Wake up and smell the austerity! Shock Doctrine come to Europe.

[Magda Hassan]

Here comes Cameron with the electrodes. Naturally it will be applied equally to all. Not likely.

Cameron: 'Difficult decisions' on pay and benefits

Page last updated at 11:55 GMT, Monday, 7 June 2010 12:55 UK

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David Cameron: "Britain will come out stronger on the other side"

Prime Minister David Cameron has warned of "difficult decisions" on pay, pensions and benefits as he set out the case for "painful" cuts ahead.
He said dealing with the deficit would be "unavoidably tough" and affect "our whole way of life".
He said he would not cut the deficit "in a way that hurts those we most need to help" or "that divides the country".
Shadow chancellor Alistair Darling said Mr Cameron was talking "nonsense" and did not understand the need for growth.
Spending 'splurge' The Conservative-Lib Dem coalition government has already outlined plans for £6.2bn cuts this financial year - and is preparing for a Budget on 22 June.
Mr Cameron started his speech by saying problems were "even worse than we thought" and blamed the last Labour government for the "debt crisis".
He said they had let the economy get "out of balance" by "hitching our fortunes to a select few industries", not tackling worklessness and through a "public sector splurge" - even when the private sector was shrinking.
Continue reading the main story

Labour stopped recession becoming depression

Liam Byrne Shadow Treasury chief secretary Have your say: How will cuts affect you?
Economic growth had been based on "things that could never go on forever" - "unsustainable" booms in financial services, immigration and government spending, he said.
And he said figures which the Labour government had refused to publish showed the UK would be paying £70bn in debt interest within five years - more than it spent on schools in England, tackling climate change and transport.
'Difficult decisions' "What a terrible, terrible waste of money... this is the legacy our generation threatens to leave the next," he said.
He argued that, without tackling the deficit, confidence in the British economy would take a hit which could risk pushing up interest rates and increasingly taxes would be used to pay interest on the national debt, rather than being spent on public services.
Mr Cameron said decisions were needed with "enormous implications" which cannot be ducked or got wrong, adding: "I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country."
CORRESPONDENT VIEW

Continue reading the main story Peter Hunt,
Political Correspondent
It was a speech peppered with bleak language, but which contained no fresh insight into where the axe will fall.
Instead, this was David Cameron preparing the British public for what he called the "inevitably painful times that lie ahead".
He was also trying to persuade people that doing nothing about the deficit was not credible.
At one stage, Mr Cameron told his audience: "This government will not cut this deficit in a way that hurts those we most need to help, that divides the country, or that undermines the spirit and ethos of our public services".
He will be held to account over these words and they could help to define the success, or not, of his premiership.
Flanders: Changing world UK lessons from Canada's cuts?
He added: "Because the legacy we have been left is so bad, the measures to deal with it will be unavoidably tough, but people's lives will be worse unless we do something now."
Speaking after the speech he acknowledged it would "mean difficult departmental decisions and yes it will inevitably mean some difficult decisions over big areas of spending like pay and pensions and benefits - and we need to explain those to people".
But he insisted he would protect NHS spending and international aid - both of which the Conservatives have promised to ringfence.
He did not spell out exactly where cuts would be made, saying there was a "proper process" for doing so - in the Budget on 22 June - followed by a "proper debate" involving as many people as possible about detailed three-year spending plans later this year.
Shadow chief secretary to the Treasury Liam Byrne said Labour had "stopped recession becoming depression" and had made the "right calls".
"The coalition has inherited an economy that is growing, borrowing which is falling, and unemployment lower than in America or Europe," he said.
"Everyone agrees that the deficit must fall, but we must do it fairly. And on that basis the coalition has made a poor start, cutting support from young people out of work, and breaking their promise to protect frontline services."
Hugh Lanning, deputy general secretary of the Public and Commercial Services Union, told the BBC Mr Cameron's speech was "trying to paint the public sector as a problem".
"But the debt wasn't caused by the public sector - it was caused by the banks and the financial crisis and we would like to see them share some of the pain, not just us."
He added that 100,000 civil service jobs had been cut in the past five years.
And Unison general secretary Dave Prentis said the speech was a "chilling attack on the public sector, public sector workers, the poor, to the sick and the vulnerable and a warning that their way of life will change".
"There was nothing in this speech that told the rich, the banking and financial sector or the city speculators that their privileged way of life will change," he said.http://news.bbc.co.uk/2/hi/politics/10250603.stm

