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Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

China is cheating again. Yawn… China is subsidizing its paper industry ($33 billion 2002-09) and has tripled their production, and now is the largest producer of paper and paper products. Yawn.

This has cost jobs and approximately 400,000 remaining American jobs are at risk. And the companies they work for. NOT so yawn!

The Economic Policy Institute has released a briefing paper, titled, No Paper Tiger. This paper documents the different government subsidies behind the surge of Chinese paper imports, and looks at its implications for the American paper industry.

Some of the subsidies that government provides:

This Briefing Paper estimates that in China’s paper industry, subsidies for electricity amounted to $778 million (from 2002 to 2009); subsidies for coal, $3 billion (from 2002 to 2009); subsidies for pulp $25 billion (from 2004 to 2009); subsidies for recycled paper, $1.7 billion (from 2004 to 2008); subsidy income reported by companies, $442 million (from 2002 to 2009); and loan-interest subsidies, $2 billion (from 2002 to 2009). Missing data prevented calculation of pulp or recycled-paper subsidies in 2002, 2003, and 2009.

Implications for our own industry:

Cheap, subsidized Chinese paper exports have affected the U.S. paper industry. Despite comparable cost structures, high efficiencies, and plentiful natural resources, U.S. paper companies have failed to compete globally or nationally on price against much-cheaper Chinese imports. In 2010, the United States remains a net importer of paper and paper products. Imports from China are rising faster than those of any other country for this industry, with the value of U.S. imports from China growing at an annualized rate of 22%.

And the cost is jobs:

“From 2002 through the end of 2009, U.S. employment in the paper and paper products sector dropped 29 percent, from roughly 557,000 workers to 398,000.”

As the paper shows, China has no competitive advantage or cost advantage that would lead to the lower prices that are powering this surge. Labor is only 4% of the cost, and they import much of the pulp for the paper. They don’t have economy of scale. It is only the government subsidies that enable them to take over the industry.

From the Alliance for American Manufacturing, (See press release here.)

China’s massive subsidies to its paper sector are doing severe damage to the U.S. paper industry, its workers and their families,” said Scott Paul, executive director of the Alliance for American Manufacturing (AAM). “The only way to stop the bleeding is for U.S. policymakers to take action against China’s blatant violations of trade laws, including sweeping subsidies to paper and many other industries.”

The Manufacturethis blog lets you look up how many jobs this costs in your state and Congressional district.

We need better trade law enforcement.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project and the “Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck The Economy.” Sign up here for the CAF daily summary.

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Johnson also is a fellow at the Commonweal Institute and a Senior Fellow at the Institute for the Renewal of the California Dream.

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Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson

Robert Borosage

By Robert L. Borosage
Co-Director of the Campaign for America’s Future

Republican House leader John Boehner laid out the Republican world view in an interview with a friendly reporter.

Boehner defended the big banks from reform, arguing that the finanical reform bill was like “killing an ant with a nuclear weapon.” His comments came as Republican Senators Scott Brown and Susan Collins announced that they might oppose the financial reform bill because it levied fees on the big banks to pay for its cost.

Who should pay? Boehner gave some indication, arguing that in order to have enough money to pay for the war in Afghanistan, the Congress should RAISE THE RETIREMENT AGE TO 70, and cut Social Security across the board. From the article:

“Ensuring there’s enough money to pay for the war will require reforming the country’s entitlement system, Boehner said. He said he’d favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation and limiting payments to those who need them.”

Wall Street wrecks the economy, but shouldn’t be taxed to pay for the cost of reform. BP is victim of a “shakedown.” And now the one Obama policy Republcans support — escalation in Afghanistan — should be paid for by the elderly — raising the retirement age and cuttng Social Security.

If Republicans win the majority of the House, the perpetually tanned John Boehner will become Speaker. Hard to envision that.

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Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement.

Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

The real deficit is jobs. That is one more of those things that everyone can see in front of their faces, but we’re told it isn’t what it is. There aren’t enough jobs, and we’re being told this is our fault because we wanted pensions and good wages and vacations and respect and dignity and please, sir, just a little slice of the pie.

