Status Quo Is No Solution
• G-20 Washington Economic Crisis Summit
• Bush's Summit on Financial Markets and the World Economy
• The G-20 and the Financial Stability Forum
• Summit, Bail Out Bill and Control Board Model: What Kind of “Stability” Do U.S. Ruling Circles Have in Mind?
Top left: Argentinian autoworkers protest on November 10, 2008 outside the Labour Ministry
building in Buenos Aires over dismissals and suspensions in the auto industry;
placard reads: "No to layoffs." Top right: Thousands of Bulgarian steelworkers from the country's
largest steel maker Kremikovci (part of ArcelorMittal) protest in Sofia October 29, 2008 over
unpaid salaries for August and September. Bottom: Spanish autoworkers employed
by Japanese automaker Nissan protest against job cuts at its Zona Franca plant in Barcelona,
October 17, 2008. Nissan announced October 13 it was cutting 1,680 jobs at its Barcelona plant;
banner reads, "In defence of employment; No to layoffs at Nissan!"
G-20 Washington Economic Crisis Summit
Workers and their allies across the country and worldwide are closely following developments on the international economic front. Leaders from the state monopoly capitalist systems of the Triad (U.S., Europe and Japan) plus China, Russia and others are meeting in Washington November 14 and 15 to discuss the current economic crisis. (For full list of participating countries, see note below.)
The international economic arrangements dominated by the U.S. Empire that emerged with the end of the Cold War never acquired stability or gained coherence. One crisis after another has occurred with the present one the most severe and widespread. The U.S. state monopoly capitalist system and its strongest ally Britain are seeking to manage the economic crisis in such a way that U.S. hegemony globally is not lost in economic affairs in general and within international financial institutions in particular. This includes attempting to maintain U.S. dollar hegemony.
It is important to analyze what the monopoly capitalists discuss and decide at this summit and their subsequent meetings, in particular any agreements to shift the burden onto the working class and peasants and any sharp differences that may arise within the Triad. As the crisis deepens, the threat of war increases as happened during the long depression of the 1930s. Americans must be wary of the attempts to blame workers themselves for the crisis, such as the claim that people were “spending beyond their means” or that demands for wages and pensions are “bankrupting” monopolies like GM. Similarly, blaming the neo-liberal policy of deregulation also hides the source of the crisis and the corresponding solutions needed. The blame for the crisis here and worldwide rests squarely with the U.S. monopoly capitalist class together with the monopoly capitalists that control the economy in every country within the Triad. All of them are to blame for not recognizing the socialized economy in their own countries as it presents itself and how that economy is in contradiction with the outmoded property relations based on private ownership. The monopoly capitalists, led by the U.S., refuse to abandon these old property relations even though they are the root cause of the economic crisis. The rulers benefit from the status quo and are organizing the arrangements necessary to maintain it in the face of deepening crisis and growing resistance.
The U.S. Empire is desperate not to lose its grip on international economic affairs and the various institutions that it established following World War II such as the International Monetary Fund, World Bank and World Trade Organization. The U.S. is also acting to maintain their control over international currency and trade, which it holds through U.S. dollar hegemony and free trade agreements such as the North America Free Trade Agreement (NAFTA) and other bi-lateral trade agreements — which are all based on unequal terms of trade.
The flow of tribute from around the world into the United States, along with Britain, Japan and the European Union, has become unsustainable. The world economy cannot support a system where added-value is torn out of sovereign countries and sent to the Triad as tribute, especially to the United States in various forms of U.S. debt. This added-value derived from the labor-time of workers and peasants worldwide has been stolen from them and their societies and squandered on war spending and giant military machines, luxuries, reckless investments for big scores and U.S. bribery and interference in the peoples' sovereign affairs. The added-value ripped from the peoples' socialized economies has left them weak, in many cases dependent on exports or tourism or unevenly developed, without the capacity for self-reliant development from internal accumulation. Within the Triad itself, the working class has been subjected to concessions and layoffs and is increasingly incapable of sustaining any semblance of security. In the United States, forty percent of people's purchases are realized through borrowing money while the banking and credit system as elsewhere is in crisis. Even more layoffs have now been announced in the U.S. despite the massive government bailouts already in place. Demands by the monopolies and their governments for workers to give up their pensions and healthcare and accept massive cuts to social programs at the state level, are further indications that the current situation is unsustainable.
