Category Archives: Trade

Why Would China and Huawei Commit Economic Self-Ruin?

Rune Fisker for the Washington Post

It could be construed as a badge of professional honor that a news broadcaster is open to presenting a wide range of views. This might especially be considered so when the corporate-state media is parochially aligned to portraying an unskeptical right-wing, warmongering bizzaro worldview where left-wing (defined as socialist, communist, anarchist… not Democrats or Liberals who frequently bang the drums of war and toe the neoliberal line), pro-peace types are absent or marginalized to the fringes.

A recent segment with RT America anchor Rick Sanchez led me to question again whether Sanchez is doing the news again or opining again? He opens by discussing the friendly, deepening relations between president Vladimir Putin’s Russia and chairman Xi Jinping’s China. He asks:

Here’s the question really, right? Is this a union of strength, convenience, of necessity, of revenge, or somehow all of the above?

Of convenience, of necessity, of revenge? Are these among the best speculations of Sanchez?

Rick Sanchez interviewed John Jordan, a frequent guest on RT America. Sanchez asked Jordan: “Can you, can you, can we, can anybody blame Russia for jumping into China’s … loving arms?” Really, where does a news anchor come up with such questions?

Jordan presented his bona fides. He stated he was an American patriot on air to present the American viewpoint. He said he has “studied Russian history and culture in excruciating detail” and that he speaks Russian. Such a background does, indeed, confer gravitas. But gravitas can be nullified by the bias of patriotism.

Jordan stated “that as a friend of Russia that Russia will rue the day it did this [more closely ally with China through accepting Huawei’s 5G].” Jordan provides as a rationale that the Chinese government, legally, has a right to access all made in China technology. Thus he fears that this will be “an enormous intelligence gathering tool for China.” He adds that this could have “a chilling effect of investment into Russia.”

Jordan points out that other countries need not be dependent on Huawei for 5G and neither on American 5G; there are companies in other countries besides the United States that sell 5G. This is a crucial point since, as revealed by ex-NSA official William Binney, ex-CIA employee Edward Snowden, and by WikiLeaks, the US is deeply involved in intelligence gathering, as are American companies like Google, Microsoft, Apple, and social media such as Facebook.

Time to do news? What is the evidence — beyond mere conjecture — that Huawei would be an intelligence gathering instrument? Have US corporations ever offered a no-spying pact with foreign governments as Huawei has done?

It is too easy to tear apart any thread of rationality to what Jordan says. Jordan professes to be an American patriot. First, it reeks of a double standard to demonize China for what the US, as is well-known by Jordan, also does. Second, why is it even necessary to wave a flag of patriotism? My country right or wrong? Does love of a geo-political entity triumph love of humanity? Love of morality? Love of truth?

And why shouldn’t Russia and China be close partners? That often happens when countries, like Russia and China, are neighbors that share a long border where transportation and communication are easier. First, it makes good economic sense to trade with a neighbor who has goods you want and who also wants your goods. Second, being populous countries, economies of scale also come into advantageous play. Third, the China-Russia union connects both to Europe and Asia. Fourth, both these countries find themselves surrounded by American military bases, navy ships, and weaponry. As such, it also makes clear military sense to create strength through a union.

The overarching question that Sanchez and Jordan do not deal with is why Huawei would shoot itself in its economic foot? 5G technology is poised to be a financial windmill in the near future for Huawei and China, and it seems the US is far behind in this technology. As far as speculation goes, this would be a strong motive for a hyper-American patriot to jump to the defense of US interests by demonizing an economic competitor that is outpacing US economic growth.

Germany, Japan, Iran and Trump: Will Reason and Harmony Triumph in the World?

Japan used to be the number one foreign consumer of Iranian oil, slipping to number two as China increased its purchases. Now, obliged to defer to the U.S., Japan purchases none. Germany has been Iran’s largest European trade partner, and was hoping for major deals following the conclusion of the Iran Deal in 2015. These plans have been sabotaged by the U.S. using its control over the international banking system, one of its main weapons to use against free market principles and free trade, to inflict pain on people who do not submit, and to (try to) assert its global hegemony.

Both Japan and Germany (whom you recall were the U.S. two greatest adversaries in World War II and who emerged soon after the war as close U.S. allies, the third and fourth largest economies, after the U.S. and USSR.  Both not coincidentally were occupied by tens of thousands of U.S. troops from their defeat in 1945, politically controlled by the U.S. and incorporated into its military alliance network, as they remain 74 years later.

(Notice by the way how the Soviets, who defeated the Nazis on the all-important Eastern Front, losing as many as 30 million in that effort, and who occupied what had been Nazi-occupied parts of eastern Europe, withdrew from Finland and Austria while the U.S. consolidated its grip on postwar western Europe, while shaping the emergence of pro-Soviet client states in Poland, Czechoslovakia, Hungary, East Germany (after the U.S. unilaterally declared West Germany an independent state), and Bulgaria. Other ostensibly socialist states (Albania, Yugoslavia, Romania) always retained a high degree of independence vis-à-vis the Soviets. The U.S. meanwhile pronounced the Truman Doctrine (justifying any means necessary to defeat communism, from electoral interference to assassination to coups and wars) and in 1949 created NATO as a ferocious anti-Soviet military alliance. The Soviets responded seven years later with their own much smaller Warsaw Pact alliance that, of course, was dissolved in 1991, when NATO should have been. The U.S. remains tied by expensive military alliances with the now-reunited Germany and Japan, and continues to station more soldiers in those two countries than anywhere else. They are followed by South Korea (part of the Japanese Empire during the Second World War) and Italy, showing that the U.S. is still in a perverse deluded way fighting that war.

Both Japan and Germany—the third and fourth largest economies in the world, whose combined GDPs equal about half the U.S. figure—oppose the Trump administration’s decision to withdraw from, and seek to destroy, the Joint Comprehensive Plan of Action signed with Iran four years ago. They want normal ties with Iran. They fear the real prospect that crazies around the U.S. president—known, rapid war-mongering, fanatically Zionist, pathological liars, bible-toting nutcases, smug psychos and wild-eyed brutes like Jared Kushner, John Bolton and Mike Pompeo—will arrange a war to bring on the apocalypse they so crave.

They are surely indignant that a man as obviously as moronic as Tillerson intimated is ordering them, in their maturity, and their nations, in their dignity, to obey U.S. orders to isolate and provoke Iran. And worried about the possible consequences of Trump’s madness and vulnerability to the arguments of evil advisors. They will surely be trying through flattery and patient argument to promote talks with the Iranians.

Trump says he doesn’t want war. He says he wants to talk, but leaves it to the Iranians to call him, to show their respect. He says he doesn’t want regime change (although Bolton surely does and says so continuously). He says President Rouhani is probably a “lovely man.” He just doesn’t want Iran to have nuclear weapons.

The Germans and Japanese know Trump likes others to come to him. So they will get on the phone and urge Iranian Foreign Minister Zarif to stoke Trump’s ego and call him. And they will say, just repeat what you have many times, guarantee him that Iran does not want and will not build nuclear weapons. Give him a way to back down, like the Mexicans just did. Let him claim a better deal, if that allows trade to get going…

Trump is a profoundly ignorant if not stupid human. He genuinely might not know that U.S. intelligence services have been saying since 2003 that Iran does not have an active nuclear weapons program. The IAEA has ascertained this. The Iranian supreme leader has issued a fatwa banning the production or use of nuclear weapons. The leading western authority on Iran’s nuclear program, Gareth Porter, has exhaustively documented the fact that Iran has never had a serious program to produce nuclear weapons, at least not since the Islamic Revolution.

Anyway, by suggesting that his only demand is that Iran not acquire nukes, Trump allows the Iranians to say, “Fine. We agree. What more assurances do you want?” And then, if his advisors are in the room, Trump will say, actually, we want more than no nukes, we need to you to obey us in all these other areas Pompeo has announced. You have to stop missile tests, and end aid to Hizbollah, Hamas, Iraqi Shiite militias, Houthis and the Syrian government. Only then will we let Japan, Germany and all the countries we indirectly control trade with you.

The German foreign minister Heiko Maas has visited Tehran to meet with his dignified, level-headed counterpart. Japanese Prime Minister Abe Shinzo is heading to Iran Wednesday to attempt to mediate between his U.S. bosses and the Iranian leadership. He is perhaps in a good position to do so. Abe has been Japanese prime minister since 2012—a very long time for a Japanese leader. He is an extremely reactionary figure, proud grandson of an accused war criminal who also served as prime minister (1957-60), advocate of constitutional revision (to legalize the huge Japanese military), promoter of a view of history in which Japan once led Asia in sloughing off colonialism. He has deliberately provoked the Koreas and China by statements, actions and threats involving contested claims over islands. His tax hikes and austerity measures have produced much pain for the Japanese. I have no fondness for the man.

But I would like to suggest what he might, speaking from his own point of view perhaps, say to the Iranian president.

He could begin by pointing out that Japan, as a close U.S. ally due to its post-war fate, must follow its leadership on foreign policy. However, he might add that for years Japan was Iran’s number one oil purchaser nation, before it was overtaken by China. Now it buys no oil from Iran; it is not allowed to, due to U.S. secondary sanctions. But for a time Japan, which has towed the U.S. line on virtually all global matters from the time of the Occupation to the present, did have a strong trade relationship with Iran, receiving special permission from the boss-nation to do so due to its complete dependence on foreign oil. (South Korea received this too.) So there is precedent for Japan playing a slightly independent role.

