OBAMA’S WINTER OF NEO-LIBERAL DISCONTENT
by MITCHEL COHEN
President Obama’s chief economics adviser, Lawrence Summers, left the cabinet a year ago as rebellions against the neoliberal, austerity and anti-democratic programs he authored washed over Tunisia, Egypt, and Europe. But hopes for a shift in government policy were dashed, as President Obama continued to pursue Summers’ corporate and bank-friendly policies, accelerating the global ecological and economic crises.
Capitalist planners such as Summers hop from administration to administration. Republican or Democrat – it makes little difference. The competition among corporations to increase market share and maximize profits remains constant, as does the government’s protection of corporate interests regardless of who sits in the Oval Office. In times of economic crisis such as the one in which the U.S. – and indeed, the world – is currently mired, the space for avoiding the worst aspects of unemployment, ecological devastation, poverty, vast reductions in public services and expansion of imperialist wars are circumscribed by the urgency, for capitalism, of stripping down to essentials, controlling natural resources and labor, and repressing all forms of organizing and resistance.
Lawrence Summers is Capitalism’s chief economist. He was, as we shall see, a major influence on Bill Clinton and Al Gore, whose approach to economics and the environment is continued by Obama. While Gore powerfully illustrated the planetary devastation underway via Global Climate Change in his 2006 film “An Inconvenient Truth,” it was Summers who provided Gore’s nonsensical consumer-driven approach about “what to do” to halt and repair the global ecological crisis. Here is where the ecological and the economic intersect.
To get us out of the crises, President Obama has turned to the same coterie of economic advisers who got us into them. They have brought the U.S. (and world) economy and ecology to the brink of collapse. Writer Ron Suskind, in his new book “Confidence Men,” confirms that there was never any question of Obama doing things differently. Describing the then-president-elect’s choice of economic advisers, Suskind notes,
“Obama, after all, had selected for his top domestic officials two men [Lawrence Summers and Timothy Geithner] whose actions [in the Clinton Administration] had contributed to the very financial disaster they were hired to solve.”1
John R. MacArthur, the editor of Harper’s, also references Suskind’s book: “These anti-reform appointments did not go unnoticed by party regulars, even though they were ignored by Obama groupies. ‘I don’t understand how you could do this,’ Suskind quotes Sen. Byron Dorgan (D.- N.D.) saying to Obama. ‘You’ve picked the wrong people!’
“The ‘wrong people’,” MacArthur notes,
“included Rahm Emanuel, now mayor of Chicago, and his replacement as White House chief of staff, William Daley. Both of these advisers were four-star generals within the Chicago Democratic machine who cut their teeth in Washington during the campaign to pass that job-killer North American Free Trade Act and who later worked for investment banks.2 But Obama’s hypocrisy in Osawatomie, Kansas, set a new standard in deception. Among other things, his speech blamed ‘regulators who were supposed to warn us about the dangers of all this [the unfettered sales of bundled mortgages], but looked the other way or didn’t have the authority to look at all. It was wrong. It combined the breathtaking greed of a few with irresponsibility all across the system.’
“What’s truly breathtaking,” MacArthur bristles, “is the president’s gall, his stunning contempt for political history and contemporary reality. Besides neglecting to mention Democratic complicity in the debacle of 2008, he failed to point out that derivatives trading [still] remains largely unregulated while the Securities and Exchange Commission awaits ‘public comment on a detailed implementation plan’ for future regulation. In other words, until the banking and brokerage lobbies have had their say with John Boehner, Max Baucus, and Secretary of the Treasury Tim Geithner. Meanwhile, the administration steadfastly opposes a restoration of the Glass-Steagall Act, the New Deal law that reduced outlandish speculation by separating commercial and investment banks. In 1999, it was Summers and Geithner, led by Bill Clinton’s Treasury Secretary Robert Rubin (much admired by Obama), who persuaded Congress to repeal this crucial impediment to Wall Street recklessness.”3
THE CLINTON-GORE-KYOTO CONNECTION
Once Upon a Time, Al Gore claimed to have invented the internet. He also laid claim, along with the rest of the Clinton administration, to having “reinvented government.” A few years ago he re-invented himself as a modern-day Paul Revere galloping across the country on his white horse crying, “To arms, to arms, the Climate is Changing.” Yet back in the 1990s while the rest of the world was negotiating a mandatory reduction in industrial emissions that were punching holes in the Ozone layer, it was none other than Al Gore, Vice President of the United States, who traveled to Kyoto, Japan to take those negotiations hostage and prevent a ban on targeted emissions.4
Gore commandeered the Kyoto conference. The U.S. government, he said, would not sign the Accord – as limited as it was – if it imposed emissions reductions on industrial countries. Instead, he demanded that the rest of the world adopt his proposal that would allow industrial nations like the U.S. to continue polluting by establishing an international trade in carbon pollution credits. Gore’s “solution” – like Obama’s – was to turn pollution into a commodity and buy and sell it in the form of “pollution rights”. The free market trade in “pollution credits” would simply shift around pollution and spread it out more evenly without reducing the total amount of ozone-depleting greenhouse gases. It would allow the United States and other industrial countries to continue polluting the rest of the world.
