exploitation and repression and the answers that can be shaped into an anti-capitalist program.
The fifth epicenter for social change lies with the emancipatory movements around questions of identity – women, children, gays, racial, ethnic and religious minorities all demand an equal place in the sun – along with the vast array of environmental movements that are not explicitly anti-capitalist. The movements claiming emancipation on each of these issues are geographically uneven and often geographically divided in terms of needs and aspirations. But global conferences on women’s rights (Nairobi in 1985 that led to the Beijing declaration of 1995) and anti-racism (the far more contentious conference in Durban in 2009) are attempting to find common ground, as is true also of the environmental conferences, and there is no question that social relations are changing along all of these dimensions at least in some parts of the world. When cast in narrow essentialist terms, these movements can appear to be antagonistic to class struggle. Certainly within much of the academy they have taken priority of place at the expense of class analysis and political economy. But the feminization of the global labor force, the feminization of poverty almost everywhere and the use of gender disparities as a means of labor control make the emancipation and eventual liberation of women from their repressions a necessary condition for class struggle to sharpen its focus. The same observation applies to all the other identity forms where discrimination or outright repression can be found. Racism and the oppression of women and children were foundational in the rise of capitalism. But capitalism as currently constituted can in principle survive without these forms of discrimination and oppression, though its political ability to do so will be severely curtailed if not mortally wounded in the face of a more unified class force. The modest embrace of multiculturalism and women’s rights within the corporate world, particularly in the United States, provides some evidence of capitalism’s accommodation to these dimensions of social change (including the environment), even as it re-emphasizes the salience of class divisions as the principle dimension for political action.
These five broad tendencies are not mutually exclusive or exhaustive of organizational templates for political action. Some organizations neatly combine aspects of all five tendencies. But there is a lot of work to be done to coalesce these various tendencies around the underlying question: can the world change materially, socially, mentally and politically in such a way as to confront not only the dire state of social and natural relations in so many parts of the world, but also the perpetuation of endless compound growth? This is the question that the alienated and discontented must insist upon asking, again and again, even as they learn from those who experience the pain directly and who are so adept at organizing resistances to the dire consequences of compound growth on the ground.
Communists, Marx and Engels averred in their original conception laid out in The Communist Manifesto, have no political party. They simply constitute themselves at all times and in all places as those who understand the limits, failings and destructive tendencies of the capitalist order as well as the innumerable ideological masks and false legitimations that capitalists and their apologists (particularly in the media) produce in order to perpetuate their singular class power. Communists are all those who work incessantly to produce a different future to that which capitalism portends. This is an interesting definition. While traditional institutionalized communism is as good as dead and buried, there are by this definition millions of de facto communists active among us, willing to act upon their understandings, ready to creatively pursue anti-capitalist imperatives. If, as the alternative globalization movement of the late 1990s declared, ‘another world is possible’ then why not also say ‘another communism is possible’? The current circumstances of capitalist development demand something of this sort, if fundamental change is to be achieved.
These notes draw heavily on my forthcoming book, The Enigma of Capital, to be published by Profile Books in April 2010.

Larry Wilkerson on Obama's Choice to send people to die in Afganistan

2009-12-05T11:38:00.000-08:00

Unemployment #4

2009-11-23T10:02:00.002-08:00

Unemployment #3

2009-11-23T10:02:00.001-08:00

Unemployment #2

2009-11-23T09:59:00.002-08:00

Unemployment #1

2009-11-23T09:59:00.001-08:00

Anatomy of Casino Capitalism w/Jane D'Arista

2009-11-11T17:12:00.000-08:00

Incipient Facism? Frank Schaeffer

2009-11-06T10:20:00.000-08:00

Why Afganistan? Pipeline? Oil?

2009-10-24T10:08:00.000-07:00

http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=4368

Very interesting conversation about Uzbekistan. Who is going to profit from Uzbekistan's oil and gas?

An answer to Capitalist Crises - see part 2 at site

2009-10-18T20:17:00.000-07:00

More at The Real News

Is Being a Woman a Pre-existing Condition?

2009-10-16T21:14:00.001-07:00

What you are up against!

2009-10-15T16:27:00.001-07:00

Public Option

2009-10-15T09:43:00.000-07:00

Bethany Morton : Great Bargain-God and Walmart

2009-10-08T10:31:00.000-07:00

2009-10-05T20:45:00.000-07:00

http://www.singlepayeraction.org/index.php

2009-10-05T15:39:00.000-07:00

Neo-liberalism as water balloon - written by Ady Cousins

2009-10-03T13:43:00.001-07:00

Neoliberalism As Water Balloon from Tim McCaskell on Vimeo.

Is there a Left? "I want to be sedated" Can't I just give some money, anonymously?

2009-10-01T08:51:00.000-07:00

Information that came with video below.

2009-09-25T16:01:00.000-07:00

Back in June a NYT/CBS News poll found that the majority of Americans support a public option, a government run insurance plan to compete with private insurers. More than 500,000 doctors support a public option. It hardly seems controversial. But many fear, and with good reason, that it won't be part of whatever kind of bill ends up on the president's desk. So where does the public option stand? Maggie Mahar, author of Money-Driven Medicine and a Fellow at The Century Foundation, Lester Feder, a contributor to the Columbia Journalism Review's Campaign Desk, and Dr. Manisha Sharma, Director of Media Relations at the National Physicians Alliance in NY on the Baucus bill and whether it will be improved.

What's left of Public Opinion

2009-09-25T15:57:00.000-07:00

It is sounding like a Country run by stupid incompetent people!

2009-09-18T08:40:00.000-07:00

Cigna Health Insurance

2009-09-14T10:45:00.000-07:00

Feeling like a foreigner at home, in the USA.

2009-09-13T21:47:00.000-07:00

Following was posted on Mother Jones, Glenn Beck watch. It is a response to the hysterical dialouge happening around Obama.

So why do you care so much now?
Submitted by FreeThinker on September 13, 2009 - 12:12am.

Anonymous, you care so much about the honesty and integrity of administration people - where were you when the most corrupt and autocratic admin in history was in for the past 8 years? We've probably never come so close to seeing the loss of liberty (such as it is anyway in this Corporatocracy which owns the media & most of the "elelcted" officials) in the US as during that time. Lies, lies and more lies and coming in with a big surplus (after another Conservative, Reagan, nearly spent the country into bandruptcy) and leaving with $1trillion debt, all to enrich (w/o competetive bidding) the Robber Barons/War Profiteers who are the real employers of the Bush Gang - Haliburton, Bechtel, Lockheed Martin, Blackwater, The Carlyle Group. And you talk about doing the research? Google PNAC - Project for a New American Century. The invasion and occupation of Iraq/Afghanistan, in fact the whole Middle East eventually, was planned in advance by the Conservatives. They just had to find a way to make it happen - 9/11, how convenient! Follow the money....

The most corrupt administrations in the past 100 years have all been Conservative - Harding (who even overtly placed organized crime bosses in his admin), Nixon, Reagan, Old Bush and Bush the Idiot. So much for talk - we've seen the walk.

I used to be a Repug and nothing in my whole life brings me more shame than that. What a brainwashed dork I was - and you too. They are the biggest puppets of the Corporatocracy which owns the "news" media and has brainwashed us all for years about "Socialism". What a crock. Socialism is a powerful political/social movement in Europe that was the force behind democracy (as opposed to the Conservatives who backed the aristocracy and sneered at the unwashed masses). Socialism is the reason Europe is more advanced than the US, has healthcare for all, has only military for defense (so has the money to spend for the people like healthcare and parks and highspeed trains, for ex), has a lower crime rate, lower poverty rate, smaller gap between the rich and poor, almost no trailer houses & much lower infant mortality etc. I am now a European and wouldn't go back to the US for anything - what a hick place.

The Socialized countries of Europe are the most advanced in the world - and the happiest, with the happiest country in the world as Socialist Denmark, along with Sweden, The Netherlands, Belgium, Spain (my own new homeland where our Socialist government has given full & complete Human/Civil rights to LGBT people, something that won't happen in my lifetime in puritanical, fundamentalist USAmerica) et al.

You have been brainwashed into equating Socialism with the Soviet Union, which was not, but that is like equating Democracy with the "Democratic" Republic of Zimbabwe or True Christianity with the Catholic Inquisition or Focus on the Family.

Do you oppose all the other "Socialist" benefits in US society: the police, the fire dept., the army, the navy, the coast guard, the air force, public libraries, street sweeping, public parks, schools, unemployment insurance, social security, workmens' compensaton insurance, 5 day work week, the end of child labor, the 40 hour work week (it's lower in most Socialist EU countries), paid vacations, minimum wage or medicare/medicaid, to mention a few? Most of these last 9 or 10 civilized benefits were opposed just as bitterly by you Conservatives/Repugs as is universal health care is now. Hopefully, history will show you and your selfishness will fail here too.

Beck smears and raises fear in people. He doesn't challenge or question issues with clear, intelligent, civilized logic, facts and reason. He and the rest of the Conservative Shock Jocks spread hate, fear and confusion - not a good thing to have in a civilized republic. We'd all be far better off with reasoned, calm, respectful debate, don't you think? I supported Nader, not Obama, but Obama has handled himself like a President, a statesman, and has not stooped to the third grade antics of the Conservative Shock Jocks or members of congress like Wilson. He's certainly more capable, knowledable and dignified than that Dubya Jackass and his evil coven. He was left with the highest debt and the most ruined economy with crumbling infrastructure and 2 immoral/illegal wars by the Conservatives/Repugs and he's gotten down to work in an amazing way with the Conservatives/Repugs opposing everything he's tried to do and he's tried to do things as bipartisanly as possible (something Conservatives never do). Do the reading and research yourself and not just on rightwingnut sites, you're way out of the reality zone.

Time to split the Blue States from the Red as should have been allowed to do at the time of the Civil War and saved a lot of bloodshed. What a difference that would have made - the Union would have been such a much more advanced country than it is now and the Red States would be aligned with the developing world and military dictatorships which much of it would be if independent countries (Mississippi, Lousiana, Idaho et al). Of course, then the Union would have an illegal immigration problem with people trying to escape to a more advanced and civilized place from the Confederacy. Oh well, so be it.

* recommend this (2)

Who is Stephen Hemsley?

2009-08-07T02:24:00.000-07:00

More Privatization

2009-08-04T02:47:00.000-07:00

From "In These Times"
We’re Public … No, We’re Private
Charter school corporations take on public school teacher unions.

By MICHAEL KLONSKY

On April 23, parents learn whether their children have been admitted to the Harlem Success Academy charter school system in New York. (Photo by Chris Hondros/Getty Images)

Under the Bush administration, charter management organizations with deep pockets and powerful supporters overpowered the small, independent teacher-run charter schools.
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What began as an attempt by small groups of urban charter school teachers in Chicago and New York to win collective bargaining rights has exploded into a national battle between teachers’ unions and operators of large charter “chain schools.”

In Chicago, a successful drive to organize three schools run by the city’s largest operator, Chicago International Charter Schools (CICS), and its for-profit subcontractor, Civitas, was temporarily stalled when Civitas management argued that as a private employer it is not covered under rules set down by the Illinois Educational Labor Relations Board (IELRB).

Since its founding in 2004—with a $4-million grant from the Bill & Melinda Gates Foundation—Civitas has touted itself as a “public school,” especially when asking for state funding. But in April 2009, when a majority of Civitas teachers at the three Chicago schools signed union cards and the IELRB approved the Chicago Alliance of Charter School Teachers (ACTS) as their representative, Civitas changed its tune. Now the corporation claims that charters are essentially private schools and, as such, the IELRB has no power to recognize any union as the official bargaining unit for charter school teachers. Rather, Civitas insists the National Labor Relations Board (NLRB) should decide whether or not to recognize union representation only after a secret-ballot vote. On June 2, the NLRB issued a narrow ruling upholding Civitas’ claim that it is a private entity and that its teachers are private employees.

“What the decision demonstrates is that charter management organizations are private,” Simon Hess, chief executive officer of Civitas, told the Chi-Town Daily News. “That’s part of the entrepreneurial spirit that has come to the public school system.”

The union views it differently, according to ACTS spokeswoman Gail Purkey: “We accepted the ruling as a tactical compromise, only so we could quickly proceed with the election process, which we knew we could win.”

Union meets charter

Charter schools have grown exponentially in the past decade. Today, more than 4,600 charters employ more than 50,000 teachers nationally, and simmering discontent (and even open revolt among a significant group of young, activist teachers) has opened the field to new organizing campaigns by the teachers’ unions.

Union leaders have begun organizing more aggressively, recognizing that charter schools are not going away and keeping a wary eye on potentially competing unions like Service Employees International Union. They’ve also been nudged into this expanding field by recently elected American Federation of Teachers (AFT) President Randi Weingarten. As leader of New York’s United Federation of Teachers (UFT), Weingarten partnered with Green Dot Charter Schools operator Steve Barr to create two of New York City’s new unionized charter schools.

