Category Archives: infrastructure

Bloated

The Bloated Defense Department

The so-called Defense Department does not live up to its name; instead, the acronym and word Bloated describe this behemoth and its budget. We the people need defense, but the trillion tax dollars we spend a year do not provide it. Instead they pay for:

Some 800 US overseas military bases

Endless wars

The Nuclear Arsenal

Billions for Bombers and Battleships

These do nothing to make us secure.  They have benefited few people in the US or the world, apart from bloated arms manufacturers and merchants, bloated military contractors, bloated generals, bloated politicians, and those in the high echelons of bloated corporate power.

The Defense We Need

We need a strong, universal free-of-charge public health system to help defend us against COVID-19 and other health problems; the bloated Department steals resources that could provide the true security for a healthy population.

We need defense against climate disruption and heating of the planet. The bloated Department aggravates these problems by emitting more greenhouse gases than any other institution in the world and more than many entire nations.

We needed defense against Wall Street predators when they stole home ownership from millions of people – especially people of color and other working class people – during the 2008 economic meltdown. The bloated Department offered no defense.

Women especially need defense against sexual harassment, assault and domestic violence. The bloated Department exacerbates these problems: military culture promotes sexism, Military Sexual Trauma is rampant; the military protects sexual perpetrators of women and men within its ranks .

Veterans who have survived the endless and earlier wars need to heal from physical, emotional and moral injury.  The resources offered are inadequate and often inappropriate.  The bloated Department’s promotion of war and hyper-masculinity tends to aggravate veterans’ trauma.

The bloated Department did not even defend against a military attack on its own headquarters on September 11, 2001.  Nobody in the Pentagon lost their job over that “failure”.

Truth in Language

Toward the goal of ending war and militarism, let us have truth in language.  Bloated is an accurate word and acronym for the Department that oversees the enormously wasteful and destructive military. As the COVID pandemic makes painfully clear, funds now squandered on the military are urgently needed to meet the real security needs of US people – for healthcare, housing, infrastructure, and food security.

Let us also stop using the term defense expenditures when referring to costs that do not defend human beings from real problems that we face.  Military or war expenditures are accurate terms.

Changes in language in our writings, speeches, conversations and on social media can help change thinking and help lead to right action.

The Decade Of Transformation Is Here: Remaking The Economy For The People

The pandemic, economic collapse and the government’s response to them are going to not only determine the 2020 election but define the future for this decade and beyond. People are seeing the failure of the US healthcare nonsystem and the economy. The government was able to provide trillions for big business and Wall Street without asking the usual, “Where will we get the money?” However, the rescue bill recently passed by Congress provides a fraction of what most people need to get through this period. Once again, a pandemic will reshape the course of history.

Last week, we wrote about the failings of the healthcare system and the need for a universal, publicly-funded system. This week, we focus on the need to change the US economic system. The economic crisis in the United States is breaking all records. The class war that has existed for decades is being magnified and sharpened. The failings of financialized, neoliberal capitalism is being brought into focus at a time when people in the United States have greater support for socializing the economy than in recent times.

This Thursday, there was a record 3.3 million applications for unemployment, an increase of three million from the previous week, but on the same day, there was a record rise in the stock market. This contradiction shows the divide between the economic insecurity of the people and investors profiting from the crisis. The 11.4 percent increase in the stock market on Thursday was the largest increase since 1933 while the record rise in unemployment was 40 percent higher than ever recorded. Projections are for 30 percent unemployment this quarter, which is five percent higher than the worst of the Great Depression.

The response to the economic crisis reveals who the government represents. While people’s economic insecurity grew, the government acted to primarily benefit the wealthiest. This realization should spur an uprising like the United States has never seen before. Perhaps the most dangerous to the ruling class is their incompetence has been exposed. As Glen Ford writes, “The capitalist ‘crisis of legitimacy’ may have passed the point of no return, as the Corporate State proves daily that it cannot perform the basic function of protecting the lives of its citizens.”

Disaster Aid: Crumbs For The People, Trillions For The Wealthiest

Congress unanimously passed a $1.6 trillion coronavirus disaster aid bill this week. This is almost equal to the 2009 Recovery Act and the 2008 Wall Street rescue combined. Democrat’s votes were essential to passing the bill so they could have demanded whatever they wanted. This bill shows the bi-partisan priority for big business.

The bill is too little too late for people who have lost their jobs and for small businesses that have been forced to close. The law includes a one-time $1,200 payment to most people. This payment will arrive after rent and other debt payments are due for a US population with record debt. Congress does not understand the economic realities of people in the United States. Nobel Prize-winning economist Joseph Stiglitz explained what was needed saying, “The answer is we need no evictions, no foreclosures on all properties, and the government should guarantee pay.” In addition, credit card companies should also put “a stay on interest on all debt.”

When COVID-19 first began, we pointed out that the US healthcare system was not prepared to respond and showed the problems of putting profits before health. The COVID-19 rescue bill did not pay for coronavirus testing or treatment. Millions of people who lose their jobs will lose their health insurance, demonstrating why healthcare should not be tied to employment. Adding to health problems, the law did not increase the SNAP food program for the poor.

Roughly one-third of the funding goes to direct payments to people, unemployment insurance for four months, hospitals, veterans’ care, and public transit. Two-thirds go to government and corporations. Adam Levitin describes the law as “robbing taxpayers to bail out the rich.”

Congress allotted at least $454 billion to support big business in addition to $46 billion for specific industries, especially airlines. Some of these funds will also bail out the fossil fuel industry. According to the way the Federal Reserve operates, they will be allowed to spend ten times the amount Congress allocated to support big business, $4.5 trillion. Jack Rasmus writes that the Federal Reserve had already “allocated no less than $6.2 Trillion so far to bail out the banks and investors.” He summarizes the disparity: “Meanwhile Congress provides one-fourth that, and only one-third of that one fourth, for the Main St., workers, and middle-class families.”

Trump shows the disdain government has for the people and its favoritism for big business and investors as he objected to paying for 80,000 life-saving ventilators because they cost $1 billion while the government provides trillions to big business and investors. Governors and hospitals are issuing dire warnings of what is to come, but the federal government is not listening.

Economic Collapse Shows The Need For Transformational Change

The economic collapse is still unfolding. The US is already in a deep recession that is likely to be worse than the 2008 financial crisis and could develop into a greater depression if the COVID-19 economic shutdown lasts a long time.

Already, the crises, the government’s support for Wall Street and its failure to protect the 99% are creating louder demands for system change. We need to put forward a bold agenda and agitate around it to demand economic security for all. As Margaret Kimberly writes, we are entering a period of revolutionary change because we know returning to normal is “the opposite of what we need.” Or as Vijay Prashad says, “Normal was the problem.”

While the urgent health and economic crises dominate, the climate crisis also continues. The climate crisis already required replacing the fossil fuel era with a clean and sustainable energy economy and remaking multiple sectors of the economy such as construction, transportation, agriculture, and infrastructure. Now, out of these crises, a new sustainable economic democracy can be born where people control finance, inequality is minimized and workers are empowered, along with creating public programs that meet the necessities of the people and protect the planet.

The US Constitution gives the government the power to create money; Article I, Section 8 says: “The Congress shall have power … to coin money, regulate the value thereof, and of foreign coin.” Congress needs to take back that power so the government can create debt-free money. Currently, the Federal Reserve, which was created by Congress in 1913, is the privately-owned US central bank that produces money and sets interest rates. It puts the interests of the big banks first. The Fed can be altered, nationalized or even dismantled by Congress. Its functions could be put into the Department of the Treasury.

