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A State of Alabama jury has determined that the production and marketing contracts that many farmers sign with processors and other buyers are anti-competitive if the buyer or processor is one of a handful that control a market.

In February, 2004, a jury awarded $1.28 billion to a group of up to 30,000 cattlemen after finding that TYSON FOODS, the largest beef processor in the United States, had unfairly manipulated cattle prices for almost a decade.

That's $43,000 per farmer from ONE link in the agri-food chain.

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Interview

Free Trade for Whom?

An interview with Kristin Dawkins

By David Barsamian

Kristin Dawkins is director of the Trade and Agriculture Program at the Institute for Agriculture and Trade Policy in Minneapolis. She directs the Institute’s work on ecological economics and the links between trade and environmental policy. She came to the Institute from Harvard Law School Program in Negotiation, where she was Senior Writer for the publication Consensus. From 1973 to 1989 she worked in community development in Philadelphia, where she served as the Executive Director of the Phila­delphia Jobs and Energy Project. She is the author of Gene Wars: The Politics of Biotechnology.

BARSAMIAN: You write, “The Uruguay Round of the General Agreement on Tariffs and Trade, known as GATT, and the creation of the World Trade Organization, WTO, have elevated concerns about the impacts of global trade rules on rural and urban communities, family farmers, consumers, indigenous peoples, the environment, demo­cracy, and human rights.” You want to delineate a little bit?

DAWKIN: In general, the objective of globalization, particularly as it is being driven by trade policy, is the commercialization of everything. The marketplace determines societal decisions. Its goal is to have corporate wealth as the measure of human welfare. This is the general problem that the Uruguay Round and its 28 different trade agreements is exacerbating. Each one of the constituencies you listed is affected somewhat differently by one or more of the 28 agreements, according to the part they play in the general economy and the changes that are driving the way they can or can’t make money in a global economy.

I’m interested that you mention “democracy” and “human rights” as a constituency.

There are constituencies trying to reinforce democracy and human rights as alternative frameworks for global policy. The United Nations and its agencies are not perfectly demo­cratic, but at least all of the governments of the world do have a vote. On the other hand, the World Trade Organization, the World Bank, and the International Monetary Fund are the three institutions spearheading globalization, often referred to as the Bretton Woods group. This group is not driven by a voting procedure in which all governments have a voice or a vote. It is driven by a voting procedure based on the dollar. The wealthy countries that invest money in those organizations get to make the decisions. The poorer nations of the world, who are generally the recipients of the policy and the actual financial aid, have no voice in the decisions that are made.

Bretton Woods is in New Hampshire. In 1944 it was the site of a big power economic summit to shape the postwar economic world.

It was part of the general movement towards the Marshall Plan. After the war, the very highly industrialized U.S. economy no longer had war production to fuel the economy, and so they were trying to convert to a peacetime agenda. That peacetime agenda was essentially to rebuild Europe. So they embarked on a series of institutional design questions, created the World Bank, the IMF, and what was the GATT up until very recently. It’s been converted into the WTO. In so doing, they poured a lot of money into construction of harbors, shipping, transport, railroads, and factory development. All of that was designed to subsidize the reconstruction of Europe. Once Europe was reconstructed, however, things really changed. It became a competitor. The industrial sectors of Europe and the U.S. began to compete with each other and to compete for foreign markets in the developing world. As a result, over time there’s been a switch in the policies that these three Bretton Woods institutions embrace. These policies are now designed to move the industrialized production system into the Third World, exploit the resources and the labor of the Third World, and make those cheaper imports available to a globalized economy that is supposedly more efficient, but definitely more profitable for the transnational corporations.

Perhaps some people are stuck in the quagmire of acronyms that surround trade issues. We’ve already mentioned GATT and the WTO. Then there are NAFTA and MAI and terms like fast track. Could you sort these out?

GATT is the General Agreement on Tariffs and Trade. At the time, the Bretton Woods negotiators were really designing something they called the International Trade Organization. Reading those original documents, one sees a number of principles that might be considered valid and important to implement at the international level, such as antitrust regulation and fair pricing for trade and international commodities. These parts of the International Trade Organization, however, did not get implemented into international law, precisely because the Truman administration at that time was having a number of partisan disputes with Congress. The only piece able to emerge from the congressional process was the one segment of the International Trade Organization that dealt with commercial trade. So only commercial trade was regulated, and in those days the regulations were primarily promotion of trade in order to re-stimulate investments in Europe. To this day they remain a promotion of trade more than a regulation of trade.

A number of the regulations that are emerging from the last couple of rounds of trade negotiations, in particular the Uruguay Round, which was finished in 1994, require governments to undo laws that had been made at the national level through processes of citizen participation, through Congresses or Parliaments, as the case may be. According to the WTO, which is the new World Trade Organization created by the Uruguay Round to enforce the new trade regime, many existing national laws need to be either changed in order to conform with international trade law or a country has to pay a penalty if they prefer to keep what has been their democratically derived national legislation.

NAFTA, the North American Free Trade Agreement, passed Congress by a narrow vote.

In 1993, Congress voted in favor of NAFTA, 234-200. The vote was close because of well organized campaigning against the kind of free trade the U.S. promotes on behalf of corporations. Canadians can talk at great length about the changes in their economy, none for the better, that the 1989 Free Trade Agreement with the U.S. started up there. Then free trade promoters took a number of those principles, applied them to Mexico, and added another couple of layers. Free trade means that corporations are allowed to send goods back and forth across borders, regardless of a number of policies that at the border used to be considered legitimate protection for the citizenry. Take, for example, the inspection of meats. One of the provisions of NAFTA was that the meat industry should be allowed to ship meat back and forth across the border with minimal inspection standards.

In the summer of 1997, there was the largest recall of meat in U.S. history.

There are more and more scares every day. I just read that the average American has one stomach upset per year as a result of eating food. There is a general decline in food safety standards. Meat inspections are way down. So, too, are pesticide standards, so that the amount of toxic residue on the fruits and vegetables that we get at the store is often higher than in the past. All of this is in the interest of promoting trade and commerce, not in the interest of protecting the public.

When the U.S., which is the prime mover behind these free trade pacts, crafts them, they are structured as agreements rather than treaties. Why that distinction?

This gets us to fast track. Under our Constitution, the Senate has the obligation to determine what international treaties become national law. It requires a vote of two-thirds of the Senate for an international treaty to be implemented as part of U.S. law. The two-thirds requirement is fairly stiff. In order to evade that particular requirement, which I would say is a highly democratic provision, the White House, going back a good 20 years, has used what is called the fast track process and changed the classification from treaties to executive agree­ments requiring just a 51 percent majority vote of the House or Senate. They claim that it’s difficult to reach a balance with a number of issues having been bargained back and forth to reach some kind of optimal agreement among many countries. In order to preserve this delicate balance, the White House prefers to eliminate through fast track the right and obligation of the Congress to approve them as treaties. Instead they’re obliged to vote on the entire package as a simple agreement with a majority vote, up or down, one vote each for the whole package. No debate and no consideration of the different issues.