All the rulers and their political leaders within the Triad stubbornly refuse to recognize that for the modern economy to avoid recurring crises it needs an empowered working class to bring into being alternative relations based on collective ownership and control where the actual producers can exercise control over the direction of the economy. It is the leadership of the working class and its alternative of political empowerment and a modern society based on modern social relations of production that is required. New arrangements by the U.S. to impose and maintain the status quo will only further intensify the problems and increase the danger of world war. Now is the time to step up the struggle against U.S. imperialism and organize for new arrangements by and for the working class, empower the people to govern and decide. This is the responsibility and duty of American workers and their allies.
(Note: The G-20, which is meeting in Washington, is comprised of the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, the Republic of Korea (south) and Turkey. Spain, although only an indirect member of the G-20 through its membership in the European Union, has been invited to participate directly in the summit.)
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Bush's Summit on Financial Markets
and the World Economy
U.S. President George W. Bush is hosting the "Summit on Financial Markets and the World Economy" in Washington, DC on November 14 and 15. In his November 13 speech addressing plans for the summit, Bush said that it includes the G-20 "leaders from developed and developing nations that account for nearly 90 percent of the world economy. Leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum are going to be there, as well." The Financial Stability Forum includes officials from the U.S. Treasury Department and the private bankers of the Federal Reserve and the Securities and Exchange Commission. South Africa's president, Kgalema Motlanthe, is the only African leader invited, although Democratic Republic of Congo president Denis Sassou Nguesso vowed to attend even without an invitation. Other non-G-20 members like Spain have also been invited.
President-elect Barack Obama has chosen not to be at the summit, emphasizing that there is "only one president at a time." However he and leading Democrats like Nancy Pelosi support the calling of the summit and have been part of the pre-summit consultations.
In his speech Bush said, "The leaders attending this weekend's meeting agree on a clear purpose — to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future. We also agree that this undertaking is too large to be accomplished in a single session. The issues are too complex, the problem is too significant to try to solve, or to come up with reasonable recommendations in just one meeting. So this summit will be the first of a series of meetings."
This suggests that a more permanent body of officials from the executive offices of the G-20 and private banking officials may be created to make decisions about the world financial markets and economies.
Bush said that the summit "will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity."
For most of the world's peoples, the source of the current problems is precisely that their economies are based on "free market principles." How can an affirmation of the exacerbating factor be "the surest path to lasting prosperity"? It cannot, which indicates that the aim of the Summit has nothing to do with "understanding the causes of the global crisis" and everything to do with finding ways and means to make whatever state arrangements are possible to further concentrate wealth and power in the hands of the few.
News reports indicate that there are noticeable and even significant differences among countries over the best approach to the deepening economic crisis. The proposals coming from European leaders are being presented as proposals that will conflict with those coming from the U.S. and Canada. White House spokesperson Dana Perino said that it is "too early to say" what will emerge from the summit, and that leaders will discuss "how they can enhance their commitment to open, competitive economies, as well as trade and investment liberalization."
On November 9, 2008, Finance ministers and central bankers from the G-20 concluded talks in Sao Paulo, Brazil, the host of the G-20 Finance Ministers and Central Bank Governors Meetings for 2008. They blamed "excessive risk taking and faulty risk management practices in financial markets" for starting the economic crisis, while highlighting "deficiencies in financial regulation and supervision in some advanced countries." The officials said they are prepared to act "urgently" to bolster "growth." While on an official visit to Italy, Brazilian President Luiz Inacio "Lula" da Silva said that he does not expect much to be accomplished at the Summit.
For his part, French president Nicolas Sarkozy demanded the Washington talks deliver "ambitious, operational decisions" and a plan for officials to reconvene by the end of February. The French leader has support from German Chancellor Angela Merkel, who seeks regulation of hedge funds and curbs on bonus packages for bankers as part of a new "constitution" governing financial markets. British Prime Minister Gordon Brown has lobbied for improving "cross-border oversight" of the global financial system by placing the world's top 30 banks under the supervision of a panel of regulators.
Chinese Premier Wen Jiabao said while more oversight may be required, "we need to handle correctly the relationship between financial innovation and regulation."
The summit is already being billed by some as a "Bretton Woods II" — a reference to the meeting after World War II that imposed the U.S. dollar as the instrument of world trade and created the International Monetary Fund and the World Bank. Both are instruments of U.S. domination of the global financial system. Bretton Woods was also promoted as needed to restore "stability" and prevent crisis, after the Great Depression and the war.
Actions in the U.S. (left) and the Philippines oppose G-20 Summit.