Monetary actions need to be transparent and designed to serve the necessities of the people and the planet. Money should be spent by the government into the economy to meet those needs while preventing inflation and deflation. In this way, the government would have the funds needed to transform to a green energy economy, rebuild infrastructure, provide education from pre-school through college without tuition, create the healthcare infrastructure we need for universal healthcare and more.  In addition, through a network of state and local public banks, people would be able to get cost-only mortgages and loans to meet their needs.

Moving money creation into the federal government would place it within the constitutional system of checks and balances where the people have a voice to ensure it works for the whole society, not only for the bankers and the privileged. This could end the parasitic private banking system and replace it with a democratic public system designed for the people’s needs as Mexico is doing.

Globalization must be reconsidered. Corporate globalization with trade agreements that favor corporate power is a root cause of this global pandemic. We need trade that puts people and the planet first and encourages local production of goods. This includes remaking agriculture to support smaller farms and urban farming using organic and regenerative techniques that increase the nutritional value of foods and sequester carbon.

What we need instead is popular globalization – developing solidarity and reciprocity between people around the world. We can learn from each other, collaborate and provide mutual aid in times of crisis as Cuba and other countries are doing now.

As businesses are bailed out by the government, they could be required to protect and empower workers. Workers’ rights have been shrinking since the 1950s as unions have become smaller and more allied with business interests. The right to collective bargaining needs to be included as a requirement for receiving government funds. For large public corporations, workers should be given a board seat, indeed the government should be given a board seat and an equity share in any corporation that is bailed out. For smaller businesses, as they reopen, it is an opportunity to restructure so worker ownership and workers sharing in the profits become the norm.

The US needs to build the economy from the bottom up. The era of trickle-down economics that has existed since the early 80s has failed most people in the United States. The government needs to create a full-employment economy with the government as the employer of last resort. The American Society of Civil Engineers gives US infrastructure a grade of D+ requiring a $2 trillion dollar investment that would create millions of jobs. The Green New Deal would create 30 million jobs over ten years according to the detailed plan put forward by the Green Party’s Howie Hawkins.

The coronavirus disaster aid includes a payment to every person in the US earning under $70,000. While the one-time $1,200 check is grossly insufficient, it demonstrates the possibility of a universal basic income. This would lift people out of poverty and protect them from the coming age of robots and artificial intelligence that will impact millions of existing jobs. The evidence is growing that a basic income works. A World Bank analysis of 19 studies found that cash transfers have been demonstrated to improve education and health outcomes and alleviate poverty

The United States economy is in a debt crisis that demands quantitative easing for the people. Personal, corporate and government debt is at a record high. While the economic collapse is being blamed on the coronavirus, the reality is that the pandemic was a trigger that led to a recession that was already coming. The US needs to correct those fundamentals — massive debt, a wealth divide, inadequate income, poverty — as part of restarting the economy. Just as the Fed has bought debts to relieve businesses of debt burden, it can do the same for the personal debts of people. We should start by ending the crisis of student debt, which is preventing two generations from participating in the economy. While we make post-high school vocational and college education tuition-free, we should not leave behind the generations suffering from high-priced education.

Rise-Up and Demand Change

To create change, people must demand it. Even before the coronavirus collapse, people were demanding an end to inequality, worker rights, climate justice, and improved Medicare for all, among other issues. In the last two years, the United States has seen record numbers of striking workers. The climate movement is blocking pipelines and infrastructure and shutting down cities. Protests against inequality and debt resistance have existed since the occupy movement.

Now, with the economic collapse, protests are increasing. It’s Going Down reports: “with millions of people now wondering how they are going to make ends meet and pay rent, let alone survive the current epidemic, a new wave of struggles is breaking out across the social terrain. Prisoners and detention center detainees are launching hunger strikes as those on the outside demand that they be released, tenants are currently pushing for a rent strike starting on April 1st, the houseless are taking over vacant homes in Los Angeles, and workers have launched a series of wildcat strikers, sick-outs, and job actions in response to being forced onto the front lines of the pandemic like lambs to the slaughter.”

Workers at the Fiat Chrysler Windsor Assembly Plant walked off the job over concerns about the spread of coronavirus. Pittsburgh garbage collectors refused to pick up trash because their health was not being protected. Chipotle employees walked off the job and publicly protested the company for allegedly penalizing workers who call in sick. Perdue employees in Georgia walked off their jobs on a production line over a wage dispute and management asked workers to put in extra hours without a pay increase during the pandemic. Some Whole Foods workers announced a collective action in the form of a “sick out,” with workers using their sick days in order to strike. In Italy, wildcat strikes erupted to demand that plants be closed for the duration of the virus. Postal workers in London took strike actions due to the risks of the virus.

The pandemic requires creativity in protest. Technology allows us to educate and organize online, as well as to protest, petition, email, and call. There have also been car marches, public transport drivers have refused to monitor tickets, collective messages have been sent from balconies and windows. People are showing they can be innovative to get our message across to decision-makers. We can also build community and strengthen bonds with mutual aid.

If the ownership class continues its call to re-open the economy despite the health risks, the potential of a general strike can become a reality. When Trump called for returning to work the hashtags #GeneralStrike and #GeneralStrike2020— calling on workers everywhere to walk off the job — began trending on Twitter. Rather than a strike against one corporation, people would strike across multiple businesses and could also include a rent and mortgage strike as well as a debt strike. The coronavirus has shown that essential workers are among the lowest-paid workers and that they make the economy function. We also understand that if people refuse to pay their debts or rent, the financial system will collapse. Understanding those realities gives a new understanding of the power of the people.

A general strike, as Rosa Luxembourg described it in 1906, is not ‘one isolated action” but a rallying call for a campaign of “class struggle lasting for years, perhaps for decades.” A general strike could take many forms, including a global day of action. Before the current crises, we saw the decade of the 2020s as a decade of potential transformational change because on multiple fronts movements were growing and demanding responses to an array of crises. Now, the triggers for the economic collapse could also be the trigger for transformational revolt.

We are all in this together. We are all connected and share a common humanity. If we act in solidarity during this time of crisis and in this decade of transformation, we can create the future we want to see for ourselves and future generations.

China’s vision for the future is “Give Peace a Chance”

China’s vision for the future is “Give Peace a Chance”. It is also the title of one of John Lennon’s most prominent songs. It became the anthem for the anti-war movement, at the time of the US-waged war against Vietnam. John Lennon was a peace activist. No wonder he was ostracized, considered enemy number one by the US establishment, was followed and surveyed by the FBI – and was eventually assassinated. October 9, 1940 is his birthday.

“Give Peace a Chance” is the key motto for China’s peace philosophy throughout her 70-years Revolution, often against challenging situations, especially in the last decade with almost permanent aggressions of one kind or another by the United States and their coopted allies in Europe. China is a tremendous challenge for the west, not only because of her sheer size and economic and technological advances, but also because China seeks peaceful cooperation and development around the globe.

The West does not seek Peace. Peace is bad for business. War is good and profitable, as such renown mainstream journals as the Washington Post have openly propagated in their op-ed columns time and again. Anecdotally, both world wars were initiated in the west. This is the premise under which the permanent western aggressions against the east, especially the leadership of the east, China and Russia, are being waged.

The motto of non-aggression and Peace – a Tao doctrine – prevails in China’s foreign policy as the top principle as of this date. And there is no indication that China will depart from this Peace dogma which has brought her internal stability, international recognition and has made China over the last decades one of the world’s foremost economies, as well as a leader in technological and environmental advances. This, despite constant western castigating for pirating western technology and destroying the environment. The demonization is like a propaganda tool to deviate the world’s attention from western capitalist disasters around the world. But China moves on, undisturbed, generously, with a vision for a common future for mankind all mankind, not just China.

