Merge Left

Michael Hudson, interviewed by Paul Jay for the Real News, argues that the Fed’s QE3 is shoveling money to the banks not meant to create jobs, but a way to give banks even more speculative capital and prepare them for another meltdown:

Paul Jay at The Real News Network:

A new book titled Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent begins its conclusion with the following. During the past four decades, sub-Saharan Africa has experienced a financial hemorrhage. We estimate that from the thirty-three countries for which we have data, capital flight between 1970 and 2008 amounted to $735 billion in 2008 currency. Including imputed interest earnings, the drain of resources amounted to $944 billion. These sums far surpass the same countries’ combined external debts, which stood at $177 billion in 2008. This means that sub-Saharan Africa is a net creditor to the rest of the world. If this is true, why are so many of Africa’s people so poor? The answer, of course, is that the subcontinent’s external assets are private and in the hands of a narrow and wealthy stratum of its population, whereas its external debts are public and therefore borne by the people as a whole through their governments. Our statistical estimates indicate that half or more of the money flowing into Africa as foreign loans exited in the same year as capital flight. Now joining us are the authors of the book: Professor Leonce Ndikumana, who teaches economics at the University of Massachusetts Amherst and is a research associate at the PERI institute, and Professor James K. Boyce, director of the Program on Development, Peace Building and Environment at PERI institute. Thank you both for joining us.

In Part 1, of this 3-part series, Boyce and Ndikumana argue that under international law, debts incurred by dictators should not be enforceable (14:34):

from the transcript:

PAUL JAY: So this is the beginning of what’s going to be a three-part series. In part one, we’re going to talk about the roots of this debt crisis in Africa. In the second part, we’re going to talk about the human costs of the crisis. And in the third part, we’re going to talk about solutions and just what the word “odious debt” refers to. So, Leonce, can you give us some background on what you mean by this odious debt, some of the historical roots of this debt? …

In Part 2, Léonce Ndikumana and James K. Boyce explain how the cost of servicing external odious debt leads to tragic underspending on health care and education (11:50):

from the transcript:

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. This is the second part of our series of interviews based on the book Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent. One of the things the book points out is that Africa spends more on servicing its external debt than it does on health care. …

And in Part 3, Léonce Ndikumana and James K. Boyce detail how international law supports Africa rejecting debts that did not benefit the people (18:04):

from the transcript:

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. This is the third and final part of our series of interviews based on the book Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent. In the first two parts of our interviews, we talked about the extent to which Africa’s debt was accumulated because IMF and World Bank and private banks made loans to dictators, kleptocracies, in the name of the Cold War and for the sake of the scramble for the riches of Africa, gave these loans knowing they would be, essentially, misused, not used for the benefit of the people of the countries that did the borrowing. So the question in this segment we’re asking: then why the heck should the people of these countries keep servicing these debts? And it turns out there is some international law that says maybe they shouldn’t be. …

In Part 1 of his 3-part ‘Real News’ interview, Gerald Friedman, a professor of economics at the University of Massachusetts in Amherst, explains how a single-payer plan in Maryland would cover everyone, improve outcomes and make business more competitive:

from the transcript:

PAUL JAY: So before we dig into some of your research, just sort of give us the bigger picture of why this would make sense for Maryland.

GERALD FRIEDMAN: Well, the big picture is that health insurance provided by competing private companies is inherently inefficient and destructive of people’s health. I mean, that’s a strong statement, but I think it is well founded.

The problem with private health insurance is that it’s not like selling shoes. If you’re a shoe company, you want to sell more shoes, you want to make a better quality shoe at a better price to attract more business. Health insurers don’t want more business. They want to get rid of sick people. Eighty percent of your costs as a health insurer are incurred for about 20 percent of your people. You know, in some places it’s 90-10—90 percent of your costs go to 10 percent of the people. If you can find those people, identify those people, and figure out a way to get them to go away, go to a different company, then you will be in a position to lower your prices and increase your profits. That is what health insurers try to do.