Barr, considered a maverick among charter management organizations (CMOs), started his original Green Dot schools in Los Angeles, taking over several large, dysfunctional inner-city high schools and converting them into smaller and, by some accounts, more successful charters. Green Dot accommodates union teachers with a short and concise contract to protect them from arbitrary firings and untenable working conditions. Its schools are intentionally smaller than L.A.’s traditional high schools, which are among the largest in the nation, with many exceeding 4,000 students. All Green Dot schools are locally managed and rely heavily on teacher autonomy, heavy parent participation and infusions of foundation dollars for their success.

When Barr met resistance from both the L.A. School Board and teachers’ union chief John Duffy, a majority of tenured teachers at Locke High School in Watts voted to leave United Teachers of Los Angeles and signed on with the California Teachers Association, the largest union in the state.

Weingarten and Barr’s current partnership in New York is at least partially responsible for encouraging recent organizing efforts at two New York City charters run by Knowledge Is Power Program (KIPP), the largest chain of CMO-run schools in the nation with 66 schools in 19 states and the District of Columbia.

In Brooklyn, the KIPP-AMP (Always Mentally Prepared) School has pushed back frantically, targeting pro-union teachers for firing and harassment, according to Leo Casey, the UFT’s vice president in charge of charter schools. The final outcome isn’t assured, as the union and KIPP negotiators struggle over a proposed 25-page contract modeled on Green Dot’s. According to Casey, the KIPP-AMP contract will place a limit on class size and teacher loads. It will give teachers greater say and put them on decision-making committees. There is also a strong “just cause” standard, making it difficult to fire teachers without due process.

The charter school vision

Early school reformers and visionaries who created the first charter schools nearly 20 years ago saw charters as incubators of public school innovation, experimental pilot schools and teacher-led learning communities. These were progressives and education activists—hardly the hard-line, anti-union types who dominate charter school associations today. One of the most outspoken charter advocates at the time was none other than then AFT President Albert Shanker. The goal of early charter school advocates was school autonomy.

In 1991, Joe Nathan, director of the Center for School Change at the University of Minnesota and a critic of the charter operators’ union-busting tactics, helped write the nation’s first state charter law. “In the Minnesota charter law,” Nathan says, “it is explicit that charter schools are public … there’s nothing inconsistent with our teachers being union teachers.” Nathan adds that moves to declare charters as private or efforts to block unionization are “inconsistent with the charter ideal or good public policy.”

He points out that unionization wasn’t an issue back then because most charter teachers were already union members and felt ownership of the schools they had helped create. Often they constituted their own small boards along with parents and community members.

The idea was to create a decentralized space within the big, bureaucratic system. The trade-off was autonomy for accountability, meaning that if the new, small schools weren’t meeting the expectations laid out in the charter, the schools could lose their charters and be closed.

All of that began to change under the Bush administration’s ownership society and “No Child Left Behind” policies. CMOs with deep pockets and support from conservative think tanks and foundations—as well as from Bush’s Department of Education—overpowered the small, teacher-run charters, not unlike the way large food chains have replaced mom-and-pop grocery stores.

The rise of the CMOs brought with it a top-down efficiency model and an aggressive management style. It also brought at-will firings of unprotected teachers and principals, 16-hour work days, pre-packaged curricula and abnormally high teacher attrition rates. In this new vision, charters were seen as business-model schools, complete with quotas for rapid Starbucks-like economies of scale.

President Barack Obama has broken with much of the ownership society legacy—especially in terms of support for school vouchers—though he and Secretary of Education Arne Duncan are both big fans of charter schools. Duncan has used his bully pulpit to pump the charter cause and has even threatened states with loss of stimulus funds if they fail to increase the numbers of charter schools in their districts. One big difference from the previous eight years is that the AFT and the National Education Association (NEA) are now at the table pushing for collective bargaining rights for charter school teachers and other accountability measures for charter operators.

At a recent gathering of the nation’s governors, Duncan called on them to “break through the dynamic that positions charters against unions.” After invoking Shanker’s name, he pointed out that “the AFT represents something like 70 charters and the NEA represents another 40. So we should stop fighting over charter caps and unite behind charter accountability.”

Only in the past two years has the leadership of the AFT and NEA come to accept charter schools as a permanent reality. The questions of whether they indeed are public or private and whether their teachers can win the same collective bargaining rights are now being hotly debated, negotiated and litigated.

“Charter teachers are saying they want a voice in their workplace,” UTF’s Casey says. Meanwhile, labor movement and public education eyes would do well to keep a close watch on the coming charter school battles, especially in large urban districts like New York and Chicago.

UPDATE, 8/3/09: Teachers at the three Civitas schools voted 73-49 to unionize in late June, joining the Chicago Alliance of Charter Teachers & Staff (Chicago ACTS), an affiliate of the Illinois Federation of Teachers (IFT) and AFT. They are currently negotiating their contracts with Civitas Schools.

GET INVOLVED:

Alliance of Charter School Teachers and Staff
Green Dot

Physicians for a National Health Program

2009-06-24T14:05:00.000-07:00

Why not let the so-called "Free Market" work?

2009-06-19T22:07:00.000-07:00

Why we don't let the free market work is because it cannot work on it's own without guidance. But let them try. Let AIG and J.P.Morgan and Bank of America fail, and all the rest of them fail. Copyright laws are government interference as well, let's get rid of them.
Total anarchy in the market! Or should we just hide behind the fear of socialism? The laws that allow people to be evicted from their home are a form of government interference.
How far should we shape the language and laws around those who have most of the power and money?
They are ready to kill you, destroy your life, so they can stay in power. You let them define the rules they shape against you.

Next they want to put you in the position of being totally powerless. So that you cannot rise against them. They know that sooner or later you will wake from liberal dream enough to see what they are actually doing to your life. They are hoping that it will be too late for you to know what to do.

2009-06-19T22:06:00.001-07:00

Worker id cards for everyone!

2009-06-17T18:09:00.000-07:00

BIG SCHUMER IS WATCHING YOU – New York senator wants to force every American worker to carry an electronic federal ID card
Posted in Uncategorized by gangbox on the June 16, 2009
from the LOS ANGELES TIMES:

Worker ID cards expected to stir up immigration debate

Paul J. Richards / AFP-Getty Images
Sen. Charles E. Schumer (D-N.Y) will lead the effort to craft the Senate’s comprehensive immigration overhaul legislation.
Sen. Charles Schumer supports a worker ID card for all Americans. Business groups warm up to the idea, but labor activists and the ACLU have concerns.
By Teresa Watanabe

June 16, 2009

As the immigration reform debate begins to heat up again, some observers expect that one of the biggest and most controversial new elements will be a proposed national worker identification card for all Americans.

A “forgery-proof” worker ID card, secured with biometric data such as fingerprints, is an idea favored by Sen. Charles E. Schumer (D-N.Y), the new chairman of the immigration subcommittee. Schumer, who will lead the effort to craft the Senate’s comprehensive immigration overhaul legislation, called the card the best way to ensure that all workers were authorized.

“The ID will make it easy for employers to avoid undocumented workers, which will allow for tough sanctions against employers who break the law, which will lead to no jobs being available for illegal immigrants, which will stop illegal immigration,” Schumer wrote in his 2007 book, “Positively American.”

“Once Americans are convinced that we will permanently staunch the flow of illegal immigration, they will be more willing to accept constructing a path toward earned citizenship for those who are already here.”

A Schumer aide said last week that the senator would probably present the worker ID card idea at a hearing this summer on employee verification systems. The senator previously held a hearing on border enforcement and plans to hold three more this summer — on future immigrant flows, legalization of illegal immigrants and worker verification — before introducing a comprehensive bill in the fall, the aide said.

The idea of a worker ID card is embraced by some business and community organizations. But it has touched off fears among some labor activists and the American Civil Liberties Union about civil rights violations and a “big brother” intrusion into private lives.

In his book, Schumer proposed requiring every American worker, citizen and noncitizen, to apply for an identity card.

Some activists worry that any ID card proposal could divide the immigrant rights community between those opposed to its perceived dangers and those willing to accept it as part of a compromise that would legalize many of the estimated 11 million undocumented immigrants in the U.S.

“The bottom line is that this would be really expensive, really invasive and people will hate it,” said Chris Calabrese, counsel for the ACLU’s technology and liberty project.

Maria Elena Durazo, who heads the Los Angeles County Federation of Labor, AFL-CIO, said she would not want employers to control any worker verification system because they could selectively use it to punish people advocating labor rights or union organization.

Immigration lawyer Peter Schey said it would be nearly impossible to monitor the nation’s 26 million employers for compliance with a worker verification system. As a result, he and others argue, the best way to discourage illegal immigration is by strict enforcement of wage and hour laws, and by serious penalties on employers who violate them.

Business leaders say they want to be sure they will not be saddled with high costs or liability for any new verification system.

Some business groups have opposed the idea of making mandatory the system known as E-Verify. The online system allows employers to check the citizenship status and work eligibility of new employees.

U.S. Chamber of Commerce spokesman Angelo Amador said employers never knew whether the passports, driver’s licenses or Social Security cards being presented were genuine. But he said anyone presenting a worker ID card would be assumed legal, subject to confirmation by checking on a national database.

“It takes away the burden on employers of being ID experts,” Amador said.

Most activists say they are waiting for details before weighing in. But some say they may ultimately have to compromise.

“At the end of the day, if we’re going to achieve legalization of a major share of the undocumented, we realize there will have to be some give and take over worker verification,” said Mike Garcia, president of the Service Employees International Union Local 1877 in Los Angeles. “We’re not against it necessarily if all of the other pieces of immigration reform fall into place.”

teresa.watanabe@latimes.com

We need a competition movement!

2009-06-02T22:22:00.000-07:00

Senate passes anti-trust measure
By Aurea Calica Updated June 03, 2009 12:00 AM

MANILA, Philippines - The Senate has passed on third and final reading the anti-trust bill that prohibits and penalizes business cartels and monopolies to protect consumers from abuse.

Senate Bill No. 3197 or the Competition Act of 2009 will discipline the country’s market system to avoid unfair trade and anti-competitive practices.

The bill authored by Senate President Juan Ponce Enrile, Senators Miriam Defensor-Santiago, Antonio Trillanes IV, Manuel Roxas II and Edgardo Angara defined and imposed penalties for business cartels, monopolies, monopoly power or abuse of market power through price fixing and price discrimination, bid rigging, limitation and control of markets, agreement to limit and or control markets, and tie-in arrangements.

Enrile said the anti-trust bill would cover not only oil companies but also pharmaceutical, cement, food products and other industries where there is possible collusion among traders.

Enrile said that the proposed law is patterned after anti-trust laws in the United States and in some European countries, the purpose of which is to foster sound business ethics that would protect the ordinary consumers.

Cartelization includes the following agreements: Fix selling price of goods or other terms of sale; limit supply or output; divide the market, whether by volume of sales or purchase or by territory, by type of goods sold, by customers or sellers, or by any other means; exclude or limit dealings with particular suppliers or sellers from supplying or selling goods, or customers from acquiring of buying goods; applying dissimilar conditions to equivalent transactions with other parties, thereby placing them at a competitive disadvantage; and making the transactions in particular goods dependent upon other conditions which have no connection with subject of the transaction.

The penalties that can be imposed for every violation cover a fine of not less than P10 million and not exceeding P50 million for a person; P250 million to P750 million if a firm and imprisonment not exceeding 10 years or both at the discretion of the court.

“In the alternative, a fine shall be imposed in the amount double the gross proceeds gained by the violator or double the gross loss suffered by the plaintiffs,” the bill read.

The Senate President explained that despite the existence of laws aiming to foster competition in the industries, they proved to be inadequate to stop the detriments of anti-competitive structures and behavior in the market. “Moreover, while there are special laws which have provisions that encourage competition, it is a fact that not one corporation was ever prosecuted for anti-trust acts,” he said.

“We need to enact an anti-trust measure. In fact, the adoption of a competition policy has been included in the Medium-Term Development Plan for 2004 — 2010 to create a competitive environment not only to ensure efficiency among big business firms and corporations,” Enrile further said.

“More importantly, we need to foster an environment that is conducive for the development of micro, small and medium enterprises, he said.

Remember Anti-Trust? It's time to find some balance

2009-06-02T22:15:00.000-07:00

New Mood in Antitrust May Target Google
By STEVE LOHR and MIGUEL HELFT
Published: May 17, 2009
For decades, the nation’s biggest antitrust cases have centered on technology companies. And they have all been efforts by the government to deal with powerful companies with far-reaching influence, like AT&T, the telephone monopoly; I.B.M., the mainframe computer giant; and Microsoft, the powerhouse of personal computer software.