On 1 October, China celebrated the 70th Anniversary of her Revolution. China’s vision began with the Chinese Revolution, when China’s leader of the Communist Party, Mao Zedong, declared the Independent People’s Republic of China on 1 October 1949, succeeding the Republic of China (1912). In fact, China’s Revolution already began just after the Second Sino-Japanese War (1937-1945), at the end of WWII, with the Chinese Civil war (1945 – 1949), also called the War of Liberation.

The International Forum on “China’s 70-Year Development and the Construction of the Community with a Shared Future for Mankind”, 5-6 November in Shanghai, is part of the celebration. It is a forward-looking event with a Chinese vision for the future. To better grasp that vision for the future, here is a quick look at the past.

History with Foresight

Visionary Chairman Mao Zedong wanted to finally free the people of China from hundreds of years of western colonization and oppression, from the calamities of Opium Wars I and II (British imposed 1839-1842, and 1856-1860) and engaged the Chinese Communist Party (CPC – Communist Party of China) in an all-out confrontation with the Kuomintang (KMT), or the second phase of the Civil War (1945 – 1949).  The KMT, also called the Nationalist Party, was led by General Chiang Kai-shek, who succeeded KMT’s founder, Sun Yat-sen, after his death in 1925.

Chiang Kai-shek had the support of the United States, whose main objectives were stopping the “spread” of communism and maintaining continuous access to China’s riches, mostly in the form of natural resources, but also by exploiting the Chinese labor force. Washington ordered Chiang to break all relations with the Soviet Union and to eliminate the threat of a communist leadership in China. This led to a lingering on and off conflict from the 1920s onwards between KMT and the CPC (also considered the first phase of the Civil War).

Hostilities began shortly after the foundation of the KMT in 1919 which was ‘helped’ by the United States. While Mao and his Communist Party emerged as the winner of the Civil War in 1949, Chiang Kai-shek and his followers took over the Chinese Province of Taiwan, where Kuomintang is still the ruling party. China’s non-aggression against the occupation of Taiwan is one of the many demonstrations of China’s peaceful diplomatic approach to conflict.

The current President of the Republic of China, as Taiwan calls itself, although it is a part of China, is Tsai Ing-wen, a politician and professor, in office since 2016. He caters entirely to the interests of Washington and the west in general, even vying to buy independently – and totally illegally – weapons from the US. While part of the PRC, Taiwan enjoys a certain autonomy, again compliments of China’s non-belligerent approach to conflicts.

Today, Taiwan is still recognized by 14 countries out of 193 UN members as the official representative of China. This, despite the fact that the UN declared the People’s Republic of China already in 1971 as the official representative of China with one of the five permanent seats in the UN Security Council (UNSC). Countries recognizing Taiwan as official China, still bending over to please Washington, are becoming fewer and fewer, as China is emerging as the number one economy of the world; call it socioeconomy, because China’s advancements are not just measured by the western standards of linear economic growth, but promote distributive growth, encompassing also vast improvements of people’s quality of life.

Mao’s victory brought a new era to the Chinese people. With what he called the Great Leap Forward (1958 – 1962), Mao and the CPC led a social and economic campaign converting the rural agrarian areas into a socialist industrialized economy through communal farming or agricultural cooperatives. This 4-year effort was constantly attacked and disrupted by infiltrated anticommunist saboteurs at a high social and monetary cost for China. But it served as a learning phase. China’s flamboyant rise to the second (by some accounts the first) world economy, proved that the lessons helped defeat US interference then and today.

The ten-year Cultural Revolution (1966 – 1976) was Mao’s sociopolitical movement aiming at cleaning socialist China from infiltrated capitalist elements and influences. Then, and to some extent still today, China was full with so-called Fifth Columnists, a term coined during the Spanish Civil war, when General Franco’s Nazi-party, the “Falange”, were able to defeat the legitimately elected Republicans, because the “Falange” had what they called a “Fifth Column” clandestinely embedded among the Republican defense forces in Madrid. Today Fifth Columnists are everywhere. They come in all shapes and forms, including disguised as western NGOs, in every country that Washington and its western allies want to dominate and provoke ‘regime change’.  It was clear that the west, predominantly the emerging US empire, wanted to disrupt Mao’s revolution; they would not let China flourish under her own political, communist values and beliefs.

Foreign meddling in China’s Revolution came at a huge cost for China. As a consequence, Mao’s revolutions are often portrayed by the west as failures, the usual western tarnishing the success of other nations, of other socioeconomic systems, in order to hide the west’s own disastrous failures. From a Chinese and humanitarian perspective, Mao’s Revolutions have drastically improved the public education and health system, have eradicated endemic deadly diseases inherited from the western dominated colonial and KMT times and, foremost, poverty was largely eradicated. As of these days, about 750 million people have been lifted out poverty. Alleviation of poverty was an emphasis under both of Mao’s Revolutions. These Revolutions also taught valuable lessons to Chinese scholars and future leaders and have drastically advanced China towards food self-sufficiency which she reached by 2018.

It is thanks to these lessons that, after Mao’s death in 1976, his successor, Deng Xiaoping, led China through a far-reaching economic reform, including elements of a market economy, however, always under central government control, a principle that is maintained as of today. Deng called the new Chinese economic model “socialism with Chinese characteristics”, a principal that continues today. He helped develop China into the world’s fastest-growing economy, improving the lives of hundreds of millions of citizens. Deng also masterminded the return of Hong Kong from a UK colony to China in 1997, and Macau from Portugal in 1999. The transition was completed by Deng’s successor, Jian Zemin.

Deng retired in 1992. His successor, Jian Zemin, had several high-ranking positions in previous governments and was President of the PRC from 1993 – 2003. Jian opened China further for foreign investments and trade. He visited the US in 1997, where he met with President Clinton. Jian followed a non-confrontational foreign policy, like his predecessors, strengthened relations with western partners, especially the United States, and maintained at home an economic annual growth of at least 8%. This led to an explosion of wealth, but also initially to a less than optimal distribution of wealth, most of which concentrated along China’s eastern shores, risking conflicts with the lesser developed Chinese “hinterland”.

Hu Jintao followed Juan Zemin as China’s Paramount Leader from 2002 to 2012. Hu, as a rather modest leader, along with his Premier, Wen Jiabao, and his Vice-President, Xi Jinping, continued the policy of economic growth and development, achieving more than a decade of double-digit growth, however shifting the economy gradually more to non-consumption growth, fostering, instead, socioeconomic equality, aiming at building a “Harmonious Socialist Society”.

Hu was seeking a prosperous China, free of internal social conflicts and pursued internally and externally a “peaceful development policy” – with ‘soft power’ meaning a diplomatic approach to foreign policy issues, that was never confrontational. During Hu’s rule China increased its influence in Africa and Latin America, laying the groundwork for future closer relationships with these regions. Hu was also known for shared and consensus-based leadership. Hu was succeeded in 2013 by Xi Jinping.

The Vision

Enter the era of President Xi Jinping. He is a lawyer, chemical engineer, philosopher – and visionary. On 7 September 2013, President Xi Jinping gave a speech at Kazakhstan’s Nazarbayev University, in which he spoke about ‘People-to-People Friendship and Creating a better Future”. He referred to the Ancient Silk Road of more than 2,100 years ago, that flourished during China’s Western Han Dynasty (206 BC-AD 24).

