World Socialist Review #22 (2011)

Notice from the August 2011 issue of the Socialist Standard

Is Obama a socialist? No, he’s not! This book of 112 pages examines Obama’s outlook and life story, his packaging as a politician, and his policy in the areas of healthcare reform, the economy, the environment, the space program, and Afghanistan. It places Obama in the context of a largely undemocratic U.S. political system and a wasteful, cruel, and crisis-ridden world economic system.

From the Introduction: “We have nothing against Obama personally. We do not accuse him of going into politics solely in pursuit of fame and fortune. He started out with the best of intentions, hoping that one day he might be able to do something to make the world a better place. Our aim is to show how the capitalist class, who exercise real power in our society, corrupt and co-opt well-intentioned young people like Obama, how capitalism frustrates and corrodes even the noblest aspirations.”

Topics include:

U.S. Midterm Election Results * The Tea Party * Obama: The Brand and the President * The World Outlook of the Young Obama * Health Insurance Reform * Obama and the Environment * The Invisible Primaries * The Electoral College * The Politics of the “Lesser Evil” * Unemployment * Waste and Want * Economic Crises * Afghanistan * Asteroids * Right-Wing Talk Radio

To order, go to wspus.org and click on the icon at top right (showing the Obama photo). This will take you to a page at createspace. com where you can create an account and buy copies of the book. you can also get the book through Amazon. Price $7.  Published by the World Socialist Party of the United States.

Cooking the Books: Southsea bubble (2011)

The Cooking the Books column from the August 2011 issue of the Socialist Standard

On 17 June the papers reported the failure of a bank. It was only a small bank in Hampshire with a single branch. But it was a bank, subject to the same regulations and basic practices as any high street bank. It took in deposits and loaned out money.

 

Called the Southsea Mortgage and Investment Company, it had 267 depositors whose deposits totalled £7.4 million (Daily Express, 17 June) and lent money to people, mainly to buy a house, or to finance property developments. It was the failure of one of its property investments that led to its assets becoming less than its liabilities. In short, to becoming insolvent, to it not having enough assets to cover the value of its liabilities, in particular what it owed its depositors.

 

The Southsea bank was set up fifty years ago. At that time all UK banks were required to keep a “cash ratio” of 8 percent, which meant they had to retain 8 percent of all money deposited with them as cash. The other 92 percent they could lend out at interest. Interest is of course the main source of any bank’s income, its profit coming from charging a higher rate of interest to lenders than it pays to its depositors.

 

This is still how banks operate today, even though there is no longer any formal requirement for a bank to keep 8 percent of deposits as cash. It’s now up to their own business judgement to decide how much or how little money they can safely retain as cash (or assets quickly convertible into cash) to meet withdrawals.

 

Some people think that a cash ratio of 8 percent means that, when someone deposits £100 in a bank, that bank can then immediately lend out an amount of which £100 is 8 percent, i.e. £1250. There is in fact a whole school of currency cranks who do argue this and claim that banks can “create money” (make loans) “out of thin air”. They are obviously wrong. What an 8 percent cash ratio means is that if someone deposits £100, the bank can lend out £92.

 

The “thin air” school of banking is based on a misunderstanding of something that is in economics textbooks about what the whole banking system can do over a period of time. The textbooks set out a scenario of what happens to the £92. They assume that it will be spent and will eventually be redeposited in some bank. That bank now has a new deposit of £92 and so can lend out 92 percent of it, or £84.64. The same will happen to this, and 92 percent of it (£77.87) can be loaned out. In the end loans totalling £1250 will have been made, which is 12.5 times the original deposit of £100.

 

The loans have not been made out of thin air, but out of successive deposits totalling £1250. Certainly, the same sum of money has been used to make these loans, but that money circulates and can be used to make more than one transaction is one of its features. So nothing remarkable there either.

 

The proof – or rather the disproof – of the pudding is in the eating. If the view that a bank on receipt of £100 can then, depending on the cash ratio, immediately lend out many times that amount were true, why would a bank ever go bankrupt from making a bad loan? With deposits of £7.4 million why didn’t the Southsea bank simply write off the bad investment in property development and “recreate” a loan of the same amount for something else?

