Monday, August 31, 2009

Analysing America's Health Debate - by Wes Bishop

The GOP's Waterloo

Shortly before the August recess, before the various members of Congress returned to their districts and states, a coalition of conservative organizers held a meeting in which Senator Jim DeMint R-SC stated in a conference call that, “If we’re able to stop Obama on this it will be his Waterloo. It will break him…” The comment had been preceded by a careful strategy that if the health care vote could make it past the August recess then conservatives would be able to apply pressure in town hall meetings, demonstrations, and calls to congressional offices. In all honesty it was not a bad plan. It was perfectly constitutional, and conservatives, despite their past mistakes, have every right to make their voices heard to their elected officials.

However, the plan was seriously flawed in many aspects. In the August to follow accusations began to abound that the concerns being expressed by conservatives were not real, that the conservative movement was being manufactured, and that in fact the goal of the protest had nothing to do with health care but instead to slow down a piece of legislation for political purposes. Such was the position taken by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. In many ways this was both true and false. The reason this dichotomy exist is because there is almost always a difference between what a populace is protesting and what political leaders want to extract from those protest.

One need look no further then the 1990’s to see that a significant number of Americans have anxiety over the concept of health care reform. This should not be surprising. Ever since Harry Truman the health care and the insurance industry have put much time and money into the message that health care reform is bad, that it is unnecessary, and that it is a form of the dreaded “Red Menace.” These concerns are real and politicians such as Reid and Pelosi ignore them at their own risk, but a close examination reveals that this time the opposition truly is different from even a few years ago. What is different this time is that the conservatives are not focusing on what is important. This is where DeMint’s plan is fundamentally flawed, because DeMint and many of the protesters are not in fact protesting health care reform, no more then the TEA Parties where demonstrations concerning taxes. Instead, what these August demonstrations are is really just protest against Obama. One hears the term Obamacare, one can readily see Obama on protester signs dressed as a quasi-Hitler, and politicians such as former Governor Palin are creating science fiction scenarios where the elderly and sick have to prove their worth to live.

It is all nonsense, and reasonable American citizens are beginning to understand that. The very name, Obamacare, is a reflection that conservatives are angry that John McCain and Sarah Palin lost, and not how health care is going to be provided. In reality it is congress that is writing this bill, not Obama, so a better term would be Congresscare. Yet, since the protesters are mad that Obama is president above all else no one will see this as the driving force or loose label used by protesters.

DeMint himself illustrates this Obama obsession that the conservatives have developed by comparing American legislation to Waterloo, the 1815 battle were various European Allies succeeded in stopping the French Emperor Napoleon. It occurred after Napoleon had returned to France after his 100 days of return from exile.

If the Nazi comparisons are shameful in the exploiting of historical emotions then the comparison to Waterloo is just plain silly. Not surprising considering DeMint’s claim to be for individual liberty but also in favor of banning single mothers living with significant others from teaching.

Health care reform is needed, even the staunchest conservative will admit this fact. It will most likely occur with or without the support of the conservatives but in the sake of preserving their own movement leaders such as DeMint had better come to terms with history. This will include accepting the 2008 presidential election and understanding what Waterloo was really all about because if the GOP destroys health care reform again it will not matter what temporary victory they will have achieved. Like Napoleon they will face a brief and bitter return to power before being ousted, and perhaps like the French Monarch this time it will be permanent.

-Wes Bishop

Monday, August 24, 2009

Pension reform cause still urgent

above: Australian PM and Deputy PM - Kevin Rudd and Julia Gillard - important progress on pension justice - but still some way to go...

Recently Mark Davis reported in The Age (August 13, 2009) on plans canvassed by the Henry tax review to reform superannuation and aged pensions.

According to Davis, the plan suggests that: “… lower income earners retiring with low superannuation lump sums would be given the opportunity of handing the money to the government in return for guaranteed income payments indexed to the age pension.”

To clarify: “For a retiree with $100,000, the top-ups could be worth 20 per cent of the age pension and would come in addition to the means-tested entitlement to the pension.”

Finally, according to Fiona Reynolds, the chief executive officer of The Australian Institute of Superannuation Trustees: “There are not a lot of lifetime annuity products, and the ones around are pretty highly priced, especially for retirees with small amounts of savings. If someone with a lump sum of $60,000 could buy a top-up to the age pension from the government, it might provide an extra $2000 a year.”

The demand for such lifetime annuity “products” reflects what some call “longevity risk” - the prospect that retirees will live longer, and that their superannuation and savings will not last them.

Importantly though, for those profiting from private provision of “lifetime annuity” products, and even private superannuation funds, there is a motive to undermine a universal aged pension system.