In Part 2, Gerald Friedman explains how a single-payer plan in Maryland would cover everyone, improve outcomes and make business more competitive:

from the transcript:

PAUL JAY: So let’s dig in into your study and what you found. So you have a section on savings, and point one is administrative costs. So explain what you found there.

GERALD FRIEDMAN: Okay. Well, first of all, there are the administrative costs of the health insurers themselves, who devote a great deal of energy and resources to, first, screening people and supervising what doctors do in order to drive away people who will need extensive care.

The average health insurer in Maryland has what they call a medical loss ratio of 85 percent. Now, the medical loss ratio is the proportion of health insurance premiums that are actually paid out to provide the health care. In Medicare, the medical loss ratio is 98 percent.

Wall Street doesn’t like high medical loss ratios. To them, to Wall Street, a high medical loss ratio means that you have too many sick people, you’re not running enough profit. They like the medical loss ratios to be low. We, the consumers of health care, normal people, we like a high medical loss ratio. We want the money we put into the insurance plan to be paid out in benefits.

And in Part 3, Gerald Friedman details how to pay for single payer health insurance:

from the transcript:

PAUL JAY: Alright. So in the last segment, we went through your report and we looked at the savings, which came to just over 24 percent over existing insurance coverage and health care expenditure. But that doesn’t cover everything, does it? And then so what isn’t paid for out of these cost savings, and how are you going to pay for it?

GERALD FRIEDMAN: Okay. Well, first of all, the cost savings are there. There are also extra expenses, as we were saying, with the Medicaid rate fix. Also, we would be covering everybody. Now 15 percent of the population of Maryland is currently without health insurance. Extend health insurance to them, they’re extra expenses. Also, the plan for the Maryland Health Security Act does away with copayments, deductibles, and all of those expenses. We expect that people would use health services more.

PS. Tonight’s ‘Bill Moyers & Company’ episode is an encore presentation of the ‘Luis Alberto Urrea’ episode.

In Part 1 of his 3-part ‘Real News’ interview, Jeff Thompson, Assistant Research Professor in Economics at the University of Massachusetts at Amherst, explains that his study shows that while states need revenue, most tax wealthy at lower rates:

from the transcript:

Since the beginning of what some people are calling the Great Recession in 2008, revenues to states have sharply plummeted. Most of the response has been cuts—cuts in public spending and the social safety net, education, and other such areas. Very little of this has been made up by increasing revenues, especially in terms of taxes on the affluent. So why? And what would be effect of this? Some people argue that taxing the wealthy drives down investment or makes them leave the state, so you really can’t do this as a public policy option.Well, what’s the research on this? Well, there’s a new paper out now by Jeffrey Thompson. He’s a assistant professor at the PERI institute in Amherst, Massachusetts, and he now joins us. Thanks for joining us, Jeffrey.

In Part 2, Jeff Thompson details how his study shows that while states need revenue, most tax wealthy at lower rates:

from the transcript:

We’re now discussing Jeffrey Thompson’s research paper looking at the actual evidence of what happens when you raise taxes on the wealthy. States across the country have massive decreases in their revenue because of the recession, and mostly they’re making it up through cuts. Well, Jeffrey’s paper argues that you could raise revenues on the wealthy and in fact increase growth and jobs, not decrease it as some people are arguing.

And in Part 3, Jeff Thompson details how his study shows that if states raise taxes the rich will not relocate:

from the transcript:

We’re continuing our series of interviews with Jeffrey Thompson, who’s recently written a paper looking at ways states can raise revenue and what would happen if they raise taxes on the upper tier, on the 1 percent. Will they stop working? Will they stop investing? Well, as you’ll see if you watch the earlier episodes of the interview, Jeffrey Thompson concludes the rich will not go on strike. But will they just leave? If one state raises its taxes, will wealthy people just move out of the state or do something else to avoid taxes, for example, spend most of their time hiring tax lawyers to figure out ways not to pay the taxes?