Letters: Nuclear power (2011)

Letters to the Editors from the August 2011 issue of the Socialist Standard

Nuclear power

 

Dear Editors,

Re Pathfinders in the July issue. Since 1960 all aircraft carriers and since 1955 all submarines in the United States Navy have been nuclear-powered. Their safety record (I understand) is impeccable, although one must remember that this is a “not-for-profit” organization.

 

The history of steam boilers in the 19th century was one of explosions on locomotives, factories and ships until effective standards of design were recognized.

 

Uses were found for boiler waste – ash and clinker from coal was used for breeze blocks, soot for fertilizer.

 

Surely with world socialism standards for reactors would be advanced and uses found for nuclear waste?

Fred Moore, 

Canterbury

 

Reply: 

Your suggestion that socialism might develop safer and more reliable nuclear reactors is certainly reasonable, given that it wouldn’t be trying to do nuclear on the cheap and skimping safety standards in favour of bigger profits. However nuclear power is not so nearly carbon efficient when one factors in build and decommissioning costs. It’s also difficult to imagine how one could dispose of or indeed utilise waste which is toxic for tens of thousands of years, in any social system or with any known science. The most tempting solution would be to lob the stuff into space, however the consequences of a rocket explosion on launch or in the stratosphere hardly bear thinking about. Socialism might very well decide, for this reason alone, that nuclear power is just too hot to handle and look to a combination of other technologies, including reduction in energy consumption. – Edtiors

Plainer English

 

Dear Editors,

 

Thank you for publishing my letter on plain English in the July Socialist Standard. Unfortunately (and also ironically, given the subject-matter), you omitted part of a sentence in the editing/typesetting process, leaving it meaningless. The sentence in question actually read as follows in my original email (the section omitted is highlighted in italics):

 

An “issue” is a bone of contention, but there is certainly no contention (at least among socialists) that a lack of money in the capitalist world is nothing less than a major problem for the vast majority of the population suffering from the affliction.

Martyn Dunmore,

Brussels, Belgium. 

Closed-minded academics

Dear Editors,

 

It is infuriating to listen to those sociologists and similar ‘social scientists’, particularly the contributors Professor Laurie Taylor has on his Thinking Allowed programme (BBC Radio 4). These academic circles define the world in a multitude of classes, minutiae of people’s behaviour and so on. They publish books etc on post-communist societies and countries, which reinforce the view that communism has existed. These learned intellectuals stick to the accepted view that communism equals totalitarian state government with central control by a ruling elite. In their lazy thinking that’s it and any advance can only be to liberal democracy or, if they are a little radical, to social democracy.

 

These so-called intellectuals have never bothered to address what is communism/socialism. They don’t seem willing to make the effort to find what Marx and others meant in defining communism/socialism. Because they are part of the intellectual establishment and its output of publications reinforcing stereotypes, they effectively lie or at least mislead about the real meaning. 

 

These people give legitimacy to the view that communism/socialism has existed and is now replaced with a better system. They obfuscate the definition of Marxism on the grounds that we have moved on to the better system of ‘democracy’ but they also misrepresent even this. How do we attack these closed-minded academics and get them to try original thought to their convoluted and erroneous conclusions?

Stuart Gibson, 

Wimborne, Dorset

 

Resource database

 

Dear Editors,

 

Congratulations to Stefan on the excellent article, ‘Money – a waste of resources’ (Socialist Standard, July). In my view this is just the sort of empirical approach needed to clinch the argument for socialism, and one that I’ve promoted via www.andycox1953.webs.com.

 

Theory has its place, but let’s face it, more often than not, a theoretical exposition on Marx’s labour theory of value or the class struggle is likely to be met with a snort of derision or a glazed expression. Facts on the other hand have a kind of primacy that demands a considered response. Hence the urgent need for a robust, wide-ranging, and up-to-date database which Socialist Party members and others can access. 

 

A word of caution, however, should be added at this juncture: When constructing a database, one is likely to come across countless factual inconsistencies. Stefan’s source, for example, has it that there are ‘145,000 people working at casinos and other gambling joints (in the US)’. In my webs.com database, I cite a source (‘Economic Impacts of Commercial Casinos and On-Line Gambling’ by Alijani, Braden, Omar and Eweni, 2002 (?)) which produces statistics showing that there were 364,804 commercial casino jobs in the US in 2001 (205,151 in Nevada alone). 