In proposing (and imposing) that mechanism, Gore and Clinton were enacting a policy – trade in pollution credits – that had first been put into effect in a more limited way by President George H.W. Bush under the 1990 extension to the Nixon administration’s “Clean Air Act.”5 The mechanisms were developed by the World Bank (under Summers’ tutelage) and International Monetary Fund, and this quintessential capitalist policy was actually endorsed by several well-known environmental groups.
The global trade in industrial waste emissions credits, as I wrote above, were a new kind of commodity and would require new regulations and agencies to administer their authorization and trade. Clinton and Gore constructed an elaborate set of structures such as the World Trade Organization, and treaties such as NAFTA, GATT, and the FTAA to do just that. Under the new trade bureaucracy, countries would not be allowed to exempt themselves from trade – not even from imports of toxic wastes or trade in pollution credits – regardless of environmental or social justice considerations. The entire edifice institutionalized the complex mechanisms designed to save capitalism from the demands of the growing grassroots environmental and global justice movements.
In his 1992 book, Earth in the Balance – much praised (foolishly but to be expected, in my estimation) by the large environmental not-for-profit corporations vested in the current economic system – Al Gore laid out the ideological basis for his flawed pro-capitalist solution to environmental destruction and climate change: Rely on voluntary self-regulation by corporations and the governments they control. Forget that industrial corporations (including enormous slaughterhouses of factory-farmed animals) have been the primary source of toxic pollution. To remain competitive within the existing system and to maximize profits, corporations cannot voluntarily end pollution if it is cheaper for them to pollute. That is a fundamental capitalist dynamic. It propels corporations to basically use the earth as their ashtray in reckless disregard of the consequences to human and planetary health. Governmental action is required to regulate pollution and even the playing field for all.
Gore ignored that reality and built the rationale for his framework upon the fiction that corporations could and would on their own stop their emissions of greenhouse gases and pollution, and play the necessary role in cleaning up the environment.6 Despite the literally world-shaking consequences of global climate change that Gore graphically documents in his film “An Inconvenient Truth,” he refuses to challenge or even regulate the system that has driven the planet to the brink of destruction.
A number of key environmental organizations accepted Gore’s delusion that corporations, working with government and consumers, would or could save the environment while maintaining the same set of economic relationships and expansion of capitalist trade. Seven of the largest environmental groups – National Wildlife Federation, Natural Resources Defense Council, the Environmental Defense Fund, World Wildlife Fund, National Audubon Society, Nature Conservancy, and Defenders of Wildlife – joined the charade; they came out in support of the North American Free Trade Agreement (NAFTA),7 trouncing opposition by smaller, more radical grassroots ecology groups and trade unions. At a time when a united environmental movement could have made a huge difference, these organizations provided Gore and Clinton with carte blanche for pursuing neoliberal policies that have so devastated the planet.
Gore and the pro-NAFTA environmental groups created a partnership that established “free market” trade in pollution credits, basically asking corporations to deliver the world from the ravages that they themselves had created. Utter nonsense, but its ideological underpinnings were based on an outrageous document justifying the dumping of toxic wastes in poor countries. That document was written by an economist and policy-maker working at the World Bank at the time: Lawrence Summers.
LARRY SUMMERS: GOODBYE & GOOD RIDDANCE
In December of 1991, Lawrence Summers – following a stint as Ronald Reagan’s top economics adviser (where he’d lobbied successfully for cuts in corporate and capital gains taxes, and opposed unemployment insurance), and then as economics adviser to presidential candidate Michael Dukakis – was the chief economist for the World Bank. In that capacity, Summers issued a memorandum to senior World Bank staff calling upon them to use economic muscle to pressure non-industrial areas of the world to accept (and pay for) more waste from the U.S. and elsewhere. He called this a “fairer redistribution” of the industrial world’s wastes and pollution. Summers’ plan would not, of course, actually reduce toxic wastes and pollution – it would use the “free market” to widen the possibilities for where wastes would be dumped, rectifying what he saw as “the current toxic imbalance.”8
“I’ve always thought that under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low [in pollutants] compared to Los Angeles or Mexico City,9 [Summers wrote].”
Summers, who edited the World Bank’s World Development Report for 1992, claimed to have worked out “the economic logic behind dumping a load of toxic waste in the lowest wage country.” He found the logic behind all of this to be “impeccable, and we should face up to that.”
