The Top Secret Trade Deal You Need to Know About

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It is fair to say that the information, leaked about the Trans-Pacific Partnership and discussed in the video clip below, mirrors the terms, which are currently being negotiated in secret, for the EU-US Free Trade Agreement (also known as TAFTA or TTIP).  Both deals are being fast-tracked by the Obama and UK governments – the push is for implementation by the end of 2014.

Simply put, these Trade Agreements will remove all the bits of legislation aimed at protecting ordinary people and the environment.  In free-trade-speak, these protections are known as ‘barriers to trade’… and that says it all.

The Top Secret Trade Deal starts at about 13 minutes, after a harrowing preview of  ‘Unmanned: America’s Drone Wars.

The Top Secret Trade Deal You Need to Know About

Bill Moyers discusses the Trans-Pacific Partnership with journalist Yves Smith and economist Dean Baker, then a preview of filmmaker Robert Greenwald’s new documentary Unmanned: America’s Drone Wars. Also a Bill Moyers essay on Obamacare’s rocky rollout.

Why the deficit myth is a useful deception

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Why the deficit myth is a useful deception

It is often difficult to understand the economic-speak into which so many expert-explanations seem to lapse.  I imagine that I am not alone so I will share a version of the explanations that make sense to me.  Unfortunately, I no longer remember everyone that I should credit.. apologies.

The deficit is the putative shortfall in government tax receipts or ‘income’ relative to its ‘spending’.   The words ‘income’ and ‘spending’ are deliberately put into inverted commas because George Osborne and his ilk would have us believe that the UK budget is like our own individual household income and spending. (To be fair so do most mainstream economists.)

This generates an extremely useful word confusion because we all know the consequences of households getting into more debt than they can afford.   In the absence of a real analogy, ordinary people are easily persuaded that government must cut ‘spending’ which of course is the ultimate ideological goal of the tea-party Tory neofeudalists.

However, government ‘spending’ and ‘income’ are nothing like household spending and income.  Furthermore, the word ‘deficit’ itself consciously, and unconsciously, invites the belief that it is a ‘bad thing’ that must be ‘sorted out’.   Again for emphasis – the term ‘deficit’ in this context does not mean the same as it would in a household.  Bill Mitchell proposes that all ambiguous macroeconomic terms have to be reframed so as to undermine the ideological metaphors of the neoclassical consensus.  He proposes that all statements be qualified as in, for example, ‘The government deficit rose and generated higher levels of wealth for households and firms.’

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http://www.youtube.com/watch?v=w2JwUKEUdPY#t=302

The deception that arises from the deficit myth is that the government ‘spending’ more than it receives in tax is detrimental and holds back economic recovery – hence the argument for the cuts and austerity.

In order to understand why the deficit fears are just hype, it is helpful to look at how money and tax have historically been used to control and direct the behavior of populations.  For example, British Colonialism in South Africa.

Essentially, the motivation for invading and colonising a foreign country is about land – new land for settlement, agriculture and to exploit the foreign country’s natural resources.  All of these require a substantial labour force.

Obviously, the colonialists could have tried to import all the necessary workers (as the US has done) but the most practical quick solution was to use the indigenous population.

The problem was how to get the indigenous population to plough the fields or go down the mines to dig for gold.  Why would people, who had been living and surviving perfectly well for generations, want to give up their way of life to work for the colonialists?  Not only was the work demanding and uncongenial but their own self-sufficiency would be threatened.

Basically, there are three possible answers:

Offer high wages… not only would that be beside the point of colonising in the first place but (initially at least) money would only be an inducement if it could be spent on some stuff or service that the indigenous population wanted or needed.  No-one can eat bank notes.

Enslave the population and force them to work at gunpoint … but that in itself is quite labour intensive, requiring guards as gang masters, and generally incurs an inconveniently high mortality rate (as in the Belgium Congo).

The third option is much simpler…. create a currency and require the indigenous population to pay tax in that currency.

Warren Mosler has a neat routine which explains how taxing works.  He tells the audience that he is turning his business cards into a currency and that he will pay each of them, one business card, to clean the lecture theatre at the end of his talk.  The audience laugh until Warren Mosler adds that there will be armed guards at all the exits who will only allow individuals out of the lecture theatre if they pay a tax of one Mosler business card.  So now the audience has the choice of being trapped in the lecture theatre all night, or do the cleaning, get their business card ‘pay’ and be allowed to go home.

So by creating a Business card currency and enforcing ‘tax’ collection, Warren Mosler is able to control and direct the behavior of the audience.

The same system held in inducing the indigenous population to work for the colonists.  Those who failed to pay their taxes were imprisoned and could then be used as unpaid forced labour.  Either which way, the indigenous population were snookered.

