July/August 2010 Issue

We have sent our July/August 2010 issue to the printers, and we will soon be emailing it to e-subscribers. (Not a subscriber? Click here.)

We’ve posted a couple of the articles from the new issue to the website:  Mary Bottari’s bubble-chart comparing the Wall Street bailout to other large government expenditures (here);  and Elissa Dennis’s feature article on the Yasuni region of Ecuador and Rafael Correa’s plan to keep the region’s oil in the ground (here).

Here’s this issue’s editorial note:

Corporate Anarchy

How is the spill in the Gulf of Mexico related to the “too-big-to-fail” banks? A piece by Chilean blogger Gonzalo Lira posted to the Canadian website Global Research (globalresearch.ca) chalks it all up to what he calls “corporate anarchy,”

[in which] corporations do not have to abide by any rules—none at all. Legal, moral, ethical, even financial rules are irrelevant. They have all been rescinded in the pursuit of profit—
literally nothing else matters. … The larger the corporation, the greater its absolute freedom to do and act as it pleases.  …  The biggest of them all, like BP and Goldman Sachs, live in a positively Hobbesian State of Nature, free to do as they please, with nary a consequence.

BP has certainly done as it pleased. The New York Times has reported that the federal agency responsible for overseeing offshore drilling, the Minerals Management Service, “repeatedly declined to act on advice from its own experts” on how to minimize the risk of failure of “blowout preventers” on rigs like Deepwater Horizon. Lira speculates that BP postponed a “top-kill” of the well until it was too late, just so it could preserve its investments in the oil field. We may never know whether this is true, but what is noteworthy is how plausible it is: if a profit-making company is in charge of clean-up, why would it compromise its investment to protect the environment? (More on the Gulf spill from Linda Pinkow, p. 6, and Antonia Juhasz, p. 7.)

The big banks clearly also do just about as they please. Both the financial crisis and the “too-big-to-fail” banks themselves are the result of years of non-regulation, deregulation, and lax oversight—in other words, corporate anarchy. Now, industry lobbyists have derailed key provisions of the current financial reform bill, kept others (like a financial transactions tax) off the table completely, and are working overtime to water down what remains (like the Volcker Rule and Blanche Lincoln’s derivatives provision). Rob Larson’s cover story (p. 11) explains how the big banks got that way, and how market consolidation gives them the political clout to foil reform efforts. And this issue’s Economy in Numbers (p. 22) provides a striking visual representation of that clout, by showing how the bailout of Wall Street dwarfs other government spending priorities.

And bosses generally do as they please—and the fact that the bosses have the upper hand these days in the U.S. economy goes a long way toward explaining the long-term unemployment that characterizes the lingering recession. John Miller points out that what we have is an “employers’ strike”: even as their costs are down and profits are up, employers are refusing to hire. Employers’ response to the recession is just an extension of recent historical trends.  Veteran Boston-area organizer Mike Prokosch alerted us to a report from McKinsey Global Institute that looks at GDP growth since the ’70s. The report finds that adding new jobs accounted for 68% of GDP growth in the ’70s but by this decade, that figure had shrunk to only 28%. Now, it’s rising worker productivity that accounts for most GDP growth (72%, up from 32% in the ’70s). Mike observes: “There could hardly be a clearer explanation of the chronic job shortages in this country, and our increasingly slow jobs recovery from each recession over time.”

For a glimpse of what things look like with a government that actually pursues the public interest, check out Elissa Dennis’s feature (p. 17). Rafael Correa, Ecuador’s (sometimes) left-leaning president, has spearheaded a plan to keep some of that country’s oil in the ground, in exchange for international payments to be used for sustainable energy.  The plan would be a three-fer: avoiding the environmental damage of extraction, reducing the amount of oil available to contribute to carbon emissions, and helping to pay for sustainable energy alternatives. Let’s hope that Big Oil doesn’t stop the plan in its tracks.

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–Chris Sturr

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