Related
Times Topics: Google Inc.
Last week, the Obama administration declared a sharp break with the Bush years, vowing to toughen antitrust enforcement, especially for dominant companies. The approach is closer to that of the European Union, where regulators last week fined Intel $1.45 billion for abusing its power in the chip market.
In this new climate, the stakes appear to be highest for Google, the rising power of the Internet economy.
The new antitrust leadership, legal experts say, is likely to scrutinize networks — technology platforms that become so dominant that everyone feels the need to plug into them. The advantages to the companies that control such networks snowball as they attract more users, advertisers or software developers.
Internet search and search advertising, like personal computer operating software, is one example, said Herbert Hovenkamp, an antitrust expert at the University of Iowa law school. “Google is a dominant network, as is Microsoft,” Mr. Hovenkamp said. “Networks become competitive only if everyone has the same chance.”
Google’s corporate behavior is already being closely monitored. Last year, Google abandoned a planned search advertising partnership with Yahoo after the Justice Department said it intended to file suit to block the agreement on antitrust grounds. Google has 64 percent of the Web search market in America, while Yahoo has 21 percent and Microsoft 8 percent, according to comScore, a research firm.
In recent weeks, antitrust officials have opened two inquiries. The Justice Department is looking into Google’s settlement with authors and publishers for its book-search service to see if it violates antitrust laws. And the Federal Trade Commission is examining whether Google’s sharing two board members with Apple reduces competition, because both companies offer Web browsers and phone operating systems.
Eric E. Schmidt, Google’s chief executive, said this month that the close scrutiny was not surprising. “Information is incredibly important, and we should expect governments around the world to pay attention to what we do,” he said.
Google’s power is a cause of worry in many industries — media, advertising, telecommunications and software. Yet being large, successful and ambitious is not an antitrust violation. “You’ve got to be big, and you have to be bad,” observed Andrew I. Gavil, a law professor at Howard University. “You have to be both.”
In the Microsoft case, the software giant’s monopoly in personal computer operating systems was not an antitrust problem. It was its corporate actions, including using contracts and bullying tactics to stifle competition, that broke the law, the federal courts ruled. Such strong-arm practices, legal experts say, have not been part of the Google story.
Unless Google is shown to engage in a pattern of anticompetitive conduct, the company is likely to face constant scrutiny, but not a major federal suit, antitrust experts say. Even with misconduct, they say, complex antitrust cases like the one against Microsoft take years to come to fruition. “There will be a lot of agonizing about Google, and it will raise concerns, but I don’t see a big Google case in the offing,” said Michael Katz, an economist at the Stern School of Business of New York University.
Instead, Google is likely to be watched step by step. One area to observe, antitrust experts say, is whether Google uses its search engine to give it a leg up in new businesses.
Last month, the company announced that Google Profiles, a service that gives people a page to publish their name, photo and other personal information, would be featured below Google’s search results when someone typed in a name. That could give Google Profiles an edge over profiles from Facebook and other social networks, which have to earn their search result rankings.
Google, said Randal C. Picker, an antitrust expert at the University of Chicago law school, is using its search engine to “leverage” another Google service. Such tactics, he said, echo Microsoft’s linking of its Windows operating system to its Web browser. “It is the kind of thing that is likely to get antitrust attention,” Mr. Picker said.
The company says Google Profiles is an effort to improve Web search, and comes in response to users’ requests for greater control over their online identities. Google also says its software scans other social networks, and those results typically appear near the top of a search for a person’s name. “We designed Profiles to encourage user choice, not limit it,” said Adam Kovacevich, a Google spokesman.
In her speech last week, Christine A. Varney, head of the Justice Department’s antitrust division, said the touchstone of antitrust policy should be “the protection of consumer welfare.”
By that standard, Google seems an elusive target for antitrust enforcers, since most of its services are free. And in the new markets it is entering, including cellphone software and online alternatives to desktop programs, Google is an insurgent going up against large, well-heeled rivals, notably Microsoft.
“If what Google really has is an enormous scale advantage in Internet search and advertising — and it is not engaged in exclusionary or other bad behavior — I would be very reluctant to step in,” said Mr. Hovenkamp of the University of Iowa.

Get a Union Starbucks

2009-05-28T10:28:00.000-07:00

Privatizing Local Gov't in six easy steps

2009-05-27T21:18:00.000-07:00

Here are two papers supporting privatization. At their site, there are many more.

Posted: May. 15, 1999
Six Steps to Privatizing Local Government Services

If something is worth doing, it’s worth doing right. In the case of privatization, not doing it right could be worse than not doing it at all. Poorly privatized municipal services not only give privatization a bad name, they can cost more than leaving inefficient government services in place. Local officials considering privatization should keep their eyes on the goal: to reinforce and enhance their ability to govern and increase the level and quality of services for their constituents.
Privatization Manual

Reason Foundation/Mackinac Center for Public Policy "how-to" manual, Designing Comprehensive Privatization Programs for Cities, is available from the Mackinac Center for $10.00 postpaid. Call (989) 631-0900.

The nuts and bolts of a comprehensive privatization program should include the following:

Choosing the Privatization Team. Local officials should choose carefully a highly qualified team to design and implement the privatization program.

Team members should understand that for privatization to be successful, vendors and investors must realize a certain level of economic return. They must be able to develop alternative plans that balance a government’s constraints and opportunities with the often rigorous requirements of private investors and the capital market. They should know and have access to vendors for contracting. They should be able to conduct exhaustive financial analyses and develop alternative deal structures from the perspectives of both the government and the private sector. Finally, they should be particularly sensitive and responsive to the participating public, special interests, media, and voters.

Privatization Techniques. Most governments using privatization to generate new revenue or reduce costs typically use only one or two types of privatization. The most common types of privatization are contracting out public services to the private sector and selling off government-owned enterprises in their entirety.

Identifying Privatization Opportunities. There are typically many more opportunities for privatization than local officials realize for solving problems involving government-owned assets, facility operations, services, debt structure, and other facilities and infrastructure. Identifying these involves assembling and organizing data, establishing criteria to qualify each privatization opportunity for implementation, and applying privatization techniques to the fullest possible range of government services and facilities.

Another technique, made famous by Indianapolis, Indiana, Mayor Stephen Goldsmith, is called "competing-out" contracts. Goldsmith allows his public-sector employees to bid on contracts in competition with private vendors. One Indianapolis union local has actually been able to increase its membership by winning the lion’s share of contracts on which it bids.

By applying one or more privatization techniques to the wide range of government assets, facilities, infrastructure, subsidized agencies, and other government activities, a city-wide privatization program could yield 100-200 opportunities.

Evaluating Privatization Opportunities. Once privatization opportunities are identified, they must be evaluated in detail to determine whether they should proceed to implementation. Each privatization opportunity is put through exhaustive financial feasibility, legal review and cost/benefit analyses. These analyses will require additional data. Moreover, each privatization opportunity should be tested against the evaluation criteria established earlier.

Developing Implementation Plans. Plans should be drawn for the privatization opportunities that receive a high ranking. These plans should outline the specific steps required to complete the transaction. They typically include detailed financial analyses and implementation schedules; clearly assign the responsibilities of each party; outline the bid solicitation process; evaluate the bids; specify how negotiation with winning bidder should be conducted; and explain how the required contractual arrangement should be prepared.

Overcoming Obstacles to Privatization. Privatization efforts face many obstacles, including existing legislation and regulations, public employee resistance, misperceptions about privatization, and a general resistance by governments to change. Privatization programs, if they are to be successful, must incorporate innovative strategies to overcome obstacles to privatization early in the program. You can improve your chances of a successful privatization effort by a) doing your homework; b) ensuring that you maintain the desired level of control over the service being bid; c) clearly explaining the performance standards you expect; d) keeping all parties to the transaction informed during the process; and e) establishing and adhering to a strict monitoring process.

Conclusion. Traditional methods of solving budget crises such as tax increases, deep service cuts, or issuing short-term debt have significant economic or political pitfalls. Comprehensive privatization programs offer city governments a way to maximize revenue, cut costs and make greater use of private capital for public services and facilities.

Comprehensive programs offer three main advantages over traditional governing strategies. First, they afford governments greater flexibility by allowing officials to choose between a variety of privatization techniques for solving each problem.

Second, the cumulative economic impact of implementing all, or some portion of, the menu of privatization opportunities is potentially much greater and longer lasting than short-term fixes such as tax increases or bond offerings.

Lastly, if governments properly manage the privatization process and carefully monitor the implemented privatization projects, government spending can be held in check and high quality can be achieved.
Publication: Michigan Privatization Report
Next page: Is There Gold in Garbage?
This text is part of the larger publication:
Privatizationville: Privatization at the Local Level

Is There Gold in Garbage?
By Mr. Michael D. LaFaive / Posted: May. 15, 1999
Landfill Graph

In Flint's 1995 Fiscal Year the appropriations made for the city's sanitary landfill and refuse collection dropped by 31% from the previous Fiscal Year. Since then city spending on the sanitary landfill and refuse collection have increased faster than the rate of inflation.

City mayors are often scrounging around in their budgets, looking for that gold nugget of savings that will make the city richer. Sometimes that nugget even shows up in the garbage. That was the story in Flint in the early months of 1994.

Flint’s mayor, Woodrow Stanley, had long been frustrated by the cost of collecting garbage in his city. In the hope of driving these costs down, Stanley solicited bids from five private companies. The bid numbers returned to him confirmed his suspicion: Privatization could cut the city’s total cost by a whopping $2 million.

Flint’s city employee unions knew the mayor was serious, and to their credit, worked with him to develop a plan that would shave about $1.4 million from the budget. Specifics of the proposal included offers to: a) increase the number of stops on each route from 665 to 775; b) reduce the number of shifts from two to one; 3) cut the sanitation staff from 47 to 35; 4) pick up bulk items along with regular garbage instead of doing that on overtime; and 5) require workers to work a full eight-hour day instead of going home early as they often had done in the past.

These concessions were enough to convince the mayor to keep the service in-house. It has now been five years since the mayor decided to retain the work of city employees for refuse hauling, instead of opening up the process to private companies. How much have things changed?

The results have been mixed. In 1995, the year the reforms took effect, total spending for waste collection alone dropped by 31% from the previous year, from $3,491,000 to $2,399,000. The cost of maintaining the sanitary landfill dropped by 30%, from $1.3 million to just over $970,000. Bulk waste, which had cost the city nearly $400,000 in 1994, was eliminated as a separate line item in the budget. Such collections are now made during regular waste pick-up hours and factored into waste collection spending. After five years, the city of Flint still is operating its refuse collection and landfill service for less than it was in 1994.

The bad news is that the proposed Fiscal Year 2000 budget signals a five-year climb in operational expenses for refuse collection and sanitary landfill operations of 17% and 34%, respectively. If present trends continue, the total growth in Flint’s refuse budget (collection and landfill) will have outpaced inflation of 15.7% since 1995. In addition, these figures do not include the cost of employee fringe benefits. Health, vision, and dental costs alone may run as high as $7,039.08 per employee per year.

The increased costs come as Flint loses population. The 1990 U. S. Census indicated that Flint had 140,761 citizens. By 1993 that number had dropped to 137,901 and by 1996 stood at 134,881. From 1993-1996 the city lost an average of 755 residents per year. If those trends continue, by the end of 1999 the city will have 4,227 fewer citizens than it did when Mayor Stanley collected bids on refuse hauling. That is 4,227 people from whom it no longer needs to collect refuse. Fewer people should mean less garbage. Less garbage should mean fewer workers. Does it?

In 1995, the city of Flint maintained a full-time sanitation staff of 35 and a part-time complement of 10. By 1998, that figure had risen to 40 full-time and 6 part-time staff. By the year 2000 the city of Flint estimates that it will require 40 full-time employees and 10 part-time employees to handle its sanitation work.

The mayor should consider another look at privatization. It has been five years since the mayor solicited bids from private contractors for refuse collection. The mayor should again ask for bids from firms to do the collection work of city employees. This time the lowest bidder who can meet the city’s standards should win outright.

Another idea is to shed the responsibility of garbage collection and landfill work altogether and eliminate the city tax on property (currently 3 mills) that is used for those purposes. Flint citizens could hire their own garbage collectors, just as it is been done in Traverse City for businesses and people since 1986 and 1990, respectively.

While this idea may sound bold to some, the fact of the matter is that different neighborhoods have different requirements for garbage collection, just as they do for other services. One-size-fits-all programs are notoriously inefficient, and once the various neighborhoods had their own garbage collection programs in place, citizens would probably be amazed at how much better their services are. And the city would be amazed that it held on to this headache for so long.