Andy Cox (by email)

Greasy Pole: Hacking? Who’s hacking? (2011)

The Greasy Pole column from the August 2011 issue of the Socialist Standard 

“Sundays won’t be the same again,” whined the Political Editor. Or rather the ex-political editor of the abruptly defunct, paedophilia-hounding, police officer-corrupting, phone-hacking, record-circulating News Of The World. No more blearily turning the pages for a weekly dose of insight into the chaotic privacy of a select few handily grouped under the shield of celebrity. No more envious excursions into a growingly denser jungle where the more luxurious the undergrowth the larger the financial profit. Never the same again? Are there any who would be ungrateful for such a small mercy? Even accepting that it came swaddled in breathtaking hypocrisy?

 

BSkyB

 The earlier reaction to Rupert Murdoch ending the News Of The World was that it was the tycoon’s punitive response to the exposure of the paper’s habitual intrusion into the private lives of anyone liable to be regarded as newsworthy through hacking into their telephones. However within an hour or so a more acceptable explanation came onto the scene. For some years Murdoch’s News International had been manoeuvring to take over the 61 percent of shares it does not hold in BSkyB, which is estimated to yield them some £1 billion profit during the next financial year. It seemed like good balance-sheet sense to help this process by surrendering the News Of The World’s comparatively modest £12 million annual profit – apart from the prospect of the tighter binding of Murdoch’s relationship with the Tory and Labour leaderships, with all that promises in terms of future concessions for his media machine. It is a long time since political leaders have operated with no regard for the ambitions of that fearsome magnate. A long time since a Prime Minister has omitted to invite Murdoch and his underlings to one of those regularly sickening ventures intro terrified sycophancy among the lawns and terraces of Chequers. And, until the events of recent weeks, it was promising to be a long time before that situation changed. 

 

Gotcha

In essence it was a simple strategy. The party leadership and their advisers paid heed to the prejudices, fears and misconceptions which were stimulated by, and advantageous to, the Murdoch operation and calculated that these could be applied to their electoral advantage. In other words, the Murdoch empire could win elections – a theory which might be said to have fitted in with events in this way:

• 1969 Murdoch buys the News Of The World and the Sun, revamped from the successor to the old Daily Herald. 
• 1979 The Tories under Margaret Thatcher and supported by the Sun win the general election against an exhausted and demoralised Labour Party.
• 1981 Thatcher’s government supports Murdoch’s recently formed News Corporation bid to buy the Times and the Sunday Times – with the predictable guarantees of “editorial independence”.
• 1983 After surviving a number of problems during their early days in power the Tories win an emphatic majority, helped by patriotic hysteria over the Falklands war, marked by the full-page headline in the Sun screaming GOTCHA! over the sinking of the Belgrano. 
• 1987 Another Tory election win, with a majority reduced probably in reaction to Thatcher’s impending replacement by John Major
• 1992 John Major, struggling against the Eurosceptics “bastards” in his party, notches up an unexpected election victory. The Sun helps him on his way by devoting its front page to a request that in the event of Neil Kinnock’s Labour winning “…will the last person to leave Britain…turn out the lights”. Then crows that “It was the Sun wot won it.”
• 1997 With the Tories descending into a confusion of sleaze, economic chaos and scandal Murdoch joins forces with his persistently loyal friend Tony Blair and his party and Labour win the election in a landslide. 
• 2010 After Murdoch defects to support the Tories, Gordon Brown’s Labour Party loses the election, replaced by a fractious Coalition.
• 2011 As the hacking scandal breaks into the open previous assumptions about electoral alliances, governmental stability – and the influence of the Murdoch clan – need to be re-assessed. 