The advocates of free trade argue that the world is becoming a global village and we are interdependent economically, and that’s a good thing. So, for example, you can get a batik sarong from Indonesia in Minneapolis or you can buy bas­mati rice from India in Boulder, Colorado. In return, people in those countries can get a Madonna video, a Michael Jackson CD, or Nike Air Jordans.

The joys of modern progress. There are definitely some advantages to trade. I drink coffee. I drink orange juice. Those things aren’t grown in Minnesota where I live, so it is a privilege that I have as a citizen of the global economy to be able to consume these products daily. But on the other hand, the premise that trade generates wealth for all is a bogus argument.

Tetteh Hormeku of the Third World Network in Penang, Malaysia, in an article in <W0>Third World Resurgence magazine, writes that U.S. trade policy in Africa is “intervention by other means.... President Clinton’s offer at the Denver G-7 summit in June of 1997 to expand trade to Africa is not designed to build the continent’s economic capacities. Rather the move is part of a multi-pronged attempt to promote U.S. corporate interests in Africa.”

First let me explain the MAI which you asked about earlier. The MAI, the Multilateral Agreement on Investment, is the latest and greatest effort by the transnational corporations to completely eliminate any regulations that nation-states may have created to try to make sure that there is some degree of trickle-down. An investor comes into a country, let’s say Zimbabwe, and sets up shop, develops an enterprise, makes some money, and ships that money back home to a bank in New York or Switzerland or offshore. The Zimbabweans may have established some rules governing foreign investors to ensure that some percentage of the value of what that enterprise makes is reinvested in the local economy before the profits are taken out of the country: performance requirements that an investor has to either hire locally or use locally manufactured inputs, for example. The draft MAI is a set of rules for governments requiring them to free investors from the kinds of development policies that I’m mentioning. As a further violation of democratic principles, the MAI is being negotiated not at the global level, but in the Organization for Economic Cooperation and Development (OECD), which is the grouping of 29 or so of the richest countries in the world, the industrialized nations’ club, as it’s sometimes called.

If the MAI is eventually approved by these 29 rich countries, then, the draft rules say, other poorer countries can join in, without having had any access to the negotiations. Africa is considered a very interesting new market, not so much for the sale of products but for investors as a source of new raw materials for production and cheap labor, of course. So the Clinton administration is looking at a way to get a head start over the rest of the world in setting up shop for U.S.-based transnationals to penetrate that African market. There is a bill in Congress that would basically set up a NAFTA-style arrangement with African countries, but it goes even farther than NAFTA in that it applies a number of the same conditions that go along with the so-called structural adjustment process. These are conditions required of indebted governments by the IMF and World Bank to restructure their economies so that, theoretically, they will pay off their debt as the top priority. One of the conditions is currency devalution. Suppose that on one day you had $10,000 in the bank and suddenly your currency is devalued, let’s say, 50 percent; that means the next day you only have $5,000. So for holders of money, devaluing can be a terrible problem. For people, however, who are exporting, it means that the price of their goods goes down by half. The sudden cheaper price in the world marketplace means that they get a step up against their competitors. So suddenly you see the demand for those products increasing. Only half of the original value in foreign exchange is coming into their economy, but they’re selling a whole lot more stuff. The foreign exchange gets banked, and enables the country to make a debt payment. This result is good for the traders themselves and the creditors, but bad for the nations and very bad for the general population. Currency devaluation is one of the conditions attached to structural adjustment policies in general and the Africa trade bill in particular.

Structural adjustment also encompasses privatization of the public sector and shredding of the social safety net.

Those are other conditions that are a general part of structural adjustment policies and the African trade bill. They are designed to take as much of the cash that is within an economy as possible, extract it from the local system, and get it into the big banks that are presently owed money through a lot of financial mismanagement over past decades. By privatizing government services, such as agricultural marketing boards or electricity and telephone services, governmental expenditures go down so more revenues can go into debt payments. By cutting back on health and education and other social services, more government revenues can go into debt payments. The whole purpose is to extract public wealth for the banking system.

The Clintonites and those who preceded them argue that free trade is essential for the future economic well-being and growth of the U.S. They liken it to a form of national security. They say that the U.S. must remain competitive in an increasingly tough global economy. The mantra of jobs, jobs, jobs is intoned by Clinton and treasury and trade officials.

This is deeply cynical. The jobs that one can point to as a result of the free trade agreements are in general a matter of lost jobs. The actual econometric evaluation of NAFTA, for example, looks at something like 420,000 jobs lost out of the U.S. economy as a result of the changes in our trading patterns. The idea that free trade generates jobs is really hard for the proponents to prove. One of the economists that they cite most often, who was with the Institute for International Economics, admitted one year after NAFTA was in place that he had been wrong and that all of his own projections had been incorrect. The economy, however, of the transnational corporations has been boosted by these agreements. It’s easy to look at their bottom lines and see tremendous increases in sales as they’ve taken advantage of new markets in other countries, markets that were essentially stolen from national capital and small, local producers in the rest of the world.

In the context of the Asian economic meltdown, the International Monetary Fund has come under rather widespread criticism for the first time from economists like Jeffrey Sachs and Paul Krugman for some of its lending and bailout policies.

It’s good to see, finally. The original goals of the IMF was for it to act as a stabilizer of last resort. So that at a much smaller scale, if this kind of a phenomenon had occurred in the 1940s and the 1950s, the theory was that the IMF would have the ability to take some of its money and invest it in that suddenly shaky economy and thus keep the amount of cash available to that system somewhat stable and therefore functional. The result, however, of the last few decades of IMF policy has been virtually the reverse. They are still a lender of last resort but only after a country is in a lot of economic trouble, and the conditions attached to those loans make things worse: devaluations, the privatization of much of the fundamental infrastructure in a country, and the extraction of every available public dollar to pay back those earlier debts. With new loans being used to pay off old loans, as Fidel Castro has pointed out, the debt is in many cases actually mathematically impossible to pay off with the kind of production systems that drive those economies; that is, the debts and compounded interest are so great that repayment can never be achieved. A private debtor would go bankrupt, but a country cannot close its doors. This is what we’re seeing in much of Africa and in other parts of the Third World, where the debt has grown proportionately over many years. The IMF has loaned over and over again to keep some degree of fluidity in these economies, but without fogiving the debt. So as the debt mounts and mounts, an economy finally becomes prostrate before international policy. That’s when the conditions swing in. Under IMF-imposed structural adjustment regimes, gov­ernments are forced to eliminate health, safety, education, and food assistance subsidies.

The U.S. is the largest constituent member in the IMF and clearly calls the shots within that organization. Does that one dollar of taxpayer-supported money from the U.S. go to the IMF, then to Indonesia, and come back to pay off a New York bank? Is that fairly accurate?

It is, more or less. This bailout that is being talked about in Congress right now, and is the top foreign policy priority of the Clinton administration, is designed to do essentially that. The taxpayers’ money would be given to the IMF. The IMF would then lend it to the banking system, the national treasury in these countries. They would use the treasury of that country, and therefore the credit-worthiness of the people of that country, to help buy out the bankrupt companies in that country, as well as to give additional fluidity to those handful of companies that have managed to stay afloat. Those companies that have gone bankrupt, oftentimes their creditors are the banks in New York. So under normal bankruptcy proceeding, there is the list of creditors who get paid off first and foremost. They tend to be the big banking names like Chase Manhattan and Citibank. Those guys then become the ultimate recipients of the bailout process.