[Magda Hassan]

Merkel Unveils Austerity Package for Germany

By JUDY DEMPSEY

Published: June 7, 20

BERLIN — Chancellor Angela Merkel on Monday unveiled a major austerity package aimed at finding savings of more than €85 billion by 2014, but it was immediately criticized by the opposition and trade unions, which pledged that they would unite to fight cutbacks they claimed would undermine the country’s generous social welfare system.
“The savings offer no perspective whatsoever,” said Michael Sommer, leader of the German Federation of Trade Unions.
Speaking after two days of intense talks in the Chancellery, Mrs. Merkel said the savings program — the largest in the country’s postwar history — was the only way for Germany to “stand on its legs.”
She said the cuts were designed to bring the budget deficit under control and, more important, comply with a legal ruling whereby Germany is bound by the “Schuldenbremse,” or debt-brake, which the German Parliament passed into law last year. The law stipulates that the government has to limit its debts to a maximum of 0.35 percent of gross domestic product by 2016, which puts immense pressure on the government to find savings between now and then. Net borrowing, which soared to €85.8 billion, or $125 billion, this year, about €48 billion more than 2009, was the largest figure since World War II.
Justifying the savings, Mrs. Merkel insisted they would make the German economy more efficient and more competitive. “I am optimistic about our goal,” she said.
But it is not a view shared by many economists — and certainly not by those at the U.S. Treasury — who argue that trimming spending is not the road to economic recovery.
Timothy F. Geithner, the U.S. Treasury secretary, over the weekend urged “stronger domestic demand growth” in European countries, especially in Germany, Europe’s largest economy, which has a large trade surplus.
Opinion polls published Monday indicated that Germans were not willing to spend and instead would save because of the fear of losing their jobs. This is despite the fact that the unemployment rate in Germany fell for the 11th month running in May, a rare exception among euro-zone countries.
The decline pushed the adjusted jobless rate down to 7.7 percent in May from 7.8 percent in the previous month, according to the Federal Labor Office.
A combination of wage restraint and more flexible labor contracts has helped to make the German economy more efficient and encourage companies to begin hiring again, according to Deutsche Bank Research. But Germans have been very cautious about spending.
Mrs. Merkel said savings for next year would amount to €11.1 billion, rising to €17.1 billion in 2012, €25.7 billion in 2013 and €32.4 billion in 2014.
She said the savings will include cutting 10,000 jobs in the federal administration, reducing special parental allowances for the unemployed and trimming the armed forces.
Defense Minister Karl-Theodor zu Guttenberg had wanted to introduce radical cutbacks by reducing the number of soldiers to 150,000 from 250,000 and even abolishing conscription, which will already be reduced next month to six months from nine months. It became clear during the past two days that Mrs. Merkel’s conservative bloc was so divided over abolishing conscription that she had agreed instead to establish a special commission to consider how the armed forces can be modernized.
“Everything is up for discussion,” Mrs. Merkel said.
Whatever the outcome of that commission, the armed forces, which have a budget of €30 billion for 2010, will make cuts of €4 billion between 2013 and 2014.
At the same time, certain subsidies for the energy sector will be abolished and a special environmental surcharge will be imposed on airline passengers.
None of the savings are to be financed by an increase in the value-added tax, sales tax or any other taxes, said Guido Westerwelle, foreign minister and leader of the pro-business Free Democratic Party. His party, which is committed to a major tax reform and tax cuts, fought tooth and nail during the negotiations to prevent any tax increases.
Mrs. Merkel will present her proposals in the coming weeks to the Bundestag, the lower house of Parliament, where she is expected to be receive a very tough reception from the opposition.
The opposition, consisting of the Social Democrats, Greens and Left Party, are in a combative mood, capitalizing on Mrs. Merkel’s political woes.
Her own popularity and that of her conservative bloc have been falling, even more after Horst Köhler resigned as president last week and a leading conservative premier, Roland Koch, quit, saying that he had had enough of politics.
Even more worrying for Mrs. Merkel is the surge of public support for Joachim Gauck, an Eastern German and former head of the special committee overseeing the secret police files of the former East Germany. Mr. Gauck was nominated Monday by the Social Democrats and the Greens as their presidential candidate. The Left has yet to decide whom to nominate.
Mr. Gauck, 70, could pose a formidable challenge to Christian Wulff, the conservative premier of Lower Saxony, who was selected by regional party leaders as presidential candidate over Mrs. Merkel’s preferred candidate, the labor minister, Ursula von der Leyen.