Moreover, there are reports that in the current situation Abe wants to play less the role of messenger than mediator, which makes sense from the point of view of his nationalist agenda.

Abe could further note that Japan and Iran (Persia) have had a trading relationship (since at least the eighth century CE, actually); have until recently enjoyed scholarly exchanges (such as Japanese archeologists’ work with their Iranian counterparts in exploring likely ancient Buddhist sites); and share a history of avoiding western colonization. Both cultures value etiquette, patience, calm and reason.

Abe and Rouhani no doubt share a common contempt for Trump as an ignorant, rude, unpredictable, dangerous, posturing buffoon. This would be how most world leaders see him. But they also no doubt grasp that his vanity can be used to defuse him. So Abe will say, as friend to friend, why not call him? Say that you are contacting him in response to his public invitation and whatever private communications there have surely been, because you have made statements that suggest you want to ease the “tensions” the U.S. claims have gotten higher recently. These statements include a perhaps facetious statement that you, Rouhani, are a “lovely man;” that he is not calling for regime change in Iran; that he wants to make a deal with the present government; even that he wants Iran to thrive under the present regime. All he wants, he insists, is that Iran not get nuclear weapons.

Call him and call his bluff. Remind him that the Iran Deal virtually prevents Iran from getting nuclear weapons any time soon, and that the IAEA knows that, and the UN knows that, and the signatory nations except for Trump’s know that. Offer him even more iron clad assurances; he won’t know what you’re talking about. Dangle before him the prospect of the Nobel Peace Prize. Let him announce that trust has been achieved and the U.S. now looks forward to investing in Iran, which like North Korea, has awesome prospects.

The current head of the IAEA happens to be a Japanese flunky of the U.S.  (He was elected in July 2009 to succeed the Egyptian, Mohammad ElBaradei, a Nobel Peace Prize laureate in part due to his refusal to bow to U.S. disinformation about Iran’s nuclear program provided by the likes of Bolton. There were six rounds of voting, the U.S. each time opposing the favored South African candidate. Amano was more suitable because a diplomatic cable released by the invaluable Wikileaks indicated that Amano “was solidly in the U.S. court on every key strategic decision, from high-level personnel appointments to the handling of Iran’s alleged nuclear weapons program.”)

The other day as he opened a meeting of the IAEA’s board of governors, Amano stated blandly, “I… hope that ways can be found to reduce current tensions through dialogue.”  In other words, he faults both sides for such “tensions” and is probably saying: “Meet with Trump, President Rouhani, to reduce these tensions!” May the Iranians respond to Trump’s clueless provocations with a mix of calculated taqiyya and principled insistence on established international law, putting the bullying Wizard of Oz in his place, daring him to please Natanyahu, Jared and MbS by provoking war. And may Trump back down, agreeing on some formula allowing him to claim some victory that had eluded Obama.

Why is the Ruling Class Putting Up With the Idiot-King?

Mass complicity

Wilhelm Reich, in both The Mass Psychology of Fascism and The Function of the Orgasm argued that socialists do not understand mass psychology. He said that the biggest problem in Germany was not Hitler or even the economic system of capitalism. Rather he asked what is it about the masses of people who supported Hitler? His answer was that Hitler wouldn’t have existed if there wasn’t a little bit of Hitler in a whole lot of people. The problem is why masses of people are so passive. He gave answers to these questions, but his answers aren’t as important to me as the question he posed. Even in his later books (Listen Little Man and The Murder of Christ), when Reich was clearly paranoid, he remained lucid when it came to insisting that masses of people are ultimately responsible for whatever political body has power.

Group Complicity

In my experience teaching courses in group dynamics, I ask my students to discuss problems they are having in the groups they are members of outside of school. My greatest problem is to get them to go beyond a) blaming the leader of the group or b) identifying some jerk in the group who is obnoxious, crabby, recalcitrant, needy and then blaming them. The assumptions of both blaming leaders and individual group members is that: a) if only we got a good group leader, everything would be fine; b) if only we could get rid of a couple of pain-in- the neck group members, the group would be fine; or c) the rest of the group members are neutral witnesses with little responsibility. What this doesn’t take into account is that when the majority group members are passive, they are producing both bad group leaders and obnoxious individual members. Again, the most interesting question to me is the complicity of most group members.

Don’t follow the bouncing ball

Another way to describe this ignored perspective is to use an analogy from football. The easiest and most self-evident way to watch a football game is to follow the ball. The quarterback gives the ball to the running back, we follow the running back. The quarterback passes to the wide receiver, we follow the wide receiver. But what neither the cameraman nor the fans do is follow a) what is going in the offensive defensive lines away from the ball and b) what is going on between the defensive secondary and the offensive ends when they are not part of the immediate action. What is going on away from the ball might hold the key to understanding which team may ultimately prevail.

But what does this mass and group complicity and watching football have to do with the subject of the relationship between the ruling class and the Idiot King?

The political economy of ruling class complicity

My questions do not have to do with mass psychology, group dynamics or watching football. My question is why the ruling class in the United States is putting up with the Idiot King. To use the analogies in the previous sections, blaming the Idiot King for the state of the political economy in Yankeedom is like blaming Hitler alone for fascism or blaming only the leader for problems in group dynamics. In the football analogy, it is like following Trump’s tweets or actions (the ball in football) and thinking that counts as following politics. What is missing is why the ruling class, that has had power long before the Idiot King and will have power after he is gone, has put up with him for 2 ½ years.

In this article I ask some very simple questions. They are questions that have bothered me for over two years now. I have not found any articles that answer my questions, so I will pose them to you in the hopes you may have some answers. I am not an expert in ruling class machinations, though I have studied the work of William Domhoff, Robert Michaels and Gaetano Mosca. Hopefully a few good answers will lead us to deeper, more penetrating questions.

Network Revisited

About three-quarters of the way through the great film 1976 Network by Paddy Chayefsky, there is a showdown between Mr. Jensen, representing the forces of global capitalism, and Howard Beale who in some ways resembles Trump in his instability and economic nationalism. Here is the exchange:

Jensen: You have meddled with the primal forces of nature, Mr. Beale, and I won’t have it!! Is that clear? You think you’ve merely stopped a business deal. That is not the case. The Arabs have taken billions of dollars out of this country, and now they must put it back! It is ebb and flow, tidal gravity! It is ecological balance!

You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no west. There is only one holistic system of systems, one vast and immanent, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichsmarks, rins, rubles, pounds, and shekels.

It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today! And YOU have meddled with the primal forces of nature, and YOU WILL ATONE!

Am I getting through to you, Mr. Beale?

You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM and ITT and AT&T and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today.

What do you think the Russians talk about in their councils of state – Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do.

We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business,

Assuming that Mr. Jensen is the ruling class of today, how well have his predictions turned out? For well over two years, Howard Beale (Donald Trump) has gotten the better of the Mr. Jensen and the ruling class. The purpose of this article is to explore why.

The ruling class has no clothes

For the last two and a half years much has been written about the psychology of the Idiot King, his immorality, his crassness, his lack of impulse control, his political reversals and his inability to follow normal political procedures. Others have written about the failings of the capitalist economy and the rise of strikes. To write about those things make sense. But my purpose is to draw your attention to the absence of articles on how the ruling class has allowed the Idiot King to go on and on.

Why are the Christian Fundamentalists putting up with him?

Mike Pence, Christian fundamentalist must at least be partly sickened by Trump. Faithless in religion, patron of prostitutes, a squanderer of money, how can Pence stand next to this guy? He takes it – and he smiles. The Christian fundamentalists who are the base of Pence’s following must do cognitive compartmentalization handstands trying to square the Idiot King with their Christian beliefs. But they are managing. Why don’t they rebel?

Is Trump doing the will of the ruling class?

For some, the answer to my question is that the idiot king is simply doing the will of the ruling class. After all, some may say fascism is the last stage of capitalism. The ruling class is frightened that more people are calling the economic system “capitalism,” and a new generation is interested in socialism. They need fascism to rule by a visible fist rather than an invisible hand. I don’t buy this and I’ll explain why.

When I bring up the ruling class, I am talking about the Council of Foreign Relations, the Trilateral Commission and the whole Rockefeller apparatus. I am thinking about Kissinger, Brzezinski, the CIA, NSA and the military elites. I am talking about the liberal think tanks, the foundations and the media. I’m thinking of the New York Times, the Guardian , CNN, MSNBC. All these groups have a stake in the long-term success of capitalism and Yankee world domination. They all like to have a long-term plan and they don’t like surprises. Trump is full of surprises. Why are they putting up with him?

Maybe the Neocons have gained power at the expense of the Neoliberals?

It is a mistake to think that Trump was simply a creature of the neocons. Before the elections, the neocons, any more than anyone else, knew what Trump was going to do. It was only after the elections that they seized the opportunity. One possible exception to this is Steve Bannon who, even before the elections, saw the political possibilities. The presence of Tillerson, Bolton and Abrams affecting policy must have involved the hand of Bannon. The neocons can give the Rockefeller ruling class a run for its money. After all Cheney ruled for eight years. But so what?

A corresponding concern for the ruling class has to be Trump’s rabid followers. I suspect that many workers who voted for Trump might not vote for him again because he has not instituted policies that have improved their lives. We must remember the research done by labor historian Kim Moody, that many working-class people who voted for Trump in 2016 voted for Obama in 2008. They switched sides after they found out Obama didn’t give a hoot about the working class. They could shift again or simply not bother to vote at all. However, there are rabid racists among Trump supporters who will not go quietly if the Idiot King is not crowned. The ruling class does not want a civil war on their hands.