John Weeks explains how the Central Bank of Argentina breaks ranks with neo-liberal banking policy and targets jobs over lower inflation:

from the transcript:

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.

Most central banks around the world preach fiscal discipline. Inflation is their biggest concern. And even when they do enter into some stimulus policies, the final objective is still the issue of lowering debt. Well, one central bank in the world apparently has a growth agenda, and that’s in Argentina.

Now joining us to talk about this is John Weeks. John just was in Argentina not very long ago. He’s a professor emeritus at the University of London School of Oriental and African Studies. He’s the author of the book Capital, Exploitation and Economic Crisis. He runs JWeeks.org. And he now joins us again from London. Thanks, John.

JOHN WEEKS, PROFESSOR EMERITUS, UNIV. OF LONDON: Thank you.

JAY: So what did you make of what the central bank’s doing in Argentina?

WEEKS: It’s tremendously important, because in the 1990s Argentina was the epitome of a neoliberal monetary policy. It had something called a currency board, and that currency board involves taking the foreign exchange you hold, which is, in the case of Argentina, dollars, and that your domestic money supply is rigidly tied to the amount of dollars you hold. Of course, the amount of dollars you hold is a result of your imports and exports, the balance between the two, and so in effect you have no independent monetary policy. And it tended to be quite deflationary, that is, it tended to cause not only very low inflation, but actually negative rates, and also very slow growth.

At the end of the 1990s, the disaster that that policy had inherent in it was realized, and in 2001 and 2002 Argentina could no longer maintain that policy, because what it meant, basically, is that if you began to lose dollars because you were—Argentina was running a trade deficit, it meant you had to contract the economy, because you had to take your domestic currency out of circulation, more and more of your domestic currency out of circulation. And that led initially to a severe recession in the economy. When that could no longer be maintained and they temporarily went off the currency board, you had hyperinflation for a year.

Okay. The current government of Cristina Fernández has repudiated that policy. They have introduced a new central bank law (they had actually been practicing it, but they formalized it in this last March, just two months ago) which completely ends the currency board regime and replaces it with a central bank that facilitates a growth-oriented policy of the government. And it also is concerned about inflation, but inflation no longer becomes a constraint, the tail that wags the whole dog.
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Paul Jay says until police and their political masters are held responsible under the criminal code, it can all happen again:

from the transcript:

It’s been two years since the Toronto G-20, two years since more than 1,000 people were arrested, hundreds of them brutally clubbed and violently assaulted by police. There’s been a series of reports looking into the police activities. First the Ontario Ombudsman issued a report. Then there was a civilian report looking into the activities of the RCMP, then the Ontario Independent Police Review Director, and now the Independent Civilian Review into matters relating to the G-20 summit—that’s the report issued by the civilian oversight board responsible for the Toronto Police.

Now that all the reviews and reports are in, the question remains: have people responsible been held accountable? And can it all happen again?

But before we dig into all of that, let’s remind ourselves what the G-20 was all about. Let’s take one more look at the big picture.

The 2010 G-20 in Toronto was a declaration by the global governing elite that the economic crisis, largely triggered by banks and financial institutions, would be paid for by ordinary people everywhere. It was also a declaration that force and the violation of basic civil rights would be used against those who protest and resist bearing the consequences of a crisis they didn’t cause. The more than 1,000 arrests at the Toronto G-20 was a statement by the governments of Canada, Ontario, and Toronto that mass protest would be met by mass arrests.

As I pointed out in a previous report, the missing words in the G-20 declaration were higher taxes on the wealthy and higher wages for workers—both obvious solutions to the stated goal of fighting deficits and dealing with a serious lack of demand in the economy.

What the G-20 leaders did agree to was this: “[The] advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016″—we know that means cuts to pensions/social services and other austerity measures. We see this plan being played out across Europe and North America and other countries. The arrests at the G-20 were made in defense of this global strategy.

And now reports from the Ontario Independent Police Review Director and the Ontario Ombudsman have made it clear: the police services responsible during the G-20 violated citizens’ right to free assembly and used excessive force in doing so.
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