Now the main point is that neither the colonists or Warren Mosler had to wait until the tax was collected before they could ‘spend’ their currencies on paying their workers.  In fact, it would have been impossible because there wasn’t a currency before they created it out of thin air. (The pound sterling became the standard currency of the Cape of Good Hope colony in 1825 … Before a unified South Africa, many authorities issued coins and banknotes in their own pound, equivalent to sterling.)

The Colonial and Mosler ‘governments’ had to ‘spend’ before the workers could pay their taxes.  Futhermore, the tax that was collected was quite irrelevant in determining how much the Colonial/Mosler ‘governments’ could spend.  If they needed more labourers, they just created more money.  The tax was not government income in the household sense.  The tax was simply part of the mechanism to get the work done and make the money flow.  In fact, after collecting, the tax receipts/business cards could just be thrown away .. the only cost would be the cost incurred in the actual manufacture of the bank notes/business cards.

Now in the Mosler currency system, the amount of tax received back would equal the amount that his ‘government’ created.. so there would be no ‘deficit’.

However, if someone wanted to ‘save’ a Mosler card memento more than they wanted to go home… there would be a ‘deficit’ of one Mosler business card collected in ‘tax’.  Nevertheless, the deficit would not be any problem to the economic system.  Warren would still have got the Lecture Theatre cleaned, he could print another set of business cards whenever he needed to, and the Mosler business card collector would have ‘saved’ his card to spend at a later date.

Essentially, the ‘deficit’ is a reflection of the total amount of saving, investment and employment that is occurring in the economy.  It is not something which has to be paid back.

Just as with the unilateral decision of the ‘saver’ of the Mosler business card:

‘It is the non-government sector deciding to save more than it invests that generates the government deficit’ (Neil Wilson cif).

Michael Burke provides the numbers to show that it is indeed the current non-government sector ‘saving’ (ie. not investing) which accounts for the ‘entirety of the prolonged crisis’.  It is estimated that private sector businesses are holding back £700+billions.  Effectively, there is an investment strike by the private sector:

The driving force of the slump remains the fall in investment, led by the fall in business investment. The fall in business investment alone more than accounts for the entirety of the prolonged crisis.

Michael Burke (and others) stress the necessity for the government to act as the ‘investor of last resort’:

Government could act to offset this by investing on its own account, if necessary drawing on the resources of the private sector to do so. Instead, the Coalition cut public sector investment by £6bn after Labour increased it modestly…. It is still the case that increased public sector investment is the only viable means of resolving the crisis that doesn’t lead to further misery for the majority of the population.

Neil Wilson writes:

Why is it so difficult for people to connect the dots… When money is injected into the economy it bounces around generating transactions and taxation. Anything left is saved by somebody and eventually ends up being swapped for Gilts.

Government spending pays for itself.  Each time every time.

It is, at least arguable, that Osborne knows that his policies on deficit reduction are a complete but ideologically useful fiction.  Generously, the Financial Times’ Martin Wolf wrote in response to the Autumn Statement:

“The government has been led astray by focusing on deficit and debt rather than the health of the economy.”

However, Professor Bill Mitchell does not mince his words and they can act as a conclusion as to why the deficit myth is a useful deception:

Structural deficits – the great con job!

… the constraints imposed by neo-liberalism are entirely ideological and came about from a concerted campaign to win the battle of ideas. There is nothing about deficits that should frighten international capital. In fact, capitalists will make higher profits in a fully employed economy than in a stagnant economy.

Update:

Important point made in comment’s thread by petermartin2001 

The question of inflation also does need to be answered. No economist, including Warren Mosler and Bill Mitchell, would say that the deficit didn’t matter. Although their argument is often deliberately misrepresented in that way. The argument at the moment should be that, as inflation isn’t the major issue at present, therefore the deficit isn’t the major issue either..

Its an argument which, as Bill Mitchell points out, doesn’t bother the more progressive of the capitalist class. They know they don’t make profits from low deficits if low deficits mean reduced business activity and higher unemployment. There’s no profit , or surplus value, to be made from an unemployed worker!

Reply:

I was trying to keep it simple. I did try working inflation into the Mosler business card model but it all got a bit surreal!

Inflation is only a problem when all the potential capacity of the economy has been reached which with our levels of unemployment/underemployment is not an immediate problem. In the words of Neil Wilson (filched from Cif):

‘five million without work that want it, education opportunities for our youth, limiting the excessive growth of house prices, and euthanising all the rentiers and oligopolists out there.’

I know that the OBR etc question that the UK has suffered a decline in capacity post 2008 but you know how iffy their predictions are.. and can’t see it being a problem when we need ‘a New green Deal’ to be zerocarbonbritain 2030!

References:

https://think-left.org/2012/08/25/why-does-the-structural-deficit-remind-me-of-libor/

http://www.youtube.com/watch?v=Z1uWVj0YJ3M

http://socialisteconomicbulletin.blogspot.co.uk/2013/11/a-milestone-reached-in-british-slump.html

http://bilbo.economicoutlook.net/blog/?p=2326

Why do politicians tell us Debt/Deficit myths which they must know to be untrue?