[Magda Hassan]

Society Begins to Crack Under Harsh Measures
By Apostolis Fotiadis

ATHENS, Jul 30, 2010 (IPS) - Every working day, more than a hundred people crowd around the entrance of the merchant and passenger boats' reconstruction industry, well known as 'The Zone', in the southern suburb of Attiki.

Most of them are unemployed steel workers and torch welders, who wait desperately from the early hours of the morning for an announcement of jobs offered on a daily basis on the ships that dock at the port.

"Tensions often run high among them," says Makis Kistikidis, a steel worker with 32 years of experience in the Zone, amid a scuffle between some workers scrambling to grab a two-day job slot.

"This is not the worst of days," Kistikidis says. "Very often, there are no jobs at all. Many of these people haven't had more than five or six days of work since the beginning of this year, and no more than 100 working days since 2008."

While public debate is Greece is focused on austerity measures to cut the country's ballooning budget deficit, little attention has been paid to the societal impact of growing unemployment and how these harsh measures are squeezing salaries of ordinary citizens.

The zone, once a strong industry employing over 5,000 people on a daily basis, is now a vivid example of Greece's economic collapse. Its slow demise, as Kistikidis explains, began when the lure of cheap labour in China and the Far East propelled ship owners away from the shores of Greece.

The global financial crisis in the last two years has slowed down commerce further. Unemployment has hit the workers very hard.

"Today unemployment in the Zone is above 90 percent," says Kistikidis. "Check out the dates of registration in the unemployment list. You'll see how many people are stuck here since the beginning of the year or even before that."

Aristedes G, a 58-year-old steel worker, has not had a single day of employment since 2008.

"After being unable to pay up my debt for a bank housing loan, bank authorities confiscated the property and put it on auction," he says.

"Look, this is my food," he says, raising a plastic bag with leftover cheese pies donated to him by owners of the café at the entrance of the zone.

Such stark stories have become all too common, says Kistikidis. He points at a line of men idling around the café. Many of them have endured economic hardships for months. "Atmosphere at home is often bad and many just prefer to spend time outside to avoid the nagging at home," he says.

Four couples known to Kistikidis have separated over the past year, he says, precisely for this reason.

Kistikidis cites the example of one of his unemployed friends, George, a 47- year-old man who was abandoned by his wife after a bank he owed money to evicted him from his house. Kistikidis sought to visit him on a recent evening to boost his morale, but he was in for a shock. George had hanged himself.

In recent months, port workers have joined strike action, taking on the government against reforms intending to deregulate their sector. Kistikidis bristles at companies for bypassing unemployed Greek labour and importing cheap labour from Latvia and Lithuania. The average wage for Greek labourers ranges from 60 to 75 euros per day whereas Latvian or Lithuanian labourers cost about a tenth of that.

"This time we managed to stop them," he says of the government. "But this is the future they want to give us."

The Organisation for Economic Cooperation and Development (OECD), a grouping of rich nations, reported recently that unemployment in Greece is expected to rise beyond 14 percent, four percent higher than last year.

Experienced workers are facing hardships, just as much as novices in the market.

The problem is deteriorating work ethics, says Fannis Klissas, a 26-year-old cook. Klissas landed a job a few months ago in a pastry shop in Athens that paid 840 euros per month.

"In the beginning the agreement seemed good. The money was a bit less than what it is usually but in these times you can't have it all," he says.

A few weeks after he joined his job, he became aware that the owner of the shop was imposing fines on people who made mistakes during production.

"I made a mistake some weeks ago that cost the owner a few euros, but be asked me to pay a fine of 100 euros. When you work overtime everyday, six days per week, you can't be punished for spoiling a couple of cakes. If you cannot do your job they can warn you and then ask you to leave the job, but this attitude of a boss being able to punish people the way he desires is totally unjustified."