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The G-20 and the Financial Stability Forum
The G-20 was founded on September 25, 1999 in Washington. According to its official website: "The members of the G-20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Britain and the United States of America. The European Union (EU) is also a member, represented by the rotating Council presidency and the European Central Bank. To ensure global economic fora and institutions work together, the Managing Director of the International Monetary Fund (IMF) and the World Bank President, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate in G-20 meetings on an ex-officio basis. The G-20 thus brings together important industrial and emerging-market countries from all regions of the world. Together, member countries represent around 90 percent of global gross national product, 80 percent of world trade (including EU intra-trade) as well as two-thirds of the world's population. The G-20's economic weight and broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system."(www.g20.org)
The Financial Stability Forum (FSF) "brings together senior representatives of national financial authorities (e.g. central banks, supervisory authorities and treasury departments), international financial institutions, international regulatory and supervisory groupings, committees of central bank experts and the European Central Bank."(www.fsforum.org) This includes representatives from 26 countries; from the IMF, World Bank, Bank for International Settlements and the Organization for Economic Co-operation and Development (OECD); from International Standard Setting, Regulatory and Supervisory Groupings including the International Organization of Securities Commissions, International Association of Insurance Supervisors, International Accounting Standards Board and Basel Committee on Banking Supervision; from Committees of Central Bank Experts and the European Central Bank. The U.S. has representatives from the Department of the Treasury, Securities & Exchange Commission and Board of Governors of the Federal Reserve System.
The website states that the "FSF was first convened in April 1999, at the initiative of G7 Finance Ministers and Central Bank Governors, in order to promote international financial stability, improve the functioning of financial markets and reduce the tendency for financial shocks to propagate from country to country, thus destabilizing the world economy.
"The FSF's mandate is:
- to assess vulnerabilities affecting the international financial system;
- to identify and oversee action needed to address these; and
- to improve co-ordination and information exchange among the various authorities responsible for financial stability.
"The FSF seeks to give momentum to a broad-based multilateral agenda for strengthening financial systems and the stability of international financial markets. The necessary changes are enacted by the relevant national and international financial authorities. Since 2001, the FSF has also held regional meetings with non-member financial authorities in Latin-America, Asia-Pacific, and Central and Eastern Europe."(www.fsforum.org)
It can be seen from this that there already exist a considerable number of bodies involved in regulating and oversight aimed at "reducing the tendency for financial shocks to propagate from country to country thus destabilizing the world economy." The current crisis shows they are not succeeding. Will there now be a streamlining of these bodies and a further concentration of power? Will the U.S. succeed in keeping its dominance? The Summit will provide indicators of how international arrangements of the imperialist system of states will develop.
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Summit, Bail Out Bill and Control Board Model
What Kind of “Stability” Do U.S. Ruling Circles Have in Mind?
President George W. Bush will be meeting with the G20, representatives of countries from North and South America, Asia and Europe, as well as top officials from the World Bank, International Monetary Fund (IMF) and the Financial Stability Forum. In organizing the meeting, Bush repeatedly said it is needed to “prevent a global meltdown.” The summit of elected officials representing the executives in their countries, and top private bankers and CEOs, is the first of many according to Bush. The group plans to establish a common response and common method to control the world financial markets. It remains to be seen what relationship it will have to existing elected governments and legislatures worldwide.
In watching summit developments and also examining the passing of the recent bail out bill to pay the rich, some insights for answering this question can be found. Like the Summit, economic stability and avoiding disaster were the justifications given for rapidly passing the more than $700 billion bail out bill. The official name of the bill is the Emergency Economic Stabilization Act. It established a Financial Stability Board to oversee implementation of the Act.
The passing of the bill was accompanied by hysteria that if action were not taken, there would be an economic disaster. Bush, Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke said failure to pass it would “endanger the fundamentals of our economy,” with the “security of the nation,” at stake. It was urgent to act quickly to “save the economy from collapse” so as to “restore confidence and stability in our financial system.” President George W. Bush emphasized, “This bill provides the necessary tools and funding to help protect our economy against a system‑wide breakdown. …Without this rescue plan, the costs to the American economy could be disastrous.” In defending the push for the bill Democratic House Leader Nancy Pelosi said, “It is clear that the Administration has requested that Congress authorize, in very short order, sweeping and unprecedented powers for the Treasury Secretary to confront a financial crisis of historic proportions.”