Government Reviewer Opposed ESA Rollout

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Government Reviewer Opposed ESA Rollout

By Sue Marsh, also published here

In 2008, Labour introduced a new out of work sickness benefit, Employment and Support Allowance, to replace the old Incapacity Benefit.

The new system of application and assessments was much tougher, and politicians originally hoped that up to a million people could be moved from the benefit.

However, by 2010, it was clear there were significant flaws in the process. People with mental health and fluctuating conditions were not being fairly treated and successful appeals against “fit for work” decisions soared to 40%.

Professor Harrington was asked to review the new benefit and make recommendations for improving it. As the election took place in 2010, crucially, only new claimants were being assessed. ESA was yet to be rolled out to the more complicated, and often longer term, Incapacity Benefit claimants, though trials were underway in Burnley and Aberdeen.

Most people claim out of work sickness benefits for short periods – perhaps to get through a sports injury, accident or one off surgery – and stop their claims within 2 years. However, this will always leave a few people with serious, life limiting conditions who will need to claim the benefit for longer periods. Over the years, those claims build up, increasing the proportion who need long term support.

When the coalition came to power in May 2010, they immediately announced that they would go ahead and start to reassess those already claiming Incapacity Benefit.

I could never understand this decision. Why would you take a failing benefit and roll it out to almost 2 million of the most vulnerable claimants? Not only that, but at first, just 25,000 people per month were being assessed, but the government constantly increased and increased the numbers until today, nearly 130,000 assessments are carried out every month.

Why? Why would you rush this group through failing assessments, ever faster, when backlogs kept on increasing, tribunals were overturning 40% of decisions that went to appeal and even legally, courts were starting to judge that the test discriminates against certain groups?

Unless of course you don’t want the tests to be fair. If your aim is to remove a million people from the benefit, perhaps it suits you to make sure that as many of those existing claimants don’t face a fair test? Since 2010, the government have repeatedly delayed improvements to ESA. Out of 25 recommendations made by Professor Harrington in his Yr1 Review, almost two thirds have not been fully and successfully implemented. An “Evidence Based Review” using new descriptors designed by mental health charities and those charities representing people with fluctuating conditions was initially rejected, then taken on, but although results were due in June, still, tests use the old descriptors to decide who qualifies for support. *

The government repeatedly claimed that Professor Harrington had supported the national rollout of incapacity benefit claimants

“Professor Harrington went away and made his recommendations to us, which we accepted in full and have implemented. He told me, “I believe the system is in sufficient shape for you to proceed with incapacity benefit reassessment.” We set ourselves a goal to put his recommendations in place, improve the quality of the process and address many of the issues to which hon. Members have referred today by the end of last May, when the assessments in the incapacity benefit reassessment were to start alongside the existing process of assessing ESA new claimants. We did that, and we started.”

1 Feb 2012 : Column 289WH Hansard Chris Grayling
However, Harrington was clearly an intelligent man who had made thoughtful and intelligent suggestions for improving the assessments. I could never understand why he agreed to put the most vulnerable claimants through a failing test.

So I decided to ask him.

It took me a while to track down his email address, but after pulling lots of strings, I was able to ask him outright.

This was Professor Harrington’s reply :

“To your question:

I NEVER—repeat–NEVER agreed to the IB migration. I would have preferred that it be delayed but by the time I said that, the political die had been cast.

I then said that i would review progress of that during my reviews.

The decision was political .

I could not influence it.

IS THAT CRYSTAL CLEAR?

Malcolm”

I’d say it was fairly clear, wouldn’t you?

Ian Duncan-Smith and others took the decision to push nearly 2 million people through a failing test as quickly as they could. Why? Was it so that they could remove as many people as possible from the benefit whether they needed it or not? Surely any failures to improve the test as recommended by Harrington, charities and campaigners couldn’t have been deliberate? Delaying improvements until the IB cohort had been rushed through, the cohort this government and others are convinced are simply “scroungers” and “skivers”?

Instead, as we now see, delays have increased, successful appeals have risen, lives have been lost to the sheer inaccuracy and flawed design of the assessments and the human suffering is now clear for all to see.

To have taken the decision through incompetence is bad enough, but if it was taken deliberately and cynically, I can only hope the responsible ministers will be held to account. Over 200,000 incorrect decisions have since been overturned in law and appeals are taking up to a year to be heard in some areas.

When David Cameron came to power he said :

“The test of a good society is how do you protect the poorest, the most vulnerable, the elderly, the frail.