Mayor Stanley should consider mining Flint’s balance sheet for savings. The last time he went digging Flint shaved a $1.4 million gold nugget from its refuse collection tab. Issuing another bid for proposals from private-sector firms wouldn’t take much effort, and the returns to the city from privatization would be impressive.
Publication: Michigan Privatization Report
Next page: Local Economic Development: Public or Private?
This text is part of the larger publication:
Privatizationville: Privatization at the Local Level

How to balance the budget in California

2009-05-22T21:46:00.000-07:00

Why not raise the tax on those making $200,000. or more in California. Are there too many of them?
We don't really need to privatize everything under the sun, we just need to create an equitable economic system.

Tax the Rich!!

From Dilbert.Blog
by Scott Adams
How to Tax the Rich

Warren Buffet says the rich aren’t being taxed enough. That’s an impossible-to-solve problem as long as rich people control the government.

Or is it?

I got my MBA from the University of California at Berkeley. I will now make them proud by showing you the most important thing I remember from the program: “There’s always a deal to be made.”

If the government simply says to rich people, “Give us more money,” the rich people will say, “Go pound deficits up your ass.” No one agrees to pay extra taxes without a fight, and the super rich are more powerful than the government. We’ll have to come at this from a fresh angle.

What if the government could give something of value to the rich in return for paying higher taxes? It would have to be something that didn’t cost the government or its citizens any real money. How about extra rights?

I smell a deal.

This concept depends on the fact that there aren’t many super rich people in the population. We could grant this tiny group of people some extra rights without even noticing the loss.

For example, let’s say the super rich are granted the right to use the carpool lane even if no one else is in the car. They’d need special stickers on their cars so they didn’t get pulled over. It wouldn’t clog the car pool lane because there are so few super rich people, and half of them have chauffeurs, so they use the carpool lane already. Society wouldn’t notice the difference.

And what if we allowed the super rich to park in front of fire hydrants? Then they’d always have a parking place, and being rich, they wouldn’t mind so much in the unlikely event the fire department had to smash all their windows to run a hose.

How about giving the super rich five votes in each election? Their extra votes would have almost no impact compared to the large amounts of money they already donate to candidates. Again, society wouldn’t even notice.

How about letting the super rich have DVDs of movies while the film is still in theaters? The super rich could watch the movies in their own home theaters, and even pay $1,000 per copy so the movie studio makes a profit. The super rich probably don’t like going to public theaters, and the public isn’t hurt if a few people see a movie at home ahead of schedule.

Let’s also say the super rich are exempt from jury duty. Realistically, they probably get out of serving now if they want, but it saves them the hassle of making up an excuse. Throw that extra right on the list. No one would notice.

We could also relax drug laws for the super rich. Let them drink, snort, inject, and pop anything they want, so long as they don’t operate a motor vehicle. The super rich can afford to have someone else do the driving. They can also afford an addiction without becoming burglars to pay for the habit. Society loses nothing if a billionaire gets high.

Maybe we could also let the super rich name new streets and government buildings. They could name them after themselves, or use it as an opportunity for revenge, e.g. Carlisaputz Avenue. It wouldn’t cost the poor anything, and it might make life more interesting.

You might say all of these extra privileges would never equal the tens of millions in extra taxes the super rich would have to pay each year. But the value of a thing is determined partly by its scarcity. If these extra rights were available only to the super rich, those rights would start looking special, whereas a few extra million in tax savings won’t contribute to their quality of life in any way. I think a deal could be made.

Perhaps you will say there is a psychological cost to the poor in that it will increase their resentment of the super rich. But realistically, how much extra resentment could anyone generate about a guy who has his own golden helicopter and uses a supermodel as a fluffer?

Can you think of more rights that can be granted to the super rich in return for their tax money? The key is that those extra rights have to have no significant impact on other people.

Go.