Referring to this epoch of more than 2,000 years back, Xi Jinping pointed to the history of exchanges under the Ancient Silk Road, saying:

They had proven that countries with differences in race, belief and cultural background can absolutely share peace and development as long as they persist in unity and mutual trust, equality and mutual benefit, mutual tolerance and learning from each other, as well as cooperation and win-win outcomes.

Xi’s vision may be shaping the world of the 21st Century. He designed and engineered the Belt and Road Initiative, loosely modeled according to the Ancient Silk Road, soon after assuming the Presidency in 2013. He launched this ground-breaking “project”, a fabulous idea to connect the world with transport routes, infrastructure, industrial joint ventures, teaching and research institutions, cultural exchange and much more. Enshrined in China’s Constitution, BRI has become the flagship for China’s foreign policy.

BRI is literally building bridges and connecting people of different continents and nations. The purpose of the New Silk Road is to construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database”.

During the 19th National Congress in 2017, BRI was included in the Chinese (CPC) Constitution as an amendment to promote the BRI’s objective of “shared interests” and “shared growth” which are major political objectives for China. This amendment to the Constitution for raising international cooperation through a multifaceted socioeconomic development endeavor is unique in China’s history. It fits precisely the theme of the present Forum, “The Construction of the Community with a shared Future for Mankind”.

The BRI is a global development strategy adopted by the Chinese Government, eventually with investments in more than 150 countries and international organizations – and growing – in Asia, Africa, Europe, the Middle East and the Americas. BRI is a multi-trillion investment scheme, for transport routes on land and sea, as well as construction of industrial and energy infrastructure, energy exploration, cultural exchange and integration facilities, education and research institutions, as well as trade among connected countries; and, unlike WTO (World Trade Organization), BRI is allowing nations to benefit from their comparative advantages, creating a win-win situation. In essence, BRI is to develop mutual understanding and trust among member nations, allowing for free capital flows, a pool of experts and access to a BRI-based technology data base.

At present, BRI’s closing date is foreseen for 2049 which coincides with new China’s 100th Anniversary. The size and probable success of the program indicates, however, already today that it will most likely be extended way beyond that date. It is worth noting, though, that only in 2019, six years after its inception, BRI has become a news item in the West. Remarkably, for six years BRI was denied or ignored by the western media in the hope it may go away. But away it didn’t go. To the contrary, many European Union members have already subscribed to BRI, including Greece, Italy, France, Portugal, and more will follow as the temptation to participate in this projected socioeconomic boom is overwhelming.

Germany is mulling over the benefits and contras of participating in BRI. The German business community, like business throughout Europe, is strongly in favor of lifting US-imposed sanctions and reconnecting with the East, in particular with China and Russia. But the official Berlin is still with one foot in the White House and with the other trying to appease the German – and European – world of business. This balancing act is in the long run not sustainable and certainly not desirable. At present BRI is already actively involved in over 80 countries, of which at least half of the EU membership.

To counteract the pressure to join BRI, the European Union, basically run by NATO and intimately linked to Washington, has initiated their own ‘Silk Road’, to connect Asia with Europe through Japan. In that sense, the EU and Japan have signed a “free trade agreement” which includes a compact to build infrastructure, in sectors such as energy, transport and digital devices. The purpose is to strengthen economic and cultural ties between the two regions, boosting business relations between Asia and Europa. It is an obvious attempt to compete with or even sideline China’s BRI. But it is equally obvious that this response will fail. Usually initiatives taken in ill-fate are not successful. And China, non-belligerent China, is unlikely to challenge this EU-Japan competitive approach.

China’s New Silk Road is creating a multipolar world where all participants will benefit. The idea is to encourage economic growth, distributed in a balanced way, so as to prioritize development opportunities for those most in need. That means the under-developed areas of western China, eastern Russia, Central Asia, Central Europe, reaching out to Africa and the Middle East, Latin America, as well as to South East Asia and the Pacific. BRI is already actively building and planning some six to ten land and maritime routes, connecting Africa, the Middle East, Europe and South America (see map, above).

The expected multi-trillion-dollar equivalent dynamic budget is expected to be funded by China, largely, but not exclusively, by the Asian Infrastructure and Investment Bank (AIIB), by Russia and by all the countries that are part of BRI and involved in singular or multi-country projects.

Implementing BRI, or the New Silk Road, is itself the realization of a vision of nations: Peaceful interconnectivity, joint infrastructure and industrial development, as well as joint management of natural resources. For example, BRI may help with infrastructure and management advice resolving or preventing conflicts on transboundary water resources. There are some 263 transboundary lake and river basins, covering almost half the earth’s surface and involving some 150 countries. In addition, there are about 300 transboundary aquifers serving about 2 billion people who depend on groundwater.

Water resources, life depends on them. If these resources are not properly managed, by, say, one or several parties taking advantage of the other users, a conflict is born. Often such conflicts can become violent. BRI may turn this source of potential hostilities around into a source for peace. Water is among the most shared resources on earth, and as such it may serve as an instrument for peaceful connectivity.

The Chinese government calls the Silk Road Initiative “a bid to enhance regional connectivity and embrace a brighter future”. With freshwater resources rapidly diminishing for ready use in the public domain, because of industrial and human pollution and privatization, management of water resources and transboundary water, in particular, may be constructed into a “Shared Future for Mankind.” The Belt and Road Initiative may provide the guiding principles for this shared future of life’s essential resource – water.

Today, “Give Peace a Chance” is more relevant than ever. And China is a vanguard in promoting peaceful development across the globe. During the Cuban Conference “For a World in Equilibrium” of January 2019, one of the Chinese representatives said very unequivocally in his presentation, “we are building bridges between people and nations to connect the world peacefully”. Undoubtedly, he is right and was referring to President Xi Jinping’s Belt and Road Initiative, or the New Silk Road.

The same can unfortunately not be said about the West which is, instead, building walls, predominantly the US, followed by her European vassals, either physical walls, or walls by conflicts, wars and – walls by “economic sanction”, by which they strangle and kill people en masse. Whenever a government does not share the US neoliberal doctrines, or refuses to bend to their dictate and efforts to plunder a country of natural resources, it is first subject to atrocious sanctions, then to military intervention with the goal of regime change. All that is possible because the western world is run by the fiat dollar system, under which all international transactions have to transit through an American bank, foremost a Wall Street bank. That’s how they block transfers, confiscate and steal money in banks all over the world.

In Venezuela sanctions started soon after President Hugo Chavez was elected as President in 1998. They were severely enhanced under Obama in 2014, and President Trump squeezed the country even more in 2017. In August 2019 Trump tightened the noose of economic strangulation to the maximum, “the most that any country has been sanctioned”, he proudly proclaimed, blocking and confiscating government accounts, including national reserve accounts and gold all around the western world. They are seizing Venezuelan assets in the US and internationally, intercepting ships and otherwise interrupting trade, for example, blocking crucial medication and food stock from entering the country, while also threatening sanctions on countries that are trading with Venezuela.

According to Venezuelan officials, the financial losses since 2017 amount to at least 130 billion dollars. These funds represent goods and services, the absence of which compromises not only well-being but real lives of Venezuelans. The 130 billion dollars could amply supply food and medication for Venezuelans to live well and for hospitals to function with the necessary medication and equipment. In addition, the US was directing mercenaries and members of the government opposition to sabotage the countries electric system, which caused days — in some regions weeks — of black-outs, a disaster for hospitals depending on electricity for refrigeration and lighting of operating theaters. Indeed, a recent study by the Center for Economic Policy Research (CEPR), in Washington, concluded that sanctions of the US and their European allies may have cost the lives of up to 40,000 Venezuelans. But Venezuela will not cave in and will survive, largely thanks to the support from China and Russia.