Generating hysteria and a lack of confidence in government, followed by the call for “stability” that only appointed officials, usually top CEOs, can bring, is characteristic of the current process. They are also evident in the meeting President George W. Bush has organized with leaders of the G20 countries (including the U.S., Canada, Brazil, Europe, Japan, China, India, Russia and others) and top private bankers of the IMF and World Bank. They too are meeting to “provide stability” and a “coordinated response” to the deepening economic crisis. The G20 website says they provide “a high degree of legitimacy and influence over the management of the global economy and financial system.” What further arrangements for governance by the private bankers will emerge?
There are ominous signs that the U.S. ruling class is moving toward imposing the kind of arrangements that have been imposed on various cities, such as Pittsburgh, Buffalo and others, known as control boards. These signs can be seen in the continuing discrediting of elected governance and in the manner that the recent bail out bill was passed and is now being imposed. Control boards for the cities have commonly been brought in to restore “fiscal stability,” when cities are said to be unable to “control” their spending and provide “balanced” budgets. The boards are given control of the purse, including borrowing, and in this manner take control of governance.
There are several important features common to the control board model, among them:
1) discrediting and then elimination of the power of elected government by imposing an appointed board that controls the public purse;
2) institutionalizing, commonly in law, payments of public funds to the private financial interests as the first priority of government and the accompanying elimination of the conception of government responsibility to society;
3) institutionalizing increasing debt and debt servicing, coupled with massive attacks on social programs, including wrecking of education and healthcare;
4) broad attacks on public workers and their unions, including elimination of contracts, as the control boards unilaterally dictate terms.
Buffalo, New York is one of the more recent examples, with a control board being put in place in June of 2003 and still in power at present. Its official name is the Buffalo Fiscal Stability Authority. It is an example of how control boards are put in place and the character of their rule.
Discrediting Elected Governance
One of the features of the present situation is the discrediting of elected governance. Indeed, a main theme of the presidential elections was the “gridlock” and “broken politics” of Washington. Both Senators Barack Obama and John McCain pledged to change this.
The actions taken in New York State to prepare conditions for imposing the control board on Buffalo are worth examining so as to compare them to what is currently happening with respect to getting the bail out bill passed. For months preceding the control board for Buffalo, politicians in both the New York State Assembly and Buffalo in particular were branded as “reckless” and unable to “make the tough decisions.” They were seen as too susceptible to a public that “did not understand the complexities of city financing.” As the Buffalo News repeatedly put it, the politicians were in need of “adult supervision.” Every effort was made to make a mystery of city finances, especially debt instruments and debt servicing.
In addition to discrediting of elected officials there was the blackmail and threats from Wall Street. The state was told that if a control board was not imposed, Wall Street would further lower the state and Buffalo’s credit ratings, making all borrowing even more expensive. They also threatened not to extend credit, particularly for “revenue anticipation notes,” (RANS) which are a common means of short-term borrowing that city and state governments utilize. Business interests in the area, represented by the Buffalo-Niagara Partnership, joined in insisting that the control board was necessary and the “dire consequences” that would occur without it. Great hysteria that the city would collapse and the state would lose funds was created using these threats. The monopolies and media worked to manipulate the anger of the public with the on-going cuts to social services and the refusal of government to meet the needs of the city. The answer of the rich, using the state government, was to impose the control board on Buffalo.
In the current battle that continues with the government bail out of the private banks and Wall Street interests, threats of disaster and the blackmail that martial law would be imposed occurred, alongside discrediting of the House of Representatives. Hysteria was created and continues that the entire economy will “grind to a halt” if the demands of the private financial monopolies are not immediately met.
Top officials from the Office of the President and Congress all insisted immediate action had to be taken. The country’s major business groups, including the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers also joined in demanding immediate passage. The Business Roundtable, representing CEOs of top monopolies urged “The swift passage of legislation to stabilize our financial markets. This necessary action would impact not only our financial institutions, but every American who will continue to be adversely affected by the deteriorating economy. Failure to act now will have widespread negative ramifications across the domestic and international economies…As such, this legislation is crucial to our country’s financial well-being.” The National Association of Manufacturers (NAM), the country’s largest industrial association, called on Congress “To move quickly to help bring stability and restored confidence to the U.S. financial system. We make this call with a real sense of urgency. Wall Street’s troubles are Main Street’s troubles, and they threaten the economic health of manufacturers and the 14 million American workers we employ… The NAM applauds the administration for acting quickly, and the Congress for moving to examine, discuss and question the components of the Treasury proposal. At the same time, discourse should not become an excuse for inaction, or worse by attempting to somehow gain partisan advantage. The consequences of delay could be disastrous and long lasting.”