You use the term biopiracy.” What is it?

The normal kind of piracy that we’re all familiar with is when a ship on the high seas back in the 1700s would plunder another ship and loot it. In modern times the plunderers are going into wilderness areas in the Third World, the Amazon, some of the Asian and African tropical belts, and plundering the genetic resources, which are very prolific in these tropical zones. Modern biopirates are scientists, anthropologists, botanists, people with that kind of training who know how to approach a tribal community or a forest-dwelling community in the tropical forests and find out from their shamans, their medicine people, their leaders what their use of some of the local plants may be. If you look at our modern medicine, some 90 percent of the medications that are prescribed have their active ingredient derived from plants. These traditional medicine healers have scientific knowledge. The anthropologists go into villages, find out about useful plants, take them back to the laboratories in the U.S. or Europe, develop a new medicine from that knowledge, patent that medicine with a 20-year monopoly on any use of that knowledge for that one company to profit from. This is biopiracy.

For example, the aloe plant. It has healing properties for cuts and burns. Are you saying that a corporation will have an absolute patent right on that and if you were living in Costa Rica you could not go into the forest and pick an aloe leaf and use it?

The police aren’t lurking behind every aloe plant throughout the planet. In most cases people will still go out and pick the leaf and use it. But where there’s a real profit to be made, the private police of that company are monitoring these kinds of activities. The case I’d like to mention is a practice that used to be very common in the U.S. and is still common throughout the rest of the world, and that is for farmers to re-use seeds. They plant a seed and it grows a crop and they select from that crop some of the better seed and then use it next year for the next planting season. But now that they are patenting seeds companies are finding that some farmers are going ahead and re-planting these patented seeds anyway, contrary to the terms of the contract that the farmers sign when they buy it, the companies are actually penalizing those farmers. You would think seeds are common and available. But when there is a tremendous market to be kept for the private use of one company, they will send the police out. Farmers in the U.S. have been fined and, in some cases, their crops have been burned as a penalty for re-planting patented seeds.

You talk about some case studies in India, three in particular, neem, basmati rice, and turmeric.

The basmati case is the most recent. In late 1997, Ricetec, which is a U.S.-based company, went to the Patent and Trademark Office of the U.S. government to file for a patent on basmati. The result means that they are the only company in the world allowed to use the name “basmati” on a commercially sold package of rice. In the northern region that straddles India and Pakistan, basmati rice has been produced for hundreds if not thousands of years. It is a special form of rice that is particularly sweet, aromatic, and very popular. This means that Indian farmers, who developed this rice, who made it sweet and aromatic through cross-breeding and selection processes, are no longer able to market the rice from the original region as long as Ricetech owns the patent and can monopolize use of that name.

The same with the neem. Neem is a tree that grows everywhere in India. It happens to have properties that are insecticidal and antibacterial. People go out in their backyards and pick a few leaves and use them to brush their teeth with, to wash their clothes with, to delouse with if they’re having a problem with lice. The W.R. Grace & Company took the neem seed and, through a number of laboratory processes, developed a certain pesticidal extract and patent­ed its manufacturing process. All together, more than a dozen U.S. patents have been taken out by various companies on uses of the neem. The patents don’t mean an Indian can’t use the tree. The neem police aren’t watching every backyard. But they do prevent Indians from competing in the commercial world using a plant that is from India. It’s W.R. Grace and the other patent-holders’ right to commercialize neem in any capacity whatsoever for 20 years.

Turmeric is used in cooking and it helps in healing as well. There was a patent applied for in the U.S. which declared all commercial uses of turmeric would belong to the company. This one was successfully challenged by the Indian government, which is very likely to challenge the basmati patent, too. In the case of turmeric, after a good deal of publicity, the company was forced by the U.S. to withdraw its patent.

Today three giant corporations dominate agri­culture, Con­Agra, Continental Grain, and Archer Daniels Midland. The latter, which calls itself “supermarket to the world,” is a major sponsor of National Public Radio and PBS. It was con­victed of price-fixing on the international grain market and fined $100 million, the largest amount in history. What kind of impact do those three corporations have on U.S. agriculture?

What we see in rural America is the result of a couple of decades of this process in which agribusiness has been lobbying for low farm prices—cheap raw materials for their industry. During the 1980s, the combination of low farm prices and high interest rates forced many farmers to go bankrupt. The number of family farmers today is roughly about a million, down from something like six to eight million a couple of decades ago, while the agribusiness conglomerates have expanded by leaps and bounds. This corporate windfall is structured in a very clever fashion. Every five years, the U.S. government produces something that they call “the farm bill.” If you look back five years at a time, you find a very steady lowering of the legislated “target price.” This is the price farmers get paid and, since the 1950s, it’s been less than their costs of production. The farm bill then offers a taxpayer subsidy of the difference between this low target price and what the private sector, the companies that you mentioned, offer in the market. Thanks to this insulation by taxpayers, the big companies have gradually been able to offer a lower and lower market price. The taxpayers’ contribution, up to a legislated target price, still fails to bring the value that the farmer makes up to the actual cost that the farm entails when it puts a crop into the ground. That difference, for many years around 25 percent of real costs, is what led to the bankruptcies of the 1980s. Now we’re seeing another wave of farm bankruptcies, as the most recent farm bill eliminated government support for farmers’ income altogether.

Again, within the context of really existing capitalism, Archer Daniels Midland is one of the largest recipients of corporate welfare. This has been documented by Public Citizen and United for a Fair Economy.

This is absolutely true. Yet they go ahead and do their price-fixing and their market allocations with their subsidiaries in other countries around the world. The case that they got caught for had to do with a byproduct of the grains themselves, but they were colluding with Japanese subsidiaries to affect the international market for this lysine product as well.

Where’s the USDA in all this?

ADM, the “supermarket to the world,” was caught and fined a record-breaking $100 million. But compared to the $15 billion in sales ADM expects to make this year, it’s not enough to eliminate this kind of rogue marketing. There’s something like a couple thousand complaints of various sorts of antitrust violations that the U.S. government fields every year. They are only able to investigate something like a few hundred of those. Those few hundred end up getting mired in enormous bureaucratic procedures, otherwise we would hear about more ADM-type scandals. But this is the nature of antitrust enforcement in the government today. Not to end pessimistically, I’d say the average American is getting more and more skeptical about corporate welfare, while internationally there is a lot of resistance to U.S. policy as it is being advanced by the Bretton Woods Institutions. Campaigns at the WTO this year are focusing on food safety, meat inspections, and genetically engineered foods. Next year, we’ll see fights at the WTO over whether Monsanto and Novartis should be allowed monopoly patents on life and how to stop biopiracy, with Africa leading the opposition. International organizing isn’t very well reported in the news media, but there’s plenty going on.                                                          <S>Z

@COMINGNEXT = <$TSpAbove=92;SpInterLn=1400><R>Kristin Dawkins can be reached at kdawkins@atp.org; or the Institute for Agriculture and Trade Policy, 2105 1st Ave. South, Minneapolis, MN 55404; 612-870-3410.

http://www.zmag.org/Instructionals/GlobalEcon/id45_cf.htm

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NEW!!