 

Profit

 That ex-Political Editor told us why he grieved at the closing of the News Of The World: “Villains, paedophiles and corrupt politicians will be able to sleep more soundly now that the greatest investigative newspaper on Earth has gone.” He did not mention that such newspapers work so devotedly to unearth their scoops in the cause of higher sales, advertising revenue and investment – or that in that process a significant clutch of criminals and corrupt politicians are enabled to stay active. One investor in News Corporation, the Church of England, held £4 million worth of shares overseen by a body incongruously known as the Ethical Investment Advisory Group which described the News Of The World’s hacking campaign as “utterly reprehensible and unethical”. Compared to that, and in the present crisis in the industry, the advice of Murdoch’s favourite son James, chairman of News International, to the 2009 Edinburgh Television Festival, that “the only guarantee of independence is profit” reads as more illuminating and useful – if menacing. Among the terrified hysteria of Westminster, the panic of laggardly journalists and manipulatory police officers, the figures – an expectation of £135 million a year circulation revenue, £38 million advertising income, and, if the bid for BSkyB succeeded there would be an additional £1.6 billion a year – carried more weight than the exotically titled, smugly gambling excuses of the clerics. The simple fact is that what we know as the media, in all its forms, is no different in its need to conform to the rules and demands of a commodity society. Unavoidably, politicians saw it as a priority to foster such ambitions in the assumption that come the next election it would yield a rich harvest of votes. The sudden flooding of these facts into what is known as ‘the public domain’ provoked widespread outrage. Another example of the urgency for the ‘public’ to react in a proper, reparative manner.

Ivan

Tiny Tips (2011)

The Tiny Tips column from the August 2011 issue of the Socialist Standard

Thousands of British schoolgirls as young as eight face being taken abroad this summer to have their genitals mutilated and stitched up to preserve “purity”. A campaign by the Metropolitan Police and Foreign Office will suggest that more than 22,000 girls under the age of 15 risk being taken abroad by their family for “cutting”, based on data from The International Centre for Reproductive Health. Girls may have their outer genitals removed and stitched up to preserve their virginity, with an opening as small as a matchstick head, meaning it can take up to 20 minutes to urinate:

[Link.]

Anyone who thinks slavery ended with the 13th Amendment is not paying attention. According to the latest State Department statistics, as many as 100,000 people in the United States are in bondage and perhaps 27 million people worldwide. The numbers are staggering:

[Link.]

Just counting work that’s on the books (never mind those 11 p.m. emails), Americans now put in an average of 122 more hours per year than Brits, and 378 hours (nearly 10 weeks!) more than Germans. The differential isn’t solely accounted for by longer hours, of course—worldwide, almost everyone except us [in the USA] has, at least on paper, a right to weekends off, paid vacation time (PDF), and paid maternity leave. (The only other countries that don’t mandate paid time off for new moms are Papua New Guinea, Sierra Leone, Liberia, Samoa, and Swaziland.)

[Link.]

Every hour, more than 1,300 severed pork heads go sliding along the belt. Workers slice off the ears, clip the snouts, chisel the cheek meat. They scoop out the eyes, carve out the tongue, and scrape the palate meat from the roofs of mouths. A woman next to Garcia would carve meat off the  back of each head before letting the denuded skull slide down the conveyor and through an opening in a plexiglass shield.

On the other side, Garcia inserted the metal nozzle of a 90-pounds-per-square-inch compressed-air hose and blasted the pigs’ brains into a pink slurry. One head every three seconds. A high-pressure burst, a fine rosy mist, and the slosh of brains slipping through a drain hole into a catch bucket. (Some workers say the goo looked like Pepto-Bismol; others describe it as more like a lumpy strawberry milkshake.) When the 10-pound barrel was filled, another worker would come to take the brains for shipping to Asia, where they are used as a thickener in stir-fry. Most days that fall, production was so fast that the air never cleared between blasts, and the mist would slick workers at the head table in a grisly mix of brains and blood and grease:

[Link.]

Here’s one financial figure some big U.S. companies would rather keep secret: how much more their chief executive makes than the typical worker. Now a group backed by 81 major companies — including McDonald’s, Lowe’s, General Dynamics, American Airlines, IBM and General Mills — is lobbying against new rules that would force disclosure of that comparison. In 1970, average executive pay at the nation’s top companies was 28 times the average worker income. By 2005, executive pay had jumped to 158 times that of the average worker

[Link.]