In this election year, the very broad mass anger against the bail out — with more than a million phone calls, faxes and emails running 9-1 against the bail out and more than 150 demonstrations organized — the House of Representatives initially voted the bill down.
Again President George W. Bush, top Congressional leaders, Senators Barack Obama and John McCain, did their arm-twisting and blackmail. Wall Street will collapse it was said, and lose 5,000 points. Martial law will be needed. The experts and media said the public did not understand the need for the bailout. They said elected politicians were not able to “make the tough decisions” because of electoral constrictions and therefore it is necessary to put economic experts and CEOs in charge.
Here are a few examples of the discrediting that took place. The San Francisco Chronicle headline was, “Politics Sinks Bailout.” The Los Angeles Times said, “Why did the House vote down the rescue package…? Blame haste, partisanship, timidity and brinkmanship — they all played a role. More important, though was Washington’s failure to convince taxpayers that a dramatic bailout was vital to their health, not just Wall Street’s” (September 30). The New York Times added that a flawed bail out was better than nothing when “the survival of the nation’s financial system” is at stake (September 30). The Dallas Morning News headline was “Want to Save the Economy or Play Politics?” “The consequences of stalemate could be catastrophic,” the article said. The House refusal to pass the bailout was “indefensible…at a time when leadership, not partisanship,” is urgently needed (September 30). The Star Tribune of Minneapolis added, “The outrage [of the public] was understandable, but it was limited in scope. Lawmakers should have listened but risen above it for the greater good of the nation and quite possibly the world.” (September 29).
Michael Gerson, a former senior advisor to Bush and now a fellow at the Council on Foreign Relations, said, “It is clear that American political elites have lost the ability to quickly respond to a national challenge by imposing their collective will.” He goes on to say that Congress represents a “weak government populated by small men,” and that this is more frightening than bank failures. George Will writing in the Washington Post said, “Congress should disconnect from a public that cannot be blamed for being more furious about, than comprehending, this opaque debacle.” The logical conclusion from the demand for Congress to “disconnect,” from the public and that its failure to do so shows it is “weak” and that it has “lost the ability to quickly respond,” is that some other form of governance is needed. At the city level, that form has been a control board.
It is also interesting to note that President Bush formed precisely such a “non-partisan” committee comprised of Senators John McCain and Barack Obama, top Democrats and Republicans of the House and Senate, top government officials from the Office of the President, like Treasury Secretary Henry Paulson and from the private banking interests, like Federal Reserve Chairman Ben S. Bernanke. It indicates the composition that a federal-level control board might have. Similarly the existing Fiscal Stability Board set up as part of the bail out bill includes the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary. It could also be used with the addition of one or two elected officials.
Using Buffalo as an indicator, its board included two top elected officials, the mayor and county executive, and seven other officials appointed by the governor and top leaders of the New York State House and Senate. The CEO of the area’s top bank, M&T, was made chairman. This gave the appearance of having government control, when actual control was vested in the control board.
In the Buffalo example, the establishment of the control board did not mean elimination of elected governance and elections. Elections still take place, but these elected bodies have no power as they have no control of the public purse. That control belongs entirely with the control board, as does the authority to borrow funds and pay debts.
On this basis it can be seen that such a board could be put in place at the federal level, in the name of needing to “quickly respond” to protecting the “survival of the nation’s financial system.” Officials from the Office of the President, those chosen by top Congressional officials and private monopoly interests like the Federal Reserve would be appointed with power of the purse. Congress could still be elected, but have no power.
The Buffalo board was initially appointed for what was expected to be a temporary period. The law also included measures, however, for its continued existence until 2037 or as long as it still had debts outstanding. No doubt, a move at the federal level could similarly be initially done as a temporary emergency measure that becomes permanent.
Elimination of Government Responsibility to Society and Institutionalizing Paying the Rich as Sole Responsibility
Control boards commonly require that “fiscal stability” be achieved by guaranteeing that debts to the Wall Street monopolies are paid and that borrowing steadily increases. For the Buffalo Control Board it was directly written into the law that the board must first use the public purse to make debt payments. The board also had all authority to approve borrowing. In the first year alone, borrowing increased by 250 percent. Debt and debt servicing have steadily increased. Buffalo has also seen a massive attack on social services, including the elimination of 1 in 4 teachers, most school librarians and nurses, closing of medical clinics, and more. When the School Board provided what it called a “bare bones budget,” the control board said it was not enough. They insisted, “We have to get to the point where we’ve cut absolutely as deep as you possibly can.” They have imposed that dictate ever since.