At this time it could also be mentioned the 60 years blockade of Cuba, the US instigated wars on Iraq, Syria, Afghanistan, Vietnam, the civil wars in Central America, Central Africa, the hostilities towards North Korea – and, of course, the constant aggressions vis-à-vis China and Russia – and much more. All for eradicating any “threat” of socialism that might spread as a positive alternative to boundless turbo-capitalism which is currently running the western world.

But enough about the west and its drive for world hegemony in flagrant disrespect of international law and Human Rights. It just goes to illustrate a few examples to juxtapose the west and the east, foremost China in alliance with Russia, whose approach is a multipolar socioeconomic development scheme, generous and peaceful, connecting people through trade and through BRI.

“The future is in the East” – so goes a progressive axiom. It is also my strong belief. By the East is meant China, Russia, most of Central Asia; now all represented by the Shanghai Cooperation Organization (SCO), or the Shanghai Pact. SCO is a Eurasian political, economic, and security alliance, the creation of which was announced on 15 June 2001 in Shanghai, China by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The Pact was signed in June 2002 and entered into force in September 2013. SCO’s headquarters are in Beijing

Today, the SCO counts 8 members, including the members India and Pakistan. Iran and Mongolia are on a “waiting list”, on the verge of becoming members. Turkey, already a dialogue partner, is increasingly vying gaining SCO access, either through association or full membership. And this, despite the conflict it may create with Turkey’s NATO partners, mainly the US. Clearly, were Turkey to join the SCO, exit from NATO would be imminent – and disastrous for NATO, perhaps the stumbling block that would bring NATO down. Especially, since popular anti-NATO pressure from Italy to Germany, Greece, Spain and Portugal is steadily growing. Turkey is also the most strategically located NATO partner between East and West; between Europe and Asia, controlling the Bosporus, access to the Black Sea.

The SCO has also several observer and dialogue partners which eventually, it is assumed, may become full-fledged SCO members. The SCO is also called the alliance of the east and is considered a security pillar in more ways than one: SCO members account for almost half of the world population and for about one-third of the world’s economic output. In other words, this eastern alliance is politically and economically autonomous and to a large extent detached from the western dollar based “sanction-prone” economy.

The SCO, a visionary Chinese initiative of the early 2000s, was overlaid and expanded in 2013 by another brilliant Chinese Initiative, the BRI. May also be added to this powerhouse another association of countries, the Eurasian Economic Union (EAEU), primarily a trading partnership. The members are located in central and northern Asia, and include Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. The treaty was formally established in January 2015.

This block of eastern countries and associations is seeking against all odds, a multi-polar world, a world of Peace and Prosperity for All – a big challenge given the current socioeconomic disequilibrium – but feasible with mutual respect and a will to cooperate, to apply the forces of synergy and solidarity, as is inherent in the Belt and Road approach. The stakes are high. As Russia’s Foreign Minister, Mr. Lavrov pointed out during the 74th UN General Assembly, in September 2019: “The West ignores reality by trying to prevent the formation of a multi-polar world by imposing its narrow “liberal” rules on others”, “but” he added, “Western dominance is on the wane, ‘we’re liberals, so everything’s allowed’ just isn’t working anymore.” These words are the basis for a strong pillar and union of eastern associations.

Outlook and Vision

Economy

China has registered during the past decades a phenomenal economic growth rate, at times exceeding 12% per year. Today it has been on purpose reduced to about 6%, so as to allow a better distribution of the growth benefits, and also spread wealth more horizontally to create greater equality of well-being.

In figures and facts:

China’s GDP measured in US-dollars amounts to $14.2 trillion (nominal; 2019 est.), which corresponds to $27.3 trillion in Purchasing Power Parity (PPP; 2019 est.). This corresponds to US$ 10,153 / capita, in nominal term (2019 est.), to US$ 19,520 / capita measured by PPP.

Compare this with the US GDP of US$ 21.345 trillion in nominal terms (2019 est.) and $64,767 / per capita (2019 est.) This makes China the world’s second largest economy in nominal terms, expected to exceed the US by 2026. However, when comparing the two GDPs by their PPP values, China is number one; having surpassed the United States in 2016.

Measured by PPP, China is already today de facto the world’s largest economy, because the only figures that have any significance in economic production and consumption, are those that reflect the output’s purchasing power

Examples of Economic Efficiency

New Airport in Beijing: In only 4 years China built by far the world’s largest airport in Beijing, Daxin International Airport. It was ready for China’s 70th Birthday on 1 October 2019, when it was inaugurated by President Xi Jinping. It has been operational the week after inauguration. This airport, an architectural wonder, covers some 700,000 m2 (almost 100 football fields) and carries passengers by fast train in 20 minutes to the center of Beijing. It is expected to accommodate in 2021 already 45 million passengers and can easily be expanded to receive and serve 100 million passengers as the need requires. This airport is a sign that China is capable of realizing extraordinary achievements. It signals a visionary future.

China’s Rapid Urbanization: When in 2017, Beijing was faced with a housing shortage for low-wage migrant workers, they built 100,000 low-rent apartments in twelve months. The speed of China’s infrastructure development, the rapid urbanization, providing millions of new subsidized housing for migrant workers, is a model that has worked and is being replicated throughout China. In fact, it pays off socially and economically. People who do not have to worry about shelter, are healthier and live and work better. China has been building homes for a million people — the entire housing stock of San Francisco — every month since 1950. This policy aims at and creates well-being among the workers, among the people, and is at the same time a solid tool for China’s economic development – and people’s happiness. China’s successful and rapid housing development is being closely watched by Australia, as her major cities, Sydney and Melbourne face similar problems.

Trade

China has been the world’s largest exporter of goods since 2009. Official estimates suggest Chinese exports amounted to about $2.1 trillion in 2017. The total annual value of the country’s exports equates to approximately $1,500 for every Chinese resident. Since 2013, China has as well become the world’s largest trading nation.China is also a significant importer and accounts for about 10% of total global imports, i.e., about US$ 1.7 trillion, leaving China as a net exporter with a trade surplus of about US$ 400 billion.  Trade war with the US  see below.

Monetary Policy

China’s Yuan, is a solid currency, backed by China’s economy and by gold. In 2017 the Yuan was admitted into the International Monetary Fund’s (IMF) basket of reserve currencies, which constitute the SDR or Special Drawing Rights. The SDR basket consists of five currencies and their respective weights are: US-Dollar $41.73%, Euro 30.93%, Renminbi (Chinese Yuan) 10.92%, Japanese Yen 8.33%, British Pound 8.09%. The Yuan is clearly undervalued in the SDR basket, as it is rapidly replacing the dollar as reserve currency. Treasurers around the globe realize that the US-dollar is fiat money, backed by nothing, whereas the Yuan is a solid currency, based on a solid economy, plus backed by gold.

The decline of the US dollar as a world reserve currency means that the US dollar hegemony is fading. This is inadmissible for the US. Therefore, Washington along with the major western allies, are considering to abandon the key reserve role of the dollar and replacing it with some kind of an SDR, in which the dollar would maintain a prominent role, but its Ponzi-scheme characteristics would no longer be openly visible.