Klissas refused to pay up and was fired.

This culture prevails across the country, and is tolerated only because of mounting economic uncertainties, says Klissas. "People are scared and easily manipulated. Things are getting tougher here. Most of the people put up with things that they should speak against. How can they? Don't they understand that work should be based on mutual respect and mature human relations, not domination and fear?"

Many observers say that deregulation is the price Greek society has to pay in order to increase competitiveness and cut its mounting debts. Some others predict that hardships resulting from the austerity measures could spark more severe social tensions in Greece.

Afroditi Korfiati, a special investigator with the Labour Inspectorate of the Ministry of Labour, responsible for exposing work place irregularities and resolving disputes between workers and employers, suggests people should stay calm until the impact of austerity reforms materialise.

"There is a general mood that things are deteriorating. But the actual data we are gathering proves that workplace irregularities are just as bad as last year. We are trying hard to maintain checks," Korfiati told IPS.

The measures are also impacting her own department, she says. "We are 18 investigators less than last year. And vacancies aren't being filled up."

Recently, people took to the streets for the fourth general strike this year. The crowd was smaller compared to previous strikes, fuelling speculation that the fear of losing jobs is compelling people to stay quiet despite the growing frustration.

"It is not fear that keeps people away from demonstrations. It is the lack of any alternative political perspective for the future," Xristina Kopsini, a columnist wrote in Kathimerini, a political daily.
http://ipsnews.net/news.asp?idnews=52327

[Magda Hassan]

Even with Keynesian economics, which is still mainstream Capitalism and in no way shape or form socialistic, there was no fixing the system. It was WW2 which got the unemployed off the dole and into war time jobs. Since then it was the post war extension of credit to the working classes which has kept them indebted and allowed the burgeoning of the finance sector and the Cold War continued to grow the military economy. In the US there is now only about 3% manufacturing jobs. The last light bulb factory left there has just closed and has gone to China. The only economy which is left standing there is the war economy. Currently it is involved in other people's countries but soon it will be in a town near you.

IMF Fears 'Social Explosion' From World Jobs Crisis

America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned.

by Ambrose Evans-Pritchard
"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).
Unemployed workers protest on the steps of Federal Hall across from the New York Stock Exchange on August 12 in New York. (AFP/Getty Images/File/Chris Hondros)
He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said. A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. "The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies," it said.
The study cited evidence that victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the "employment intensity of growth" as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45m jobs a year for the next decade just to tread water.
Olivier Blanchard, the IMF's chief economist, said the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time.
"Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression," he said.
Spain has seen the biggest shock, with unemployment near 20pc. Britain's rate has risen from 5.3pc to 7.8pc over the last two years, a slightly better record than the OECD average. This contrasts with the 1970s and early 1980s when Britain was notoriously worse. UK jobless today totals 2.48m.
Mr Blanchard called for extra monetary stimulus as the first line of defence if "downside risks to growth materialise", but said authorities should not rule out another fiscal boost, despite debt worries. "If fiscal stimulus helps avoid structural unemployment, it may actually pay for itself," he said.
"Most advanced countries should not tighten fiscal policies before 2011: tightening sooner could undermine recovery," said the report, rebuking Britain's Coalition, Germany's austerity hawks, and US Republicans. Under French socialist Strauss-Kahn, the IMF has assumed a Keynesian flavour.
The report skirts the contentious issue of whether globalisation lets companies engage in "labour arbitrage", locating plant in low-wage economies such as China to ship products back to the West. Nor does it grapple with the trade distortions caused by China's currency policy, except to call on "surplus countries" to play their part in rebalancing.
The IMF said there may be a link between rising inequality within Western economies and deflating demand.
Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.

Meanwhile the TUC president in the UK is gearing up to defend established working conditions and warning of the future if these cuts go ahead:

The motion rejected the idea that cuts were necessary to pay for the deficit and said they were a "savage and opportunistic attack on public services" which "goes far further than even the dark days of Thatcher".
TUC general secretary Mr Barber told delegates: "These are not temporary cuts, but a permanent rollback of public services and the welfare state. Not so much an economic necessity as a political project driven by an ideological clamour for a minimal state.
"What they take apart now could take generations to rebuild. Decent public services are the glue that holds a civilised society together and we diminish them at our peril. Cut services, put jobs in peril and increase inequality, that's the way to make Britain a darker, brutish, more frightening place."