While it is desirable to improve retirement incomes and national savings, there are dangers in the possible marginalisation of the aged pension and those dependant on it.

A single public “life-time annuity” product might play a potentially legitimate role in supplementing pensions for some. But aged pensioners must have the flexibility to reclaim this from the government when there is a real and immediate need. Meanwhile there are many for whom even a modest $60,000-$100,000 in lifetime savings is “out of reach”. What will become of these people with the stratification of retirement schemes and incomes?

Private self-funded retirement products, specifically superannuation, are also exposed to risk - as evident in the current financial crisis.

Retirees ought to enjoy financial security regardless of financial market trends. The element of “risk” could - and should - be “hedged” against collectively by citizens and tax payers through a public pension fund (with returns supplemented by tax as a last resort - and hence secure).

Earlier this year, in the Left Focus blog, I considered the need for sweeping reform of public pensions.

While the 2009 Australian Budget provided for a degree of distributive justice, further change is desirable. Pension reform is necessary as a matter of social justice - in addition to any public “lifetime annuity” scheme.

Already, reform has provided for a future increase of $32.49 per week to full rate single pensioners and $10.14 per week combined to couple pensioners.

As of September 20, 2009 pension reform will see a new legislated benchmark for singles of 27.7 per cent of Male Total Average Weekly Earnings, up from 25 per cent”.

Importantly, though, the value of such reform is undermined and (in part) “swallowed up” by the impact of a rising cost of living, including rent, food, water and energy.

Earlier this year - and as the Federal Budget approached - I noted,

“Given cost-of-living pressures, it is reasonable to suppose that [the Singled Aged Pension] ought to be lifted to at least 30 per cent of Male Average Total Weekly Earnings (MATWE). … This would lift such pensions (at the full single rate) to about $17,537 a year: a significant improvement.”

Such reforms should be the absolute minimum provided by the Federal Government to be implemented at the very next opportunity; and should be provided to all receiving full single pensions (including the aged, the disabled, job-seekers, and carers).

Proportionate improvements to pensioner couples is also important – of course.

And yet there is a case for more robust reform for the most vulnerable pensioners. The Council on the Ageing (COTA) has argued for a full single pension formula of 35 per cent of Male Average Total Weekly Earnings.

As I noted in March this year in the “Left Focus” blog: “A “Cost of Living in Retirement” benchmark could translate to $750.60 a fortnight for singles, and $1125.90 a fortnight for couples. For singles, this would amount to $19,515 a year for those living purely on the pension.”

Such reform has been promoted by the Combined Pensioners’ and Superannuants’ Association with the aim of targeting those pensioners with little or no additional income.

A stronger single aged pension needs to be consolidated as part of a bulwark against the stratification in the pension system in Australia: and against the marginalisation of those dependent upon it. A public pension fund provided through progressive taxation - and spreading fairly and evenly the cost of “hedging” risk - needs to be established as a matter of top priority by the Federal Government.

Importantly, though, while means testing can play a central and progressive role, it should not be too onerous for those of relatively modest means. There must also be incentives for those on lower and middle incomes to save.

And again if there is a place for any “lifetime annuity” programs, then this should be in the form of a public and not-for-profit scheme.

Finally, the Federal Government needs to reconsider its commitment to raise the retirement age in Australia to 67.,25197,25471039-5017014,00.html

Federal Opposition frontbencher Tony Abbott has canvassed the possibility of raising that age even further - to 70.

Such plans as these, from both the Federal Labor government and the Opposition, are discriminatory and unfair for a number of reasons.

To begin with, manual workers can experience strain - and sometimes disability - as a consequence of years of physical labour. Furthermore, older workers regularly face negative discrimination by employers. And the prospect of necessary and radical re-skilling late in one’s career does not seem fair or productive. That such people can be left dependant upon an inferior “Newstart” job-seekers pension under such circumstances is also plainly unjust.

The kind of society we ought to be encouraging is one where we “work to live” and not just “live to work” even where work is alienating and unrewarding. Retaining the retirement age of 65 may cost the “budget bottom line” into the future. But what younger tax payers forsake in the short term, they may reap for themselves in the long term.

We need aim for a scenario where, as Karl Marx once put it, “[rewarding] labor [becomes] not only a means of life but life's prime want”.,_to_each_according_to_his_need

Whereas Marx’s aim, here, of “exploding” the division of labour is not an immediately realisable prospect, what is reasonable and immediately achieveable is the preservation of a more generous retirement age. Here, the goal is for citizens to enjoy an earlier and more sustained retirement - with freedom and opportunity to commit to family, friends, community, self-development and/or civic activism. Indeed, to provide such opportunities to all citizens there is even a reasonable argument to shorten the working week.