In case you haven’t noticed, the world’s economy is suddenly undergoing a classic “Shock Doctrine”-style, coordinated propaganda attack. The wealthy and powerful, having insisted that countries cut their taxes and run up debt, now insist that the middle class and poor must work harder, have their pensions reduced, sell off (to them) their publicly-held resources, and take other “austerity” steps to pay off the debt that these lazy, parasitic peasants dared to run up.

The excuse is that “the markets” will “lose confidence” in us. Apparently we aren’t working the salt mines hard enough. “The markets” — that’s the crowd who got in trouble and insisted that the world would end unless we immediately handed over to them all the rest of the money in the world — will “lose confidence” in our ability to work the mines hard enough, and will cut us off, unless we cut our pensions, sell off (to them) our resources, and promise never to be lazy and make demands for better wages, pensions, workplace safety, and do it now.

The real deficit is jobs.

History teaches that the way out of an economic slowdown is to invest in infrastructure, education and modernizing manufacturing.

Slactivist said it best the other day,

This calls to mind an old story:

But knowing their hypocrisy, he said unto them, “Why are you putting me to the test? Bring me a dime and let me see it.”

And they brought one. Then he said to them, “Whose head is this — FDR’s or Herbert Hoover’s?”

They answered, “Roosevelt’s.”

And he said unto them, “Right. So shut up. Have you morons already forgotten the 20th Century? When the choice is between imitating what worked and what really, really didn’t work, why are you pretending it’s terribly complicated?”

And after that, no one dared to ask him any question.

I’m not an economist, but we’ve got five applicants for every single job opening. If you tell me that the best response to that situation is to lay off hundreds of thousands of teachers, I will not accept that this means that you’re smarter and more expert than I am. I will instead conclude — regardless of your prestige or position or years of study — that you’re a moral imbecile.

According to the Labor Department,

By the end of 2009, the jobless rate stood at 10.0 percent and the number of unemployed persons at 15.3 million. Among the unemployed, 4 in 10 (6.1 million) had been jobless for 27 weeks or more, by far the highest proportion of long-term unemployment on record, with data back to 1948.

That’s right, it was the policies of austerity that created a depression, and the policies of job-creation, infrastructure investment and taxing the wealthy to pay for it that got us out. But that was back when We, the People were still in charge.

In other news:

Number Of Millionaires Grew Amid Recession.

The rich grew richer last year, even as the world endured the worst recession in decades.

Top 1 Percent of Americans Reaped Two-Thirds of Income Gains in Last Economic Expansion, Income Concentration in 2007 Was at Highest Level Since 1928, New Analysis Shows,

Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.

During those years, the Piketty-Saez data also show, the inflation-adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households.

Top 1% Increased Their Share of Wealth in Financial Crisis,

According to his analysis, the top 1% held 34.6% of all national wealth in 2007. By Dec. 31, 2009, they held 35.6%.

Meanwhile, share of national wealth held by the bottom 90% fell to 25% from 27%.

Corporate Wealth Share Rises for Top-Income Americans

In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data.

. . . For every group below the top 1 percent, shares of corporate wealth have declined since 1991.

. . . Long-term capital gains were taxed at 28 percent until 1997, and at 20 percent until 2003, when rates were cut to 15 percent. The top rate on dividends was cut to 15 percent from 35 percent that year.

See if you can make the connection. They want us to cut back our pensions, cut our wages, sell off our resources and work harder, to pay back the money that was borrowed and handed to them.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project and the “Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck The Economy.” Sign up here for the CAF daily summary.

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Johnson also is a fellow at the Commonweal Institute and a Senior Fellow at the Institute for the Renewal of the California Dream.

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Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

Is advice from the IMF better than advice from a drunk in the street? That is the question that people around the world should be asking as the International Monetary Fund dishes out its prescription for austerity. The IMF program calls for cutbacks in government support for healthcare, pensions, and a wide range of other public services. It also calls for weakening labor market regulations that provide workers with job security.

These recommendations are being given in a context where the world economy is suffering from a massive shortfall of demand. In other words, tens of millions of people are unemployed right now because there is not enough spending to keep them employed. The IMF’s program is almost certain to reduce spending further leading to even larger shortfalls in demand and more unemployment.

But, the IMF says that we should trust them. The question we should all be asking is: “why?”