A firestorm erupted over Summers’ comments worldwide. (Strangely, the rage was muted here in the United States). Impoverished people – their health shattered by the dumping of toxins in their communities and waterways – viewed Summers as creating a mockery of their concerns. In his infamous memo, he argued that precisely because of their poverty,
“the concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under five mortality is 200 per thousand.”
In other words, the poor would never live long enough to contract the diseases that exposure to dumped or burned wastes would cause, so let’s take advantage of that. Instead of eliminating imperialist conditions causing their poverty and helping people to live longer and less toxic lives, Summers (and Obama, like Bush, Clinton and Gore before him) inflicted an ecological and human rights nightmare on Africa, Asia and Latin America, intensifying exploitation and expanding the empire of capital. Summers proposed forcing the wretched of the earth to provide an inestimable service to capital, and thereby make their immiserated, shortened lives meaningful.
Throughout the world people saw through Summers’ grand scheme to further exploit and to poison them in the name of the “free market.” They raised a ruckus. They understood that Summers’ flippant analysis was no aberration in an otherwise sterling and positive career; in fact for years Summers had blocked initiatives by environmental organizations to make the World Bank more ecologically and socially responsible. His 1992 “pollution” memo was simply one in a long train of exploitative schemes on behalf of the global capitalist class.
Greenpeace and numerous defenders of the planet demanded that the World Bank terminate Summers. Brazil’s Environment Secretary, Jose Lutzenberger, wrote to Summers directly:
“Your reasoning is perfectly logical but totally insane. … Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in. … If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said … the best thing that could happen would be for the Bank to disappear.”10
Lutzenburger was fired shortly after writing his letter.
Instead of being shocked by the horror of the environmental devastation they were causing, the big corporations and governments of the U.S. and several other industrialized countries looked favorably upon Summers’ spin. Through Summers’ neoliberal economic strategy, the dumping of toxic wastes (and later, genetically engineered grains) became not some isolated happenstance of industrial production that can be apologized for and dismissed, but a planned component of George Bush’s, Bill Clinton’s, Dick Cheney’s, and now Barack Obama’s New World Order strategy – a weapon in the imposition of structural adjustment programs upon the “third world.”
“So much pollution is generated by non-tradable industries (transport, electrical generation) [which makes] the unit transport costs of solid waste … so high. [These non-tradable industries unfortunately] prevent world welfare-enhancing trade in air pollution and waste,”
as stipulated for domestic polluters in the 1990 Clean Air Act extension. Instead of outlawing dangerous pollutants and carcinogens, the Act granted “pollution credits” – ecology-destroying quotas – to corporations and municipalities in the U.S. Those who “under-pollute” may then sell their “excess” pollution credits – their “right” to ravage the environment – to companies that refused to cut back toxic waste or were unable to do so and still maintain their profit rates – the “free market” at its most crass and savage.
Caught with his foot in his mouth, Summers claimed he was half-joking, and found someone else to take the heat for writing the memo he’d signed. But claims to irony aside, the memo accurately expressed the trajectory of an expansive capitalism as evident in the views of the first Bush and soon-to-be Clinton Administrations, who were maneuvering to establish new markets for toxic wastes, and air pollution and water rights.
Summers’ memo certainly removed the mask from the face of neoliberalism. That framework had long informed the policies of most U.S. government officials since the days of President Jimmy Carter. It was the Georgia Democrat Andrew Young – Carter’s ambassador to the United Nations and a man who earlier in his life stood at the side of Dr. Martin Luther King, Jr. – who described his participation most clearly:
“My approach to Africa is in some ways like the Japanese approach to Asia, and my approach is not necessarily humanitarian. It is in the long-range interests of access to resources and the creation of markets for American goods and services.”11
Summers took Andrew Young’s imperialist worldview a few notches further. In his infamous memo, Summers argued that poor countries should exploit their ‘comparative advantage’ of low wages, access to natural resources, and lower environmental standards.12
Virtually every other country in the world broke with Summers’ Harvard-trained ‘economic logic’ and his ruminations in support of dumping rich countries’ poisons on their poorer neighbors. All countries except for the U.S. “agreed to ban the export of hazardous wastes from OECD to non OECD countries13 under the Basel Convention. [Seventeen] years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention’s Ban Amendment on the export of hazardous wastes from OECD to non OECD countries.”14
While not a single poor country has successfully ‘developed’ by following Summers’ advice (that is, by exploiting their “comparative advantage” and begging the world to dump their wastes there), it has proved very effective for multinational companies like Nike,