Ruling class incompetence before the elections

What is far more important than Trump winning the election is that Hillary Clinton lost. The queen of the Council of Foreign Relations, hand-picked, “It’s my-turn” Clinton, lost to a reality TV host and bad businessman. All the money of the ruling class was put on Clinton and she lost anyway. How can that be? What is the ruling class doing wrong?

Ruling class incompetence after the elections

As we know, the Idiot King is full of surprises. If you were a member of the ruling class would you be pleased with his performance? In the space of less than two years Trump has alienated Europe as Italy, Germany and even England are turning towards Russia and China for resources. He has wrecked relations with China. The Yankee ruling classes have Israel, Saudi Arabia, Australia, England and perhaps India on their side, along with assorted dictators they’ve installed on the periphery of the world-system. However, the number of countries they can count on is dwindling. It this what Rockefeller and Kissinger wanted? Why hasn’t the idiot King been stopped? The CIA has tried assassinations all over the world. The CIA works for the Rockefellers. Draw your own conclusions.

Look at the neoliberal press. They work for the ruling class. Yet day after day they respectfully report on his escapades, treat him with respect in public even though they loathe and despise him. Journalists are upper middle class people, many of whom have PHDs. Going toe-to-toe with the Idiot King, they could easily humiliate him in public. They are far more knowledgeable than Trump, yet they put up with him. There is no reason why journalists could not unite as a group, walk out of his press conferences and shout him down together publicly. But they don’t. The editors of most every neoliberal newspaper probably hate Trump. But day after day, week after week Trump’s stupid opinions are trotted out and his moronic mug appears constantly in the news. These papers are the organs of the ruling class. Why don’t they refuse to print what he says?

The instability of capitalism

There is one other factor I want to consider and that is the instability of capitalism. The ruling class has never understood the system from which their wealth derives. Capitalism has been in a decedent phase since the 1880s or so. If we follow the work of Michael Roberts in his book, The Long Depression, capitalism is haunted by the tendency of the rate of profit to fall. In the last 150 years it has used investment in the military and finance to forestall this decline.

But now, all around the world the limits of the system are showing. Ecological forecasters say at this rate the earth will be unlivable in 30 years. Countries on the periphery of the world-system, taken as a whole, have been in hell for at least 50 years. Even Europe, the home of capitalism, is in big trouble. Southern Europe is swamped with debt. The EU is on its last legs and the centrist parties have taken a beating. Macron had been stung by Yellow Jackets for six months. Even Germany, the mighty jewel of Europe, has ceased to develop its manufacturing sector. World-systems theorists have said that relative to world-capitalism, the US has been in decline for 50 years. Strikes around the world have been increasing. Even the World Economic Forum has been worried about the potential for world rebellion.

The capitalists who run the world are cannibalizing their own infrastructures and their working class and all they can do is invest in wars and finance capital. They have no answers. It used to be that a capitalist would say to a socialist, triumphantly, “name one country where socialism works?”. We can now say without any hyperbole or dogma “name one capitalist country that works”. You know – the way Adam Smith described it and the way economics professors in the United States teach it.

Is the ruling class finally drawing a line in the sand?

Up until now, the ruling class has benefitted from Trump’s “policies” of tax cuts and deregulation. But these are both domestic policies. His relationship with the ruling class around international issues is another story. In his trade war with China and now Mexico, Trump has been disrupting supply chains all over the world. The companies affected include General Motors, Delphi, Constellation Brands, Cummins, Black & Decker and Fiat-Chrysler (partly American). Not exactly small potatoes. Some companies are switching suppliers to countries not affected by Trump’s tariffs like Vietnam, Taiwan and Korea, according to Capital Economics. The patience of the heads of these corporations with Trump must be wearing thin. There are the costs of pulling out and setting up shop in a new place with no guarantee of a better deal than China, and for what?

The Idiot King is allowing his hatred of CNN, the NYT and the Washington Post to get in the way of international capital. He is on a collision course with the ruling class. His has encouraged a boycott of AT&T which owns CNN. He is considering Antitrust proceedings against Google, Facebook, Apple and Amazon, owner of the Washington Post.

Has the ruling class lost its capacity to rule?

Even if the ruling class finds a way to stop Trump, this doesn’t account for why it has taken them so long. The self-assured silkiness of Mr. Jensen of Network is gone. The calm inevitability of capitalism is gone. The ruling class the world over is fumbling. Their efforts seem to be focused on how to climb higher and higher up the mountain to avoid the rising flames below. The ruling class is lost.

For those of us who are revolutionaries, the most important question is to understand why the ruling class is so weak and how we can exploit those weaknesses. We cannot expect to overthrow capitalism if we don’t understand where the ruling classes are weakest and act accordingly. I welcome your thoughts.

• Originally Published in Planning Beyond Capitalism

Snubs, Bumps and Donald Trump in Britain

He may not be popular in Britain, but he still has shavings of appeal.  For a country that has time for Nigel Farage, pro-Brexit enthusiast and full-time hypocrite (he is a member of the European Parliament, the very same institution he detests), President Donald Trump will garner a gaggle of fans.

One of them was not the London Mayor, Sadiq Khan, trenchant in his belief that the US president should never have been granted a state visit.  “It’s quite clear that Theresa May was premature in making this invitation, and it’s backfired on her.” But Trump’s tendency to unhinge his critics is not so much levelling as lowering: Khan’s coarse remarks a day before Trump arrived were timed to create a Twitter scene.

Trump, he wrote spitefully in The Guardian, was leading a push from the right “threatening our hard-won rights and freedoms and the values that have defined our liberal, democratic societies for more than seventy years.”  The UK had to stop “appeasing” (that Munich analogy again) dictatorial tendencies.  (Oblivious, is Khan, to the illustrious record Britain has in providing receptions and banquets for the blood thirsty and authoritarian.)

This semi-literate historical overview had the desired result.  Just prior to landing in London, Trump tweeted that Khan “who by all accounts has done a terrible job as Mayor of London, has been foolishly ‘hasty’ to the visiting President of the United States, by far the most important ally of the United Kingdom.”  For good measure, Trump insisted that the mayor was “a stone cold loser who should focus on crime in London, not me…”

The mood was set, and the presence of the president overseeing Britain’s increasingly feral political scene reminded The New York Times of boardroom takes of The Apprentice (reality television, again) though it came uncomfortably close to an evaluation of the “rear of the year” or a wet t-shirt competition of the fugglies.  This was aided by the absence of a one-to-one meeting between Trump and the soon to depart Theresa May, there being no preliminary meeting in Downing Street.

Trump felt at home, sizing up candidates to succeed May as British prime minister.  While he could muster choice words to describe Boris Johnson and Jeremy Hunt, Michael Gove barely registered. “Would do a good job, Jeremy?  Tell me.”

A few candidates did their best to impress, a spectacle that did, at points, verge on the grotesque.

The Conservative Party is deliriously panicked: Farage’s Brexit Party is proving so threatening its pushing the old guard to acts of pure desperation.  This is riveting, if troubling stuff for political watchers such as Tim Bale of Queen Mary, University of London.  “A lot of the constraints have come off British politics.  Whether they’ve come off permanently, or whether it’s because the Conservative Party is at panic stations, is something only time can tell.”

Foreign secretary Hunt was particularly keen to show his wet shirt to the ogling Trump.  He no doubt felt he had to, given that Johnson had already been praised as a person who “would do a very good job” as British prime minister. To repay Trump for his acknowledgment, Hunt dismissed the views of the London mayor.  “I agree with [Trump] that it is totally inappropriate for the Labour party to be boycotting this incredibly important visit.  This is the president of the United States.”

The situation with Johnson cannot but give some amusement.  Trump, rather memorably, had been a subscriber to the theory that parts of London had become a dystopian nightmare replete with psychotic, murderous residents of the swarthy persuasion.  Johnson, for all his faults, was happy to give Trump a nice slice of demurral on his city when mayor.  He also opined that Trump was “clearly out of his mind” in making the now infamous suggestion on December 7, 2015 for a “total and complete shutdown of Muslims entering the United States.”   But politics is an odd stew, throwing together a strange mix of ingredients.  For his part, Johnson declined an invitation to see Trump in person, preferring the comforting distance of a 20-minute phone call.

Away from rear of the year proceedings were those who had consciously boycotted any event associated with Trump.  Prince William and Prince Harry preferred to avoid a photo opportunity with the president at Buckingham Palace.  Jeremy Corbyn of the Labour Party preferred to join protests against Trump over attending the state banquet.  The act will no doubt be seen as admirable in some quarters, but hardly qualifies as those of a potential future prime minister.  “Corbyn,” noted The Independent, “has again dodged the stately bullet and had instead taken the easy way out.”  To the echo chamber he went.

Beyond the visit, more substantive matters are going to be troubling for diplomats in the UK Foreign Office.  One of the things touted during the Tuesday press conference was the prospect of a trade agreement between a Britain unshackled from the EU, and the United States.  Trump even went so far as to press May to stay longer for the negotiations.  Not one for briefings, he ventured a suggestion: “I don’t know exactly what your timing is but, stick around, let’s do this deal.”