July 12, 2007 in General Nonsense | Permalink

Study on Women and Privatization

2009-05-21T10:25:00.000-07:00

INSTITUTE FOR
WOMEN’S POLICY RESEARCH
Why Privatizing
Government
Services Would
Hurt Women Workers
By Annette Bernhardt, Ph.D.
Laura Dresser, Ph.D.
Why Privatizing
Government Services
Would Hurt Women Workers
By
Annette Bernhardt, Ph.D.
Laura Dresser, Ph.D.
Center on Wisconsin Strategy
INSTITUTE FOR WOMEN’S POLICY RESEARCH
About This Report
Why Privatizing Government Services Would Hurt
Women Workers was made possible by generous funding
from The American Federation of State, County, and
Municipal Employees (AFSCME).
Acknowledgements
The authors wish to thank Catherine Hill, Ph.D., for
editing this report and writing the executive summary.
Additional thanks goes to Dennis Houlihan, AFSCME,
for his comments on an earlier draft of this report.
About the Institute
for Women’s Policy Research
The Institute for Women’s Policy Research (IWPR) is a
scientific research organization dedicated to
informing and stimulating debate on public policy issues
of critical importance to women and their
families.
IWPR focuses on issues of poverty and welfare, employment
and earnings, work and family issues, the economic
and social aspects of health care and safety, and
women’s civic and political participation.
The Institute works with policymakers, scholars, and
public interest groups to design, execute, and disseminate
research and to build a network of individuals and
organizations that conduct and use women-oriented
policy research.
IWPR, an independent, nonprofit organization, also
works in affiliation with the graduate programs in
public policy and women’s studies at The George
Washington University.
IWPR’s work is supported by foundation grants,
government grants and contracts, donations from
individuals, and contributions from organizations and
corporations. IWPR is a 501(c)(3) tax-exempt
organization.
IWPR # B237 $5.00
© Copyright 2002 by the Institute for Women’s
Policy Research, Washington, DC. All rights
reserved. Printed in the United States of America.
INSTITUTE FOR WOMEN’S POLICY RESEARCH
1707 L Street NW, Suite 750 • Washington, DC 20036
P: (202) 785-5100 • F: (202) 833-4362
www.iwpr.org
Executive Summary .............................................................................. iv
Background ............................................................................................ 1
Data and Measures ................................................................................ 3
Trends in Public and Private Sector Employment Over Time ................. 4
Worker Characteristics ........................................................................... 6
Teachers and Non-Traditional Jobs ........................................................ 8
Health and Pension Benefits .................................................................. 9
Wages .................................................................................................... 9
Wage Regressions by Sex ................................................................... 12
Wage Regressions by Race and Sex ...................................................14
“At Risk” Occupations ...........................................................................15
Summary ..............................................................................................17
References ........................................................................................... 19
Figures & Tables
Figure 1 Percentage of Workers Who Work for an Employer Who
Sponsors a Pension Plan Compared with the Percentage
of Workers Enrolled in a Pension Plan ............................................. 5
Figure 2 Percent of Wage and Salary Workers
Employed in the Public Sector, by Race and Sex ........................... 5
Table 1 Sample Sizes ................................................................................... 3
Table 2 Employment of Wage and Salary Workers, by Sector ..................... 6
Table 3 Characteristics of the Workforce, by Sector .................................... 7
Table 4 Access to Non-Traditional Job ......................................................... 8
Table 5 Pension and Health Care Coverage ................................................ 9
Table 6 Median Wages by Education, Sex, and Sector .............................. 10
Table 7 Wages by Race/Ethnicity ............................................................... 11
Table 8 Regression Results, by Sex .......................................................... 13
Table 9 Regression Results, by Sext and Race ........................................ 14
Table 10 Employment in Six “At Risk” Occupations, Women Only .............. 15
Table 11 Median Hourly Wages in “At Risk”
Occupations, Women Only ($1998)............................................... 16
Table 12 Wage Regressions for “At Risk” Occupations, Women Only ........ 17
Table of Contents
Why Privatizing Government Services Would Hurt Women Workers
iv
This report analyzes the implications of privatization for women workers, especially
those employed in low-end occupations. Data analyzed show that women
disproportionately depend on the public sector for jobs that pay decent wages and offer
benefits. This is especially true for African American and Hispanic women, and for women
who do not have a college education. In part, higher wages and better access to health and
pension benefits in the public sector can be attributed to higher rates of union coverage.
The evidence suggests that privatizing government services will have a negative impact on
women workers, especially those workers who are most vulnerable.
A Relative Decline in Public Sector Employment
Over the past two decades, employment in the public sector has grown much more slowly
than employment in the private sector. In 1979, 16 percent of working men held public
sector jobs, while in 1998 only 13 percent did. For women, the share employed in the public
sector dropped from 20 percent in 1979 to 18 percent in 1998 (See Figures 1 and 2).
• The proportion of workers employed in the public sector declined for both
women and men between 1979 and 1998, with especially pronounced declines
for African American and Hispanic workers.
• In 1998 almost one in five women held a public job (18 percent), a higher rate
than among men (13 percent). This was especially true for African American
women (22 percent).
Public sector employment declined for both women and men between 1979 and 1998
with a somewhat sharper decline among men.
Public Sector Employees Have Higher Wages
and Better Access to Health and Pension Benefits
Focusing on 1998, the most current year for which data is available, the report shows
that median earnings in the public sector are higher than in the private sector for most
categories of workers.
• Median wages for women without a four-year college degree are 15 percent higher in
the public sector. For women with a college degree, wages in the public sector are 7
percent higher than in the private sector.
• Among women, 72 percent of public workers participate in a pension plan and 69
percent have employer-provided health insurance. By contrast, in the private sector
less than half have either benefit, and in the case of Hispanic women, less than a third
do (see Table 5).
Thus, privatization is likely to erode the wages and benefits of women workers, especially
for African American and Hispanic women and those with fewer years of formal education.
Explaining Why Wages in the Public
Sector are Higher than in the Private Sector
Wage ratios shown above are useful descriptions of employment conditions, but they can
also be misleading because they do not account for differences in the public and private
Executive Summary
Institute for Women’s Policy Research
v
sector workforces. For example, workers in the public sector tend to be older and hence
could be expected to have higher earnings. This study uses regression analysis to distinguish
components of the wage differential that can be attributed to the public/private sector
distinction. Overall, controlling for race, region, and work experience, women in the
public sector are still more likely to have higher wages than their counterparts in the
private sector. While non-college educated men, particularly African American and
Hispanic men, also benefit from somewhat higher wages and benefits in the public sector,
the effect is more pronounced for women workers. For example, women without a
college degree in the public sector earn wages that are 5 to 6 percent above the earnings of
their private sector counterparts.
Once union membership and occupation variables were included, however, the differences
in public sector and private sector wages largely disappeared. In other words, for women
who have the same occupation, union status, education, work experience, and race, the
public sector does not, on average, pay better than the private sector. Unionization emerges
as a central factor in understanding why the public sector pays better than the private sector.
Gender Equity in the Public and Private Sectors
While women are paid better in the public sector in an absolute sense, a gap between
men’s and women’s wages remains (see Table 6). The size of the wage gap between male
and female workers in public and private sector employment varies by race and educational
background.
• The gender wage gap is smaller in the public sector, especially for women of
color, but this result is driven largely by education. Only women with college
degrees see greater pay equity in the public sector. For less educated women,
gender inequality is as great in the public sector as in the private.
The public sector is generally regarded as providing better access to professional and
managerial jobs for women. When teachers are separated from other professional and
managerial occupations, however, the public sector does not appear to provide greater
opportunity for women to hold managerial or professional positions.
• With the exception of teachers, women are only slightly more likely to hold
managerial, technical, or other professional jobs in the public sector than in the
private sector (26.8 percent and 25.3 percent, respectively).
Because women in the public sector have more education than women in the private
sector, we would expect them to be well represented in managerial and professional
positions. This is not the case, however. That educational wealth has not translated into
greater numbers of managerial jobs for women (while it has for men) indicates the
continued presence of occupational barriers for women. This report finds that the public
sector does not, in general, offer exceptional opportunities for women to hold managerial
and professional positions (although other research by IWPR suggests that the public
sector does, in fact, offer better opportunities for women of color than the private sector).
Risks of Privatization
The second part of this research focuses on occupations — such as health care and child
care workers, janitors, food preparation employees, and clerical and administrative staff
— that are considered to be “at risk” for privatization. This research finds that women
Why Privatizing Government Services Would Hurt Women Workers
vi
working in these “at risk” occupations have less education, with close to half holding a
high school degree or less. Because the wage differential in the public and private sectors
is largest for women without a college education, these women have the most to lose
under privatization.
• For women without college degrees, occupations “at risk” for privatization
constitute 63.9 percent of their public sector jobs.
• Even though “at risk” occupations are not generally considered exceptional job
opportunities, these jobs pay better in the public sector than in the private sector.
The Upshot
From a policy standpoint, there is good reason to be concerned about the continuing call
for contracting out public services to the private sector. On average, public sector jobs
pay better and are more likely to include pension and health benefits. When government
services are privatized, women—especially women of color and women who do not have
a college education—will likely experience significant declines in how much they earn
and in their health and pension coverage. Even though, the public sector is far from a
perfectly fair employer—glass ceilings and the gender gap in pay and benefits persist as in
the private sector—this analysis finds that privatization, and the de-unionization that
frequently accompanies it, is likely to prove detrimental to the economic welfare of
women workers.
Institute for Women’s Policy Research
1
Over the past two decades, privatization, in which businesses (or not-for-profit agencies)
provide public services, has changed the nature of public sector employment. A growing
number of public functions that previously were performed by government employees
are now performed by private businesses. While the privatization of public services is not
new, its prevalence has grown steadily over the past two decades, resulting in a decline in
public sector employment as a percentage of the overall workforce.
The impetus for privatization of government services is to lower the costs of public
services and improve their quality (Sawicky 1999; Mason and Siegel 1997). The literature
on privatization is dominated by case studies where cost reduction was the main goal.
More often than not, the researchers claim that cost savings were achieved.
There are two major problems with this research approach. First, as Sawicky (1999)
argues, studying only governments that have privatized their services does not tell us
what the impact would be under different circumstances and in different settings. Private
contractors often “cherry pick,” taking over lucrative services (such as well traveled bus
routes and safer districts) and leaving less profitable services to the public sector (Barnekov
and Raffel 1990). For example, a private school might not accept a disabled student, but
a public school would, because it is legally required to accommodate all children. As a
result, the public school might appear less efficient. In other words, the problem of
comparing “apples and oranges” looms large in the privatization debate.
A second problem with the literature on privatization is that studies rarely address how
cost savings are achieved. In particular, few analysts document whether cost savings are
achieved by lowering workers’ wages and benefits (as opposed to improvements in
efficiency). Case study research suggests that reductions in workers’ wages and benefits
can be an important, if not the only, component in the cost savings achieved by
privatization (Schlar 2000).
This study re-examines the impact of privatization on the wages and benefits of workers
with particular attention to women workers. The public sector has historically had smaller
gender and racial wage gaps, better overall pay, and higher numbers of women at
professional levels than the private sector (Sawicky 1999). It also has substantially higher
union density (Hirsch and Macpherson 1999), which translates into greater job stability
and due-process rights—the latter may be of particular use to women and minorities. In
addition, because benefits in the private sector have eroded in recent years, the public
sector advantage in benefit-provision has increased (Belman and Haywood 1997; National
Commission on Employment Policy 1989). Finally, Freeman (1996) found that employee
involvement and job satisfaction are higher in the public sector, partly because of a greater
willingness by managers to share power. Consequently, privatization may also affect nonfinancial
aspects of job quality.
Much popular rhetoric about public sector employment focuses on raw differences in
compensation and benefits between the public and private sectors, which can be substantial
(Sclar 2000). Raw differences, however, are potentially misleading because they fail to
control for differences in the composition of the workforce across the two sectors. The
public-sector workforce, for example, is substantially better educated than the privatesector
workforce.1 It is also substantially more unionized.
Background
1 Belman and Heywood (1993) found that approximately 20 percent of private sector workers have a college education,
compared with 44 percent of public sector workers.
Why Privatizing Government Services Would Hurt Women Workers
2
Because there are differences of opinion regarding what variables should be controlled
for, estimates of the difference between public and private sector compensation are often
not consistent across studies. For example, Belman and Heywood (1993) found that the
pay of federal public employees was roughly equal to the wages of comparable private
sector employees; other studies have found public pay levels to be higher (Cox and Brunelli
1992; Peterson, Davis, and Walker 1986).2 All approaches, however, find a decline in
public pay relative to private pay in recent years. The pace of this decline has varied
depending on macroeconomic and political conditions (Freeman 1985), and also varies
regionally (Belman and Heywood 1995). Another point of agreement is that wages among
workers in the public sector are more equal than they are in the private sector (see Sawicky
1999). Part of this is likely due to the greater presence of unions, which tend to equalize
wages among their members.
There is also agreement that well educated workers tend to earn more in the private
sector, whereas less educated workers tend to earn more in the public sector.3 Thus,
privatization is likely to affect less-skilled, low-wage workers more adversely (Sclar 2000;
Poterba and Rueben 1994). Low-wage government workers who have been laid-off and
who get jobs with a private contractor often lose their benefits, and their wages often
(but not always) decline (National Commission on Employment Policy 1989; Suggs
1989). Minority workers may be disproportionately affected, especially if they have less
seniority in the civil service system (Suggs 1989).
Research Objectives
This study addresses the following questions: What are the implications of privatization
for women workers, especially those employed in low-end occupations? Are there marked
differences by race or ethnicity, suggesting that privatization might have particularly negative
effects on women of color? What factors might explain differences between public and
private sector employment?
Direct answers are not possible because there are no datasets to identify and track all of
the employment changes that can result from privatization. The Current Population
Survey’s bi-annual supplement on “alternative work arrangements” includes contract
workers including independent contractors, temporary help agency workers, on-call
workers, and contract company employees. However, “contract workers” are not
synonymous with the workers impacted when government services are contracted. For
example, if mass transit spending decreases, private companies may emerge to fill the
void. While the mechanism is different than explicit subcontracting (and much more
nebulous), the effect is the same: the public sector shrinks relative to the private sector,
and wages may decline as a result.
This paper takes the simple route of comparing wages and other outcomes in the public
sector to those in the private sector in order to get at the potential impact of privatization
on women. This indirect approach has the advantage of addressing the potential impact
of all forms of privatization, not simply direct subcontracting.
This study has two components. First, public sector employment growth relative to the
private sector over the last two decades is documented based on data from the Current
Population Survey (CPS). Second, using the most recent year available (1998), the report
2 In the extreme, one study found that the public/private wage gap evaporates when the higher education levels for public
sector workers are considered (Gold and Ritchie 1992).
3 This study finds that college educated women earn more in the public sector than in the private sector.
Institute for Women’s Policy Research
3
“maps” the differences in job quality between the public and private sectors. Particular
attention is paid to clerical and service occupations, since these workers are likely to lose
the most from privatization (relatively speaking) and are the most likely to be subcontracted
in the first place. Throughout, close attention is paid to differences by sex and race, since
the public sector has historically provided especially strong opportunities to women of
color. (The focus on differences by race, however, is limited at points by insufficient
sample sizes.)
The Current Population Survey (CPS), the government’s monthly household survey of
employment and labor markets, yields a nationally representative sample of individual
workers with employment variables such as earnings, hours worked, industry, occupation,
education, and unionization, as well as background variables such as age, sex, race, ethnicity,
and geographic location. In order to achieve sufficient sample sizes within any one year,
the Merged Outgoing Rotation Group (ORG) version of these data is used.4 The exception
is the analysis of pension and health care coverage, where the March 1998 CPS Supplement
was used (since this is the only month where such data can be found). Sample selection
was straightforward. The study includes workers aged 18-64 who had positive earnings
and who were not self-employed. Final sample sizes are given in Table 1.
Some of the variables used in these analyses are basic and do not require description (for
example, sex), but others require elaboration. The key variable of interest, sector, consists
of three categories: public, private for-profit, and private non-profit. For convenience,
throughout this report the terms public, private, and non-profit are used. The key outcome
variable, hourly wages, is constructed as follows: if an individual actually reported an
hourly wage, that value is used; otherwise, usual earnings per week are divided by usual
weekly hours worked. The resulting measure is hourly wages at the respondent’s main
job, in 1998 dollars. Part-time work is defined as less than 35 hours per week, again using
the usual weekly hours measure.
Data and Measures
Table 1. Sample Sizes
Women Men
All All
Workers White Black Hispanic Workers White Black Hispanic
Public 13,497 9,599 2,370 519 10,546 7,815 1,458 801
Private 56,205 40,187 7,561 2,562 67,913 48,712 7,065 9,125
Non Profit 5,989 4,845 675 179 2,688 2,109 294 147
Total 75,691 54,631 10,606 3,260 81,147 58,636 8,817 10,073
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
4 The ORG files effectively combine monthly samples into yearly samples. Specifically, each household entering the CPS