The current US debt to GDP ratio is about 105%. However, what the General Accounting Office calls “unmet obligations” amounts to about 700% of GDP (net present value – total outstanding obligations discounted to today’s value). According to former Federal Reserve Chairman, Alan Greenspan, responding to a journalist’s question, “we will never pay back our debt; we will just print new money”. This is a dangerous pyramid, or Ponzi-scheme, of which most governments are aware, and yet many of them hold on to the dollar as key reserve currency. With the yuan rising, this may change rapidly. In fact, the conversion from dollar to yuan as reserve currency has already started.

Regarding the western foreseen reserve basket to “save” the dollar, it is not clear yet what the other currencies and their respective weight in the new “Reserve SDR” would be, but let’s assume the same five currencies. The Yuan, if still in the reserve basket, would probably still be under-valued. If so, this might be a good reason for China to exit the Reserve SDR and continue with the Yuan by its own economic and monetary value as a reserve currency. The Yuan has made its reputation of stability and does no longer need the backing of a (western coined) SDR to prove its strength as a reserve currency.

The War on Tariffs

In June 2018, US President Trump started an unprovoked Trade War with China, then expanded it to other countries, including his European allies. But it is most ferocious with China. As usual, China’s response was not hostile. Retaliation, yes; but still an approach of seeking negotiations and compromise. In reality, the US market for China may be important, but not that important to be humiliated as was the case with the American bulldozer approach to impose not just tariffs, but tariffs that were nothing but a new form of economic sanctions.

The real meaning and purpose behind these tariffs was not reducing China’s exports in the first place, but harming the Yuan, as it was gaining strength and, as mentioned before, gradually taking over the US-dollar’s role as world reserve currency. Some 20 years ago the US dollar accounted for more than 90% of all reserve assets in nations’ treasuries around the globe. Today, that percentage has shrunk to less than 60% and is fading rapidly. Much of the lost territories by the US dollar was made up by the Chinese Yuan. And as the importance of the Yuan rises, the US hegemony of the world’s economy, resources and people will fade. This does not go down in Washington without a fight.

Future Economic Growth

China, in the near future, will most likely keep to a “modest” growth rate, around 5% to 7%, concentrating on horizontal distributive growth, with a focus on improved public well-being for all, universal access to affordable housing, basic infrastructure, water supply, sanitation, public transportation, rural higher education, as well as internal cultural exchange and harmonization. Two areas of economic development, ”horizontal growth”, may be singled out; (i) Artificial Intelligence (AI), and (ii) Environmental Improvement.

Technological Innovation

China is a Power House of new technologies and no doubt the world’s number one in Technological Innovation. Just to mention a few, not in order of priority:

  • Rapidly progressing robotization of construction and manufacturing, as well as of medical interventions, like surgeries and localized cancer treatment;
  • 3-D construction of serving a myriad of sectors, including manufacturing in the medical sector, medical equipment, human body replacement parts, production of construction materials – and more. China predicts in 20 to 30 years everybody (in China) will have access to individualized 3D building capacity;
  • Face recognition technology, making traditional ID and bank account access cards obsolete and identity protection more secure;
  • High-speed train systems, a domain where China has bypassed Japan and is the world’s number one; i.e., the high-speed railways Shanghai Maglev and Fuxing Hao CR400AF/BF;
  • A new generation of garbage recycling into building material, fertilizers, fuel as a source of energy, and more;
  • Architecture and building efficiency, only two examples, (i) the new Beijing Daxin International Airport, the world’s largest, built in just 4 years, with a capacity of more than 100 million passengers per year, and a superb architecture; (ii) the “Birds Nest” – the stadium for the 2008 Summer Olympics which will also be used for the 2022 Winter Olympics; it was built in less than 5 years and is an architectural masterpiece, and
  • Artificial Intelligence (AI) – see below.

China’s ambition: Everything is possible – and China has already proven that it can be done

Artificial Intelligence (AI). China is also moving rapidly towards leadership in Technical Innovation for Artificial Intelligence, with plans to invest considerable resources into research. In 2017, the State Council (CCP) issued a “Next Generation Intelligence Development Plan”, including a US$ (equivalent) 2.1 billion AI industrial park. By 2025 the State Council predicts China to be a leader in AI research and predicts that China’s AI core industry will be worth some US$ 60 billion, amounting to about US$ 700 billion equivalent, when accounting for related industries. By 2030, the State Council expects China to be the global leader in development of AI.

Environmental Improvement. China has made leaps in improving her environment, by far exceeding efforts of western countries. China’s environmental policies are developing BRI at home and abroad in shades of green. New parks with trees and areas for recreation are emerging in every major city in China. According to an expert at the School of Regulation and Global Governance of the Australian National University, Beijing has improved its air quality by 30% in the last five years.

A study of the University of Chicago demonstrates that Chinese cities have reduced the concentrations of fine particulates in the air on average by 32% between 2014 and 2018.

The Chinese people and government are putting utmost importance to protecting the environment and ecosystems. Green development makes for improved public health, but is also attractive for investments.

China has a three-year “green” plan to improve air quality and tighten regulations. Air quality is one of the key environmental issues besetting China. In that sense, the government is accelerating the electrification of vehicles and has pledged that by 2030 all new cars will be powered by electricity.The government is also tackling drinking water quality and shortages, as well as improving urban and rural sanitation. These are longer-term propositions. Cost estimates for China’s overall environmental programs are not readily available but may easily reach into hundreds of billions of US-dollar equivalents over a ten-year period.

Conclusion

A few years ago, China, Russia and other SCO countries started trading among themselves in their local currencies with a non-western monetary transfer system, using mostly the Chinese Cross-Border Interbank Payment System (CIPS). It is out of control of the western SWIFT transfer system, thereby escapes the sanctions regime of the US. Gradually, the SCO and associated countries are detaching themselves from the western dollar-based fiat system.

In terms of trading, the SCO countries, mainly China, control most of the Asian markets, even making rapid inroads into Japan and Australia, and are evermore present in Latin America and Africa. Before long Europe will see the light and turn eastwards. It would be a wise decision. Dealing first within the confines of the huge Eurasian landmass, including the Middle East and parts of Africa – has been the logical way of trading since the Ancient Silk Road, more than 2,000 years ago.

China has a great visionary future that had already begun 70 years ago, and was enhanced six years ago with President Xi Jinping’s launching of the Belt and Road Initiative. BRI will continue spanning the globe for the next at least 50 to 100 years, spreading development in a multi-polar world, stressing equality and well-being for all. BRI investments may be counted in the multi-multi trillions and will be funded by China and the participating countries, with a socio-economic return that cannot be expressed in sheer monetary terms, as investments will also bring unfathomable social benefits, poverty reduction, improved health, higher and better education and, generally improving people’s well-being.

The bright side of this initiative is the Chinese philosophy of non-aggression, of diplomacy to resolve conflicts and of promoting peaceful economic coexistence and development around the globe.

China’s determination to develop with a “green” economy, a “green” BRI and a horizontal distributive growth that emphasizes equality and inclusion is a landmark model for the world to embrace. It is a model to construct a Community with a Shared Future for Mankind.

• First published in Global Research

How an Expanded Conception of Capitalism Requires us to Move Political Struggles to Unexpected Spaces

Attracting a large audience, political theorist Nancy Fraser visited Stockholm a couple of days ago to present her view of a socialism for the 21st century. However, the talk was not only about socialism but also about its antagonist, capitalism, which, according to Fraser, must be subjected to a more refined analysis in order for a credible socialist alternative to be formulated. Current analyses of capitalism, Fraser argues, are inadequate as it is stuck in the Marxist notion of capitalism as an economic system. Rather, for this system to even function, it is dependent on a range of non-economic conditions. Here, the list of preconditions provided by Fraser is long; it is about the social reproduction so often emphasized by feminist theorists, including the unpaid work in the confines of the family, the exploitation of “cheap gifts” from nature such as raw material and energy, public goods provided by states, such as infrastructure, judicial protections for property rights and the access to policing measures. These very conditions of possibility for capitalism must be incorporated into an analysis of capitalism as well as in the critique against it.