The issue is fascinatingly premature: Britain, having not yet left the EU, let alone on any clear basis, faces an orbit of sheer, jangling confusion for some time to come.  In terms of numbers, the issue is also stark: the UK has the EU to thank for half of its trade; the United States comes in at 14.7 percent.

The troubling feature of any free trade proposal coming out of the Trump administration will be its rapacity, or, as Trump likes to call it, “phenomenal” scope.  Nothing will be exempt.  Agriculture and health are two fields of contention.  Access for US exports will entail easing limitations on animal feed with antibiotics and genetically modified crops.  More headaches, and bumps, await the relationship between troubled Britannia and groping Uncle Sam.

Trump: From China to Iran to Venezuela, Threats and Sanctions Everywhere

As of May 10, Mr. Trump has arbitrarily increased tariffs on Chinese goods imported into the US, worth about 200 billion dollars, from 10% to 25%. It is an action without any foundation. An action that makes no sense at all, as China can and will retaliate – and retaliate much stronger than what the impact of the US’s new “sanctions” may bear – because these arbitrary tariffs are nothing else but sanctions. Illegality of such foreign interference aside, there is hardly any serious economist in this world who would favor tariffs in international trade among “adults” anywhere and for any reason, and, of course, least as a punishment for a nation. All that such sanctions do is pushing a partner away. In this case it’s not just any partner; China is a key trading partner of the United States.

The new tariffs will hardly harm the American consumer. There are huge profit margins by US middlemen and importers of Chinese goods. They are competing with each other within the US  and the consumer may not even notice a thing. However, the US economy will likely suffer, especially from Chinese retaliatory actions.

A spoiled child, what Trump is, doesn’t get his way – and goes into a tantrum, not quite knowing what he is doing, and knowing even less what he may expect in return. Mr. Trump, himself, has not only reached a level of incompetence and ignorance which is scary – but he has also surrounded himself with inept, preposterous people, like, Pence, Bolton, Pompeo – who, it appears, have no other means left than running around the world amok, dishing out threats left and right and spending billions on moving aircraft carriers around the globe to make sure people are afraid of the great-great United States of America.

Back to trading with China. China has a million ways (almost) to retaliate. China can devalue her currency vis-à-vis the dollar, or China can dump some of their almost 3 trillion dollars-worth of reserves on the money market – just take a wild guess about what that would do to the hegemony of the dollar which is already in dire straits – with ever more countries departing from the use of dollars for international trade.

And just hypothetically, China could stop altogether exporting all that Walmart junk that American consumers love so much just for a while. Or China could stop making iPhones for the US market. Guess what kind of an uproar that would trigger in the US?  Or China could, of course, levy herself high tariffs on US imports, or stop US imports altogether. China being part of the Shanghai Cooperation Organization (SCO) – actually the co-founder of it – has many alternatives to cover her demand. No need to depend on the west.

Let’s not forget, the SCO which also counts as its members, Russia, India, Pakistan, most of Central Asia, and Iran poised to become a full-fledged member, covers about half of the world population and a third of the world’s economic output, or GDP. No need to look to the west for ‘survival’ – those times are long gone.

But more importantly, what all this looks like to me is the desperate thrashing around of a dying beast, or in this case a dying empire.

We have the US and Venezuela – threats after threats after threats – Maduro must go, or more sanctions. Indeed, according to a study by the Center for Economic Policy Research (CEPR), these horrifying, totally illegal sanctions or blockages of imports, most of them already paid for by Venezuela, have killed some 40,000 people in Venezuela. Of course, Washington doesn’t care about legality and killing, also typical for a fading mighty power – no respect for law and order, no respect for human rights and human lives. One only has to see what type of psychopaths are occupying the tasks of “Foreign Minister” and of “National Security Advisor” or of Vice President, for that matter – they are all sick, but very sick and dangerous people.

Well, in Venezuela “regime change” didn’t work out – so far. Pompeo has been clearly told off by Mr. Lavrov during their recent get-together in Helsinki,  and China is in the same line of supporting the government of Nicolas Maduro.

Next – Iran. Attacking Iran has been a dream of Bolton’s ever since the US 2003 “Shock and Awe” invasion of Iraq. Bolton and Pompeo are of the same revolting kind: They want wars, conflicts, or if they don’t get wars, they want to sow fear, they enjoy seeing people scared. They want suffering. Now they didn’t succeed – at least so far – with Venezuela, let’s try Iran. Pompeo – “Iran has done irregular things” – not saying what in particular he means – so Iran has to be punished, with yet more sanctions. And any argument is good.

The entire world knows, including the Vienna-based UN Economic Energy Commission, and has acknowledged umpteen times that Iran has fully adhered to the conditions of the Nuclear Deal from which the US exited a year ago. Of course, no secret here either, this at the demand of Trump’s Big Friend Bibi Netanyahu. The European Union vassals may actually turn for their own business interests, not for political ethics, but pure and simple self-interest – towards respecting the Joint Comprehensive Plan of Action (JCPOA), or Nuclear Deal. China and Russia are already holding on to the Deal, and they are not impressed by Washington’s threats. So, there is very little Trump and his minions can do, other than saber rattling.

Therefore, the nefarious Pence-Pompeo-Bolton trio must invent another warning: Iran or any proxy of Iran shall attack an ally of the US, and Iran will be devastated. In fact, they consider the Houthis in Yemen who fight for their sheer survival against the US-UK-France – and NATO supported Saudis, as a proxy for Iran. So, the US could start bombing Iran already today. Why don’t they?

Maybe they are afraid – afraid Iran could lock down the Strait of Hormuz, where 60% of US oil imports have to sail through. What a disaster that would be, not just for the US but also for the rest of the world. Oil prices could skyrocket. Would Washington want to risk a war over their irrationality? Maybe, Mr. Halfwit Trump might, but I doubt that his deep-dark state handlers would. They know what’s at stake for them and the world. But they let Trump play his games a bit longer.

Moving the aircraft carrier USS Abraham Lincoln, loaded with war planes, close to Iranian waters costs hundreds of millions or billions. Just to enhance a threat. A show-off. Bolton and Pompeo will entertain their sadism, enjoying seeing scared people. But the cost of war doesn’t matter – it’s just more debt, and as we know, the US never, but never pays back its debt.

Next, or simultaneously, is China. The trade war with China that started last year, then had a respite to the point of the recent joint negotiations and suddenly the Trumpians are veering off again. They must smash China, wanting to appear superior. But why? The world knows that the US is no longer superior by a long shot, and haven’t been for the last couple of years, when China surpassed the US in economic strength, measured by PPP – Purchasing Power Parity – which is the only parity or exchange rate that has any real meaning.

Guess what!  All these three cases have one common denominator: The dollar as a chief instrument for world hegemony. Venezuela and Iran have stopped using the dollar for their hydrocarbon and other international trading, already some years ago. And so did China and Russia. China’s strong currency, the Yuan, is rapidly taking over the US-dollar’s reserve position in the world. Sanctioning China with insane tariffs is supposed to weaken the Yuan; but it won’t.

All of these three countries, China, Iran and Venezuela are threatening the US dollar’s world hegemony and without that the US economy is dead, literally. The dollar is based on thin air, and on fraud.  The dollar system used around the globe is nothing but a huge, a very big and monstrous Ponzi-scheme, that one day must be coming crashing down.

That’s what’s at stake. New FED Board member, Herman Cain, for example, is pledging for a new gold standard. But none of these last resort US measure will work, not a new gold standard, not a trade and tariff war, and not threats of wars and destruction and “regime change”. The nations around the world know what’s going on, they know the US is in her last breath; though they don’t quite dare saying so, but they know it, and are waiting for the downfall to continue. The world is waiting for the grand fiesta, dancing in the streets, when the empire disappears or becomes utterly irrelevant.

• First published in New Eastern Outlook (NEO)

France and the EU: Recognizing Yet Supporting Apartheid Reality in Palestine

A recent statement made by the outgoing French Ambassador to the US regarding the nature of Israeli apartheid accentuates a larger ailment that has afflicted the European Union foreign policy.

The EU is simply gutless when it comes to confronting Israel’s illegal occupation of Palestine.

Ambassador Gerard Araud was, of course, right when he told the US magazine, The Atlantic, that Israel is already an apartheid state.

Noting the “disproportion of power” between Israel and the Palestinians, Araud said, “The strongest (meaning Israel) may conclude that they have no interest to make concessions.”

And since Israel “won’t make (Palestinians) citizens of Israel  … they will have to make it official, which we know the situation, which is apartheid.” Araud added, “There will be officially an apartheid state. They are in fact already.”

The fact that Araud has only divulged such obvious truths at the end of his five-year diplomatic assignment is expressive of the nature of politics, in general, and European politics, in particular.

The unpleasant truth is that the EU has served as an American lackey in the Middle East and has consistently operated within Washington’s acceptable margins. EU diplomacy rarely ventures away from this maxim. The fact that Araud dared to speak out is the exception, not the rule.

But Araud’s revelations are unlikely to translate into anything substantive. Moreover, they will not inspire a serious rethink in the EU’s position regarding the Israeli occupation or the US’ blind support for Israeli Prime Minister Benjamin Netanyahu’s militant and racist policies towards the Palestinians.

Some had hoped that the advent of an erratic and abrasive president in the White House could jolt the Europeans into action. They were encouraged by the January 2017 Paris Middle East summit that took place, despite American protests.