“which has taken advantage of low wages throughout Asia, or even G.M., which produces cars and trucks in Mexico with the same technology as in Michigan but with lower wage workers. Makers of polluting technologies such as incinerators that are being phased out in industrialized countries have also benefitted, because they are able to stay in business by selling to third world countries. U.S. manufacturers that wanted to escape environmental regulations (like furniture makers who use toxic glues, solvents, and paints) have capitalized by shifting from places like Los Angeles to Mexico.”15
Just as they did a decade-and-a-half later in putting faith and high hopes in Barack Obama, many environmental activists foolishly thought that with the Clinton administration taking over in Washington in 1993 the environment would be saved, things would improve, peace would reign and Summers, then of the World Bank, would go away. Instead, Clinton and Gore brought Summers and his mentor, Robert Rubin, who was a former member of the board of the Carnegie Corporation, into their administration.16 Together they pushed through legislation in Congress that
- institutionalized NAFTA, GATT and the World Trade Organization,
- enacted shameful “welfare reform,”
- enacted new laws that further eroded civil liberties and the Bill of Rights (under the guise of “anti-terrorism”),
- vastly increased military spending,
- decimated the last remaining old-growth and redwoods forests in the United States,
- defeated Haiti’s progressive movements and continued U.S. military occupation of that country,
- promoted genetically engineered foods and the biotech industry,
- bombed Iraq on a daily basis for a decade and imposed sanctions against Iraq and Yugoslavia,
- attempted to dismember organic standards,
- legalized irradiation of foods, and
- managed the collapse of a once-powerful movement for free universal health care
– all accomplished by Clinton and Gore’s neoliberal policies drawn up by Summers and others. Even before taking office, President Clinton sought to appoint Summers to a national policy position: Chairman of the President’s Council of Economic advisers, the position Summers held until a year ago in the Obama administration.
Environmental and other radical groups were outraged and fought against his appointment. For a time, they were successful. But Summers’ work on behalf of global capitalism would not go unrewarded for long. The day following Clinton’s inauguration as the 42nd President of the United States, he appointed Lawrence Summers to the post of Undersecretary for International Affairs at the U.S. Treasury, a position traditionally responsible for “the formulation of U.S. economic policy in the Third World, including U.S. policy related to the IMF, the World Bank and the regional development banks.”17
Summers became the leading voice within the Clinton Administration against the U.S.’s participation in greenhouse gas reductions via the Kyoto Treaty negotiations,18 and strongly influenced Al Gore in that regard. He argued that while industrialized countries needed to rid themselves of toxic wastes, that did not have to become a serious barrier to an expansive global capitalism; he could “re-invent” toxic waste disposal as a marketing opportunity. And so he blustered his way forward:
“There are no… limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn’t a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.”19
And foster that expansion he did, with all its consequent social costs. Summers – “the scheming architect of an end-run around Congress that resulted in the $12 billion Mexican bailout” in 199520 – became a leading proponent of bailing out the rich, and soaking the working class to pay for it. A key official characterized the Mexico bailout this way:
“Early in 1995, the size of the collapsing emerging market bubble so terrified official Washington that Treasury Secretary Robert Rubin … embraced a public bailout for private investors in Mexico. It is some measure of the ethical laxity of Washington that this rescue for friends and former clients of a sitting Treasury Secretary went almost completely unchallenged. Rubin, lest we all forget, is the chief fiscal officer of the United States. When a Treasury Secretary condones a public bailout for private foreign debts, he commits an act of fraud.”21
Green Party Presidential Candidate Ralph Nader also expressed opposition to the Mexican bailout, which was really a gift of billions of dollars to U.S. banks to whom Mexico owed its debt:
“The Mexican political economy is basically a lawless, criminal operation run by a dicatorial regime in cahoots with oligarchs who keep getting richer through privatization and through other transfers of public wealth. Private privilege becomes public policy through secret government that is unaccountable and is affected by the institutional conflicts of interest perpetrated by Government officials on leave from their financial posts in New York.
“For the first time in our history, we have bailouts directed at protecting investors who gambled and lost. … Has Mexico joined the list of big banks deemed too big to fail?…To put it symbolically, if Wall Street expects to be able to stampede Washington any time the Street’s risks materialize in a foreign country, these risks will be taken every few years. … Insiders who counsel prudence will be waved aside in the rush to speculate in excess, and the Washington corporate welfare system will continue to mushroom…”22
As if to prove Ralph Nader’s point, Summers, the advocate of de-regulation, demanded that government bail out de-regulated countries and financial corporations – good practice for the hypocrisy to come.