As I listen to Fraser’s talk, I start to think of what the consequences of this expanded conception of capitalism has for political struggle. As I interpret her, this must mean moving political struggles to new spaces and creating new political frontiers of struggle. One precondition for capitalism, mentioned by Fraser, is infrastructure. Here, we can think of the transporting possibilities in the form of roads and railways so important for the transport of material. It can also mean the financial infrastructure needed to move money with a single push on a button. However, as I sit there, bracing myself for a tedious ride home on the subway, I realize that there is something about the very infrastructure of modern cities that provides the perfect precondition for capitalism: its ability to direct and discipline flows.

As someone not being used to live in a big city, I have become fascinated by travelling in local traffic to and from work every day. Taking the subway has taught me something about human disciplining. Although living in a metropolis, people behave in a predictable way: they stand quietly at the platform and wait for the subway, enter it and endure the often unpleasant experience of standing in a crowded car, and in the station they follow the flows to the next subway train, standing in line in long escalators. Although people sometimes walk slowly, sometimes run, the behavior is remarkably stable: you just go with the flow to your end destination where you sit down and work. Philosopher Gilles Deleuze and psychoanalyst Félix Guattari1 would perhaps call this “the striation of space”, that is, the ordering of space so that speed can be restricted and circulation regulated. This is an important precondition for capitalism. In the words of human geographer Mekonnen Tesfahuney and political scientist Magnus Dahlstedt:

Power and control over different flows (capital, commodities, services and people), on various geographical scales, have a crucial function in capitalist economies and states. The capitalist economy requires complex and wide-ranging infrastructures of planning, coordination and execution, in the assembly, circulation and distribution of materials, commodities and capital in time-space. Accumulation would be practically impossible without such infrastructure.2

Thus, the transport system of big cities is a perfect example of what Fraser calls the preconditions for capitalism as it directs and disciplines flows, transporting people from place to place, ensuring that they can do their work as good citizens in a capitalist economy. In this way, the struggle against capitalism must move its efforts to these spaces that work as preconditions for capitalism. In the case of infrastructure, it means disrupting the way that large cities are planned to facilitate the flows that are so important for the functioning of capitalism, and imagine spaces that do not serve the interests of capital accumulation. Although a difficult task, Fraser shows that an expanded conception of capitalism, which I have tried to use as an analytical frame here, forces us to exercise our struggles on different fronts, even during the practice of the most mundane tasks in daily life.

  1. Deleuze, G & Guattari, F (2013 [1987]). A thousand plateaus. New York: Bloomsbury.
  2. Tesfahuney, M. & Dahlstedt, M. Maze of camps: (Im)mobilities, racism and spaces of exception, (p. 179) in Holmgren Troy, M. & Wennö, E. (Ed.) (2008). Space, Haunting, Discourse. Newcastle: Cambridge Scholars Publishing.

If China Can Fund Infrastructure with Its Own Credit, So Can We

May 15th-19th has been designated “National Infrastructure Week” by the US Chambers of Commerce, the American Society of Civil Engineers (ASCE), and over 150 affiliates. Their message: “It’s time to rebuild.” Ever since ASCE began issuing its “National Infrastructure Report Card” in 1998, the nation has gotten a dismal grade of D or D+. In the meantime, the estimated cost of fixing its infrastructure has gone up from $1.3 trillion to $4.6 trillion.

While American politicians debate endlessly over how to finance the needed fixes and which ones to implement, the Chinese have managed to fund massive infrastructure projects all across their country, including 12,000 miles of high-speed rail built just in the last decade. How have they done it, and why can’t we?

A key difference between China and the US is that the Chinese government owns the majority of its banks. About 40% of the funding for its giant railway project comes from bonds issued by the Ministry of Railway, 10-20% comes from provincial and local governments, and the remaining 40-50% is provided by loans from federally-owned banks and financial institutions. Like private banks, state-owned banks simply create money as credit on their books. (More on this below.) The difference is that they return their profits to the government, making the loans interest-free; and the loans can be rolled over indefinitely. In effect, the Chinese government decides what work it wants done, draws on its own national credit card, pays Chinese workers to do it, and repays the loans with the proceeds.

The US government could do that too, without raising taxes, slashing services, cutting pensions, or privatizing industries. How this could be done quickly and cheaply will be considered here, after a look at the funding proposals currently on the table and why they are not satisfactory solutions to the nation’s growing infrastructure deficit.

The Endless Debate over Funding and the Relentless Push to Privatize

 In a May 15, 2017 report on In the Public Interest, the debate taking shape heading into National Infrastructure Week was summarized like this:

The Trump administration, road privatization industry, and a broad mix of congressional leaders are keen on ramping up a large private financing component (under the marketing rubric of ‘public-private partnerships’), but have not yet reached full agreement on what the proportion should be between tax breaks and new public money—and where that money would come from. Over 500 projects are being pitched to the White House. . . .

Democrats have had a full plan on the table since January, advocating for new federal funding and a program of infrastructure renewal spread through a broad range of sectors and regions. And last week, a coalition of right wing, Koch-backed groups led by Freedom Partners . . . released a letter encouraging Congress “to prioritize fiscal responsibility” and focus instead on slashing public transportation, splitting up transportation policy into the individual states, and eliminating labor and environmental protections (i.e., gutting the permitting process). They attacked the idea of a national infrastructure bank and . . . targeted the most important proposal of the Trump administration . . . —to finance new infrastructure by tax reform to enable repatriation of overseas corporate revenues . . . .

In a November 2014 editorial titled “How Two Billionaires Are Destroying High Speed Rail in America,” author Julie Doubleday observed that the US push against public mass transit has been led by a think tank called the Reason Foundation, which is funded by the Koch brothers. Their $44 billion fortune comes largely from Koch Industries, an oil and gas conglomerate with a vested interest in mass transit’s competitors, those single-rider vehicles using the roads that are heavily subsidized by the federal government.

Clearly, not all Republicans are opposed to funding infrastructure, since Donald Trump’s $1 trillion infrastructure plan was a centerpiece of his presidential campaign, and his Republican base voted him into office. But “establishment Republicans” have traditionally opposed infrastructure spending. Why? According to a May 15, 2015 article in Daily Kos titled “Why Do Republicans Really Oppose Infrastructure Spending?”:

Republicans – at the behest of their mega-bank/private equity patrons – really, deeply want to privatize the nation’s infrastructure and turn such public resources into privately owned, profit centers.  More than anything else, this privatization fetish explains Republicans’ efforts to gut and discredit public infrastructure  . . . .

If the goal is to privatize and monetize public assets, the last thing Republicans are going to do is fund and maintain public confidence in such assets.  Rather, when private equity wants to acquire something, the typical playbook is to first make sure that such assets are what is known as “distressed assets” (i.e., cheaper to buy).

A similar argument was advanced by Noam Chomsky in a 2011 lecture titled “The State-Corporate Complex: A Threat to Freedom and Survival”. He said:

[T]here is a standard technique of privatization, namely defund what you want to privatize. Like when Thatcher wanted to [privatize] the railroads, first thing to do is defund them, then they don’t work and people get angry and they want a change. You say okay, privatize them . . . .