Where was the IMF when the housing bubble in the US and elsewhere was inflating to ever more dangerous levels? Was it frantically yelling at governments to rein in the bubbles before they burst with disastrous consequences? After all, what could possibly have been more important than warning of the dangers of these bubbles?

It was easy to both recognize the housing bubbles and that their collapse would have devastating consequences for the economy. Economies don’t adjust easily to a loss of wealth that in some cases exceeded 50 percent of GDP.

Real economists know this, but apparently the folks at the IMF did not, or if they did, they didn’t think it was worth saying anything. One will look in vain through IMF publications during the build-up of the housing bubble for serious warnings of the potential dangers. While the IMF can scream about the need for austerity today, it couldn’t be bothered to say much about the bubbles that got us here.

The IMF’s track record gives us reason not only to question the institution’s competence but also its motivations. This question comes up most clearly in the case of Argentina. At the end of 2001 Argentina defaulted on its debt, enraging the IMF. Prior to the default, Argentina had been an IMF poster child eagerly embracing the IMF’s program.

The IMF’s growth forecasts clearly reflected its change of attitude toward Argentina. Prior to the default the IMF was consistently overly optimistic about Argentina’s growth prospects, projecting much higher growth than Argentina actually experienced. After the default, the IMF was hugely over-pessimistic, projecting much lower growth rates than it subsequently experienced. It is difficult to explain this pattern of errors except by a political motivation.

It is possible to see a similar pattern in the IMF’s latest set of policy recommendations to deal with the economic crisis. The impact of most of its proposals will be to reduce the benefits received by ordinary workers. The proposed changes in labor market regulations will likely also weaken workers’ bargaining power, leading to cuts in wages. Furthermore, the reduction in demand caused by the turn to austerity will leave millions more out of work, both depriving these workers of income and further weakening the bargaining power of those who still have jobs.

There are alternatives. Central banks like the European Central Bank, the Bank of England, and the Federal Reserve Board could just buy and hold large amounts of government debt. These central banks can both ensure that there are no questions of solvency by providing a ready market for government debt and that there is no build-up of interest burdens. The interest paid on the debt held by the banks is refunded to governments.

Large-scale central bank purchases of government debt will not create inflation in a context of massive unemployment and excess capacity. This is not a point we have to debate. Japan’s central bank has bought an amount of government debt roughly equal to its GDP, yet it remains far more concerned about deflation than inflation. While we could hope to do better on the stimulus front than Japan, inflation is simply not a problem it faces now or even on the distant horizon.

It is especially painful to see these calls for austerity coming from the IMF. This organization is distinguished not only by its dismal track record in pushing economic policies that don’t work; it also is known for the exorbitant benefits that it gives its economists. Under the IMF’s pension program, many staffers can retire in their early 50s with six-figure pensions. Imagine the folks who completely missed the housing bubble or who got it totally wrong on Argentina lounging around the tropics at age 51 on their $100,000 a year IMF pension. When it comes to economic advice, I think I’d rather listen to that honest street drunk.

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This piece is re-posted from The Huffington Post

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Dean Baker is author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy,” PoliPoint Press, LLC. This piece was first published on the Center for Economic and Policy Research’s Jobs Byte. CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102 or chinku@CEPR.net.

Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future 

A letter-writer in my local paper today reaches the wrongest possible conclusion: 

Public, private workers live in different worlds
The current issue of Time magazine includes a cover story on the increasing numbers of nearly bankrupt states and municipalities across the country. An important point made in the story is that public and private workers increasingly live in separate economies. Private-sector employees face frequent job change, relentless layoffs, flat wages and rising health care premiums, and they fund their retirement with 401(k) contributions. If they’re lucky, their employers will match a portion. Many do not. Contrast that reality to public-sector employees, who enjoy relative job security, defined benefit pensions with guaranteed cost-of-living increases, and competitive wages that rise every year. Public employee unions have had a stranglehold on state and local elected officials for decades. This has to end, as the taxpayers are fed up and tapped out. Nancy Pyle needs to get a clue, as do others on the San Jose City Council.
A.S.
San Jose 

Summary: Workers in the private sector have it harder and harder. They are increasingly losing benefits, pensions and jobs. Forced to work ever-harder in increasingly degrading work environments their wages stay flat and are starting to fall. 