More than 70 countries added their voices to that of their French host, declaring their opposition to the illegal Jewish settlements and calling for the establishment of an independent Palestinian state as “the only way” to achieving peace.

The summit’s final statement urged Israel and the Palestinians to “officially restate their commitment to the two-state solution.” Then-French President, François Hollande, explained that his country’s motive was to merely ensure the ‘two-state solution’ is the frame of reference for future negotiations.

But what good did that do? Israel and the US ignored the summit as if it never took place. Tel Aviv continued to pursue its Apartheid policies, crowning these efforts with the Nation-state Law in July, which declared Israel as “the nation-state of the Jewish people”.

Trump, too, ignored the French and the EU altogether. On December 15, 2016, he selected an ardent Israeli supporter, David Friedman, to be his Ambassador to Israel. Friedman opposes the two-state solution and still refers to the Occupied Palestinian Territories in some ancient biblical designations, Judea and Samaria.

Nor did Trump consider the French position when he moved his country’s embassy from Tel Aviv to Jerusalem last May.

How did the EU respond to the concrete, albeit illegal, American actions? With more redundant statements that merely emphasized its political position but lacked any mechanism for serious action.

Last December, eight EU ambassadors, including that of France, issued a statement at the UN that was clearly aimed at the US. “We, the European Union members of the (UN Security) Council, would like to reiterate once more and emphasize the EU’s strong continued commitment to the internationally agreed parameters for a just and lasting peace in the Middle East, based on international law, relevant UN resolutions and previous agreements,” the statement read, in part.

Again, words and no action. The same pattern was repeated after Trump took it upon himself to grant the Occupied Syrian Golan Heights to Israel, defying the UN, the EU and, needless to say, the aspirations of millions of Arabs.

The EU foreign policy chief, Federica Mogherini, countered with another statement, on behalf of 28 EU states that Europe “does not recognize Israeli sovereignty over the occupied Golan Heights.”

So what? While the US defies international law with concrete steps, the EU settles for mere words, emphasizing a status quo that, even when it was embraced by Washington itself, wrought nothing but misery for Palestinians.

EU ineptness is only matched by its hypocrisy. Israel still enjoys advantageous trade privileges with Europe, and diplomatic ties between Israel and most EU member countries are at an all times high.

The only collective European initiative that seemed to matter at the time was in 2013, when the EU requested that Israeli products made in illegal Jewish settlements be labeled as such. After years of haggling, the EU admitted that monitoring Israeli trade practices as far as labeling is concerned has proven “impossible”.

The French position on trade with the illegal settlements was particularly disgraceful. While the Irish Senate had voted on December 5 to end the import of settlement-produced goods, in October 2018 the French did the exact opposite by suspending the special labeling rules.

In truth, the ineffectiveness of EU policies is nothing new, nor can it be blamed on Trump’s unilateral measures, either.  In fact, the words of French Ambassador Araud are consistent with the frustration felt by other EU diplomats throughout the years.

In February 2013, a report issued by EU diplomats described illegal Jewish settlements as “the biggest single threat to the two-state solution”, calling on Brussels to take decisive measures to stop Israel’s “deliberate and provocative” settlement enterprise.

It has been over six years since the report was issued. The EU did nothing to stop the illegal settlements, which have grown in leaps and bounds since then.

Worse, in the latest elections won by Netanyahu, he promised to annex the illegal Jewish settlements into Israel.

Considering the unconditional American support regarding Israel’s previous illegal annexations of Jerusalem and the Golan, this, too, could be a tangible reality in the near future. After all, the Jewish Nation-state law recognized Jewish settlements as “national value” and the state “will labor to encourage and promote (their) establishment and development.”

In the face of the US backing of Israel, EU foreign policy is inconsistent, weak and, ultimately, a failure. Alas, the idea which gained momentum during the early months of Trump’s presidency that the EU can develop a truly independent foreign policy position on Israel and Palestine has proven wrong.

To change all of that, EU members should heed the words of the French Ambassador, recognize the apartheid reality in Palestine and act against it as forcefully as the world acted against South African apartheid, which led to its final, irreversible collapse in 1994.

The Iron Fist of “Free Trade”

President Donald Trump is against the big, multilateral “free trade” deals (which have little to do with trade) supported by so-called “liberal elites” (who are not really liberal), like Hillary Clinton and Barack Obama. Such deals include the Trans-Pacific Partnership, from which Trump withdrew, and the Transatlantic Trade and Investment Partnership, which appears to be dead in the water, due in large part to popular opposition. The more moderate wing of the Democratic Party (represented by the likes of Bernie Sanders) also opposes the big, multilateral deals, but for opposite reasons. Unions, working people and small businesses see the TPP and TTIP as a way of undermining their rights. Trump, on the other hand, sees them as not going far enough to maximize US corporate profits. Trump prefers bilateral (or one-to-one) deals because, in a bilateral deal, the US is the biggest partner, whereas in an association, the US position is weakened.

But in terms of the basics—privatizing public resources, cutting back on workers’ rights, opening the environment to exploitation—there’s little difference between bi- and multilateralism when it comes to “free trade.” In poor countries, “free trade” is underpinned by the iron fist of militarism. Consider the case of Congo in the 1960s: the US, Britain and Belgium overthrew the government, backed a dictatorship and laid the foundations for an exploitative Bilateral Investment Treaty (BIT) that enabled US corporations to sue to the government of the impoverished people.

The US State Department’s website lists three broad aims of BITs: “protect investment abroad…[;] encourage the adoption of market-oriented domestic policies that treat private investment in an open, transparent, and non-discriminatory way; and support the development of international law standards consistent with these objectives.” BITs are only “nationalistic” in the sense that they benefit national corporations. They undermine domestic workers and investors by allowing country x to open businesses or acquire businesses in country y. “Nationalism” in this context really means US corporate dominance.

In the 1980s, the Reagan administration signed BITs with several countries, most of them extremely poor. Early test-subjects included: the Democratic Republic of Congo (DRC, 1984), the Republic of Congo (1990), Bangladesh (1986), Cameroon (1986), Egypt (1986), Grenada (1986), Haiti (1983), Senegal (1983) and Turkey (1985). Let’s look at the DRC, also known for a time as Zaire.

In June 1960, the Belgian Congo became independent of its European master. Patrice Lumumba came to power on a popular vote and made clear his intentions to use Congo’s resources in the interests of the Congolese: “The exploitation of the mineral riches of the Congo should be primarily for the profit of our own people and other Africans,” he told New York businesspeople. In September 1960, President Kasa-Vubu dismissed Lumumba, who had been Prime Minister for less than three months before the British, Belgian and US intelligence services conspired to murder him.

In Britain, MI6 officer and later peer, Daphne Park, was asked if MI6 was involved in Lumumba’s assassination. “I organized it,” said Park. The BBC acknowledges: “Lumumba made a fateful step − he turned to the Soviet Union for help [economic and military]. This set off panic in London and Washington.” Lumumba and his supporters, Maurice Mpolo and Joseph Okita, were tortured and executed by forces from Belgium and Congo’s Katanga region, before being dissolved in acid.

From the South African Truth and Reconciliation Commission we learn that British intelligence plotted Operation Celeste, the murder of UN Secretary-General, Dag Hammarskjöld, who died in a plane crash. Hammarskjöld refused to withdraw UN troops from Congo, fearing further massacres between the warring factions. Britain’s MI5 and the Special Operations Executive were involved in the plot, which was hatched in apartheid South Africa via the South African Institute for Maritime Research. The CIA was also involved. Letters exchanged between agencies state: “Dag is becoming troublesome… and should be removed… I want his removal to be handled more efficiently than was Patrice.” The plan was to explode Hammarskjöld’s plane with a bomb allegedly supplied by Union Minière, a Belgian mining company with private interests in the copper-rich Katanga region.  In 1965, Lumumba’s pro-US Chief of Staff for the Congolese National Army, Mobutu Sese Seko, came to power. Mobuto quickly garnered an international reputation for brutality, banning political parties and crushing secessionist movements.

By 1984, when the US signed its first-ever BIT with the country, Congo was importing 60 per cent of its food, despite having plenty of arable land; half of all Congolese children died before the age of five; and wages were 10 per cent of what they had been prior to independence. The New York Times reported at the time: “Zaire has one of Africa’s largest markets and a liberal investment code.” The BIT stated that the objective was “to provide US investors with significant investment guarantees and assurances as a way of inducing additional foreign investment.” Another aim was “to encourage, and facilitate participation by private enterprise to the maximum extent practicable.” It also noted: “Each of these models was developed after lengthy and extensive consultations within the US Government and with the private sector.”

As well as the generic misery and mass deaths that come with propping up a dictator, one of the other anti-democratic facets of the BIT is the fact that American companies could now sue the Congolese government for alleged inhibitions of profit. In 1993, the firm American Manufacturing Trading sued Zaire in a case “based on the provisions of a [BIT].” The law suit chides Mobutu’s failure to prevent looting of foreign-owned corporations. It says that this is the fault of the Congolese people (“the government”), who must compensate companies like American Manufacturing Trading.

This model of using the iron fist of militarism to impose the “velvet glove” of so-called free trade is an in old one that generalizes around the world.

*****

This article is an excerpt from my new book, Privatized Planet: “Free Trade” as a Weapon Against Democracy, Healthcare and the Environment, (New Internationalist).