is administered four monthly interviews, then ignored for eight months, then interviewed again for four more months.
Since 1979, only households in months four and eight have been asked their usual weekly earnings/usual weekly hours.
These are the outgoing rotation groups, and each year the BLS gathers all these interviews together into a single Merged
Outgoing Rotation Group.
Why Privatizing Government Services Would Hurt Women Workers
4
The race variable makes use of questions about race as well as ethnicity and differentiates
among the following groups: non-Hispanic white, non-Hispanic black, Hispanic, and
non-Hispanic others. In the text, the ‘non-Hispanic’ prefix is dropped, but the reader
should remember that the race categories have been defined in this manner. The education
variable uses information on highest grade attended, and consists of three groups: high
school graduates and drop-outs; workers with some college experience but no four-year
college degree; and workers with a four-year college degree or higher. The union variable
measures whether a worker is a union member. For occupation, most often the Census’
one-digit occupational coding is used, collapsed for brevity as needed. To identify
occupations most at risk for privatization, two-digit and three-digit codes are used. For
health care coverage, the question asks whether the respondent is currently covered by a
health plan provided through their current employer, former employer or union. For
pension coverage, the question asks whether the respondent is currently participating in
the employer’s or union’s pension plan. Both of these variables, therefore, measure actual
participation in employer-provided benefits.
At the end of the paper, several regressions are performed in which the natural log of the
dependent variable, hourly wage, is used. In these regressions, an indirect measure of years
of work experience is used, since no direct measure exists. “Potential” experience is calculated
as the respondent’s age, minus years of education minus six. This formula roughly
approximates the number of years that an individual has worked in the labor market,
though it does a better job for men than it does for women (who are more likely to take
time out to care for children or elderly parents). Finally, all analyses are weighted with
CPS earner weights, normalized to represent the actual sample sizes (rather than the
whole population).
Figure 1 shows the percent of all wage and salary workers employed in the public sector
from 1979 to 1998, for men and women separately.5 Women have always been more
likely to hold jobs in the public sector than men, and this pattern continues to the
present. Both sexes, however, have seen a slow decline over the past 20 years. The trend is
more pronounced among men. In 1979, 15.9 percent of men held public sector jobs,
while in 1998 only 13.2 percent did so, for a decline of 17 percent over the past two
decades. Women saw their public jobs go from 19.8 to 18.0 percent over that same
period, for a 9 percent decline over this same period. For both men and women, there is
clear evidence of the relative reduction in public sector jobs. Although the absolute number
of both private and public jobs has grown, as the former has grown faster than the latter,
the percentage of public jobs dropped. These trends cannot be directly tied to an increased
use of subcontracting, the drop in relative public sector employment is certainly consistent
with it.
Figure 2 takes a closer look at the experience of different racial and ethnic groups. Most
striking are the high levels of public sector employment for African American men and
women. At least in part, this is likely due to stricter adherence to equal opportunity laws
in the public sector. It is worrisome that African American workers have seen very strong
drops in public employment over time, stronger than those seen for white workers. For
example, the percent of public workers has dropped by 16 percent for African American
Trends in Public and Private
Sector Employment Over Time
5 We do not show trends for non-profit employment because this sector is not consistently identified across all years.
Institute for Women’s Policy Research
5
women over the past two decades, compared with seven percent for white women. And
the drop for African American men (18 percent) also outpaced that of white men (13
percent). These are disturbing figures for a minority group that has historically found
some of its best opportunities for employment in this sector (see also Sawicky 1999).
Hispanic workers have relatively low levels of public sector employment, both historically
and currently. Moreover, the drop in such employment for Hispanic men is the strongest
of any group, declining by an astonishing 35 percent (as compared with nine percent for
Figure 1. Percent of Wage and Salary Workers
Employed in the Public Sector, by Sex
0
5
10
15
20
25
30
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
Year
Percent
Men
Women
Women
0
5
10
15
20
25
30
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
W hite Black H ispanic
Men
0
5
10
15
20
25
30
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Figure 2. Percent of Wage and Salary Workers
Employed in the Public Sector, by Race and Sex
Why Privatizing Government Services Would Hurt Women Workers
6
Hispanic women). Given these trends, the public sector is unlikely to prove a major
source of stable, well-paid jobs for Hispanic workers, especially men, in the future.
Finally, Table 2 takes a closer look at the most current information on employment
across the sectors, including the not-for-profit sector. Despite the shedding of public
sector jobs, women of all races and ethnicities are still more likely to hold jobs outside
the private for-profit sector than their male counterparts. African American workers of
both sexes are more likely to hold public jobs than whites. On the other hand, Hispanic
workers are consistently underrepresented outside of the private for-profit sector. It is
worth reiterating that of all these groups, African American women have the highest level
of public sector employment (22.4 percent). This figure will become especially relevant
when wage differences between the sectors are examined below.
Demographic and occupational characteristics of the workforce vary significantly across
the three sectors of the American economy. Table 3 reviews these basic characteristics of
the public and private labor force. Compared with workers in the private sector, those in
the public sector have significantly higher levels of education. For example, 45.9 percent
of women in the public sector hold a four-year college degree, compared with only 19.2
percent in the private. (Some, but not all, of this differential is due to the large numbers
of teachers in the public sector.) On the other end of the spectrum, about a quarter of
women in the public sector have a high school diploma or less, compared with nearly
half in the private sector. This pattern holds true for men as well as women.
Public workers also tend to be older, reflecting in part the job stability and seniority rules
that stem from greater union strength in this sector. In fact, the difference in union
coverage between the sectors is striking. For women, 36.1 percent are union members in
the public sector, compared with only 6.1 percent in the private sector. The numbers for
men are 41.2 percent and 13.3 percent, respectively. While the absolute figure for men is
higher, it is worth noting that women have the most to gain: they are six times more
likely to be unionized in the public sector than in the private sector, while for men
Table 2. Employment of Wage
and Salary Workers, by Sector
Women Men
Public Private Non-Profit Public Private Non-Profit
All workers 17.8% 74.3% 7.9% 100 % 13.0 % 83.7% 3.3% 100%
White 17.6 73.6 8.9 100 13.3 83.1 3.6 100
African American 22.4 71.3 6.4 100 16.5 80.1 3.3 100
Hispanic 14.0 81.9 4.0 100 8.0 90.6 1.5 100
Other 15.9 78.6 5.5 100 13.0 83.2 3.8 100
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Worker Characteristics
Institute for Women’s Policy Research
7
unionization is just three times as likely. Much of this difference is likely a function of
high unionization rates for teachers (who are disproportionately women) in the public
sector.
Perhaps because of this strong union presence, part-time work is less prevalent in the
public sector, though the differential is not as large as one might expect. In the public
sector 17.7 percent of women work part-time compared with 22.6 percent in the private
sector. Of course, rates of part-time work are much lower among men, with 6.7 percent
of men working part-time in the public sector compared with 7.2 percent in the private
sector. Given the relationship between full-time employment and benefits, the greater
access to full-time jobs in the public sector suggests greater access to benefits as well.
In terms of occupational segregation, there are greater differences between women and
men. In the private sector, women tend to be concentrated in service and clerical
occupations and men tend to be concentrated in manufacturing-related occupations. In
the public sector, however, the pattern shifts somewhat. As noted above, public workers
tend to be well educated, and this is clearly reflected in the types of jobs they hold. For
men, public sector employment means far fewer manufacturing jobs and many more
professional, managerial, and protective service jobs. For women, it means greater numbers
of professional and clerical jobs, and fewer in service and sales (which are traditionally
found at the bottom of service industries). Overall, while occupational segregation is
apparent across these sectors, the public sector contains a higher proportion of managerial
and professional jobs for women than does the private sector.
Table 3. Characteristics of the Workforce, by Sector
Women Men
Public PrivateNon-Profit Public PrivateNon-Profit
High school or less 27.2% 48.2% 25.7% 27.6% 50.8% 22.6%
Some college experience 26.9 32.7 33.2 29.8 27.2 24.3
College degree 45.9 19.2 41.1 42.6 22.0 53.2
100.0 100.0 100.0 100.0 100.0 100.0
Ages 18 to 30 19.5 35.3 24.2 19.6 34.3 25.2
Ages 31 to 54 69.0 56.5 63.8 67.5 57.3 63.1
Ages 55 to 64 11.5 8.2 12.1 12.9 8.4 11.8
100.0 100.0 100.0 100.0 100.0 100.0
Percent working part-time 17.7 22.6 27.1 6.7 7.2 13.3
Percent unionized 36.1 6.1 8.0 41.2 13.3 7.3
Executive, administrative, managerial 11.9 13.3 15.0 14.3 12.5 17.4
Professional (including teachers) 39.5 9.9 37.0 27.4 9.3 42.9
Technicians & related support 2.6 4.0 6.7 3.7 3.1 4.8
Administrative support, including clerical 28.9 24.3 21.2 11.4 5.7 6.5
Protective service 2.6 .4 .2 17.2 1.1 1.5
Service and sales 11.5 34.4 17.3 8.0 19.6 13.5
Precision production, craft, & repair .4 2.5 .2 8.5 20.9 5.6
Operators, fabricators, & laborers 5.4 10.4 2.1 7.9 25.0 6.1
Farming, forestry, & fishing .2 .8 .2 1.7 2.9 1.8
100.0 100.0 100.0 100.0 100.0 100.0
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Why Privatizing Government Services Would Hurt Women Workers
8
At first blush, it might appear that the public sector is a watershed of sorts for women,
breaking down barriers to non-traditional occupations. But a closer look reveals that
much of this is a function of the large numbers of teachers in the public sector. Table 4
summarizes our occupational data in a different way, by distinguishing between three
groups. The first consists of managerial, professional, and technical occupations except for
teachers (for example, administrators and officials, engineers, computer scientists, lawyers
and judges, and all management-related occupations). The second consists of teachers
(primary, secondary, and post-secondary). The third consists of all other occupations,
typically front-line and non-supervisory jobs (for example, administrative assistants, data
processors, welfare and childcare workers, and building maintenance occupations).
When viewed this way, it quickly becomes clear that the public sector does not generally
provide exceptional opportunities for women. Although the public sector contains a very
high percentage of teachers, which women fill disproportionately, it would be a stretch
to call teaching a non-traditional job for women. Occupations that have truly been outside
of the reach of many women—managerial, technical, and other professions—are nearly
as hard to get in the public sector as in the private (26.8 percent versus 25.3 percent,
respectively). It is men, however, who have the best access, with close to a third (31.1
percent) holding high-end, non-teaching jobs in the public sector, as compared with only
24.2 percent in the private sector.
This point, however, should not be overstated. After all, the general conclusion of Table
4 is that far fewer women have front-line, non-supervisory jobs in the public sector.
Many more hold jobs that are well paid, challenging, have greater autonomy, and require
greater skill. There is no doubt that women are better off, in an absolute sense, working
in the public sector. But it is worth remembering that much of this “boosting” is
accomplished through teaching jobs that women have held throughout much of the 20th
century. This is relevant because women in the public sector are much better educated
than in the private sector (as are men), with nearly half holding four-year college degrees
(even a bit more than men). That such educational wealth has not translated into greater
numbers of managerial jobs for women (while it has done so for men) indicates the
continuing presence of other barriers for women.6
Teachers and Non-Traditional Jobs
Table 4. Access to Non-Traditional Jobs
Women Men
Public Private Non-Profit Public Private Non-Profit
Managers, professionals, technicians 26.8% 25.3% 47.6% 31.1% 24.2% 56.0%
Teachers 27.2 2.0 11.1 14.3 .7 9.0
Front-line, non-supervisory jobs 46.0 72.8 41.3 54.6 75.2 34.9
100.0 100.0 100.0 100.0 100.0 100.0
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
6 To push the point, female-dominated professions such as teaching typically pay less than male-dominated professions
such as the law, even though comparable education levels are often required (Baker and Fortin 1999).
Institute for Women’s Policy Research
9
Another key measure of worker welfare is the extent to which workers receive employeror
union-provided health care and pension benefits. Table 5 shows that benefits provision
differs enormously across the public and private sectors.7 All workers, regardless of sex,
race, or ethnicity, have significantly higher rates of pension and health care coverage in the
public sector.
Among women, 71.6 percent of public workers participate in a pension plan and 69.0
percent have health insurance. By contrast, in the private sector less than half of women
have either of these benefits, and in the case of Hispanic women, less than a third do.
These are striking differences—public jobs clearly give a significant boost to worker
welfare.
The public sector advantage in benefit provision looks quite similar for men, but with
the difference that men are more likely to have pension and health coverage, regardless of
sector. To a large extent, this reflects men’s greater unionization rates in both sectors,
which, in turn, is a function of the types of jobs men tend to hold. Another central factor
limiting women’s participation in pension plans is their greater propensity to work parttime
(see Shaw and Hill 2002).
The final and perhaps most important question is how wages compare across the different
sectors of the economy. Educational and occupational differences aside, the bottom line
for most workers is how much their jobs pay. This section describes differences in the
wages earned by men and women in the public and private sectors as well as differences
between the two sectors for African American, Hispanic, and white workers. While the
Health and Pension Benefits
Wages
7 For this analysis we can only use the March Supplement of the CPS (see Data section). As a result, the sample sizes for
the non-profit sector are too small to report reliable estimates.
Table 5. Pension and Health Care Coverage
Women Men
Private, Private,
Public for-profit Public for-profit
Percent with pension plan 71.6% 37.7% 78.4% 45.3%
White 71.7 39.5 79.9 49.7
Black 73.5 39.3 75.6 40.6
Hispanic 67.9 24.0 77.1 26.8
Percent with health insurance 69.0 47.2 78.6 59.3
White 68.7 48.4 79.1 63.4
Black 71.3 52.9 81.6 55.2
Hispanic 67.2 32.4 73.5 42.8
Source: Authors’ analysis of the March 1998 Current Population Survey Supplement.
Why Privatizing Government Services Would Hurt Women Workers
10
degree to which this differential reflects the public/private sector distinction is best obtained
through regression techniques (presented in the next section), a broad overview of the
patterns in wages and benefits is useful.
As shown in Table 6, with the exception of college-educated men, all workers receive
higher wages in the public sector. For both men and women, employment in the public
sector pays off—and it pays off the most at lower education levels. Thus, the public/
private ratio is the largest for workers who do not hold a four-year college degree. By
contrast, the ratio is significantly lower for college graduates. In fact, men with a college
degree would be better served by finding jobs in the private sector, as their wages are
higher, on average.
The general conclusion cannot be overstated: public sector employment provides the
most benefits to “less-skilled” workers—those who do not have access to the labor market
power that a college degree confers. It is likely that high unionization rates in the public
sector, particularly for less skilled men, drive this conclusion. As noted earlier, unions
have been found to compress the wage gap between front-line and supervisory workers.
Thus, privatization is likely to hit hardest precisely those workers, male and female, who
are the most vulnerable in the labor market: high school dropouts, high school graduates,
and workers who have attended college but did not attain a four-year degree.
Wages and Sex
Another question concerns women’s standing relative to men. Here, the findings are a bit
more complicated. In the final column of Table 6, we show the ratio of women’s to
men’s median wages in each sector. All of the ratios are less than one, meaning that
women’s wages are consistently lower than men’s. This is not surprising. There are, however,
important sector differences. Among well-educated workers (those with a college degree
Table 6. Median Wages by Education, Sex, and Sector
Ratio of Ratio of
Median Wages ($1998) Public/Private Wages Women’s to
Education Women Men Women Men Men’s Wages
High School or Less
Public $ 9.23 $12.35 1.15 1.24 .75
Private $ 8.00 $10.00 .80
Non-Profit $ 8.03 $ 8.90 .90
Some college
Public $11.00 $14.00 1.15 1.14 .79
Private $ 9.60 $12.25 .78
Non-Profit $10.80 $11.05 .98
College
Public $16.78 $19.74 1.07 0.96 .85
Private $15.63 $20.65 .76
Non-Profit $15.37 $18.00 .85
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Institute for Women’s Policy Research
11
or higher), women’s wages are 85 percent of men’s in the public sector, but only 76
percent of men’s in the private sector.
For workers with less education, however, the picture is less promising. The gender
difference in wages is about the same for workers with some college experience, regardless
of which sector they work in. And for those with a high school diploma or less, the
gender gap in wages is actually greater in the public sector than in the private. Why? It is
true that women with less education have the most to gain from getting public sector
jobs, in an absolute sense. But this is also true for men with low education levels, in fact,
even more so than for women. Both men and women benefit from public sector jobs,
but men gain more. They are pulling away from women in a relative sense, widening the
gender gap.
What is the upshot? When considering the likely effects of privatization on women
working in the public sector, the bottom-line consideration has to be in terms of “dollarsper-
hour.” First and foremost, we should be concerned about absolute wage levels. The
data indicate that women—especially those with less education—have much to lose from
privatization; their wages are higher in the public sector than in the private.
A second consideration is the likely effect of privatization on women’s standing relative
to men. Here the data indicate that women with college degrees will see a widening of
the gender gap if their jobs are moved into the private sector. Among less educated workers,
the gender gap will remain unchanged in the private sector, or even shrink.
Wages and Race
As noted earlier, there are strong differences in the extent to which different race and
ethnic groups depend on the public sector as a source of jobs. Table 7 addresses whether
there are also differences in the wages those jobs pay. The first part of the table shows the
ratio of public to private wages, broken down by sex, education, and race/ethnicity.
Several themes emerge.
First, it is clear that non-whites tend to benefit the most from employment in the public
sector. This is especially striking for African American and Hispanic men, who consistently
Table 7. Wages by Race/Ethnicity
Women Men
White Black Hispanic White Black Hispanic
Public/Private Wage Ratio
High school or less 1.16 1.11 1.18 1.15 1.22 1.30
Some college 1.10 1.23 1.22 1.11 1.28 1.40
College 1.05 1.17 1.24 .93 1.19 1.13
Ratio of Each Group’s Wages to White Men’s Wages
Public Sector .81 .73 .68 .83 .86
Private Sector .73 .60 .55 .73 .64
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Why Privatizing Government Services Would Hurt Women Workers
12
see a larger difference in pay between public and private sector jobs than do white men. A
similar pattern can be seen among women, though it is not as striking or as pervasive.
These findings do not mean that by some magical twist, African American and Hispanic
workers are paid better than white workers in the public sector. Far from it—white men
still earn the most, whichever sector one examines. However, because minorities are paid
so much less than whites in the private sector, they have more to gain from employment
in the public sector.
The second part of Table 7 illustrates this point. For this analysis, we computed the ratio
of each group’s wages to white men’s wages (hence there is no entry for white men).
Significantly, nowhere is the ratio equal to one—white men always earn more. But for all
groups, the public sector does, in fact, reduce the wage gap. This is especially true for
Hispanic men and women, where the gap is reduced substantially. The reduction for
African American men and women is also sizeable. The reduction for white women,
while still sizeable, is the smallest.
Straightforward wage tables like those can be illuminating, but they can also be misleading
in that they do not adequately control for differences in the composition of the workforce