Meanwhile public sector workers have strong unions so they have good jobs with good working conditions, job security, pensions and raises. 

Therefore… we should get rid of public-employee unions? Wow! Talk about coming to a grossly wrong conclusion, and working against your own interests! Just wow! 

It is a psychological truth that people would rather see others brought down than see themselves brought up, but come on! How hard is it to see that this person should be for strong private-sector unions instead of against public-sector unions. 

And the letter-writer demonstrates the core of the conservative ideological argument: All the benefits of our economy to the top few at the expense of the rest of us. 

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. Sign up here for the CAF daily summary.

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--------- Tula Connell --------- Photo by Joe Kekeris

By Tula Connell
AFL-CIO Managing Editor

Today, 1.2 million jobless workers lose their extended unemployment insurance (UI) because some Senate millionaires think a $300 a week unemployment check will make people too lazy to look for a job. This group also is pushing to reduce the nation’s budget deficit rather than use short-term spending to create desperately needed jobs for the nation’s 26 million unemployed or underemployed workers.

Three things:

*  The Senate last week failed for the FOURTH time  to extend UI because Senate Republicans are blockading the bill. Economists say extending UI is fiscally prudent and essential to improve the faltering economy. Several hundred thousand more unemployed workers will lose their UI each week in addition to the 1.2 million jobless workers who already have.

*  While more than 15 million U.S. workers can’t find work because there’s five workers for every one job opening, the rich are getting massively richer. The ranks of the nation’s millionaires rose 16.5 percent, to 2.87 million, last year. Their total wealth in North America rose 17.8 percent, to $10.7 trillion.

*  A new poll shows the majority of the U.S. public wants government to take a larger and stronger role in making the economy work for America’s workers. Nine out of 10 agree that government and corporations should join with individuals to place the common good above greed. Another poll, by the Alliance for American Manufacturing, shows nearly three of five respondents (58 percent) say the United States no longer has the world’s strongest economy, compared with 36 percent who believe otherwise.

So, in short: Republicans in Congress are out of touch with the American people and are working with the growing group of millionaires—like coal mine owner Don Blankenship of Massey Energy Co. and BP CEO Tony Hayward—to ride roughshod over those whose sweat and hard work built this nation.

Some say the United States is now a corporatocracy.

Who in Congress is willing to prove otherwise?

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Re-posted from the AFL-CIO Blog

I never had much faith in leaders. I am willing to be charged with almost anything, rather than to be charged with being a leader. I am suspicious of leaders, and especially of the intellectual variety. Give me the rank and file every day in the week. If you go to the city of Washington, and you examine the pages of the Congressional Directory, you will find that almost all of those corporation lawyers and cowardly politicians, members of Congress, and misrepresentatives of the masses — you will find that almost all of them claim, in glowing terms, that they have risen from the ranks to places of eminence and distinction. I am very glad I cannot make that claim for myself. I would be ashamed to admit that I had risen from the ranks. When I rise it will be with the ranks, and not from the ranks. – Excerpted from a speech given by Eugene Debs on June 16^th 1918 in Canton , Ohio.

 This week the Senate Republicans showed the long-term unemployed some “tough love,” as some in the GOP like to describe it, by blocking unemployment insurance for millions of Americans. They spouted the usual terms about fear of “increasing the deficit” and about being “fiscally responsible.”

 Apparently the long term unemployed haven’t been looking for jobs hard enough to suit the GOP.  Being “fiscally responsible” obviously wasn’t in play when the 2001 Bush tax cuts were an issue, or the repealing of the Glass-Steagall Act that helped lead to Wall Street’s debacle that  required some government bailout money and let’s not forget the Medicare drug benefit which was a windfall for pharmaceutical companies.

The long-term unemployed in this country ARE the responsibility of this government. They are the direct result of bad trade deals, corporate welfare, and the lack of accountability from corporate America to our government.  These are the same corporations that feed at the trough of government subsidies and tax breaks but then shut down plants and move good paying jobs out of the country to bolster their bottom lines. These companies then cry foul if the government questions them, charging government interference. How many states, cities, communities, and families have to be devastated by corporate greed before the “leaders” in Washington will step forward and hold them accountable and do the right thing?