WTO, GMO and Total Spectrum Dominance

WTO rules put free-trade of agribusiness above national health concerns

By F. William Engdahl, March 29, 2006
(Previously published in GlobalResearch)
 

In February, a private organization with unique powers over world industry, trade and agriculture, issued a Preliminary Draft Ruling on a three-year-old case. The case was brought by the Bush Administration in May 2003 against European Union rules hindering the spread of genetically-engineered plants and foods. The WTO ruling, which is to be final in December, will have more influence over life and death on this planet than most imagine.

The ruling was issued by a special three-man tribunal of the World Trade Organization, in Geneva Switzerland. The WTO decision will open the floodgates to the forced introduction of genetically-manipulated plants and food products-- GMO, or genetically-modified organisms as they are technically known-- into the world’s most important agriculture production region, the European Union.

The WTO case arose from a formal complaint filed by the governments of the United States, Canada and Argentina—three of the world’s most GMO-polluted areas.

The WTO three-judge panel, chaired by Christian Haberli, a mid-level Swiss Agriculture Office bureaucrat, ruled that the EU had applied a 'de facto' moratorium on approvals of GMO products between June 1999 and August 2003, contradicting Brussels' claim that no such moratorium existed. The WTO judges argued the EU was ‘guilty’ of not following EU rules, causing ‘undue delay’ in following WTO obligations.

The secretive WTO tribunal also ruled, according to the leaked document, that in terms of product-specific measures, the completion of formal EU government approval to plant specific GMO plants had also been unduly delayed in the cases of 24 of 27 specific GMO products that the European Commission in Brussels had before it.

The WTO tribunal recommended that the WTO Dispute Settlement Body (DSB), the world trade policeman, call on the EU to bring its practices ‘into conformity with its obligations under the (WTO’s) SPS Agreement.’ Failure to comply with WTO demands can result in hundreds of millions dollars in annual fines.

Trade über Alles

SPS stands for Sanitary and Phytosanitary Measures. On the surface it sounds as if health concerns were part of the WTO considerations. The reality is the opposite. Only minimal health standards are to be allowed to be enforced under WTO free trade rules, and any nation attempting anything more strict, such as the EU ban on import of US hormone-fed beef, can be found guilty by WTO of an ‘unfair restraint of trade.’

Today the EU must pay a fine of $150 million yearly to maintain its ban on the US hormone-fed beef. WTO rules in effect put free-trade interests of agribusiness above national health concerns. That means, de facto, that the EU Commission must complete its approval process for the 24 outstanding applications to plant GMO crops in Europe once the final ruling is made later this year.

That will mean a flood of new GMO products in EU agriculture. Monsanto, Syngenta and other GMO multinationals have already taken advantage of lax national rules in new EU member countries such as Poland to get the GMO ‘foot-in-the door.’ Now it will be far easier for them. Pro-GMO governments such as that of Angela Merkel in Germany can claim they are only following WTO ‘orders.’

What is the significance of this WTO ruling, assuming it remains as is in final form by December? It represents a major, dangerous wedge into largely GMO-free EU agriculture, permitting powerful agribusiness multinationals such as Monsanto, Dow Chemicals or DuPont to overrun national or regional efforts to halt the march of GMO. For this reason, it is potentially the most damaging decision in the history of world trade agreements.

A strategic Washington matter

The case first came before the World Trade Organization in a filing made by the Bush Administration in May 2003, just as the military occupation of Iraq was entering a new phase. The US President held a rare press conference to tell the world that the US was formally charging the EU, accusing the EU ‘moratorium’ on GMO approval of being a cause of starvation in Africa. Their twisted logic argued that so long as a major industrialized region such as the EU resisted planting GMO crops domestically, it caused sceptical African governments to harden their resistance to US food aid in the form of GMO crops. That, Bush charged, was causing unnecessary ‘starvation’ in Africa because some countries refused USDA food aid in form of GMO crop surpluses.

The issue of breaking resistance barriers in the European Union to the proliferation of GMO crops has been a matter of the highest strategic priority for those controlling policy in Washington since 1992 when then-President George H.W. Bush , the father of the current President, issued an Executive Order proclaiming GMO plants such as soybeans or GMO corn to be ‘substantially equivalent’ to ordinary corn or soybeans, and, therefore, not needing any special health safety study or testing.

That ‘substantial equivalence’ ruling by President Bush in 1992 opened the floodgates to the unregulated spread of GMO across the American agriculture landscape. As basis for its 2003 WTO filing against the EU, Washington, on behalf of agribusiness interests including Monsanto, Dow, DuPont and others, charged the EU with violation of the American ‘substantial equivalence’ doctrine!

So long as the world’s second most powerful agriculture trade region, the EU, firmly resisted the introduction of untested GM plants, the global spread of the GMO revolution would remain strategically crippled. For the past decades, breaking up the system of domestic agriculture protection of the EU, centered around its Common Agriculture Program, has been a strategic political and trade goal of the US Government and US-based agribusiness. The creation of the WTO in 1995, a result of the GATT Uruguay Round trade talks during the 1980’s, opened the possibility for the first time of forcing the EU to drop its defenses on US threat of sanctions.

The secret process behind WTO

When the final WTO Panel ruling is published and official this coming December, assuming no major changes take place in the 1,050 page preliminary ruling of February 7, a major barrier to the global spread of largely untested and highly unstable genetically modified foods will be gone. This will become unstoppable, as it was in the USA, unless political pressure from a sceptical European population forces the EU Commission to pay a WTO fine or penalty, in lieu of acceding to the demands of the WTO.

It’s relevant to ask what is this body, WTO which exercises such enormous power over laws of nations? What is its mandate and who controls its policies?

The negotiations of world trade since the establishment of the Bretton Woods postwar monetary system at the end of World War II, had been made through a General Agreement on Tariffs and Trade (GATT), a series of trade rounds on specific issues between specific member countries. In September 1986, on US -led pressure, the Uruguay Round of GATT was launched in Punta del Este Uruguay. The result was creation of a new, powerful private international agency, the WTO.

In late 1994 the US Congress voted to join the WTO, the new permanent trade body established by the GATT Uruguay Round. There was almost no debate. It was clear in Washington who would dominate the new body. Unlike GATT which had no enforcement power, and which required unanimous member vote for sanctions, the WTO would be given tough sanction and enforcement powers. More important, how it reached decisions was to remain secret, with no democratic oversight. The most vital issues of economic life on the planet were to be decided behind closed doors in Geneva WTO headquarters or in Washington and Brussels. It could choose its ‘experts’ as it saw fit and ignore what evidence it saw fit. In the EU GMO dispute, three of four initial scientific experts chosen were from either US or UK institutions, two countries most in favour of GMO. (1)

Two years earlier, in 1992, at the UN Convention on Biological Diversity (CBD) in Rio, 175 UN governments signed a convention to on the safe handling and treatment of GMOs, a major vote of the world community to examine the health and economic impacts of GMO agriculture before it could be allowed in a country. The US Government of President George Bush Sr. aggressively opposed the CBD, arguing that a Biosafety Protocol was unnecessary. Under the CBD agreement, a country could prohibit GMO imports.