across the two sectors. The public sector workforce, for example, is older than the private
sector workforce, and thus has more years of work experience. Work experience is a very
strong predictor of good wages, so the public sector may pay better simply because its
workers have more experience. It is important, therefore, to control for age and education
as well as other variables, and we do so by using standard regressions.
Some researchers have also argued that unionization rates and occupational composition
should be controlled for. Again, the public sector may pay better simply because it contains
more professional and managerial occupations and because more of its workforce is
unionized. Higher unionization rates, however, are precisely one of the causal, substantive
mechanisms that lead to higher wages in the public sector. We don’t want to negate this
effect from the outset; rather, we want to measure it. Likewise, for occupation, we do
not want to erase these differences in composition at the onset. True, public jobs are
likely to pay better, in part because they are more highly skilled jobs. But that’s precisely
the point, and not one that should be erased, at least not from the outset.
We therefore conduct two sets of regressions.8 Model 1 estimates average hourly wages
for men and women separately, in the public and private sectors, by education group.
This model controls for experience (and its square), race/ethnicity, and region. We consider
the estimates from this model to be our true, baseline estimates of the public/private
wage differential. Model 2 then adds unionization and occupation into the regression to
get a sense of how much these characteristics of the public sector help explain its higher
wages. A critical point to remember is that education is already controlled for by the
time occupation is introduced into the model—so the occupation effect is not a proxy
for skill differences.
Table 8 presents the results from the two models. The table does not show all estimates
for all variables, but rather focuses on the issue of interest here: how much better or
8 Specifically, OLS regressions run separately for men and women, using weights, where the dependent variable is ln
(wages).
Wage Regressions by Sex
Institute for Women’s Policy Research
13
worse public wages are, relative to private wages. “Better or worse” are expressed in terms
of percentages. For example, the first entry in Table 8 indicates that for women, the
average wages of high school graduates and dropouts are 6.7 percent higher in the public
sector than in the private sector.9 Estimates that are statistically significant are marked
with an asterisk.
For high school dropouts and high school graduates, the public sector premium is 6.7
percent for women as compared to only 3.7 percent for men. For workers with some
college experience, the premium is 5.5 percent for women and only 3.9 percent for men.
And among the most educated, those with a college degree or higher, the premium for
women is positive, while it is actually negative for men, and strongly so.
Furthermore, women with less education benefit the most from public sector jobs, with
wages that are about 5 percent to 6 percent higher than in the private sector. The increase
for college-educated women, 3 percent, is not nearly as strong. These regressions therefore
confirm our descriptive analysis of wages in the previous section.
Model 2 adds controls for unionization and occupation, showing their dramatic impact.
For women, these two variables eliminate the public wage premium altogether. Thus
broadly speaking, women earn more in government jobs because they are more likely to
be unionized and because the occupations in the public sector are higher-end occupations.
More precisely, for women who have the same demographic characteristics (age, race,
and so on) and hold the same type of job (occupation, union status), the public sector
does not, on average, pay better than the private sector. This confirms results from
previous research (Belman and Heywood 1993; Smith 1977).
But what does this mean from a policy standpoint? Model 1 tells us that a woman
without much education – say, a high school degree – will earn significantly more in the
public sector. Model 2 then helps explain why. First, the public sector offers betterpaying
occupations, even for someone with only a high school degree, and second, those
9 These estimates were obtained with a full interaction between sector and education.
Table 8. Regression Results, by Sex
Percent Increase or Decrease in Wages in the Public Sector,
Relative to the Private Sector
Model 1 Model 2
Education Women Men Women Men
High School or Less 6.7* 3.7* 1.3 3.3*
Some college 5.5* 3.9* -1.1 5.0*
College 3.0* -8.0* -10.4* -15.0*
R-Squared .298 .339 .397 .401
*Significant at .05 level.
Note: Model 1 controls for experience, experience squared, race, and region. Model 2 also
controls for occupation and unionization status.
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Why Privatizing Government Services Would Hurt Women Workers
14
jobs are more likely to be unionized. From the vantage point of an average woman
looking for a job, this sounds like a good bet—especially if, like most workers, she
doesn’t hold a four-year college degree. And from that same vantage point, the threat of
privatization looms large, because it means lower-pay occupations, less union coverage,
and, in the end, lower wages.
How do these overall trends play out by race and ethnicity? Table 9 provides the results
of estimating Model 1 within each race/ethnic group. Before examining the results,
however, a word is necessary about significance levels in this table. When each group is
considered separately, sample sizes are smaller and statistical significance becomes a bit
harder to achieve. Although this point should not be overplayed (the really large effects in
the table are all significant), it is important to keep in mind that some borderline effects
in this table could have been statistically significant with larger sample sizes.10
That said, what is remarkable in these results is the strong and significant wage premium
that African American and Hispanic workers garner in the public sector, regardless of sex.
Depending on education level, African American workers gain between 8.3 percent and
11.4 percent in wages when they hold public jobs. With one exception, Hispanic workers
gain between 12.8 percent and 16.3 percent (the exception being college educated men).
These are quite substantial increases for minority groups that have traditionally had a
much harder time than whites getting good jobs with good wages.
White workers, by contrast, experience much smaller wage gains from public sector
employment. In fact, white men don’t benefit at all; they do better in the private sector.
White women do have higher wages in the public sector, but the difference is on a much
smaller scale than African American or Hispanic women, ranging from 1.3 percent to 4.9
percent. Only for high school graduates and dropouts is this increase significant.
Wage Regressions by Race and Sex
Table 9. Regression Results, by Sex, and Race
Percent Increase or Decrease in Wages in the Public Sector,
Relative to the Private Sector
White Black Hispanics
Education Women Men Women Men Women Men
High School or Less 4.9* -0.3 8.3* 9.5* 14.6* 14.9*
Some college 2.5 -0.3 10.1* 11.4* 12.8* 14.7*
College 1.3 -11.0* 7.9* 11.3* 16.3* 8.9
R-Squared .285 .325 .314 .245 .260 .235
*Significant at .05 level.
Note: Model 1 results, controlling for experience, experience squared, and region.
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
10 We do not show the results of estimating Model 2 separately for each race/ethnic/sex group, because the effect of
controlling for occupation and unionization is the same for all workers combined.
Institute for Women’s Policy Research
15
Non-white workers have more to gain from public jobs than white workers, both in an
absolute and relative sense. The converse, of course, is that they have more to lose if the
decline of public sector employment growth continues. In fact, what is worrisome is that
African American and Hispanic workers have seen the strongest decline over the past 20
years in public sector jobs, precisely the ones that offer them the most wage gains.
Up to this point, the analysis has proceeded as if all parts of the public sector were equally
vulnerable to the threat of privatization, regardless of function or service performed. Yet
this is clearly not the case. The best information on which types of public services are being
privatized comes from the International City/County Management Association (ICMA)
survey. While this survey has clear limitations (federal agencies are not included, for example),
it provides a general guide as to which public services are most vulnerable.
ICMA data from 1988, 1992, and 1997 show considerable variability in privatization. For
example, waste management has seen significant increases in subcontracting over the past
10 years, while public safety and parks maintenance have gone virtually untouched. But
few women actually work in waste management. The analysis presented here focuses on
those occupations “at risk” of privatization that also employ significant numbers of women.
A close examination of the ICMA data reveal five such “at risk” occupational clusters:
health care workers; child care, welfare, and social workers; janitors and maintenance
workers; bus drivers and parking lot attendants; and food preparation and food service
workers. Another occupation, clerical and administrative support, has been added because
it employs very large numbers of women. While this occupation has not yet been privatized
to a large degree, there may be increasing pressure to do so in the future, since it is one of
the few remaining public service areas untouched by privatization.
Table 10 shows women’s employment in these six “at risk” occupations across the three
sectors. Some of the occupations are more prevalent in the private sector (perhaps reflecting
“At Risk” Occupations
Table 10. Employment in Six “At Risk” Occupations,
Women Only
Public Private Non-Profit
Health Services 1.2 % 2.6 % 5.9 %
Child Care, Welfare, Social Workers 4.6 1.2 6.3
Janitors and Maintenance 2.2 2.5 2.3
Bus Drivers & Parking Lot Attendants 1.6 .7 .3
Food Preparation & Food Services 3.3 6.9 2.2
Clerical & Administrative Support 27.8 23.6 20.7
Percent of women employed in
“At Risk” occupations 40.6 37.5 37.7
Percent of women without a college
degree in “At Risk” occupations 63.9 41.6 51.0
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Why Privatizing Government Services Would Hurt Women Workers
16
privatization that has already occurred during the past several decades). Others are more
so in the public and non-profit sectors (the latter may again be evidence of past
privatization). In any event, this analysis targets the potential effects of future privatization
on those women who currently work in the public sector.
These “at risk” occupations constitute 40.6 percent of women’s public jobs, and 12.9
percent excluding clerical occupations. These numbers are somewhat misleading, however.
For women without a college degree, the “at risk” occupations constitute a much larger
portion of public jobs (63.9 percent), even if clerical occupations are not counted (19.2
percent). Thus, for the population that is of greatest policy concern (i.e., “unskilled”
workers), future privatization of the above occupations can have a truly strong impact.
Another way to make this point is to look at workers employed in these “at risk”
occupations and look at their educational attainment. Not surprisingly, women in “at
risk” occupations are significantly less educated than the overall population of women
working in the public sector. Close to half (47.2 percent) hold a high school diploma or
less, and fewer than one out of six hold college degrees (14.9 percent)—quite a contrast
to the results shown at the outset in Table 3.
The main question, of course, is how wages compare across the sectors. The top part of
Table 11 shows that, in general, public wages are higher in these “at risk” occupations
than in the private sector with a few exceptions. For example, women who work in
health services are actually paid better in the private sector, and in clerical occupations and
maintenance jobs the public sector advantage is not all that pronounced. In the bottom
of Table 11, we calculate the public/private wage ratio for all six occupations combined.11
While there clearly remains a public wage advantage, it is not as strong as for other public
sector jobs.
An accurate estimate of the public/private differential for these “at risk” occupations requires
that we again turn to regression techniques. In Table 12, we re-estimate Model 1 from
Table 11. Median Hourly Wages in “At Risk” Occupations,
Women Only ($1998)
Public/Private
Public Private Non-Profit Ratio
Health Services $11.55 $11.77 $12.50
Child Care, Welfare, Social Workers 11.05 6.50 9.00
Janitors and Maintenance 7.15 6.70 7.00
Bus Drivers & Parking Lot Attendants 10.08 8.00 7.40
Food Preparation & Food Services 7.00 5.75 6.24
Clerical & Administrative Support 10.40 9.83 10.00
All “At Risk” Occupations 10.00 8.75 9.93 1.14
All Other Occupations 15.38 10.00 13.40 1.54
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
11 Small sample sizes do not allow us to calculate the ratio for each individual occupation.
Institute for Women’s Policy Research
17
the previous section, but this time only for the six “at risk” occupations. Results show
that public wages are consistently higher than private wages, ranging from 3.6 percent to
8.2 percent higher. (Because of small sample sizes, we are hesitant to give any interpretation
to this variability or to significance levels.)
In sum, in public sector occupations that are most vulnerable to privatization, women
stand to see significant wage losses if their jobs are subcontracted or outsourced. These
potential losses are not as strong as for other occupations. It is worth pointing out,
however, that even a 5 percent difference in wages is not insignificant for jobs that, in the
private sector, are paying under $10.00 per hour. This low on the wage scale, any change
in wages can have a significant impact on the economic welfare of the worker and her
family.
Finally, we should note that race/ethnicity breakdowns were not possible in this analysis
because of small sample sizes. We suspect, however, that our findings on “at risk”
occupations would be especially marked for African American and Hispanic women.
Indeed, research at the Joint Center for Political Studies found that African Americans
tend to be employed in occupations that are more likely to be contracted out (originally
cited in Sawicky 1999).
Even though the public sector has been shrinking over the past two decades, women are
still more likely to hold public jobs than men. Therefore, examining how privatization
and subcontracting will likely affect women workers remains a critical issue.
We find that the public sector holds a significant advantage in both wages and benefits
over the private sector, especially for African American and Hispanic women. Wages are
higher in the public sector for two reasons: first, the public sector is more likely to be
unionized; and second, it offers better-paying occupations, regardless of skill level. From
the perspective of the average woman looking for a job, especially, if like most workers,
she doesn’t hold a four-year college degree, public jobs are good jobs. From her vantage
point, the threat of privatization looms large because it means lower-pay occupations,
less union coverage, and,in the end, lower wages and fewer benefits.
Table 12. Wage Regressions for “At Risk”
Occupations, Women Only
Percent Increase or Decrease in Wages in the
Public Sector, Relative to the Private Sector
High School or Less 5.3*
Some college 3.6
College 8.2*
R-Squared .159
*Significant at .05 level.
Note: Model 1 results, controlling for experience, experience squared, race, and region.
Source: Authors’ analysis of the 1998 Merged Outgoing Rotation Group, Current Population
Survey.
Summary
Why Privatizing Government Services Would Hurt Women Workers
18
If women are paid better in the public sector in an absolute sense, does this mean they
also gain ground relative to men? Not necessarily. True, the gender wage gap is smaller in
the public sector, especially for women of color, but this is driven largely by education.
Only women with college degrees see greater pay equity in the public sector. For less
educated women, gender inequality is as great in the public sector as in the private.
We also find mixed results in examining the common perception that the public sector
offers women better access to non-traditional “professional” occupations. In fact, much
of this perception is due to the preponderance of women teachers in the public sector.
Once teachers are taken out of the equation, women are no more likely to hold managerial,
technical, or other professional jobs in the public sector than in the private. This is an
important finding, because women in the public sector are unusually well educated. That
this educational wealth has not translated into more managerial jobs for women indicates
the persistence of occupational segregation and “glass ceilings” in the public sector as well
as the private.
Finally, we focus on “at risk” occupations—jobs that have historically been privatized and
subcontracted. Not surprisingly, they tend to be less-skilled and lower pay occupations,
such as health care and child care workers, janitors, and food preparation employees. For
women without college degrees, these occupations constitute the mainstay of their public
sector employment. Even though these “at risk” occupations are generally considered
low-rung, they still pay better in the public sector than in the private sector. So, even
when we consider only jobs that are the most likely to be privatized, we find that the
impact on women’s wages would be detrimental, especially for the less educated.
In sum, from a policy standpoint, there is good reason to be concerned about the
continuing call for leaner government and the contracting out of as many public services
as possible. Women depend disproportionately on the public sector for jobs that pay a
living wage and that provide benefits. If these jobs are privatized, women—especially
women of color and less educated women—will see significant declines in how much
they earn and in their access to health and pension coverage. This does not mean that the
public sector is a cure-all for inequality: glass ceilings and the gender gap persist in the
public as in the private sector. But, the bottom line is that privatization, and the
deunionization that invariably accompanies it, can only prove detrimental to women’s
economic welfare.
Institute for Women’s Policy Research
19
Baker, Michael and Nicole M. Fortin. 1999. “Topics in Labor Economics: Women’s
Wages in Women’s Work—A U.S./Canadian Comparison of the Roles of Unions
and ‘Public Goods’ Sector Jobs.” American Economic Review May:198-203.
Belman, Dale and John S. Heywood. 1993. “Job Attributes and Federal Wage
Differentials.” Industrial Relations 32(1):148-157.
Belman, Dale and John S. Heywood. 1993. “The Truth about Public Employees:
Underpaid or Overpaid?” Briefing Paper. Economic Policy Institute, Washington,
DC.
Belman, Dale and John S. Heywood. 1995. “State and Local Government Wage
Differentials: An Intrastate Analysis.” Journal of Labor Research 16(2):187-201.
Belman, Dale and John S. Heywood. 1997. “Changes in the Relative Provision of Public-
Sector Pensions.” Public Finance Review 25(4):426-441.
Cox, W. and S. A. Brunelli. 1992. American’s Protected Class: Why Excess Public Employee
Compensation is Bankrupting States. Washington, DC: American Legislative
Exchange Council.
Freeman, Richard. 1985. “How do Public Sector Wages and Employment Respond to
Economic Conditions?” NBER Working Paper #1653. National Bureau of
Economic Research, Cambridge, MA.
Freeman, Richard. 1996. “Through Public Sector Eyes: Employee Attitudes toward Public
Sector Labor Relations in the U.S.” In Dale Belman, Morley Gunderson, and
Douglas Hyatt, eds. Public Sector Employment in a Time of Transition. Madison,
WI: Industrial Relations Research Association.
Gold, Steven D. and Sarah Ritchie. 1992. Compensation of State and Local Employees:
Sorting Out the Issues. Albany, NY: National Commission on State and Local
Public Service.
Hirsch, Barry and David Macpherson. 1999. Union Membership and Earnings Data
Book. Washington, DC: Bureau of National Affairs.
International City/County Management Association. 1999. The Municipal Year Book.
Washington, DC: ICMA.
Mason, Maryann and Wendy Siegel. 1997. Does Privatization Pay? A Case Study of
Privatization in Chicago. Chicago, IL: Chicago Institute on Urban Poverty Policy.
National Commission for Employment Policy. 1989. The Long Term Employment
Implications of Privatization: Evidence from Selected U.S. Cities and Counties. A
study prepared by Dudek and Company for the National Commission for
Employment Policy. Washington, DC: National Commission for Employment
Policy.
References
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Needleman, Ruth. 1994. “The Devaluation and Privatization of Public Service: Race
and Gender Implications.” Prepared for the Fourth Annual Women’s Policy
Research Conference, June 3-4.
Office of Management and Budget, Office of Federal Procurement Policy. 1994.
Summary Report of Agencies’ Service Contracting Practices. Washington, DC.
Osborne, D. and T. Gaebler. 1992. Reinventing Government: How the Entrepreneurial
Spirit is Transforming the Public Sector. Reading, MA: Addison-Wesley.
Poterba, James M. and Rueben, Kim S. 1994. “The Distribution of Public Sector Wage
Premium: New Evidence Using Quantile Regression.” NBER Working Paper
#4734. National Bureau of Economic Research, Cambridge, MA.
Sawicky, Max. 1999. Privatization: An Exploration of the Literature. Washington, DC:
Economic Policy Institute.
Sclar, Elliott. 2000. You Don’t Always Get What You Pay For: The Economics of Privatization.
Ithaca NY: Cornell University Press.
Shall, Lois and Catherine Hill. 2002. The Gender Gap in Pension Coverage: What Does
the Future Hold? Washington, DC: Institute for Women’s Policy Research.
Smith, Sharon. 1977. “Government Wage Differentials.” Journal of Urban Economics 4:
248-271.
Suggs, Robert E. 1989. Minorities and Privatization: Economic Mobility at Risk. Washington
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U.S. General Accounting Office. 1985. Comparison of Federal and Private Sector Pay and
Benefits. Washington, DC.
INSTITUTE FOR WOMEN’ S POLICY RESEARCH
1707 L Street, NW, Suite 750 • Washington, DC 20036
Tel: (202) 785-5100 • Fax: (202) 833-4362 • www.iwpr.org