There is an old saying that is “The more things change the more they stay the same.” I doubt Eugene Debs would see much difference in the “leaders” of yesterday and their counterparts today. It is time for the working class people in this country to let their collective voices be heard. There has been a clarion call for leadership, but this leadership must and will come from the masses and not those elected who forget who they are, why they were elected and who they represent.

 Jim Weaver
Chief Steward USW Local 266
West Milton, OH

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To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone. 

Roger Hickey

By Roger Hickey
Co-Director of the Campaign for America’s Future

On Saturday, the group known as America Speaks (funded by Wall Street mogul Peter G. Peterson and two other foundations) brought together several thousand people in meetings in 60 cities. They gave participants misleading background information about the federal deficit and economic options to achieve fiscal “balance” and future prosperity.

Peterson cannot be pleased with the participants’ mainly progressive policy choices, which will be presented on June 30 to the Deficit Commission that Peterson encouraged President Obama to create.

According to America Speaks’ own press release, when a scientifically selected group of participants picked up their electronic voting devices, they overwhelmingly supported proposals to

Raise tax rates on corporate income and those earning more than $1 million.

Reduce military spending by 10 to 15 percent,

Create a carbon tax and a securities-transaction tax.

This pretty progressive set of solutions emerged from the process many feared would be skewed to the solutions of conservative deficit hawks.

America Speaks was certainly not pushing the discussion in a progressive direction. The background materials — and policy options — provided to participants were anything but fair and balanced, as analysis by economist Dean Baker demonstrated. Most egregious were the following:

Social Security. America Speaks gave participants no explanation of the fact that Social Security has its own source of funding, and thus does not contribute a dime to the deficit. Americans actually have been paying extra payroll taxes to create a trust fund that will make sure full benefits can be paid for decades into the future — and thus there is no rational reason to cut Social Security benefits (or raise the retirement age) in order to reduce the Federal deficit. But you wouldn’t know that from the America Speaks materials or explanations. The Social Security program is simply presented as another big spending program and participants were presented with various ways to cut benefits. Given all this, a majority endorsed raising the retirement age for full benefits to 69 — a benefit cut for future retirees. But they also chose the progressive plan to raise the cap on taxable earnings subject to Social Security taxes, thus producing income for the system from greater portion of higher income peoples’ wages.

Medicare and Medicaid. The America Speaks background materials actually did acknowledge that the rising budgetary costs of Medicare and Medicaid are driven by the fact that our whole health care system is broken — and costing both the private sector and government programs much more per person than in countries that have much better health outcomes. They even acknowledged that thoroughgoing reform — like single-payer health care system — is the only way to control those rising costs.

However, when it came to options the participants were allowed to vote on, they were all variations on how much people wanted to cut Medicare and Medicaid benefits. At this point in the proceedings, the America Speaks founder and President, Carolyn Lukensmeyer had to acknowledge a rebellion in the ranks. People were demanding to have the option of voting for “single-payer” reform instead of cutting Medicare and Medicaid, and when she announced a complicated process of writing in that alternative, a roar of approval went up from the crowd in several locations. Their press release doesn’t report how many people chose this difficult to select option, but the organization clearly had had to scramble to quell a revolt by participants. (Note: their press release states that people chose to “cut health care spending by at least five percent,” but the choice was really to cut government health programs five percent — and my reading of the charts online was that only 21 percent of participants chose that option, with 71 percent choosing “no change.”)

Austerity vs Growth. Finally, the organizers had heard enough protests from the Economic Policy Institute and the AFL-CIO that they felt they had to assure the audience that they were not prioritizing deficit reduction over the need for economic stimulus to get the economy to start producing jobs. But after that ritual disclaimer, they went on to devote the vast majority of the day to deficits as our defining economic program.

David Dyen, an LA participant, wrote in a post on firedoglake,

“While the cumulative effect of all this tends towards social safety net cuts rather than tax fairness, the crowd in Los Angeles, at least, wasn’t biting at first. In surveying the discussion groups, most people seemed more concerned about the desperate need for more stimulus spending to move the economic recovery forward… In the nationwide instant survey, taken by participants through electronic devices at all 19 America Speaks sites, 61% said the government needed to do more to strengthen the recovery, with only 25% opposed. Even with a push poll question asking if participants supported government programs to increase growth ‘if it increases the deficit,’ got a majority, 51%, of the nation-wide group of participants.”