The GMO industry, led by Monsanto, DuPont and Dow of the US, sabotaged this agreement. A group of six countries controlling the world Biotech or GMO market—Canada, Argentina, Uruguay, Australia Chile and USA-- forced a clause into the CBD text which would subordinate the Biosafety Protocol to the WTO. They argued that limiting trade based on ‘unproven’ biosafety concerns should be considered a ‘barrier to trade’ under WTO rules!

Traditional liability law holds that a new product must first be proven safe before being allowed on market. This WTO rule placing the burden of proof not on the producer of a new GMO product, but on the potential victims, turned prudence and health safety issues on its head. In the end the US destroyed the Biosafety Protocol by refusing to include soybeans and corn, 99% of all GMO products, making the Protocol near worthless regarding GMO health issues.

The WTO serves as the weapon for the powerful coalition of Washington and the powerful private GMO giants, led by Monsanto. Earlier in 1992, Bush, on advice of Monsanto and the emerging US GM giant companies, ruled that GM organisms were ‘substantially equivalent’ to ordinary seeds for soybeans or corn and such. As ‘substantially equivalent,’ GM seeds required no special testing or health controls before being put on the market. This was crucial to the future of Monsanto and the GMO lobby.

By Presidential Executive Order, the US had defined GMO seeds as harmless and hence not needing to be regulated for health and safety. It made sure this principle was carried over into the new WTO in the form of the WTO’s Sanitary and Phytosanitary Agreement (SPS), which stated, ‘Food standards and measures aimed at protecting people from pests or animals can potentially be used as a deliberate barrier to trade.’ The US charge against the EU in the present GMO dispute charged the EU with violation of the SPS agreement of WTO.

Other WTO rules in the Agreement to Technical Barriers to Trade (TBT) forbid member countries from using domestic standards or testing, food safety laws, product standards, calling them an ‘unfair barrier to trade.’

The impact of those two US-mandated WTO rulings meant that Washington could threaten that any government restricting import of GM plants on grounds they might pose threats to health and safety of their population, could be found to be in violation of WTO free trade rules!

This is what the US Government, on behalf of its agribusiness private corporations has done against the EU restrictions on GMO.

Under the WTO’s Technical Barriers to Trade, the US has argued that no labelling of GMO plants was required, as the plants have not been ‘substantially transformed’ from normal or non-GM soya, corn or other plants. This conveniently ignored the fact that Washington simultaneously insisted that GMOs, due to the genetic engineering process, are sufficiently transformed, i.e. NOT equivalent, to be patented as ‘original’, and protected under WTO TRIPS intellectual property patent rights. (2).

The Agreement on Agriculture

The heart of the WTO machinery is the WTO Agreement on Agriculture (AoA), which under the sheep’s wool of ‘free trade,’ hides the wolf of private agri-business GMO monopoly power. Under AoA rules, since 1995 poorer developing countries have been forced to eliminate quotas and slash protective tariffs, at the same time the Bush Administration voted to increase its subsidies to US agribusiness farming by $80 billions.

The net effect has been to allow the powerful monopoly of five grain trading giants—Cargill, ADM, Bunge, Andre (formerly) and Louis Dreyfus—to dramatically increase the dumping of food commodities globally, ruining millions of family farmers worldwide in the process, while maximizing their private corporate profits.

The AoA of WTO ignores the reality of agriculture markets which are qualitatively different from, say, the market for cars or CD’s. Agriculture and national food safety and security are at the heart of a nation’s sovereignty, and its obligation to its own citizens to support the basics of life. Agriculture is unique in this respect, along with water rights.

The AoA was written by the US-dominated agribusiness giants such as Cargill, ADM, Monsanto and DuPont, to serve the agenda of these global supranational private companies, whose sole aim is to maximize profits and market monopoly, regardless of human consequences. Their focus is the domination of the $1 trillion global agriculture trade. The actual author of the AoA of WTO was Daniel Amstutz, a former Vice President of Cargill Grain, who was at the time in the Washington US Trade Representative’s Office, before going back to the grain trade.(3).

Who controls WTO?

The essential control of WTO decisions, decisions which have the full power of international law and can force governments to repeal local laws for health, safety and such is held by private interests, by a global US-centered agribusiness cartel. There are no public or democratic checks on the power of WTO.

On paper, WTO rules are made by a consensus of all 134 member countries. In reality, four countries, led by the United States, decide all important agriculture and other trade issues. As in the International Monetary Fund and World Bank, Washington exercises decisive control behind the scenes. And it does so in the interest of the private agribusiness cartel.

The four WTO controlling countries, known as the QUAD countries, are USA, Canada, Japan and the EU. In the QUAD, in turn, the giant agri-business multinationals exercise controlling influence, most clearly in Washington.

The WTO is designed to impose the wishes of giant private companies over the legitimate democratic will of entire nations and duly-elected governments. WTO has one mission: enforce rules of a ‘free trade,’ an agenda which is in no way genuinely ‘free’ but rather suits the needs of agribusiness giants.

Under the secretive WTO rules, countries can challenge another’s laws for restricting their trade. The case is then heard by a tribunal or court of three trade bureaucrats. They are usually influential corporate lawyers with pro-free trade bias. The lawyers have no conflict of interest rules binding them, such that a Monsanto lawyer can rule on a case of material interest to Monsanto.

Further, there is no rule that the judges of WTO respect any national laws of any country. The three judges meet in secret without revealing the time or location. All court documents are confidential and are not published unless one party releases it. It is a modern version of the Spanish Inquisition, but with far more power.

The EU banned the import of US beef treated with growth and other hormones, and the US lodged a formal WTO complaint. There was a long report from independent scientists showing that the hormones added to US beef were ‘cancer-causing’. The WTO three judge panel ruled that the EU did not present a ‘valid’ scientific case to refuse import, and the EU was forced to pay $150 million annually for lost US profits. (4).

The powerful private interests who control WTO agriculture policy prefer to remain in the background as little-publicized NGO’s. One of the most influential in creating the WTO is a little-publicized organization called the IPC-- the International Food and Agricultural Trade Policy Council, shortened to International Policy Council.

The IPC was created in 1987 to lobby for the GATT agriculture rules of WTO at the Uruguay GATT talks. The IPC demanded removal of ‘high tariff’ barriers in developing countries, remaining silent on the massive government subsidy to agribusiness in the USA.

A look at the IPC membership explains what interests it represents. The IPC Chairman is Robert Thompson, former Assistant Secretary US Department of Agriculture and former Presidential economic adviser. Also included in the IPC are Bernard Auxenfans, Chief Operating Officer, Monsanto Global Agricultural Company and Past Chairman of Monsanto Europe S.A.; Allen Andreas of ADM/Toepfer; Andrew Burke of Bunge (US); Dale Hathaway former USDA official and head IFPRI (US).

Other IPC members include Heinz Imhof, chairman of Syngenta (CH); Rob Johnson of Cargill and USDA Agriculture Policy Advisory Council; Franz Fischler Former Commissioner for Agriculture, European Commission; Guy Legras (France) former EU Director General Agriculture; Donald Nelson of Kraft Foods (US); Joe O’Mara of USDA, Hiroshi Shiraiwa of Mitsui & Co Japan; Jim Starkey former Assistant US Trade Representative; Hans Joehr, Nestle’s head of agriculture; Jerry Steiner of Monsanto (US). Members Emeritus include Ann Veneman, former Bush Administration Secretary of Agriculture and former board member of Calgene, creator of the Flavr Savr genetically-modified tomato.