The interpenetration of high-finance, ecological destruction and war has always been a hallmark of capitalism. Larry Summers understood this only too well. He became the principal economist shaping U.S. financial aid to the government of Indonesia. As massive fires gutted Indonesia’s forests and produced unbreathable clouds of smoke that hung for a thousand miles over the region for many months; and as Indonesia’s military was preparing to again invade and massacre civilians in East Timor; and as anti-imperialists and enviro-activists throughout the world protested the U.S.’s economic and military assistance to the murderous Indonesian junta, Clinton’s chief financial adviser said:
“We welcome the announcement in Jakarta today that the International Monetary Fund and the Government of Indonesia have reached agreement on a revised economic program designed to stabilize the Indonesian economy. The United States has a strong economic and national security interest in seeing Indonesia succeed in these efforts, which will depend on its ability to sustain both economic and political reforms. . . . We look forward to the timely board approval and disbursement of these funds, as well as those from the World Bank.
“We also welcome the Asian Development Bank’s announcement that it has approved a substantial loan to improve financial sector governance in Indonesia. This loan will support efforts to strengthen Indonesia’s banking system and is critical to restoring financial stability and growth.”23
The words just melt in your mouth.
Nearing the end of his second term, President Clinton upgraded Lawrence Summers (first, Undersecretary for International Affairs; next, Deputy Secretary of the Treasury) to become his new Secretary of the Treasury, replacing the retiring Robert Rubin. At his 1999 confirmation hearings, not a single U.S. senator bothered to ask Summers whether he still found “the economic logic behind dumping a load of toxic waste in the lowest wage country” to be “impeccable.”
Summers provided the ideological rationalizations for the new mechanisms of neoliberalism, the primary strategy of global capitalism and its Brave New World Order, by advocating:
- cutbacks in all public services while “enclosing” (privatizing) lands, resources and social services that had been in the public domain and previously used in common (water, forests, air, transportation, medical care, etc.), sometimes using the legal pretext of “Eminent Domain” at home and economic and military might abroad;
- the patenting of what would become known as “intellectual property rights” (corporate ownership of genetic sequences in people and other living organisms);
- the establishment of a new market and “stock exchange” for trade in “pollution credits”; and,
- the proletarianizing of peasants and villagers, driving both labor and nature under the domination of new forms of exploitation and expropriation.
In the name of neoliberalism, the Clinton/Gore administration annihilated Yugoslavia’s water and electric systems, hospitals, schools, and sanitation facilities, bridges, dams, refineries and factories. The Clinton/Gore bombardment of that country displayed the U.S. Empire’s vast modern arsenal of death and ecological devastation.24 Depleted uranium weapons, cluster bombs, graphite bombs, supposedly invisible “Stealth” fighter jets, and so-called “Apache” and “Black Hawk” helicopter gunships ravaged the recalcitrant populace. “Don’t Fuck With Us” was the message scrawled on U.S. bomb fragments found near Pristina, in the Yugoslav province of Kosovo.25
As the U.S. bombed such beautiful cities as Belgrade, Nis and Pristina into the stone age, a “second wave” of attacks was launched – the economic bombs of the IMF’s “structural adjustment policy.”
Back in the 1990s, opponents of U.S. policies focused on the horrors of the massive bombardment of Kuwait/Iraq, and then Yugoslavia. But in general they failed to fully observe the underlying long-term economic goals that the bombardments and de-structuralizations were designed to accomplish. In a similar way, Bush’s and Obama’s “War on Terror” is used today as a cover for repressing resistance to the expansion of empire. The Somali pirates, for example, have become one of the more visible forms of resistance to the dumping of hazardous wastes off the north-east coast of Africa – a consequence of the neoliberal project that had been codified and refined by Summers.26 There is a growing understanding that “neither government regulations nor the capitalist market is capable of providing adequate protection for natural ecosystems or communities affected by environmental pollution,”27 and so some of the victims of neoliberalism are taking matters into their own hands against the corporations poisoning them.
Nor are we immune from such policies here at home. While the world’s environment is in worse shape than ever, also underway has been a gigantic transfer of wealth from the working class to banks, private corporations and their owners, leading to record levels of profit-taking on Wall Street. Just as he’d argued for deregulating trade in toxic wastes, Summers testified before Congress that the banks and financial institutions were capable of regulating themselves. He was a main opponent of the Glass-Steagall Act of 1933 that restricted what banks were allowed to do. Congress overturned the Glass-Steagall Act with Clinton and Gore’s approval, leading to the economic crisis the world has been enmeshed in for the past 4 years. Former President Clinton himself has had second thoughts about Summers’ role here, saying that Summers was wrong in the advice he gave him against regulating derivatives. Yet, President Obama seems to have had no second thoughts over appointing Summers as director of the White House’s National Economic Council, enabling Summers to again ascend to the pinnacle of global power, with the military might of the United States enforcing the administration’s economic policies.