My next-day posting here — claiming participants mostly rejected conservative nostrums — is based on watching the process online, from reports from people who attended events around the country — and on a fairly sketchy press release put out by America Speaks on Thursday, just after the town meetings. But America Speaks billed these events as a nation-wide scientific experiment in finding out what the “American people” think about the economic way forward. They are thus duty bound to publish a full report on the details of every single question — and voting results — that participants were asked to make decisions about. It is especially important that they put out this comprehensive report because they are also scheduled to summarize their findings before a special public meeting of the White House Deficit Commission on June 30. Only then can the people who participated in the process judge whether their surprisingly progressive decisions are being accurately presented to the Commission.

Note: Click here for a blog post on the Augusta, Maine America Speaks event by participant Barbara Burt, director of the Frances Perkins Center.

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Roger Hickey was a leader of the campaign to stop the privatization of Social Security, and he is a founder and member of the steering committee of Health Care for America Now. In the late 1980s, he and Jeff Faux created the Economic Policy Institute.

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Follow Roger Hickey on Twitter: www.twitter.com/rogerhickey

Amy Traub

 By Amy Traub
Research Director Drum Major Institute for Public Policy

As budget crises force cities to cut back public services, private companies are stepping in to profit from the unmet demand. But there’s a cost to communities when markets take over what were once public functions: the new private services are often more expensive and with less public oversight, they may also offer lower quality.

In California, revenue-strapped community colleges are struggling to cope with escalating demand for affordable higher education. Many find themselves unable to offer sufficient spots in the courses students need to fulfill graduation requirements. Enter the private sector. The New York Times reports:

Kaplan University has an offer for California community college students who cannot get a seat in a class they need: under a memorandum of understanding with the chancellor of the community college system, they can take the online version at Kaplan, with a 42 percent tuition discount. The opportunity would not come cheap. Kaplan charges $216 a credit with the discount, compared with $26 a credit at California’s community colleges.

Why pay $26 a credit to interact in-person with fellow students and professors when you could pay greater than eight times more to participate in a potentially larger and less personal course online? The Times notes that “Thus far, Kaplan has no takers for its courses.” But if community colleges are forced to cut back far enough, the private alternative may be the only choice for many students.

Meanwhile in New York it’s public transportation that’s taking a beating. As the Metropolitan Transit Authority cuts bus service, the city is now establishing routes for private commuter vans to serve areas suddenly lacking transit options. The catch?

…passengers who are connecting to a subway or bus will have to pay $2 to ride the vans as well as public transportation fare, which is $2.25 for a single trip. “The issue here is not whether it’s more expensive or less expensive; it’s whether the service exists or not,” Mr. Bloomberg said…

The city insists it will step up enforcement of private van companies, yet the Times acknowledges that the plan “expose[s] passengers to the dangers of an industry that had operated with little oversight over the years…”

We’ll continue to look at how these privatization efforts degrade job quality for the employees involved, be they transit drivers or college professors. But the impact on folks who used to be known as “the public” but now look more like a profit-making customer base is all too clear.

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Follow Amy Traub on Twitter: www.twitter.com/AmyTraubDMI

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Amy Traub is the author of the book, From Disaster to Diversity: What’s Next for New York City’s Economy. She also wrote a chapter for the book, Thinking Big: Progressive Ideas for a New Era (Berrett-Koehler Publishers, 2009).  She has authored several influential DMI reports, including “Principles for an Immigration Policy to Strengthen and Expand the American Middle Class.” In 2008, the Jewish Funds for Justice gave her its  Cornerstone Award.

Les Leopold

 By Les Leopold
Author, “The Looting of America” 

“In reality, credit pollutants pose the same kind of threat to our economy as chemical toxins do to our environment. Like their chemical counterparts, they tend to concentrate in the weakest and most vulnerable parts of the financial system, and that’s where the toxic effects show up first: the subprime mortgage market collapse is essentially the Love Canal of our ongoing risk-pollution disaster.” Eric Janszen, Harper’s Magazine, February 2008

We’re living through two of the most catastrophic ecological disasters in history. BP’s spill is wrecking the Gulf’s ecosystem. It slaughtered 11 workers and destroyed the livelihoods of thousands in the fishing and tourist industries. And soon, we’ll start hearing about the terrible toll exposure to oil-related toxics is taking on the bodies of clean-up workers.