The IPC is controlled by US-based agribusiness giants which benefit from the rules they drafted for WTO trade. In Washington itself, the USDA no longer represents interests of small family farmers. It is the lobby of giant global agribusiness. The USDA is a revolving door for these private agribusiness giants to shape friendly policies. GMO policy is the most blatant example.

Brussels also dominated by GMO lobby

The power of the giant GMO companies and US-centered agribusiness companies extends to control of key policies in Brussels at the European Commission. Typical is the fact that former EU Agricuolture Commissioner Franz Fischler is a member of the powerful pro-GMO IPC.

For years it has been common knowledge among EU farm experts that grain policy was not set by national governments but by the Big Five private grain traders led by Cargill and ADM. Now the powerful weight of Monsanto, DuPont, Syngenta and the GMO lobby has been added. This is clear in the recent announcement of a new EU program, SAFEFOODS, a successor to the controversial pro-GMO ENTRANSFOOD project. ENTRANSFOOD was set up to ‘facilitate market introduction of GMO’s in Europe, and therefore to bring the European (sic) industry into a competitive position.’

ENTRANSFOOD, now called the more innocuous SAFEFOODS, claims to combine different views on GMO food. In reality, its key Working Group 1, responsible for ‘Safety Testing of Transgenic Foods’ consists of representatives not from independent consumer organizations, but from Monsanto, Unilever, Bayer Corp., Syngenta and BIBRA International, a consultancy close to agribusiness and the pharmaceutical industry.

As well, Dr. Harry Kuiper, a Dutch scientist member of the food safety GMO group of SAFEFOODS in Brussels, is Coordinator of SAFEFOODS. Kuiper chairs the EU European Food Safety Authority GMO Panel. He also has also been leading the vicious slander attack campaign to discredit genetic scientist Dr Arpad Pusztai who dared to go public with alarming evidence of organ damage from rats fed GMO potatoes and was fired on the intervention of Monsanto in 1999.(5).

The WTO today is nothing more than the global policeman for the powerful GMO lobby and the agribusiness firms tied to it.

With the new German coalition government under Chancellor Angela Merkel and Agriculture Minister Horst Seehofer now officially on record supporting the role of Germany as a future leader in biotech crops and GMO, the impact of the latest WTO ruling on food safety in the EU and beyond has put European and hence, world food safety world in danger.

___________________________

Footnotes:

1.Abreu, Marcelo de Paiva, “Brazil, the GATT and the WTO: History and Prospects”, September 1998, Department of Economics, PUC, Rio de Janeiro, No. 392.

2. GMOs and the WTO: Overruling the Right to say No,’ By World Development Movement, November 1999, www.wdm.org.uk .

3. Murphy, Sophia, ‘WTO Agreement on Agriculture: Suitable Model for a Global Food System?’ Foreign Policy in Focus, v.7, no. 8, June 2002.

4. Montague, Peter, UAW Local 1981/AFL-CIO, The WTO and Free Trade, Environmental Research Foundation in www.garynull.com .

5. PR Operation on GM Foods again exposes EFSA industry-bias,” Press release, 29.12.2004. www.gmwatch.org.

http://chiapas.mediosindependientes.org/display.php3?article_id=121436

HOSTILE TAKEOVER - THE CORPORATE CONTROL OF SOCIETY AND HUMAN LIFE |
 
Autor(a): Stephen Lendman  --> lendmanstephen@sbcglobal.net  

HOW PREDATORY GIANT CORPORATIONS DESTROY SOCIETY AND PEOPLE

HOSTILE TAKEOVER - THE CORPORATE CONTROL OF SOCIETY AND HUMAN LIFE - by Stephen Lendman

Large transnational corporations are clearly the dominant institution of our time. They're preeminent throughout the world but especially in the Global North and its epicenter in the US. They control or greatly influence what we eat and drink, where we live, what we wear, how we get most of our essential services like health care and even what we're taught in schools up to the highest levels. They create and control our sources of information and greatly influence how we think and our view of the world and them. They even now own patents on our genetic code, the most basic elements of human life, and are likely planning to manipulate and control them as just another commodity to exploit for profit in their brave new world that should concern everyone. They also carefully craft their image and use catchy slogans to convince us of their benefit to society and the world, like: "better things for better living through chemistry" (if you don't mind toxic air, water and soil), "we bring good things to life" (for them, not us), and "all the news that's fit to print" (only if you love state and corporate friendly disinformation and propaganda). The slogans are clever, but the truth is ugly.

Corporations also decide who will govern and how. We may think we do, but it's not so and never was. Those national elections, especially the last two, only looked legitimate to most people, but not to those who know and understand how the system works. Here's how it really works. The "power elite" or privileged class C. Wright Mills wrote about 50 years ago in his classic book by that title are the real king and decision makers. He wrote how corporate, government and military elites formed a trinity of power after WW II and that the "power elite" were those "who decide whatever is decided" of importance. The holy trinity Mills wrote about still exists but today in the shape of a triangle with the transnational giants clearly on top and government, the military and all other institutions of importance there to serve their interests. These corporations have become so large and dominant they run our lives and the world, and in a zero sum world and the chips that count most in their stack, they do it for their continuing gain and at our increasing expense. Something is way out of whack, and in this essay I'll try to explain what it is and why we better understand it.

The Power of Transnational Corporations and the Harm They Cause

As corporations have grown in size they've gained in power and influence. And so has the harm they cause - to communities, nations, the great majority of the public and the planet. Today corporate giants decide who governs and how, who serves on our courts, what laws are enacted and even whether and when wars are fought, against whom and for what purpose or gain. It's for their gain, who else's, certainly not ours. Once we start one, they can even make profit projections from it like on any other business venture. For them, that's all it is - another way to make a buck, lots of them.

The central thesis of this essay is that giant transnational corporations today have become so dominant they now control our lives and the world, and they exploit both fully and ruthlessly. While they claim to be serving us and bringing us the fruits of the so-called "free market," in fact, they just use us for their gain. They've deceived us and highjacked the government to serve them as subservient proxies in their unending pursuit to dominate the world's markets, resources, cheap labor abroad and our own right here. And they've done it much like what happens in the marketplace when a predator company attempts to take control of another one that prefers to remain independent. They launch a hostile takeover, going around or over the heads of the target's management, their employees and the communities they operate in. They go right to the target's shareholders and promise them a better deal, meaning a premium price on the stock they hold.

They do this, as in a friendly merger, for a variety of financial and strategic reasons, but essentially it's to achieve any possible immediate gain as well as over the longer term greater market dominance that will build future profits. But what happens in the wake of a takeover. Assets get stripped, spun-off and/or sold-off. Plants are closed. Jobs are lost. And all this is done for the primary bottom line goal - "the bottom line," higher profits, whatever the cost to people, communities or society.