In the Autumn of 2006, Summers became a part-time managing director of the investment and technology development firm D.E. Shaw & Co. He was paid $5.2 million in his second of two years working there, while working just one day a week,28 and at the same time also collected $2.7 million in speaking fees from the same corporations to which Summers would later allot government bailout money.29
When Summers’ hero – right-wing economist Milton Friedman – died in 2006, Summers’ Op-Ed in The New York Times – “The Great Liberator” – argued that
“any honest Democrat will admit that we are now all Friedmanites”
and that Friedman had made real contributions to monetary policy. (Friedman made no real contributions at all. He was a fascist who manipulated currencies around the world for the benefit of the rich and the increased misery of the people.) But Friedman’s real contribution, Summers opined, was ideological:
“[He] convinc[ed] people of the importance of allowing free markets to operate.”30
Under Summers and other officials from the World Bank, International Monetary Fund and World Trade Organization,
“world trade . . . burgeoned with imbalanced cargoes: banned pesticides, leaded gasoline, CFCs, asbestos, and other products restricted in the North [but which] are sold to the South,”
according to Jim Vallette, formerly of Greenpeace.
“Tropical timber, oil, coal, and other natural resources flow from South to North with little or no benefit to the host communities; and while regulations tighten around dirty coal and dangerous nuclear power plants in the North, they are proliferating in Asia, Africa, Eastern Europe and Latin America, where they are owned and operated by Northern corporations.
“This trade has been facilitated through tens of billions of dollars of financing by the World Bank, the U.S. Overseas Private Investment Corporation, and the U.S. Export Import Bank, [quasi-]government institutions in which Mr. Summers has wielded his economic logic. His 1991 memo can be considered a working thesis behind this decade’s dominant global economic policies.”31
Summers’ actions as director of President Obama’s National Economics Council served to continue his contempt for those on the receiving end of global capitalism’s largesse. One of his last battles as part of the Obama administration was to remove caps on executive pay at firms receiving stimulus money,32 including Citigroup, for which he came under fire at long last for accepting free rides in its corporate jets.33
Lawrence Summers embodies the class he represents and the policies most fruitful to ripping trillions of dollars from the working class in the United States and natural resources from around the world in order to expand the Empire of capital. Thus, when U.S. President Barack Obama announced his appointment of Lawrence Summers – a fellow Harvard Alumnus – as Director of his National Economic Council, Obama completely disregarded Summers’ responsibility for causing or exacerbating the international financial crisis and the great suffering it has caused. Instead, Obama revoltingly heaped praise on Summers, oblivious to (or maybe in support of) the ecological, human and economic devastation Summers’ policies wrought on behalf of capital. Said Obama:
“As Under Secretary, Deputy Secretary, and then Secretary of the Treasury, Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. … I am glad he will be by my side, playing the critical role of coordinating my Administration’s economic policy in the White House – and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis.”
So much for Obama’s slogan of “change”. The die was cast before he stepped foot in the White House. Environmental activists might do well to ask President Obama, for starters, what are his views on grassroots activists’ demands – ridiculed by Summers – that the U.S. at long last ratify the ban on the export of hazardous wastes. Don’t hold your breath.
Mitchel Cohen is a poet and member of the Brooklyn Greens/Green Party, Chair of the WBAI Local Station Board, and hosts “Steal This Radio” on NYTalkRadio.net. You can order his two new books of poetry – “The Permanent Carnival” and “One-Eyed Cat Takes Flight” – or any of the Zen-Marxism pamphlets listed on the back cover by writing to him directly at: firstname.lastname@example.org.
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World Bank officials have always helped to shape and administer U.S. government policy. Prior to his tenure as president of the World Bank from 1968 to 1981, Robert McNamara had, you will recall, been the Secretary of Defense of the United States and, in that capacity, was the main architect of the “automated battlefield” which the U.S. government applied in Vietnam, slaughtering more than two million Vietnamese people and poisoning their crops, farmlands and water supply for generations to come. It was McNamara who approved the use of Agent Orange and other defoliants that poisoned the land, and along with it American GIs. Moving to the World Bank, McNamara maintained his interest in the region, helping to open up Thailand to the sex trade industry and presiding over the privatization of publicly used lands and infrastructure there, resulting in ecological and social catastrophe.
The revolving door between high-level government appointments and international banking, insurance, industrial agriculture and multinational corporate boards has been spinning as freely as ever regardless of who holds the Presidency. After appointing Summers to his post Clinton selected Ron Brown, former lawyer and public relations flak for Haitian dictator Jean Claude Duvalier, as Secretary of Commerce. From that post Brown participated in setting up the IMF’s devastating Structural Adjustment Program for Haiti. Another of Brown’s roles was to oversee the transport of toxic wastes abroad.