Meanwhile, Wall Street, led by financial giants like Goldman Sachs, JP Morgan Chase, Bank of America and A.I.G., polluted our financial system with toxic assets. The wreckage includes $6 trillion in lost economic value and at least 8 million US jobs destroyed in a matter of months. And like the Gulf spill, the Wall Street catastrophe will have deadly long-term consequences, as hundreds of dislocated workers die prematurely from the economic shock.

The Gulf and Wall Street disasters are oddly parallel in many ways, except one: BP is paying for some of its sins. Wall Street isn’t. (And what better evidence than the watered down financial reform bill the Congressional conferees hashed out last night, which gives banks plenty of latitude to keep doing business as usual).

Both calamities were predictable and preventable. BP–and the rest of the oil industry–relies on very risky technology to operate flawlessly under extreme pressure, in deeper and deeper water. According to the New York Times , Transocean commissioned a confidential study of safety records at some 15,000 deep sea wells. In 11 cases, crews “lost control of their wells and then activated blowout preventers to prevent a spill. In only six of those cases were the wells brought under control, leading the researchers to conclude that in actual practice, blowout preventers used by deepwater rigs had a ‘failure’ rate of 45 percent.” In short, a BP-like disaster was inevitable. But the industry and its allies studiously ignored that study and all other evidence of our offshore ticking time bombs. Drill baby drill! Just make sure you get the cash in your pocket before she blows.

Back on dry ground, we had similarly strong evidence that a Wall Street disaster was inevitable. Many thoughtful public and private officials cautioned us that Wall Street had recreated the very conditions that led to the crash in 1929 – financial deregulation plus too much speculative money in the hands of the few. In 1995, Brooksley Born, as chair of the Commodities Futures Trading Commission, warned President Clinton, Alan Greenspan and Congress that the fast-growing Wall Street derivatives casino could collapse at any time, taking the financial system with it. Her reward was to be driven out of government by Alan Greenspan, Robert Rubin and Senator Phil Gramm. The financial industry went into overdrive, creating and selling hundreds of billions of these risky products, which later turned into toxic trash. But till then, let the good times roll…for the elites.

In both the deep sea and on Wall Street, regulation was slack or non-existent. At BP, officials fudged or ignored equipment tests for key failsafe drilling systems. Regulators were clueless at best, corrupt at worst. On Wall Street, the financial ratings agencies pretended the toxic assets smelled like roses. Financial regulators from the Fed on down were not just clueless, but collaborating in the scheme.

If the Wall Street and BP disasters are eerily parallel, consider this connection between the big bankers and the BP spill. Apparently Wall Street analysts didn’t like all the extra time and money it took to conduct tests on deepwater rig failsafe devices. In a conference call with investment analysts, Transocean’s CEO virtually apologized for the annoying “anomaly” of having to repair blowout preventers. (New York Times, 6/21/10). It reportedly costs $700 a minute to pull up a blowout preventer for repairs. Investors surely didn’t want to see that kind of cash wasted on tests that could be avoided with a little guile and regulatory manipulation.

But the many parallels and connections between the Wall Street and Gulf disasters end when it comes to how the government is handling these crises. BP is paying a price for what it has done. Wall Street is being rewarded. (Populist rhetoric aside, the financial reform bill just announced will keep those rewards coming through a myriad of exemptions and loopholes. Too big to fail is here to stay.)

The Obama Administration pressured BP into canceling dividend payments and setting aside a $20 billion victims fund that will be administered by a neutral third party.

Where’s Wall Street’s victims fund? The one that will help the millions of people who lost their jobs or homes because of the crash? Instead of paying out, Wall Street is getting paid for its sins. After the crash, both the Bush and Obama administrations showered the perpetrators with at least $10 trillion in taxpayer bailouts, guarantees, toxic asset swaps and liquidity programs. The largest financial institutions were permitted, even encouraged, to become even bigger as they gobbled up distressed banks at bargain basement prices. What aid there is for Wall Street’s victims comes from us, the taxpayers, in the form of stimulus money.