New York State as a whole also has one of the highest levels of debt, currently $53 billion, of any state. Debt has increased 31 percent since 2003 and also continues to grow. It is expected to exceed $67 billion by 2012. Debt servicing alone is currently $5 billion and is expected to be $7.6 billion by 2012, a 50 percent increase. Debt servicing is one of the fastest growing budget expenditures. These payments to the rich have been made an absolute requirement, while unending cuts are made to social services.
This orientation that the first, and increasingly only responsibility of government is to pay the financiers is becoming institutionalized as part of the anti-social offensive of the rich. Control boards are used as a mechanism to guarantee this direction and eliminate any influence the public may have. The same can be said of the recent bail out bill for Wall Street and refusal to fund the needs of the states to provide social services.
The Wall Street bail out immediately provided $700 billion in public funds, on top of the earlier billions to the financiers. Current estimates put the bail out funding at more than $2.25 trillion. Treasury Secretary Paulson has authority to make whatever deals he sees fit, overseen by a “Fiscal Stability Board” of appointed officials, including those that are directly monopoly representatives, such as the Federal Reserve chairman.
At the same time that the bail out was being pushed through, New York State Governor David Paterson announced that yet more budget cuts were required to “balance” the state budget. The initial New York budget included $1 billion in funding cuts and increased fees. Then a special legislative session was called in August to cut another $1.2 billion. Now Paterson is demanding yet another $2 billion in cuts to jobs and vital programs, including Medicare, food programs, various education programs, and a general cut to education and healthcare. This is occurring at a time when there is increasing need on the part of the population, especially women, children and the elderly. Unemployment is up by 56,000 and 160,000 more jobs are to be cut statewide. The demand for food assistance is up 30 percent.
In making his call for more cuts, Paterson used the usual threat: If cuts are not made, Wall Street will lower the credit rating. In his speech he assured Wall Street that he will address “their concerns as quickly as possible” and that “in spite of the difficulty of these times, New York State is going to attack these problems.” So while Wall Street is getting its bail out, the states are not.
Similarly, California has called on the federal government to provide $7 billion in funds. Wall Street is refusing to purchase the state’s RANS, as is the federal government, at least so far. Without funding by the end of October, a $3 billion payment needed to pay teachers and staff in more than 1,000 school districts will not be made.
In this way it can be seen that the control board standard of guaranteeing that the public purse is used to pay the financiers has been established and is being implemented. The responsibility of government to meet the needs of society has been all but eliminated, while paying the rich most, if not all of the public purse, has been institutionalized. Given this, elected government becomes a block to the raiding of the public purse, while control boards provide a mechanism to eliminate such blocks. Given Wall Street has demanded this at the local level, and is imposing its dictate through refusal to provide credit at the state level, why should it stop at the federal level? This is particularly true given that the economic crisis is deepening and the anger and resistance among the people growing.
Broad Attacks on Workers and Their Unions
Control boards commonly act to eliminate existing contracts between the city and the public sector unions, such as those for teachers, firefighters and other city workers. This is not done directly, but rather by the control board having authority to reject any contracts negotiated while also being able to impose wage freezes and similar actions. It also took place in the form of imposing budget levels that required mass layoff and elimination of workers contrary to existing contract requirements. In Buffalo a wage freeze was imposed across the board on all workers, in the middle of contract negotiations. Similar demands attacking already agreed on healthcare benefits also took place. Indeed, the interference was such that contract negotiations were suspended altogether and most workers went several years without a contract or a raise. Court cases demanding that the contracts be adhered to were pursued and won in some cases, and still the control board imposed its dictate with impunity. The Buffalo experience made clear that control boards are mechanisms for the wrecking and elimination of the power of unions and elected governance in favor of executive rule in the form of non-elected governing bodies. They are organized to pay the rich and have CEOs “manage” government to achieve this aim, while eliminating government’s social responsibility to meet the needs of the people.
Obama emerged as champion of the ruling circles in part because he gave a convincing rendering of his ability to further transform the Office of the President in favor of the ruling circles and their war aims. The repeated talk that “the country does not want divided government it wants progress,” (Obama Chief of Staff Rahm Emanuel) and the G20 meeting are among the continuing signs that utilization of the Control Board form of governance to further concentrate political power in the hands of the most powerful monopolies is being considered.