Meanwhile the government, working for business interests, is trying to get the union leadership to collaborate with the bosses in preserving their profits by getting workers to make all the sacrifices:

The PM's spokesman said they wanted "partnership" with the unions to tackle the deficit.

Even bringing out the big guns to tell the unions how it is going to be:

Bank of England governor Mervyn King will address the TUC later - only the second holder of the post to do so in the union umbrella group's 142 years.
He is also expected to answer questions from congress delegates in Manchester, who have voiced concerns this week about government spending cuts.

Meanwhile the Police Chiefs are having none of this austerity nonsense for their departments. They're asking for much more money to deal with the predicted social unrest from the austerity cuts implemented in the working classes. Or else. :

Cambridgeshire's Chief Constable has warned the police service may be forced to deal only with 999 calls.
Julie Spence is retiring from the force on Sunday and has spoken out over government plans to cut its budget by up to 40%.
The force faces £33m cuts over the next four years.
"It would be Armageddon. The police service that you see today would not be the police service that you would see in the future," Mrs Spence said.

[Jan Klimkowski]

Cambridgeshire's Chief Constable has warned the police service may be forced to deal only with 999 calls.
Julie Spence is retiring from the force on Sunday and has spoken out over government plans to cut its budget by up to 40%.
The force faces £33m cuts over the next four years.
"It would be Armageddon. The police service that you see today would not be the police service that you would see in the future," Mrs Spence said.

Cambridgeshire Chief Constable Julie Spence stuck her head above the parapet on the day before she retired.

All the British police Chief Constables have been told by government and their advisory body (ACPO) to spin the cuts as a once in a generation opportunity to restructure policing in the UK.

The implementation of economic Shock Therapy (in Naomi Klein's terms) has traditionally been reserved for developing countries.

What we are witnessing now is the application of the electrodes to "First World" nations in Europe and north America. This is a relatively new development - Thatcherism notwithstanding.

I hope the ordinary working people of Europe say "No" to Shock Therapy, and prevent its implementation.

We shall see.

Ambrose Evans-Pritchard's piece suggests that the British financial-intelligence-complex is a tad worried about social unrest.

[Magda Hassan]

"The cost of delay [in applying cuts] would result in almost £100 billion of additional national debt by the end of this parliament alone. In the end, the result would be deeper cuts, or further tax rises, in order to pay for the extra debt interest. The cost of delay could be even greater than this. As recent events in some European countries have demonstrated, if the markets lose faith in Britain, interest rates will rise for all of us. There is no reason to think that the pace of consolidation envisaged in the Budget will undermine the recovery. The private sector should be more than capable of generating additional jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, so generating more employment opportunities" - 35 major UK capitalists, Daily Telegraph.

"His economic strategy is to cross his fingers and hope that the private sector will create 2.5m jobs within five years, despite the fact that between 2000 and 2008 only 1.6m private sector jobs were created. Recovery is going to be a long slog. Contrary to claims made by various members of the government, there is no believable evidence that fiscal tightening on the scale that is being proposed has ever worked. When Canada implemented its fiscal tightening its neighbour was experiencing the Clinton boom, plus it was able to cut interest rates ... And there is no evidence whatsoever that the markets are actually demanding these cuts. The government continues to be able to borrow cheaply. It is true that government bond rates in the UK have fallen since the ConDem government took office, but they have fallen even faster in the US, which is not engaging in a suicidal austerity programme." - David Blanchflower, The Guardian.

"The big argument in favour of the UK government's austerity is that the alternative might, in the words of George Osborne, be 'bankruptcy'. Why a country whose actual and prospective public debt will remain below the average of the past two centuries should be in such dire straits is very far from evident." - Martin Wolf, Financial Times.

"Lower aggregate demand will mean lower tax revenues. But cutbacks in investments in education, technology and infrastructure will be even more costly in future. For they will spell lower growth – and lower revenues. Indeed, higher unemployment itself, especially if it is persistent, will result in a deterioration of skills, in effect the destruction of human capital, a phenomena which Europe experienced in the eighties and which is called hysteresis. Lower tax revenues now and in the future combined with lower growth imply a higher national debt, and an even higher debt-to-GDP ratio." - Joseph Stiglitz, The Guardian.