A decent, fair and equitable pension system is core to the goal of social justice. Labor governments are elected - for many - in the hope they might implement real social reform.

Let us hope this Federal Labor government makes the most of this opportunity entrusted to them by the people.

Monday, August 17, 2009

Not Time for Champagne Yet

By Jim Stanford

Financial headlines around the world herald the seemingly happy news that “recovery” is here. Global stock markets have surged 40 percent or more. Business confidence has shifted quickly from gloom to boom.

But hold on a moment. The world economy is still suffering through its worst downturn since the 1930s. World GDP is still declining, for the first time since the end of World War II. Unemployment rolls are still growing, not shrinking.

So why is the champagne being uncorked in financial centres around the world? More importantly, will the rest of us get to share in this good cheer, along with the bankers and brokers? Unfortunately, not likely. In reality, for working people, the effects of this crisis will linger for several years to come.

And that’s why governments, including Australia’s, need to stay on an active recession-fighting footing. Far from turning off the tap of job-supporting stimulus measures, governments’ efforts to spur real recovery (not just a financial bounce) need to be intensified in the tricky months ahead.

The financial party began back in March, when Citibank and other U.S. banks began reporting positive profits (largely thanks, of course, to $1 trillion in government handouts). After months of doom and gloom, the prospect of renewed financial profits set the markets on fire.

But before getting too carried away with this good mood, let’s remember there’s much more to economic recovery than profitable banks and roaring equity markets. True recovery requires getting people working again, producing actual goods and services. And on that score the world economy is still going backward, not rebounding.

Much confusion over the arrival of “recovery” arrived stems from the narrow terminology used by economists. For them, it’s not a recession unless real GDP (that is, the total value of economic output, adjusted for inflation) declines for at least two consecutive quarters. Then recovery simply constitutes the point when real GDP stops falling, and starts to grow again – no matter how fitfully.

So even if unemployment is growing and poverty is getting worse, the recession is “over” once real GDP is growing (as it is in Australia now). But this narrow terminology utterly misses the point. If people are losing their jobs and their homes, and living standards are falling not rising, then the economy is in trouble – regardless of whether GDP is rising or falling. Australia’s self-congratulation for narrowly avoiding “technical recession” this year is small comfort to the tens of thousands of Australians who continue to face tough times – tough times that are sure to last for some years to come.

It is typical for unemployment to continue to rise for months and even years after economists officially declare “recovery.” GDP growth must get up enough steam and generate enough jobs to offset lay-offs incurred during the downturn (let alone absorb new entrants to the labour force). So the unemployment rate will continue to rise right through 2010. Then, unfortunately, it will stay at very high levels for at least two or three years after that. That’s the human reality of the global financial crisis – in contrast to the all-to-easy rediscovery of irrational exuberance in the realm of high finance.

So don’t be fooled by the headlines celebrating imminent recovery. The brokers and speculators inhabit a hyperactive, surreal world. Only they could speak of “recovery,” when so much hardship and fear is plainly visible outside in the real world.

For most Australians, insecurity and austerity will prevail for years to come. And government must continue to actively address the social consequences of this crisis, without being sidetracked by reports of this so-called “recovery.” Stimulus will be required for some years to come. If anything, the existing recovery package should be expanded – to include active supports manufacturing and other productive sectors, funding for training programs (an alternative to continuing redundancies), and protection for workers’ accrued entitlements (like annual leave and sick leave) in order to underpin purchasing power despite rising unemployment.

Jim Stanford is economist with the Canadian Auto Workers, and author of Economics for Everyone (

He is speaking in several Australian cities this month.

(see the earlier post immediately below for details)

Friday, August 7, 2009





* what caused the crisis?

* its real impacts

*what should be the response?

* how we can change the economic system for the better

“It seems that every progressive demand from social change activists quickly runs into opposition from the assumptions and conclusions of orthodox economics: ‘we can’t risk a deficit’. ‘Markets just don’t work that way’. ‘Free trade always works’. And above all: ‘There is no alternative’.

To counter these standard arguments, and arm ourselves with out own arguments that change is not only possible but necessary, we all need to learn economics.

We must demystify the doctrine, and take it back from the so-called ‘experts’. In short, economics is too important to be left to the economists.

This talk will highlight the key themes and methods of a progressive, activist-based approach to deconstructing and re-learning economics.”

Dr Jim Stanford, Economist, CAW








For more information on Jim's book: 'Economics for Everyone' see:

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