Think of it this way. Large corporations today everywhere, but especially the largest ones in the Global North, are a destructive force, hostile to people, societies and the environment. They're nothing less than legal private tyrannies operating freely with virtually no restraint. Everything for them, animal, vegetable or mineral, is viewed as a production input to be commodified and consumed for profit and then discarded when no longer of use. And to achieve maximum profits, costs must be rigidly controlled. That means the lowest prices paid for goods and services, the lowest wages paid to workers (below privileged higher management who reward themselves richly), as little as possible spent on essential benefits like health care and pensions, and increasingly little or no concern about the long-term cost of exploiting, plundering or even destroying the natural environment and the future ability of the planet to sustain life. These issues, however recognized and grave, are for someone else to deal with later.

For now all that matters is today, the next quarter's earnings and keeping the stockholders and Wall Street happy. They only understand numbers on financial statements and are blind, unconcerned and even hostile to human and societal welfare or a safe environment that will protect and sustain all life forms. They call it "free market capitalism." It's really the law of the jungle. They're the predators, we're the prey, and every day they eat us alive.

Does all this make sense? And do corporate chieftains who live in a community, love their wives and children, contribute to charities, attend church and believe in its teachings really go to work every day and think - "who and what can I exploit today?" They sure do because they have no other choice. No more so than breathing in and breathing out.

How the Law Affects Corporate Behavior

Publicly owned corporations are mandated by law to serve only the interests of their shareholders and do it by working to maximize the value of their equity holdings by increasing profits. That's it. Case closed. Think of these businesses as gated communities of owners (large and small), the welfare of whom is all that matters and the world outside the gates is to be used and exploited for that one purpose only. Forget about any social responsibility or safeguarding the environment. The idea is to grow sales, keep costs low, increase profits, and if you do it well, shareholder value will rise, the owners and Wall Street will be happy, and you as a CEO or senior executive will probably get a raise, good bonus and keep your job. Try being worker-friendly, a nice guy, a good citizen or a friend of the earth and fail to achieve the above objectives and you'll likely face dismissal and even possible shareholder lawsuit for not pursuing your fiduciary responsibility. Anyone choosing this line of work has no other choice. To do the job well, you have to think only of the care and feeding of your shareholders and the investment community, ignore the law if that's what it takes to do it, and obey the only law that counts - the one that helps you grow the "bottom line."

There's nothing in the Constitution, which is public law, that gives corporations the rights they've gotten. It never mattered to them. They just crafted their own private law, piece by piece, over many years with the help of corporate-friendly lawyers, legislators and the courts. And today it's easier than ever with both major parties strongly pro-business and the courts stacked with business-friendly judges ready to do their bidding. The result is big business is now the paymaster, or puppetmaster, with government and the halls of justice their faithful servants. There's no government of, for and by the people, no public sovereignty, no democratic rights or any choices but to accept their authority and bow to their will. It's a democracy for the few alone - the privileged elite. Our only choice is to go along to get along or get out of their way.

A Profile of the World's Largest 200 Transnational Corporations

In December, 2000 The Institute for Policy Studies released a report called "The Rise of Corporate Global Power." It was a profile of the 200 largest transnationals that showed just how dominant they are. A summary of their findings is listed below.

1. Of the world's 100 largest economies, 51 are corporations.

2. The combined sales of these 200 corporations (called "The Group" below) in 1999 equalled 27.5% of world Gross Domestic Product (GDP) and are growing faster than overall global economic activity.

3. The Group's combined sales exceed the total combined economies of all nations in the world except the largest 10.

4. The Group's combined sales are 18 times the income of the bottom one fourth of the world's population (1.2 billion people) living in "severe" poverty.

5. Despite their combined size and percentage of world economic activity, The Group employs only 0.78% of the world's workforce.

6. From 1983 to 1999 The Group's workforce grew only 14.4% while their profits increased by 362.4% or about 25 times as much.

7. The largest employer in the world, Walmart, employed 1,140,000 in 1999 (1.6 million in 2005) or 5% of The Group's total employment. It's also a model (and increasingly a target) for corporate union-busting, widespread use of part-time workers and a practice of avoiding giving its workers needed benefits like health insurance.

8. 82 US corporations are in The Group, twice as many as Japan with 41, the next highest contributing country.

9. 44 of the US corporations in The Group didn't pay the full 35% federal tax rate from 1996 - 1998. 7 of them paid no tax in 1998 and also got tax rebates, including Enron and Worldcom now exposed as corporate criminals.

10. The percent of The Group's sales from the service sector (not manufacturing) grew from 33.8% in 1983 to 46.7% in 1999. In the US, the service sector comprised 79% of the total economy in 2004.

How Corporate Behavior Affects the Public Interest

Big corporations have almost always thrived in the US. But a crucial, defining moment happened in 1886 when the Supreme Court granted corporations the legal status of personhood in Santa Clara County v. Southern Pacific Railway - a simple tax dispute case unrelated to the issue of corporate personhood. Incredibly it wasn't the Justices who decided corporations are persons, but the Court's reporter (J.C. Bancroft Davis) who after the decision was rendered wrote it in his "headnotes." The Court did nothing to refute them, likely by intent, and the result was corporations got what they had long coveted.

That decision granted corporations the same constitutional rights as people, but because of their limited liability status, protected shareholders from the obligations of their debts, other obligations, and many of the responsibilities individuals legally have. Armed with this new legal status corporations were able to win many additional favorable court decisions up to the present. They also gained much regulatory relief and favorable legislation while, at the same time, being protected by their limited liability status. As a result, corporations have been able to increase their power and grow to their present size and dominance.

Although corporations aren't human, they can live forever, change their identity, reside in many places simultaneously in many countries, can't be imprisoned for wrongdoing and can change themselves into new persons at will for any reason. They have the same rights and protections as people under the Bill of Rights but not the responsibilities. From that right, corporations became unbound, free to grow and gain immense power and be able to become the dominant institution that now runs the country, the world and all our lives. Most important, they got an unwritten license from all three branches of the government to operate freely for their own benefit and others of their privileged class and do it at the public expense everywhere. They've exploited it fully as they're grown in size and dominance, and the result has been lives destroyed, the environment harmed and needless wars fought on their behalf because they open markets and grow profits. It's no exaggeration to say these institutions today are real "weapons of mass destruction."

In the early days of the republic it all might have been different had Thomas Jefferson and James Madison prevailed over Federalists John Adams and Alexander Hamilton. Jefferson and Madison believed the Bill of Rights should include "freedom from monopolies in commerce" (what are now giant corporations) and "freedom from a permanent military" or standing armies. Adams and Hamilton felt otherwise, and the final compromise was the first 10 Bill of Rights amendments that are now the law but not the other two Jefferson and Madison wanted included. Try to imagine what this country might be like today had we gotten them all.

We didn't, of course, so the result, as they say, is history. It allowed small corporations to grow into giants and so-called "free market capitalism" to become the dominant state religion of this country and the West. We may say it's free, but it only is for those own and control it, and notice we never hear the system called "fair." That's because in most key industries a handful of corporate giants dominate and now work in cartel-like alliance with their "friendly" competitors here and abroad to control (read: exploit) the markets they serve. They're also able to co-opt the leaders and business elites of countries in the developing world, or work in partnership with them in the larger ones like China, India and Brazil, to allow them market entry. As an inducement, they offer to invest their capital and offer their technology in return for a business-friendly climate and access to the host country's cheap labor. It's an alliance based on pure exploitation for profit at the expense of people who are used, abused and discarded when they have no further value.