"Public bodies whose purpose is to hold corporations to account are being swept away. Public bodies whose purpose is to help boost corporate profits, regardless of the consequences for people and the environment, have sailed through unharmed. What the two lists suggest is that the economic crisis is the disaster the Conservatives have been praying for. The government's programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business." - George Monbiot, The Guardian.

[Magda Hassan]

Britain’s Shock Doctrine

October 21, 2010 By George Monbiot
George Monbiot's ZSpace Page / ZSpace
We’ve been staring at the wrong list. In an effort to guess what will hit us tomorrow, we’ve been trying to understand the first phase of the British government’s assault on the public sector: its bonfire of the quangos. Almost all the public bodies charged with protecting the environment, animal welfare and consumers have been either hobbled or killed(1). But that’s only half the story. Look again, and this time make a list of the quangos which survived.
If the government’s aim had been to destroy useless or damaging public bodies, it would have started with the Commonwealth Development Corporation. It was set up to relieve poverty in developing countries, but when New Labour tried, and failed, to privatise it, the CDC completely changed its mission. Now it sluices money into lucrative corporate ventures, while massively enriching its own directors. Private Eye discovered that in 2007 this quango paid its chief executive just over a million pounds(2). The magazine has also shown how the CDC has become entangled in a series of corruption cases(3). Uncut. Unreformed.
The same goes for the Export Credit Guarantee Department. The ECGD effectively subsidises private corporations, by underwriting the investments they make abroad. At one point, 42% of its budget was spent on propping up BAE’s weapons sales(4). It also pours money into drilling for oil in fragile environments(5,6). A recent court case showed how it has underwritten contracts obtained with the help of bribery(7,8). Uncut. Unreformed.
The Sea Fish Industry Authority exists “to help improve profitability for the seafood industry”(9). Though it is a public body, all but one of its 11 directors work for either the fishing industry or food companies(10). They seek to “promote the consumption of seafood”(11), to “champion the industry in public debates”(12) and to “influence the regulatory process” in the industry’s favour(13). Uncut. Unreformed.
Can you see the pattern yet? Public bodies whose purpose is to hold corporations to account are being swept away. Public bodies whose purpose is to help boost corporate profits, regardless of the consequences for people and the environment, have sailed through unharmed. What the two lists suggest is that the economic crisis is the disaster the Conservatives have been praying for. The government’s programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business.
In her book The Shock Doctrine, Naomi Klein shows how disaster capitalism was conceived by the extreme neoliberals at the University of Chicago(14). These people believed that the public sphere should be eliminated, that business should be free to do as it wants, and almost all tax and social spending should be stopped. They believed that total personal freedom in a completely free market produces a perfect economy and perfect relationships. It was a utopian system as fanatical as any developed by a religious cult. And it was profoundly unpopular. For a long time its only supporters were the heads of multinational corporations and a few wackos in the US government.
In a democracy under normal conditions, those who were harmed by abandoning public provision would outvote those who gained from it. So the Chicago programme couldn’t be imposed in these circumstances. As the Chicago School’s guru, Milton Friedman, explained, “only a crisis – actual or perceived – produces real change.”(15) After a crisis has struck, he added later, “a new administration has some six to nine months in which to achieve major changes; if it does not act decisively during that period, it will not have another such opportunity.”(16)
The first such opportunity was provided by General Pinochet’s coup in Chile. The coup was plotted by two factions: the generals and a group of economists trained at the University of Chicago and funded by the CIA. Their ideas had already been comprehensively rejected by the electorate, but now the electorate was irrelevant: Pinochet used the crisis he had created to imprison, torture or kill anyone who dissented. The Chicago School policies – privatisation, deregulation, massive tax and spending cuts – were catastrophic. Inflation rose to 375% in 1974; the highest rate on earth. Even so, Friedman insisted that the programme was not going far or fast enough. On a visit to Chile in 1975 he persuaded Pinochet to hit much harder. The result was a massive increase in unemployment and the near-eradication of the middle class. But the very rich became much richer, and the corporations, scarcely taxed, deregulated, fattened on privatised assets, became much more powerful.