That’s important in good times, it’s even more important in difficult times. People need to know that if they have me as their Prime Minister and they have a Conservative government, it will be that sort of Prime Minister

Iain Duncan-Smith said :

“I say to those watching today and who are genuinely sick, disabled or are retired. You have nothing to fear.

This government and this party don’t regard caring for the needy as a burden. It is a proud duty to provide financial security to the most vulnerable members of our society and this will not change. This is our contract with the most vulnerable.”

I look forward to them explaining what made them change their minds.

Today, we must be our own media. Please RT on twitter, share on Facebook and help me to make sure that as many people as possible see this news. *Coincidentally, the evidence based review was released yesterday, as I was writing this article.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/265471/wca-evidence-based-review.pdf

Education: What if..?

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Education: What if..?

First posted on December 8, 2013 by julijuxtaposed

What if we were to agree that all humans have value that lies way beyond their financial capacity and academic intellect?  That it is obscene to reduce people to nothing more than a unit of monetary worth?  That artistic, sporting and practical abilities be as valid?  That the higher intelligences such as empathy, grace and kindness be seen as strengths, not weaknesses?  That education is its own reward rather than merely a means to someone else’s ends?

The point of a structured period of compulsory schooling should be to facilitate the awareness and understanding of a complex world to children, not merely the ability to pass tests and march to the beat of the latest diktats of fashionistas, inept governments and corporate drummers.

What if we decided that we didn’t want to have to choose which school to send our children to?  What if we didn’t feel the need to?  What if we made sure there were enough state schools at every educative level, easily accessible to every child in the country?  And what if each and every one of those schools were of such an excellent standard that only fools and radicals would seek to pay extra to send their children elsewhere?  What if our state schools were so blooming good that every child received the highest possible standard of education and every parent and employer knew it?  What if teachers were trusted and valued as highly as are the expectations placed upon them?  Any worth their salt would be clamouring to work in such an amazing public sector.

And why the rush to bring our children to employable maturity if emotional intelligence cannot keep up?  (Indeed, why the rush if there are insufficient jobs to even require their labour?)  It hasn’t been coined as ‘childhood’ for nothing.  We are adults soon enough and it lasts, hopefully, for a very long time so why are we heaping panic upon pressure upon stress on our kids?  To compete in the global race to be grateful automatons?  It is part of being a child that s/he should be in a hurry to grow up but it is the job of adults to temper that impatience, not to concede and actively demand they do.  If we really are all living longer then let’s make it a life worth living by getting right one of the fundamental building blocks of a confident, prosperous people.

Education is supposed to facilitate self-confidence and the ability to learn; to encourage critical thinking, curiosity and a love of learning.  Thus, though school cannot teach absolutely everything, if it has done its job properly, it shouldn’t need to.  Education is supposed to reveal an individual’s potential.  In order for this to be achieved, schooling needs to provide the opportunity, time and space for a child to discover what that might be.  Teachers need the freedom and scope to assist and appropriately indulge or signpost that opportunity.  The next generation are the future, the continuum of the human race.  Our children are our legacy.  Not in the sense of property, but as the living arrows of Society’s bow, to paraphrase Gibran.  Could there really be any task more worthy or vital?

And what if we were to decide to phase out faith-based schools?  What if we said that doctrinal faith should not be prescribed to children with little or no escape or counterbalance?  Perhaps our society would lose an excuse for the oft-cited sense of cultural division if the doctrines of cults were retired to their temples.  The point of a secularist/pluralist society is to achieve and uphold equality under the law and in a multi-faith and no-faith country like ours, that makes Faith (which is not exclusive to Orthodox Religion) a matter of personal rather than public policy.  It does not negate nor deride it but recognises that not everyone has it and that no one faith is superior to another.  Religion, like Politics, is a living history, based on theory and belief.  In schools, shouldn’t it be reflected, explored and debated as such, under the umbrella subject of Philosophy, rather than passed off as though its teachings were fixed by empirical data or as though it were the sole route to ‘God’ and the only expression of a spiritually and consciously lived life?

In fact, what if we decided that any school, within or outside of the state system that was intentionally selective about its admissions or adherence to a compulsory, base-line national curriculum should not qualify for funds from the Public Purse?  I don’t mean barring schools from adding subjects to a mandatory curriculum – I’d have loved the opportunity to learn Latin, or even circus skills, actually – I’m talking about the ridiculous notion that a minimum national curriculum is not necessary; that schools should be able to opt out of any of the recommended subjects, particularly such issues as drugs and sex and relationships.  This is not acceptable.  Students need to know they share a common level of knowledge and that they are not being cheated of vital information or a major life skill.

Obviously it is not the place of a free society to dictate to individual adults the manner in which they live, so long as it does not harm another.  Neither, therefore, what individuals do with their income.  It follows, then, that it is unwisely authoritarian to take away the freedom to choose and pay for exclusivity.  But I would happily – very happily – see governmental policies that rendered it superfluous.