Brown, Summers and others pushed the World Bank/ IMF line, which imposed “Structural Adjustment Programs” on countries unable to keep up with paying the interest to western banks on monies loaned to them. Should they reject the IMF’s terms for “restructuring” their debt, they’d get bombed and sanctioned until they did. While individual banks of course wanted to recoup their loans, global finance capital as a whole fostered indebtedness as leverage in order to accomplish a number of things critical to the continued expansion of capital:
- hammer the working class in debt ridden countries into line, to provide a cheap international labor force;
- obliterate (“enclose”) lands and longstanding communal ways of living, and privatize them under the “free market”;
- establish networks of Non-Governmental Organizations – capital’s new global managers – to intercede in and thus “manage” any resistance. Organizations such as NRDC sent a team to Ecuador and inserted itself into negotiations between the oil companies and indigenous workers and community movements, supplanting them from speaking in their own voice and around their own demands. NRDC, in this instance, negotiated away the movements’ victories against Occidental Petroleum in exchange for minor and temporary improvements in their material situations;34
- drive down gains made during decades of struggle;
- present a pretext for “balancing the budget” at home, and thus providing an excuse for attacking gains made in workers’ living standards and the environment here; and,
- development of small indigenous capitalist classes dependent upon global capital, and maintaining them in power by any means necessary, including military force.
This is largely what the US/NATO bombardment of Yugoslavia accomplished, along with the wars against Iraq and Afghanistan – the reassertion of capitalist hegemony over the region. The U.S. and NATO forced Yugoslavia, under a newly reluctant Milosevic, back into the arms of its masters.35 In his last act as Commerce Secretary, Ron Brown led a coterie of corporate executives, military personnel and defense contractors whose companies had contributed generously to the Democratic Party and the Clinton campaign, to Yugoslavia, in search of corporate gain and expansion of their markets that the break up of that beleaguered country made possible.
When Brown’s plane went down over Yugoslavia sixrteen years ago with dozens of corporate moguls aboard, it exposed the “intervention” as an attempt “to bring the region firmly into the American sphere of military and commercial interest.”36
At stake, at the time, in addition to cheap labor, arms sales, future oil rights and a vast assortment of natural resources in already-developed mines, was $5.1 billion in reconstruction funds (that figure tripled, and by now has doubled again, to more than an estimated $32 billion), with the World Bank set to dispense $1.8 billion for the region in corporate giveaways each year. As Alexander Cockburn rightly put it, “[Brown's] was the tour to cash in the investment and bring home the trophies.”
‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
1 Ron Suskind, “Confidence Men: Wall Street, Washington, and the Education of a President,” Harper: 2011.
2 Before joining the Obama team, Rahm Emanuel helped broker the largest nuclear power plant bonanza in U.S. history. For more, see Mitchel Cohen, A Hard Rain’s A-Fallin’: Is It Too Late to Save This Planet? Red Balloon Pamphlets, April 2011.
3 John R. MacArthur, “President Obama Richly Deserves to be Dumped,” CommonDreams.org, December 14, 2011.
5 The market approach to pollution credits was proposed by Havard Prof. Robert Stavins, who was part of George H.W. Bush’s transition team and who collaborated in this approach with the Environmental Defense Fund. Also, Supreme Court Justice Stephen Breyer was an early proponent of tradable permits as an alternative to pollution regulation.
6 Brian Tokar, Earth For Sale: Reclaiming Ecology in the Age of Corporate Greenwash, South End Press, Boston MA: 1997. p. 66, quoting from Gore, Earth in the Balance, p. 337, 297. For a more complete analysis of Gore’s book, see Brian Tokar, “An Environmental Presidency,” Z Magazine, April 1993, pp. 23-28; and “Environmental Doublespeak,” The Ecologist, vol. 23, no. 4, July/August 1993, pp. 157-58.
7 Brian Tokar, ibid.
8 Later, after a firestorm of outrage about the memo engulfed the World Bank in controversy, an aide at the World Bank, Lant Pritchett, said that he’d been the one to have actually written it, that it was meant as “ironic,” and that Summers signed it in that spirit. Pritchett said – much after the fact – that it was meant as a joke.
9 Lawrence Summers, Memo to senior World Bank staff, December, 1991. Published in The Economist, February 1992.
10 Jose Lutzenberger, in “Greenpeace Waste Trade Update,” no. 5.1, First Quarter 1992.
11 As NY Green Party candidate Howie Hawkins wrote, when the Democratic Leadership Council and the AIPAC (American Israeli Public Affairs Commission) targeted former Georgia Congress Representative Cynthia McKinney for defeat because she had the temerity to call for justice for Palestinians, the Democratic leadership – from Maynard Jackson, Andrew Young, and John Lewis in her home town of Atlanta to Jesse Jackson Sr., Terry McAulliffe and Bill Clinton nationally – ran away from her. They let a Republican judge who supported right-wing fundamentalist Alan Keyes in the 2000 Republican primaries re-register as a Democrat and beat McKinney with Republican votes in Georgia’s open primary system.