By 1982, Friedman’s prescriptions had caused a spectacular economic crash. Unemployment hit 30%; debt exploded. Pinochet sacked the Chicago economists and started re-nationalising stricken companies, whereupon the economy began to recover. Chile’s so-called economic miracle began only after Friedman’s doctrines were abandoned. The Chicago School’s catastrophic programme pushed almost half the popultaion below the poverty line and left Chile with one of the world’s highest rates of inequality(17).
But all this was spun by the corporate media as a great success. With the help of successive US governments, similar programmes were imposed on dozens of countries in which crises ensured that the population was unable to resist. Other Latin American dictators copied Pinochet’s economic policies, with the help of mass disappearances, torture and killings. The poor world’s debt crisis was used by the IMF and the World Bank to impose Chicago School programmes on countries that had no option but to accept their help. The US hit Iraq with economic shock and awe – privatisation, a flat tax, massive deregulation – even as the bombs were still falling. After Hurricane Katrina wrecked New Orleans, Friedman described it as “an opportunity to radically reform the educational system”(18). His disciples immediately moved in, sweeping away public schools while the residents were picking up the pieces of their lives, replacing them with private charter schools.
Our crisis is less extreme, so, in the United Kingdom, the shock doctrine cannot be so widely applied. But, as David Blanchflower warned yesterday, there’s a strong possibility that the cuts programme will precipitate a bigger crisis: “it’s a terrible, terrible mistake. The sensible thing to do is to spread [the cuts] over a long time”(19). That’s another feature of disaster capitalism: it exacerbates the crises on which it thrives, creating its own opportunities.
So we shouldn’t wonder that 35 corporate executives wrote to the Telegraph yesterday, arguing, just as Milton Friedman used to do, for a short, sharp shock, before the window of opportunity closes(20). The policy might hit their profits for a while, but when we stagger out of our shelters to assess the damage, we’ll discover that we have emerged into a different world, run for their benefit, not ours.
www.monbiot.com
Published in the Guardian 19th October 2010
References:
1. https://spreadsheets.google.com/ccc?key=...l=en#gid=0
2. Richard Brooks, 3rd September 2010. That’s Rich! How Britain’s poverty relief fund abandoned the poor … while its bosses cleaned up. Private Eye.
3. As above.
4. http://www.guardian.co.uk/commentisfree/...e-jobs-sfo
5. http://www.guardian.co.uk/environment/20...matechange
6. http://www.guardian.co.uk/environment/20...e-drilling
7. http://www.guardian.co.uk/business/2009/...ea-bargain
8. http://www.guardian.co.uk/uk/2008/jan/02...raud.money
9. http://www.seafish.org/upload/file/about...m%20LR.pdf
10. http://www.seafish.org/about/board.asp?p=bc
11. http://www.seafish.org/upload/file/about...gComms.pdf
12. http://www.seafish.org/upload/file/about...gComms.pdf
13. http://www.seafish.org/upload/file/2008_...ochure.pdf
14. Naomi Klein, 2007. The Shock Doctrine: the rise of disaster capitalism. Allen Lane, London.
15. Milton Friedman, Capitalism and Freedom, quoted by Naomi Klein, as above.
16. Milton Friedman and Rose Friedman, Tyranny of the Status Quo, quoted by Naomi Klein, as above.
17. Naomi Klein, as above.
18. Milton Friedman, 5th December 2005. article in the Wall Street Journal, quoted by Naomi Klein, as above.
19. http://www.guardian.co.uk/business/2010/...nding-cuts
20. http://www.telegraph.co.uk/comment/lette...-jobs.html

[David Guyatt]

I actually heard a BBC News report where it was stated that unless Camerloon followed this severe spending cut-back path, bankers would not buy their Treasury Bonds/Bills (i.e., government debt) or would otherwise force the Government to ramp up the rate of interest on same to make them attractive to said bankers - thus costing the nation a great deal more in servicing interest on said debts.

And not even the slightest glimmer of realization on the part of our illustrious News Hounds of the curiosity that it is our fucking bail-out money the bankers are using to purchase our Government debt in the first place.