Failure of Trump Tax Cuts

For President Donald J. Trump, there is only one goal in life – making money. Lowering taxes gives corporations and individuals more money; therefore, lower taxes must be beneficial. The constant self-serving references to his management of the economy are meaningless – examining President Trump’s essential thrusts for invigorating an already invigorated economy reveals contradictions in his Taxation Policies.

Reducing Income Taxes

President Trump signed the “Tax Cuts and Jobs Act” into law on December 22, 2017. His belief that reducing income tax rates automatically advances the economy is a shibboleth; a simple analysis exposes the fallacy.

Some economists find subjective reasons for why lower income tax rates benefit the economy. Objectively, income tax rates only determine the transfer of money between government and taxpayers. Neither direction, up or down, adds or subtracts money to the economic system nor allows more or less available spending to the economy; purchasing power stays the same, which means the total purchases of goods and services remain the same. One exception – unlike the consumer who cannot accumulate vast funds for sizable investments, the government can temporarily postpone consumer spending, aggregate billions of dollars, and channel these funds into huge projects that add to the Gross Domestic Product (GDP).

As one example, the government uses an accumulation of taxes to initiate construction projects. The suppliers to the projects hire workers, and the total wages paid the workers almost matches the taxes raised for the effort. Spending by the new wage earners ripples through the economy, and, in its final appearance, almost matches the reduced consumer spending of the taxed individuals. Consumer spending stays about the same, but money circulates through other channels. Employment, production (new constructions), and GDP increase — give one advantage to tax increases.

Individual workers and taxpayers benefit from tax cuts; however, stimulating the entire economy by income tax breaks is a psychological phenomenon. The exaggerations, promises, and optimism generated by tax breaks fashion a more optimistic public that incorrectly assumes they stimulate additional spending to already combined consumer and government spending. Creeping into the debate are other false assumptions — those who have excess funds will purchase domestic goods, invest, and stimulate growth. Not considered is that individuals might purchase imports, invest in speculative ventures that only churn money, and decrease available purchasing power in the domestic economy. The latter seems to have been one result from the tax cuts.

New York Times, March 6, 2018, “In Blow to Trump, America’s Trade Deficit in Goods Hits Record $891 Billion”.

Money from the tax cuts helped Americans buy more imported goods than ever in 2018. In addition, to finance the tax cuts, the government needed to borrow more dollars, some of which came from foreign investors.

If those who protest vociferously against the ever increasing government debt and its burden to future generations want to ameliorate their children’s problems, why don’t they pay their fair share of taxes now, which will lower the government debt and prevent higher taxes for their descendants in the future?

Overhauling Corporate Taxes

Granted that overhauling an antiquated corporate tax structure could be advantageous to the economy. However, is it necessary for an economy that, despite supposed elevated corporate taxes, achieved great success, which included low unemployment and high corporate profits? Why fix something that was not broken and had no indication of being disrupted? If lowering corporation tax rates promoted more exports and investment, then its value is apparent. Has that happened? Analysis, statistics, and several charts answer the question.

Corporations already paid less than 21% in taxes.

In 2012, among large corporations that met that $10 million in assets threshold, 42.3% paid no federal income taxes after tax credits. Among profitable large companies, 19.5% paid no federal income taxes. The average effective tax rate among the profitable large corporations was 16.1%, under federal tax treatment. Compared to the pretax net income these corporations showed in their annual reports the rate was 14%.

One prominent feature of the “Tax Cuts and Jobs Act,” which should be factored into the assessment of the overhaul of the corporate tax structure, is the change from a global to a territorial tax system. Instead of corporations paying the difference between the U.S. tax rate and taxes already paid to the country where income was earned, each subsidiary now pays only taxes to the country in which it earns the income. Under new tax code Section 965, U.S. multinationals are required to pay a one-time “transition tax” on income accumulated overseas since 1986. The law treats the income as repatriated and imposes a 15.5 percent tax on cash or cash equivalents, and an 8 percent tax on illiquid assets, such as factories and equipment.

The amount of offshore cash corporations are bringing back to the U.S. dropped sharply for a second straight quarter, falling short of the trillions of dollars President Donald Trump had promised would result from his tax overhaul.

Companies repatriated $92.7 billion in the July-September period, the lowest amount this year and down almost 50 percent from the previous quarter, according to data released Wednesday by the Commerce Department. U.S. corporations repatriated $294.9 billion in the first three months of 2018 and $183.7 billion in the second quarter.

This provision of the “Tax Act” may be the only tax reform that stimulated the economy.

Assessing benefits of the “Tax Cuts and Jobs Act” examines its effects on:

Corporate Profits

Observe corporation after tax profits (lower figure) during the last several years — companies had high profits, and sufficient funds for investment must have been available.

Compare after tax to before tax profits (upper figure with slightly different scale) and note the low tax rate on the profit. As examples,

Profits in 2014 reached $2320 billion and after tax profits were $1920 billion.

Tax Rate = $400b/$2320b = 17.2 percent.

Profits in 2015 were $2000 billion and after tax profits were $1640 billion.

Tax Rate = $360b/$2000b = 18.0 percent.

Profits at end of 2018 (after Tax Act) were $2220 billion and after tax profits were $1980 billion.

Tax Rate = $250b/$2230b = 10.8 percent.

Calculations verify that Tax Rates for most corporations were much below the previous 35% rate and, presently, are only about 6-7 percent below that of the previous average rate.

Another supposition is that, with increased after tax profits, corporations can improve competition from foreign sources by trading the profits for lower prices. How much can prices be lowered? Calculations, shown in the following table, demonstrate what products will cost for two different profit margins with reduction of the corporate tax from 35 percent to 20 percent, and if the corporation forfeited all of the profit increase by reducing its prices.

Price That Maintains After Tax Profit

Is the cutting of prices by 2.0% – 4.0% sufficient to make products more competitive? Unlikely! Advantage from the more realistic 6 percent tax cut makes it more unlikely.

How additional profits were used


Stock buybacks, increased dividends, and net domestic investment provide the answers.

Stock buybacks increased by $330 billion; dividends increased slightly.

Net Domestic Investment increased by $200 billion.

As shown before, the repatriated profits, less the 15.5% tax rate, amounted to about $424 billion in year 2108. The sum of additional usage of profits amounted to $530 billion in year 2018. Obviously, the repatriated profits played the major role in additional usage of profits, and tax cuts had little effect on profit usage.

Using repatriated profits to enrich stockholders might have merits – stockholders deserve benefits from their corporations and this benefit has an added significance. Unlike normal stock market trades, where money is exchanged and no new money enters the system, these stock buybacks took external funds and injected them into the domestic system, which increased the available money supply and purchasing power.

Trade Balance

It is difficult to assign a relation between tax cuts and Trade in Goods and Services. President Trump’s tariff policies add confusion to determining the causes for the trade deficit and how it was affected by tax cuts. Clearly, despite President Trump’s stress on improving it, the tax cuts did not reverse the trend, and the trade deficit increased by a large margin ($69b) in year 2018.

Foreign Competition

Exports, which had already been increasing, additionally increased, and imports, especially of goods, increased much more. Bottom line is that the corporate tax cuts cannot be shown to have improved competition with foreign sources.

Gross Domestic Product (GDP)

The GDP grew at a more rapid rate during year 2018, up about $1160b compared to growth of $852b in year 2017, or an additional $300b in the rate of growth. The kicker is that Federal Government Spending (shown above), which added $110B to the GDP, coupled with the $200b increase in net domestic investment (cited previously) accounted for that added growth. The additional trade deficit of $69b (cited previously) subtracted from the GDP growth, but can be accounted for by a partial spending stimulus from the $330b stock buybacks due to the profit repatriation (cited previously). Sufficient evidence exists that other mechanisms than the tax cuts were responsible for the added growth to the GDP.

Government Deficit

According to Department of the Treasury reports, corporate tax receipts fell by 28 percent – from $223 billion in 2017 to $162 billion during the first nine months of fiscal year 2018. For that reason, as the following chart shows, the Federal Government deficit, which has increased in all of years of Trump’s presidency, increased by $114 billion. If $75b taxes had not been collected on the $500b of repatriated profits, the deficit would have increased by $189b. Because the defict increased, it can be argued that the deficit increase, caused by the tax cuts, stimulated the economy.

Conclusions

Evidently, corporations flush with repatriated profits, used these retained earnings for about $330 billion in stock buybacks and about $200 billion for additional investment. The repatriated profits also increased the money supply and GDP.

This indicates the tax cut are responsible for (1) increased after tax profits for already highly profitable corporations, (2) increased trade deficit, (3) about $80 billion loss (annualized) in government revenue, and (4) increased federal deficit to $114b. One more result – lowering of competition — corporations with large profits can use the funds to buy out and provide stiffer competition to corporations that have miniscule profits or losses.

President Trump’s corporate and income tax cuts enriched corporations, satisfied those already employed and flush with money, and did little to stimulate the national economy.

Note: Deciphering a multitude of economic statistics and using them to evaluate the effectiveness of tax cuts is a complicated task. It is believed that the statistics have been correctly applied and the results are credible. If not, rebuttals to lapses in argument and incorrect formulations, as well as advice to obtaining more precise numbers, are welcome

China and Macron’s U-Turn

Less than a week ago, President Macron was lambasting Italy for signing agreements with China in the context of their New Silk Road, alias President Xi Jinping’s Belt and Road Initiative (BRI), in the same breath he was criticizing China for attempting to undermine Europe with new trade individual country deals under the pretext of BRI. However, Italy, also scolded by Brussels for her single-handed deals with China, was, in fact, the first G7 country for signing a number of contracts with China to use Italian ports under the BRI, making Italy also the first official EU partner of China’s BRI.