privatization of waste facility

2009-05-19T11:19:00.000-07:00

Public-Private Partnerships (Privatization)
For approximately 40 years, the federal government has been a full partner with the states and local governments in meeting the nation's wastewater treatment needs. Since 1972, more than $67 billion of federal funds have been invested in wastewater treatment works through the EPA's Construction Grants program. In 1987, Congress phased out the Construction Grants program, replacing it with the Clean Water State Revolving Fund (CWSRF) program.
The CWSRF program provides low-interest loans to communities for the construction of water pollution control infrastructure projects. Federal and state investments to date of more than $23 billion ensures that the CWSRF program will play an important role in funding water pollution control projects into the future. However, even with continued capitalization, the CWSRF program will not address all local government water pollution infrastructure needs, which have been estimated to be about $200 billion. This estimate excludes the costs required to replace aging pipes and plants. As a result, it is important to fully explore other approaches to meet funding needs at the state and local level.
One approach to consider is the use of public-private partnerships that utilize private sector resources to finance wastewater treatment needs. The private sector has historically been involved in providing wastewater treatment related services to local governments. Whether providing basic wastewater treatment supplies (e.g., chemicals), maintaining a portion of the collection or treatment system under a contract, or providing contract operation and maintenance for all of a municipality's facilities, the private sector has served an important role in the effort to control water pollution across the country.
The generic term privatization encompasses a broad range of private sector participation in public services. Partnerships between the public and private sectors in the water and wastewater industry range from providing basic services and supplies to the design, construction, operation, and ownership of public utilities. The basic reasons that the public sector historically privatized services were to realize cost savings, utilize expertise, achieve efficiencies in construction and operation, access private capital, and improve the quality of water and wastewater services.
Although the vast majority of municipal wastewater facilities are publicly owned and operated, there are many examples of successful private operations of municipal facilities. Privatization should be viewed as an option for providing wastewater treatment services. The decision to privatize should be made by local governments and reflect a balanced evaluation of the financial and non-financial issues with the needs of the community.
Executive Order 12803 was issued in 1992 to simplify federal requirements related to the disposition of the federal interest in grant-funded infrastructure facilities. The Executive Order defines privatization as "the disposition or transfer of an infrastructure asset, such as by sale or by long-term lease, from a State or local government to a private party." The generic term privatization includes the Executive Order privatization definition. Where federal grants have been used to fund a facility, the privatization transactions of federal grantees must comply with federal construction grant and property disposition regulations. When non-operational revenues (e.g., concession, site access, host, transfer or other types of payments) are received by federal grantees from a private entity as a result of a privatization agreement, these revenues represent a disposition or transfer of a part or all of the grantee's interests in the asset under the Executive Order meaning of privatization. As a result, the grantee must request and receive approval from EPA for the proposed privatization agreement ("disposition agreement") and obtain a deviation from the federal grant regulations to dispose of and end the federal interest in the asset.
The Executive Order allows state and local wastewater treatment investments to be recovered from the proceeds of disposition agreements prior to any claim by the federal government for the funds provided by EPA construction grants. Repayment of federal grants only occurs to the extent that the non-operational revenues received by the grantee exceed local, and possibly the state, investment in the assets. The Executive Order allows grant funds to be recouped at their depreciated value. In the event that all EPA construction grants are fully depreciated, there is no federal grant recoupment. However, even when grants are fully depreciated, Executive Order 12803 and federal grant regulations requires EPA to approve disposition types of privatization agreements and issue deviations from the applicable grant regulations.
Privatization agreements are classified by EPA as either contract operations or disposition types of agreements. Contract operations agreements involve operations, maintenance, equipment replacement and management services. Contract operations agreements can allow infrastructure investments by the private entity under specific contract provisions. Contract operations agreements are not subject to EPA review and approval under Executive Order 12803 or the EPA's grant regulations.
Disposition agreements, as defined by the Federal government, occur when a private entity encumbers the asset's title or other interest and usually involve the payment of non-operational revenues to the local government in various forms such as, for example, concession fees, site access fees, or the transfer price. Under the federal definitions governing grant programs, any non-operational revenue received from a private entity constitutes an encumbrance, transfer, or disposition of the grantee's interest in the grant funded asset. The grant regulations do not allow a grantee to encumber, dispose of, or transfer its interest in the asset to a private entity without federal approval. As part of EPA's review and approval of disposition agreements, the Agency issues deviations from the federal grant regulations that protect the federal interest in the asset.
For further information on EPA's privatization requirements, please Contact Us

What will we do with no city services?

2009-05-18T20:05:00.000-07:00

Audrey Cooper

1,000 city employees to lose their jobs

About 1,000 city employees will be laid off this summer, the mayor's office announced this evening.

The announcement comes after members of SEIU 1021 -- which covers more than 11,000 city workers like janitors, security guards and health care workers -- rejected changes to their contract that would have saved the city $38 million in the 2009-10 fiscal year that starts July 1.

The mayor's office said 288 workers would be out of a job May 22. Another 700 or so would be given pink slips by the end of the month and lose their jobs by the end of July.

We broke the story on how this all came about. Read it here and check out the latest on the layoff announcement in Saturday's paper.

Posted By: Audrey Cooper (Email) | May 15 2009 at 05:52 PM

But the city is hiring managers. What do managers do? They manage. But who do they manage? Does this mean they will manage outsourced labor? Is this like a move toward privatization of city services??