[Magda Hassan]

Councils plan for exodus of poor families from London

• Benefit cuts force officials to book up B&B accommodation
• More than 200,000 may leave capital in 'social cleansing'

• The Observer, Sunday 24 October 2010 Jon Cruddas: 'It is tantamount to cleansing the poor out of rich areas – a brutal and shocking piece of social engineering.' Photograph: Richard Saker /Rex Features Ministers were accused last night of deliberately driving poor people out of wealthy inner cities as London councils revealed they were preparing a mass exodus of low-income families from the capital because of coalition benefit cuts.
  Representatives of London boroughs told a meeting of MPs last week that councils have already block-booked bed and breakfasts and other private accommodation outside the capital – from Hastings, on the south coast, to Reading to the west and Luton to the north – to house those who will be priced out of the London market.
  Councils in the capital are warning that 82,000 families – more than 200,000 people – face losing their homes because private landlords, enjoying a healthy rental market buoyed by young professionals who cannot afford to buy, will not cut their rents to the level of caps imposed by ministers.
  The controversy follows comment last week by Iain Duncan Smith, the work and pensions secretary, who said the unemployed should "get on the bus" and look for work. Another unnamed minister said the benefit changes would usher in a phenomenon similar to the Highland Clearances in the late 18th and early 19th centuries, when landlords evicted thousands of tenants from their homes in the north of Scotland.
  In a sign that housing benefit cuts are fast becoming the most sensitive political issue for the coalition, Jon Cruddas, the Labour MP for Dagenham, last night accused the government of deliberate social engineering.
  "It is an exercise in social and economic cleansing," he said, claiming that families would be thrown into turmoil, with children having to move school and those in work having to travel long distances to their jobs. "It is tantamount to cleansing the poor out of rich areas – a brutal and shocking piece of social engineering," Cruddas added.
  The National Housing Federation's chief executive, David Orr, described the housing benefit cuts as "truly shocking". He said: "Unless ministers urgently reconsider these punitive cuts, we could see more people sleeping rough than at any stage during the last 30 years."
  The issue is fuelling tension inside the coalition. Simon Hughes, the Liberal Democrat deputy leader, said last night he would table amendments to change housing benefit rules. He said: "I would fully expect to be one of those putting forward proposals for changes in the housing benefit rules, particularly for London."
  Under a clampdown on housing benefit, the chancellor, George Osborne, announced that housing benefit will be capped from April next year at £400 a week for a four-bedroom house, £340 for a three-bedroom property, £290 for two bedrooms and £250 for a one-bedroom property. In addition, from October 2011 payments will be capped at 30% of average local rents.
  At a meeting of the Commons work and pensions select committee last Wednesday, the day Osborne announced £81bn of cuts in the spending review, MPs were told by London council chiefs that the housing benefit cuts could have devastating results.
  Nigel Minto, head of sustainable communities at London Councils, who works closely with the capital's housing directors, told the committee that since June London councils had been "procuring bed and breakfast accommodation" in outer London and beyond. The committee was told similar problems would occur in other cities with high-priced property such as Brighton and Oxford.
  Jeremy Swain, chief executive of the homelessness charity Thames Reach, said he was particularly worried about the impact on numbers sleeping rough in London. "We have reduced rough sleeping dramatically and we have a target of zero rough sleeping in London by 2012. For the first time I'm thinking that we will not achieve that," he said.
  Karen Buck, shadow minister for work and pensions, said: "The sheer scale and extremity of the coalition proposals means almost a million households are affected across the country."
  In today's Observer, Labour leader Ed Miliband says last week's spending review took Britain back to the 80s. "This was the week that took the compassion out of David Cameron's claim to compassionate Conservatism," he writes, accusing the Tories of displaying "arrogant ideological swagger".
  But last night Cameron insisted the cuts were tough but fair. "Departments have to make savings. I don't underestimate how difficult this will be. But we are doing what we are doing because it is the right thing to do – right by our economy, right for our country."
  A DWP spokesperson said: "The current way that it [housing benefit] is administered is unfair. It's not right that some families on benefits have been able to live in homes that most working families could not afford. However, we are absolutely committed to supporting the most vulnerable families and have tripled our discretionary housing payments to provide a safety net for those who need it."
  http://www.guardian.co.uk/politics/2010/...rom-london