In his zeal of becoming Europe’s new king, Macron also called on all EU members not to go their own way with China, but to jointly negotiate with China “new deals” under the BRI. A joint EU to be strong and equal to the economic and trade behemoth, China. Indeed, solidarity is always ‘good’, but Europe is the last bit of Mother Earth’s territory that has ever shown any solidarity and cohesion among her neighbors and co-members of this illustrious non-union club, called the European Union.

Yet, surprise-surprise! On President Xi’s next stop, Paris, coming from Italy, Macron rolled out the red carpet for the Chinese President and, according to RT, went on to sign billions worth of new contracts with the Asian leader. If this looked like a Macron U-turn, it was a Macron U-turn. As an afterthought he invited German Chancellor, Madame Merkel and EU President Junker to Paris for a photo-Op under the Arc de Triomphe just to make sure his about-face was not to be misinterpreted.

President Xi also signed a multi-billion-euro deal – may be as much as € 30billion – for some 300 passenger jets from Airbus. Though Airbus is a European venture, its main manufacturing plants are in France. This is an especially hard blow to Boeing, after the company’s 737 MAX disasters. Weakening Boeing is also weakening an important US military contractor.

As was to be expected, Washington didn’t like Italy’s moving closer to the East by signing several BRI contracts, and even less so, while the EU, represented by Jean-Claude Juncker, Angela Merkel, Germany and Emmanuel Macron, France, were welcoming President Xi today in Paris. Showing a little sympathy to friend Trump, Merkel observed to Reuters, “We, as Europeans, want to play an active part and that must lead to certain reciprocity and we are still wrangling over that a bit.”  Showing Washington that not all is lost will surely give the empire a grain of hope.

Exactly 6 years ago, President Xi Jinping launched the BRI, the most ambitious and largest economic development project in recent history. On President Xi’s second state visit to Germany in March 2014, he specifically offered Madame Merkel to become (at that time) the western most link for the BRI. But Madame Merkel just snubbed at the proposal and let it go. She was too close to Washington, and, who knows, maybe received marching orders from Obama and his handlers, to leave her fingers from tightening relations with China.

As the Chinese are not pushy, Mr. Xi went home and pursued this massive project further. Within the next 30 years at least, it will build multi-trillions of Chinese Yuans-worth of infrastructure, interconnected research and education centers, industrial development, facilitate cultural exchange – it will build bridges among people. The BRI is so important that the Chinese National Assembly decided in 2017 to incorporate it into the Chinese Constitution.

Today BRI spans the globe with some six land and maritime routes. More are under preparation. BRI is not to invade and take over the world, as the west would like you to believe. The New Silk Road is instead promoting a multi-polar world. It will pave the way towards a new world order, but not the one the Rothschilds and Co. are dreaming about, but one that promotes equal partnership and solidarity among countries.

It is amazing.  The west was a sleep for 6 years, or didn’t want to see. Maybe the Washington-driven war machine simply thought it will go away. But it didn’t and doesn’t. China has the world’s strongest economy according to Purchasing Power Parity (PPP) indicators (that’s all that really counts), surpassing the US in 2017. With the BRI, and an ever-stronger currency, the Yuan, due to a stable and steadily growing distributive economy, and in a military and strategic alliance with Russia, China is literally unbeatable. Hence, as basically a last-ditch effort, Washington’s multiple attempts at trade wars. It’s a publicity stunt, to make the world believe the US is still calling the shots. In reality, the New Silk Road is most likely the vehicle to drive the United States warrior arrogance into the ground. Good riddens!

And let’s not forget, BRI is intimately linked with Russia, not only physically as in transport infrastructure, but also strategically for purposes of economic development of henceforth forgotten and neglected countries and regions. So far the esperando west has not even reacted to this “imminent threat”, as perceived by Washington, the Russian haters. If they would add Russia and China together as the new Silk Road front, they would pee in their pants – as they may realize their days of never-ending treachery and lies would soon end. Therefore, better that the Ostrich pulls only one eye out of the sand, blinking at China. Lying to themselves, and, of course, to their people, is just one more nail in the coffin of the west.

We may not be there yet, as war threats, and attempts at regime change from the neofascist Trump team are still very much “on the table”. But with Russia’s far superiority in military power, and the Chinese economic masters, this table may soon be symbolically blown apart, meaning, will the commanding and reigning elite living a lush and ego-centric lifestyle really want to run the risk of being out-nuked?  Because a new war will not just be played out in Europe, like the last two WWs; nor will New Zealand offer a safe haven for those elite and super rich, who have already secured their properties in this far-away land.  Don’t think so. They, the dark state elite, who pull the strings, rather live in a safe world and enjoy their bounties stolen over hundreds of years, as long as they last, even under a Russia-China and multipolar SCO (Shanghai Cooperation Organization) sponsorship.

When that recognition dawns on western minds, that all that counts is economics – economics that may bring more equality, a better life and harmony among nations, and more prosperity for more people on this planet earth.

Did Mr. Macron and his European counterparts just see the light? Did he realize that being the king of vassal Europe is really meaningless and that it’s high time to jump the sinking boat? Only the near future will tell.

Another scenario is that China has long realized the futurelessness of the EU, and instead of banking their trade agreements with a potentially dead body, they approach country by country, Greece, Italy, France, Germany – who is next? Because, even with the collapse of the European Union, the 28 countries must and will survive. So, trade agreements with each one of them individually have an infinitely higher value than signing up with a block of unsolidary, uncoordinated, even in some cases hostile-to-each-other nations with a fiat currency that is doomed, as it will never survive in such a non-union constellation without even a Constitution pointing to a common vision.

Why the Europeans can’t see that for themselves, and run away from this disaster called Brussels, is a miracle for me. If a Martian would watch the human behavior on our Mother Earth from outer space, he, she or it would laugh no end at our abject schizophrenic behavior but at the same time with tears of sadness, as humanity is hell-bent to self-destruct.

Well, Roi Macron will not let go, he is not (yet) allowed to let go. His paymasters, those that put him there, the Rothschild financial clan and Co. have not gotten enough out of him yet, in terms of milking Europe to the bones. How much more can Macron’s naïve pathological egocentricity still give? By launching the military, the first time since 1948, with live ammunition against harmless, unarmed protesters, the Yellow Vests, his French co-patriots (although he is an Über-French, he is a wannabe European king), is maybe the last nail in Macron’s coffin – figurately speaking.

As Tom Luongo so aptly describes:

There are few people in this world more odious than French President Emmanuel Macron after his behavior this week. I’m sure there are child molesters who are worse. But as a man who is pivotal in the future of hundreds of millions of people, his decision to order the French military to quell the Yellow Vests protests with live ammunition is simply vile. Macron outed himself as the very symbol of what animates the globalist elite he represents. Disdain.

Those black-hooded “protesters”, who plant the violence, burn down bank entrances, break windows and loot shops, are nothing less than paid agents-provocateur. You may have noticed, in the hundreds of demo-videos circulating on internet, the police leave them pretty much alone – orders from the Macron regime. Will the military be loyal to deceitful, despicable Macron, or to the nation; i.e. to the people? That remains the question, as fissures within the military are already noticeable.

So, Macron’s about-face, or U-Turn, after having scolded Italy for going it alone, instead of ’collectively’ with the EU, may be by orders of the financial monarchs who forced him with millions of false propaganda into the French Presidency and who may now also see the light: Europe is no longer a viable bet.

• First published in New Eastern Outlook NEO

US Negotiations: Masters of Defeats

The US is currently engaged in negotiations with at least a dozen countries — which involve fundamental political, military and economic issues.

The US has adopted diplomatic strategies in the face of its ‘inability’ to secure military victories. The purpose of adopting a diplomatic approach is to secure through negotiations, in part or fully, goals and advantages unattainable through military means.

While diplomacy is less subject to military and economic losses it does require making concessions. Negotiations are only successful if there are reciprocal benefits to both parties.

Those regimes which demand maximum advantages and minimum concessions, usually fail or succeed because they are based on very unequal power relations.

We will proceed to evaluate Washington’s success or failure in recent negotiations and analyze the reasons and consequences for the outcome.

US-North Korea Negotiations

President Trump and North Korean leader Kim Jong-Un have been engaged in negotiations, for nearly a year. The White House has prioritized the ‘de-nuclearization’ of the peninsula which includes dismantling nuclear weapons, missiles, test sites and other strategic military objectives.

North Korea seeks the end of economic sanctions, the signing of a US-Korean peace treaty and diplomatic recognition. A decisive meeting between the two took place Feb. 26-27, 2019 in Hanoi.

The negotiations were a total failure. Washington failed to secure any gains, nor did they advance the peace process; and there are no future prospects.

North Korea offered three significant concessions which were not reciprocated. President Kim Jong-Un proposed to (1) dismantle nuclear testing sites, (2) announced a moratorium on nuclear tests and inter-continental range ballistic missiles tests, and (3) agreed to partially dismantle missile engine test sites.

Washington offered nothing in return. Instead it demanded total disarmament, no lifting of sanctions, no signing of the end of the US-Korea war.