12 Russell Mokhiber and Robert Weissman, “Memo Misfire: World Bank “Spoof” Memo on Toxic Waste Holds More Irony Than Laughs,” San Francisco Bay Guardian, May 1999.
13 OECD countries – Organization for Economic Cooperation and Development – so-called “developed” and relatively wealthier countries.
14 Jim Vallette, “Larry Summers’ War Against the Earth,” May 13, 1999. As printed in Counterpunch.org.
15 Mokhiber and Weissman, op cit.
16 Interestingly, the Carnegie Corporation gave a $25,000 grant to the Pacifica Foundation in 1996 to help subsidize the launching of what would become its preeminent show, Democracy Now.
17 The Development Group for Alternative Policies, Inc., “Statement on the Appointment of Lawrence Summers,” 1400 I St. NW, Suite 520, Washington D.C. 20005.
18 Robert Wampler, “Kyoto Redux? Obama’s Challenges at Copenhagen Echo Clinton’s at Kyoto“. National Security Archive at George Washington University. http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB303/index.htm. December 18, 2009.
19 Lawrence Summers, 1991 interview, in William Rees, “Footprints to Sustainability“. University of British Columbia. UBC Reports, Vol. 52 No. 4 Apr. 6, 2006.
20 David E. Sanger, “Treasury Nominee is Closely Questioned,” in The NY Times, June 18, 1999.
21 Christopher Whalen, CFO of Legal Research International, testimony given on May 24, 1995 before the Congressional Committee on Banking, Housing & Urban Affairs.
22 Ralph Nader, March 9, 1995, U.S. Senate Committee on Banking, Housing & Urban Affairs.
23 Lawrence Summers, statement of June 25, 1998.
24 Mitchel Cohen, “Ecological Devastation in Yugoslavia,” and “Bombing the Bridge to the 21st Century,” in Against Nato’s War on Yugoslavia, Radical Philosophy Association, NY, April 2000.
25 Mitchel Cohen, “Not on the News,” Against NATO’s War in Yugoslavia, op. cit. http://www.thing.net/~oliveworks/
26 Johann Hari, “You are being lied to about pirates. Some are clearly just gangsters. But others are trying to stop illegal dumping and trawling,” The Independent, January 5, 2009. See also Salim Lone, “Destabilizing the Horn: American-Backed Warlords Invade Somalia,” posted to TomPaine.com, January 8, 2007; John Beacham, “U.S. orchestrated Ethiopian invasion of Somalia,” pslweb.org, January 5, 2007; K’Naan, “Why we don’t condemn our pirates in Somalia,” URB Magazine, April 14, 2009; a great song by David Rovics, “Pirates of Somalia”.
27 Brian Tokar, “Earth for Sale: Reclaiming Ecology in the Age of Corporate Greenwash,” South End Press, 1997.
28 “Geithner, Summers among key economic team members announced today.” Newsroom. November 24, 2008.
29 Louise Story, “A Rich Education for Summers (After Harvard),” The NY Times, April 5, 2009.
31 Jim Vallette, International Trade Information Service and formerly of Greenpeace.
33 Jay Fitzgerald, (February 11, 2009). “Larry Summers Jet Ride Called Part of Larger Problem”. Boston Herald. http://www.bostonherald.com/business/general/view//2009_02_11_Larry_ Summers__jet_ride_called_part_of_larger_problem/
34 “The alphabet soup of UN structural adjustment programs, debt service payments, enterprise zones, the IMF, World Bank, WTO, NAFTA, GATT, U.S. Agency for International Development and what today we call NGOs – non-governmental organizations, the so-called “progressive” arm of globalization – are the resulting mechanisms through which the New World Order is implemented.” See Mitchel Cohen, “The L.A. Rebellion and the World Bank,” in What Is The Existential Vacuum … & Does It Come With Attachments?, and also Mitchel Cohen, Haiti and Somalia: The International Trade in Toxic Waste, for further development and case study applications of NGOs in practice and the development of a new global division of labor to which the Gulf war was central.
35 Contrary to NATO’s war propaganda, for many years Yugoslavia’s elected president, Slobodan Milosevic, was not Russia’s “friend,” but the International Monetary Fund’s point man in the region, the one responsible for imposing IMF and World Bank structural adjustment programs on his country. One writer even quotes Milosevic as having “urged Yugoslavs to overcome their ‘unfounded, irrational, and … primitive fear of exploitation’ by foreign capital.” (Leonard Cohen, “Broken Bonds: Yugoslavia’s Disintegration and Balkan Politics in Transition”, p. 56) It was only when massive public protests forced Milosevic to ease the rate of privatization of public utilities that he incurred the wrath of the international financiers led by the US, Germany and England.” Mitchel Cohen, “Bombing the Bridge to the 21st Century: Behind NATO’s Bombardment of Yugoslavia” .