What’s Wrong with Public-Private Partnerships?

Privatization (or “asset relocation” as it is sometimes euphemistically called) means selling public utilities to private equity investors, who them rent them back to the public, squeezing their profits from high user fees and tolls.  Private equity investment now generates an average return of about 11.8 percent annually on a ten-year basis. That puts the cost to the public of financing $1 trillion in infrastructure projects over 10 years at around $1.18 trillion, more than doubling the cost. Moving assets off the government’s balance sheet by privatizing them looks attractive to politicians concerned with this year’s bottom line, but it’s a bad deal for the public. Decades from now, people will still be paying higher tolls for the sake of Wall Street profits on an asset that could have belonged to them all along.

One example is the Dulles Greenway, a toll road outside Washington, D.C., nicknamed the “Champagne Highway” due to its extraordinarily high rates and severe underutilization in a region crippled by chronic traffic problems. Local (mostly Republican) officials have tried in vain for years to either force the private owners to lower the toll rates or have the state take the road into public ownership. In 2014, the private operators of the Indiana Toll Road, one of the best-known public-private partnerships (PPPs), filed for bankruptcy after demand dropped, due at least in part to rising toll rates. Other high profile PPP bankruptcies have occurred in San Diego, CA; Richmond, VA; and Texas.

Countering the dogma that “private companies can always do it better and cheaper,” studies have found that on average, private contractors charge more than twice as much as the government would have paid federal workers for the same job. A 2011 report by the Brookings Institution found that “in practice [PPPs] have been dogged by contract design problems, waste, and unrealistic expectations.” In their 2015 report “Why Public-Private Partnerships Don’t Work,” Public Services International stated that “[E]xperience over the last 15 years shows that PPPs are an expensive and inefficient way of financing infrastructure and divert government spending away from other public services. They conceal public borrowing, while providing long-term state guarantees for profits to private companies.” They also divert public money away from the neediest infrastructure projects, which may not deliver sizable returns, in favor of those big-ticket items that will deliver hefty profits to investors.

A Better Way to Design an Infrastructure Bank

The Trump team has also reportedly discussed the possibility of an infrastructure bank, but that proposal faces similar hurdles. The details of the proposal are as yet unknown, but past conceptions of an infrastructure bank envision a quasi-bank (not a physical, deposit-taking institution) seeded by the federal government, possibly from taxes on the repatriation of offshore corporate profits. The bank would issue bonds, tax credits, and loan guarantees to state and local governments to leverage private sector investment. As with the private equity proposal, an infrastructure bank would rely on public-private partnerships and investors who would be disinclined to invest in projects that did not generate hefty returns. And those returns would again be paid by the public in the form of tolls, fees, higher rates, and payments from state and local governments.

There is another way to set up a publicly-owned bank. Today’s infrastructure banks are basically revolving funds. A dollar invested is a dollar lent, which must return to the bank (with interest) before it can be lent again. A chartered depository bank, on the other hand, can turn a one-dollar investment into ten dollars in loans. It can do this because depository banks actually create deposits when they make loans. This was acknowledged by economists both at the Bank of England (in a March 2014 paper entitled “Money Creation in the Modern Economy”) and at the Bundesbank (the German central bank) in an April 2017 report.

Contrary to conventional wisdom, money is not fixed and scarce. It is “elastic”: it is created when loans are made and extinguished when they are paid off. The Bank of England report said that private banks create nearly 97 percent of the money supply today. Borrowing from banks (rather than the bond market) expands the circulating money supply. This is something the Federal Reserve tried but failed to do with its quantitative easing (QE) policies: stimulate the economy by expanding the bank lending that expands the money supply.

The stellar (and only) model of a publicly-owned depository bank in the United States is the Bank of North Dakota (BND). It holds all of its home state’s revenues as deposits by law, acting as a sort of “mini-Fed” for North Dakota.  According to reports, the BND is more profitable even than Goldman Sachs, has a better credit rating than J.P. Morgan Chase, and has seen solid profit growth for almost 15 years. The BND continued to report record profits after two years of oil bust in the state, suggesting that it is highly profitable on its own merits because of its business model. The BND does not pay bonuses, fees, or commissions; has no high paid executives; does not speculate on risky derivatives; does not have multiple branches; does not need to advertise; and does not have private shareholders seeking short-term profits. The profits return to the bank, which distributes them as dividends to the state.

The federal government could set up a bank on a similar model. It has massive revenues, which it could leverage into credit for its own purposes. Since financing is typically about 50 percent of the cost of infrastructure, the government could cut infrastructure costs in half by borrowing from its own bank. Public-private partnerships are a good deal for investors but a bad deal for the public. The federal government can generate its own credit without private financial middlemen. That is how China does it, and we can too.

For more detail on this and other ways to solve the infrastructure problem without raising taxes, slashing services, or privatizing public assets, see Ellen Brown, “Rebuilding America’s Infrastructure,” a policy brief for the Next System Project, March 2017.

Trump’s Speech to Congress

After struggling mightily with whether or not to tune in, I was able to overcome my fears and convince myself to sit down in the privacy of my den and watch President Trump present his first address to the U.S. Congress.  What fears?  Well, maybe not quite the same fears that motivated early Christians to outlaw dancing as the “work of the Devil,” but in that general ballpark.

As it turned out, my trepidation was unfounded.  Trump’s “Devil Dance” was both spectacularly tame and, simultaneously, spectacularly ambitious (but not in a good way). Even acknowledging that presidents are allowed to inspirationally bullshit us during their inaugural addresses and speeches to a joint Congress, Trump clearly abused that privilege.  Basically, the man went off the deep end and promised us Utopia.

Unless I missed something, Trump not only pledged to cut taxes on everybody and everything—corporations, the rich, the superrich, the middle-class, the poor—he vowed to get rid of those pesky regulations that hamper businesses.  Accordingly, the following morning’s stock market was up a couple hundred points.

And despite what has to be a staggering loss of tax revenue, President Trump also promised to launch a massive government-sponsored program to repair our infrastructure (our roads, bridges, dams, aqueducts, hydro-electric plants, nuclear reactors, airports, seaports, all of it).

He even went so far as to assure us that “all of the problems” that plague us can be solved.  He actually said that.  All of our problems.  In short, he promised that everything wrong with this country can be fixed.

Presumably, this included drug addiction, inadequate health care, crime, spousal abuse, homelessness, malnutrition, substandard education, low-paying jobs, and the shabby treatment of veterans.  He did fail to mention the rising cost of cable TV, but let’s assume he meant that as well.

Earlier in the week, to placate the saber-rattlers and flag-wavers, he had announced that he wanted to increase the military budget by some $34 billion.   Of course, for all this money Trump is talking about spending–money we clearly don’t have—Congress (even a docile, Republican-dominated Congress) is going to have to approve it, and that may not be easy.

Let’s not forget that there is no shortage of “deficit hawks” in Congress—Republicans mainly, but Democrats also—who can’t bear to see the government continue to accrue debt.  These are people who are already pissed off at the amount of money being wastefully spent on office supplies.  As appropriate as it would be, does anyone honestly expect them to approve of a massive, New Deal-style infrastructure program?

The simple truth is that you can’t have both.  You can’t have national health care and a massive infrastructure rebuild, and at the same time be increasing an already bloated defense budget.  And you can’t do it by pretending that corporations and wealthy people shouldn’t have to pay their fair share of taxes.  But putting all that aside, it was a stunningly “optimistic” speech, one for the ages.  Alas, it meant absolutely nothing.