Washington’s asymmetrical ‘negotiations’ were pre-determined to fail. The US underestimated the capacity of the North Koreans to insist on reciprocity; they believed that future verbal promises would entice the North Koreans to disarm. The Koreans were fully aware of the recent US record of reneging on signed agreements with Iran, China and its partners in the Belt and Road agreement.

Moreover, North Korea has powerful allies in China and Russia and nuclear weapons to resist added US pressure.

US-Iran Negotiations

US and Iran negotiated an agreement to terminate economic sanctions in exchange for ending nuclear weapons development. It temporarily succeeded but was quickly reversed by the Trump regime. The White House demanded Iran dismantle its missile defense program and threatened a military attack. Washington did not bargain, it sought to impose a one-sided ‘solution’. The UK, France, Germany, Russia and China, co-signers of the agreement, rejected the Trump dictate, but a number of major EU multi-national corporations capitulated to the White House demand to tighten sanctions.

As a consequence, the US deliberate sabotage of negotiations pushed Iran closer to Russia, China and alternative markets while the US remained wedded to Saudi Arabia and Israel. The former is engaged in a losing war with Yemen, the latter has remained an international pariah receiving billions of US dollars in handouts.

US-China Negotiations

The US has engaged in negotiations with China to downgrade its economy and retain US global supremacy. Beijing has agreed to increase its imports from Washington and tighten controls over Chinese use of US technology, but the US has not offered any concessions. Instead, Washington has demanded that China end the state’s role in financing its cutting-edge technology, artificial intelligence, and communication innovations.

In other words, China is expected to surrender its structural advantages in order to avoid harsh White House tariffs which would reduce Chinese exports.

There is no reciprocity. The Trump regime operates by threats to China which will have negative effects: on US farmers dependent on Chinese markets; on US importers, especially the retail sector which imports Chinese products; consumers who will suffer higher prices for goods purchased from China.

In addition, China will deepen its links with alternative markets in Asia, Africa, Russia, Latin America and elsewhere.

As of the most recent year (2018) China’s positive trade balance with the US rose to $419 billion dollars while the US was forced to increase its subsidies to US agro-exporters to compensate for loss of sales to China.

After several months of negotiations US representatives have secured trade concessions but failed to impose a breakdown of China’s economic model.

By the middle of 2019, while negotiations continue, the likelihood of a ‘grand bargain’ is dismal. In large part this is because Washington fails to recognize that its weakened global position requires that the US engage in ‘structural changes’, which means that the Treasury invests in technology; labor upgrades and education. The US should practice reciprocal relations with dynamic trading partners; to do so, Washington needs to invest billions to upgrade its domestic infrastructure; and reallocate federal spending from military spending and wars to domestic priorities and productive overseas agreements. US diplomatic relations with China based on threats and tariffs are failing and economic negotiations are deteriorating.

US-Venezuela: Non-Negotiations a Formula for Defeat

Over the past half-decade (2015-2019) Washington has succeeded in restoring client regimes in Latin America, by military coups, political intervention and economic pressure. As a consequence, the White House has successfully ‘negotiated’ one-sided political, economic, social and diplomatic outcomes in the region … with the exception of Cuba and Venezuela.

President Trump has broken negotiated agreements with Cuba to no advantage; US threats have led to Cuba securing greater ties with Europe, China, Russia and elsewhere without affecting Cuba’s tourism business.

The Trump regime has escalated its political and economic propaganda and social war against Venezuela. Multiple overt coup efforts have backfired beginning in April 2002 and continuing to February 2019.

While the US succeeded in the rest of Latin America in consolidating hemispheric hegemony, in the case of Venezuela, Washington has suffered diplomatic defeats and the growth of greater popular resistance.

US interventionist and sanctions policies have sharply reduced the presence of its middle- and lower-middle-class supporters who have fled abroad. US propaganda has failed to secure the support of the Venezuelan military which has become more ‘nationalist’ with very few desertions.

The White House appointment of the convicted felon Elliott Abrams, known as the ‘butcher of Central America’, has certainly undermined any prospect of a favorable diplomatic settlement.

US sanction of political and military leaders precludes efforts to co-opt and recruit leaders. The US appointed as its ‘interim ruler’ one Juan Guaidó who has little domestic support – widely seen domestically as an imperial stooge.

The US non-negotiated successes in Latin America have blinded Washington to the different conditions in Venezuela; where structural socio-economic reforms and nationalist military training consolidated political support.

In the case of Venezuela, the US refusal to enter into negotiations has led to greater polarization and multiple defeats, including the failed coup of February 23/24 2019.

US-Russia: Colluding with Failed Diplomacy

Washington successfully ‘negotiated’ the surrender and break-up of the Soviet Union and the subsequent pillage of Russia. It was the US’ most successful ‘negotiations’ of the century. The US ‘negotiations’ allowed it to expand NATO to the Russian frontier, incorporated most of East Europeans into the EU and NATO and led the US to boast of creating a ‘unipolar world’.

Excess hubris led the US to launch prolonged (and losing) wars in Afghanistan, Libya, Iraq, Somalia, Syria and elsewhere.

With the election of President Putin, Russia made a comeback, which led to the Kremlin reconstituting its military, economic and geopolitical power.

The White House reacted by attempting to ‘negotiate’ Russia’s military encirclement and to undermine Moscow’s economic growth.

When Russia refused to submit to US dictates, Washington resorted to economic sanctions and power grabs in the Ukraine, Central Asia and the Middle East (Iraq and Syria).

Washington rejected a diplomatic approach in favor of economic intimidation — especially as some US-backed oligarchs were arrested or fled with their wealth to the UK and Israel.

The US refused to recognize the opportunities which still existed in Russia – a neo-liberal economic elite, a mainly mineral export economy, and Moscow’s conciliatory approach toward US military engagement in Libya, Somalia, Yemen and Iran.

US ‘negotiations’ were non-starters. The White House defined Russia as an enemy to be undermined. Sanctions became the weapon to deal with Russia’s attempt to regain its world standing. Washington’s aggressive posture included its refusal to recognize that the world had become multi-polar; that Russia had allies in China, partners in Germany, military bases in Syria, and has loyal and advanced scientific elite.

The US, operating from a past image of Russia from the Yeltsin era, failed to adapt to the new realities – a resurgent Russia willing to bargain and secure reciprocal advantages.

The US failed to recognize potential allies and economic advantages in open negotiations with Russia. Many Russian economists close to the Kremlin were neo-liberals, ready and willing to open the economy to US penetration. Russia was willing to concede the US a major role in the Middle East and offered to negotiate their oil export policies.

Instead the US refused to negotiate power sharing .US sanctions forced Russia to embrace China; Washington’s drive for global dominance encouraged Russia to build ties with Venezuela, Cuba, Iran, Syria and other independent nations.

Washington’s unipolar policies turned a potentially lucrative and long-term strategic relation into costly confrontations and failed diplomacy.

US and the European Union: Dead End Deals

Bullying Europe has been a successful endeavor, which the US has put on display on innumerable occasions in recent times. Washington negotiates agreements with the French, English and German to end economic sanction on Iran and then reneges and turns around to apply sanctions on European firms which comply with the US and disobey their own government.

The US negotiates with Europe on trade policies and then abruptly threatens to impose sanctions on its crucial auto exports.

Europe negotiates with Washington on NATO security issues and then the White House threatens them in order to raise their military spending.

The US claims that the EU is a strategic ally but treats it as a junior partner.

Negotiations between the two have been a one-sided partnership: the US sells arms and names adversaries, while Europe argues and dissents, eventually submitting and sending troops to fight US wars in Syria, Afghanistan, Iraq, Libya and elsewhere.

The US dictates sanctions against Russia, increasing the price of EU imports of gas and oil. Germany debates, discusses, hems and haws while avoiding an outright rejection.

The US has steadily encroached on EU prerogatives to the point where it claims if the EU fails to comply with the White House’s “America First” agenda, it would cause the US to withdraw from NATO.

Despite a longstanding alliance, the White House no longer negotiates policies – it threatens and expects compliance. Despite a history of EU submission and pro forma debates, as Washington has hardened its opposition to Russia, China and Iran it no longer considers EU trade relations a point of negotiations. While Europe might consider the US as an ally, it will not be allowed to be treated as such, because it is viewed as a trade adversary.

Conclusion

Washington has succeeded in securing non-reciprocal agreements with weak countries. This was the case in post-war Europe, post-Gorbachev Russia and among Latin America’s current colonized regimes.

In contrast, Washington’s rejection of reciprocal agreements with Russia, China, Iran, Cuba and Venezuela has been a failure. US trade wars with China have led to the loss of markets and allowed China to pursue global agreements through its massive billion-dollar ‘Belt and Road’ infrastructure projects.

US one-sided hostile policies toward Russia have increased ties between the Kremlin and Beijing.

Washington has lost opportunities to work with neo-liberal oligarchs in Russia in order to undermine President Putin. Washington has failed to negotiate reciprocal ties with North Korea which would ‘de-nuclearize’ the peninsula in exchange for lifting economic sanctions and opening the door for a capitalist restoration.

Demanding unilateral concession and submission has led to uniform failures; whereas negotiated compromises could have led to greater market opportunities and long-term political advances.

President Trump and his top policy makers and negotiators have failed to secure any agreements.

The Democratic Congress has been as ineffective and even more bellicose – demanding greater military pressures on Russia, expanded trade wars with China and fewer negotiations with North Korea, Iran and Venezuela.

In a word, failed negotiations and non-reciprocal diplomacy has become the hallmark of US foreign policy.