In the very year in which they destroyed eight million jobs, the finance industry big boys got away with paying themselves $150 billion in bonuses all of which came by way of taxpayer support. In the worst economic year since the Great Depression, the top ten hedge fund managers (who would have earned next to nothing without taxpayer-financed bailouts) awarded themselves an average of $1.8 billion each – that’s about $900,000 an hour (not a typo).

Why was Wall Street rewarded for nearly destroying the financial system, while BP is (rightly) being punished for polluting the Gulf and killing workers?

Blame the Brits?The Brits have one answer: BP is British and therefore easy game for American politicians. The idea makes for a nice rhetorical flourish, but I don’t think it accounts for much. My guess is that if a volcano of Exxon oil erupted in the Gulf, our response would be roughly the same. (And I sure hope we won’t find out any time soon.)

We can see oil but not finance? Another explanation for the double standard is that while Wall Street’s financial shenanigans are an invisible abstraction, the Gulf spill is a graphic nightmare – the oil- coated birds, the once pristine marshes covered with goo – not to mention the oil gushing live and in color on your computer screen.

However, losing your job overnight because of a financial collapse is pretty tangible. Watching your nice neighborhood become a shabby ghost town because of mortgage foreclosures and plummeting housing prices is not too subtle either. Knowing that Wall Street dons are rolling in dough again while you’re fighting off debt collectors is quite immediate. Seeing your town lay off teachers because the Wall Street-induced crash caused tax revenues to tank is almost as sad as looking at an oil-soaked pelican.

So what’s really behind the double standard? Power: bankers have more of it than oil execs. Big Oil just isn’t as big as the financial industry anymore.

Look at it this way: Citigroup was too big to fail. BP isn’t. If it goes under the markets will not crash. Millions won’t lose their jobs. In fact the other oil giants will be only too glad to suck up the business. But when a single major financial entity goes under, the entire economy is at risk.

That immense power gives the financial sector the moxie to cover up its culpability. We know who to blame for the Gulf spill. But how many people know who to blame for the Wall Street crash? The culprits have spent millions to convince us that they are totally innocent. Instead, it’s the government’s fault for failing to adequately regulate them. Or it’s all those hapless Americans buying houses they couldn’t really afford, touching off a housing bubble.

BP officials appear red-faced before the congressional committee and admit guilt. But when Goldman Sachs’ Lloyd Blankfein gets before Congress, he assures us that he’s doing “God’s work.” He might look innocent, but Blankfein and his Wall Street brethren are guilty as sin for polluting our financial system with toxic assets–and walking away with billions (See The Looting of America for all the evidence you need.)

Politicians know they can get away with slapping BP around. But you better not slap Wall Street–you might upset the markets. God knows we don’t want to give Wall Street the jitters and cause a Dow Jones tumble. Let’s not risk a run on currencies or any other scary reaction that might endanger our feeble jobless recovery. Taking a knock at BP might lose you some oil industry campaign contributions. But the financial industry is the biggest campaign contributor of all–to both Democrats and Republicans.

Now that Wall Street has collected its bailout billions, it wants the rest of us to tighten our belts. The captains of high finance are demanding that we reduce public debt, which we ran up to bail them out and deal with the mass unemployment they caused. It takes a hell of a lot of nerve. First they crash the system and run away with a fat pocket of cash. They we bail them out and they use the money to pay themselves tens of billions in bonuses. Then they demand that WE clean up our financial act or they won’t loan out any money.

And sadly, they’re getting away with it. A generation of deregulation and regressive tax policies gave them the keys to the world economy. They now control so much capital that they have the power to veto policiies instantly, just by rapidly moving money around. The porous financial reform bill won’t stop them. The too-big-to-fail giants will grow even bigger. Get ready for more financial toxic shock as Wall Street’s financial engineers drill through the bill’s countless loopholes.

So next time an oil-blackened snowy egret gets you furious at BP, remember to save some righteous indignation for the financial polluters who are picking your pockets.

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Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

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This piece was first published on The Huffington Post