This essay is mainly about how these same corporate giants dominate and exploit here in the US. They can't get away with the flagrant abuses commonplace in sweatshop labor countries, but they're moving in that direction. It's no longer like the past in this country when I was young and beginning my working life (a distant memory of better times) when manufacturing was strong, jobs paid well and had good benefits, and workers were protected by strong unions that served their interests even while partnering with management and willing to do the bidding of government.

I still remember well an incident early in my working life when as a newly minted MBA I worked as a marketing research analyst for several large corporations prior to joining a small family business. At one of those companies in the early 60s, my boss called me into his office on my first day on the job. He jokingly told me he was so happy with my work he was giving me a raise. We both chuckled, and he then explained on that day everyone in the company got an inflation-based increase. It was automatic from the lowliest worker to top management because the unions (then strong) got it written into their labor contract. In that company, everyone got the same benefits as union members. Try finding anything like that today even for union members alone. It's almost unheard of.

Today, the country is primarily dominated by service industries many of which require little formal education, only pay low wages and few if any benefits, and offer few chances for advancement. The US Department of Labor projects that job categories with the greatest expected future growth are cashiers, waiters and waitresses, janitors and retail clerks. These and other low wage, low benefit jobs are what many young people entering the workforce can look forward to today. You don't need a Harvard degree for them or even one from a junior college - and for the ones listed above, no degree is needed, not even a high school one.

The continuing decline of good job opportunities is a key reason why the quality of education in urban schools has deteriorated so much in recent years and school dropout rates are so high. In my city of Chicago, half of all students entering high school never graduate and of those who do 74% of them must take remedial English and 94% remedial math at the Chicago City Colleges according to a report published in the Chicago Sun Times. The situation isn't much better in inner cities throughout the country, nor is the level of racial segregation that's grown to levels last seen in the 1960s according to Jonathan Kozol in his new book The Shame of the Nation. Again in Chicago, a shocking 87% of public school enrollment was black or Hispanic, and the situation is about as bad or even worse in most other big cities.

The lack of good job opportunities for a growing population of ill-prepared young people is also a major reason for the growth of our prison population that now exceeds 2.1 million, is the largest in the world even ahead of China with over four times our population, and is incarcerating about 900 new prisoners every week. I wrote a recent heavily documented article about this called The US Gulag Prison System.

The US Has Always Been the Unthinkable and Unmentionable - A Rigid Class Society

The US has always been what the "power elite" never admit or discuss - a rigid class society. But once there was a thriving middle class along with a small minority of rich and well-off and a large segment of low paid workers and the poor. That majority in the middle could afford their own homes, send their kids to college and afford many amenities like new cars, some travel, convenience appliances and decent health care. I can still remember buying a health insurance plan while finishing my graduate work in 1959 that cost about $100 and change total for respectable coverage for a full year. Honest, I'm not kidding.

Fewer people each year can afford these "luxuries" now, including decent health care coverage, because of the hollowing out of the economy, stagnant wage growth (to be discussed below) and skyrocketing costs of essentials like health insurance, prescription drugs and college tuition for those wanting a higher education. Services now account for nearly 80% of all business while manufacturing has declined to about 14%, and total manufacturing employment is half the percentage of total employment it was 40 years ago and falling. Also, financial services of all types now comprise the largest single sector of the economy at 21% of it. But most of it involves investment and speculation running into the hundreds of trillions of dollars annually worldwide (and the US is the epicenter of it all) just for transactions involving currencies and so-called over-the-counter and exchange-traded financial derivatives. It's not the purpose of this essay to explain the nuts and bolts of this kind of trading except to say they produce nothing anyone can go in a store and buy or that enhance the well-being of the majority public that doesn't even know, let alone understand, that this kind of activity goes on or what the inherent dangers from it may be.

The dismantling of our manufacturing base, however, is a subject that should make daily headlines but is seldom discussed in the mainstream. It's crucially important because one has to wonder how any nation can avoid eventual decline when it allows its manufacturing to be done abroad, reduces its need for a highly trained work force and ends up destroying its middle class that made it prosper in the first place. There are distinguished thinkers who believe as I do that the US has seen its better days and is now in a downward trajectory economically. Unless a way is found to reverse this destructive trend, the US will be Number One only in military spending and waging wars. And no nation in history based on militarism and conquest has ever not failed ultimately to destroy itself.

I'd like to quote two distinguished thinkers who've addressed the issue of growing inequality in the US. On most social matters they'd likely disagree, but not on this one. One was former liberal Supreme Court Justice Louis D. Brandeis who explained: "We can have democracy in this country, or we can have great wealth concentrated in the hands of the few, but we can't have both." The other was distinguished "free market" economist and Nobel laureate Milton Friedman. In his view: "The greatest problem facing our country is the breaking down into two classes, those who have and those who have not. The growing differences between the incomes of the skilled and the less skilled, the educated and the uneducated, pose a very real danger. If that widening rift continues, we're going to be in terrible trouble.....We cannot remain a democratic, open society that is divided into two classes."

The Downward Trajectory of American Workers

Over the past generation working people have seen an unprecedented fall in their standard of living. In the past (except for periods of economic downturn), workers saw their wages and benefits grow each year and their living standards improve. Today it's just the opposite. Adjusted for inflation, the average working person in the US earns less than 30 years ago, and even with modest annual increases is not keeping up with inflation. In addition, the federal minimum wage is a paltry $5.15 an hour and was last increased in 1997. That rate is now at the lowest point it's been relative to average wages since 1949. It's incentivized individual states to raise their own which they have the right to do, and, as of mid-year 2005, 17 of them and the District of Columbia have done it covering nearly half the US population. That helps, but not enough.

Some of the world data is especially shocking, appalling and indicative of the economic trend in the US. According to the UN 2002 Human Development Report, the richest 1% in 1999-2000 received as much income as the bottom 57% combined, over 45% of the world's population lived then on less than $2 a day, about 40% had no sanitation services and about 840 million people were malnourished. In addition, 1 in 6 grade school children were not in school, and half the global nonagricultural labor force was either unemployed or underemployed. Most shocking and disturbing of all is that many millions (likely tens of millions) of people in the less developed world die each year from starvation and treatable diseases because of abuse and/or neglect by rich nations that could prevent it. And these numbers reflect the state of things at the end of a decade of overall impressive economic growth. But it shows how those gains went mainly to a privileged upper class who got them at the expense of the majority below them, especially the most desperate and needy.

The same trend is evident in the US although not as stark as in the less developed world. Except for the mild recession in 2001-2002, overall US economic growth for the past 15 years has been strong and worker productivity high. But the gains from it went to the privileged at the top and were gotten at the expense of working people who saw their wages fail to keep up with inflation and their essential benefits decline. In 2004 the average CEO earned 431 times the income of the average working person. That was up from 85 times in 1990 and 42 times in 1980. It's hard to believe and even harder with the real life example below.

I'd like to nominate a "poster executive" who for me symbolizes classic gross corporate excess and greed. He's the chairman and CEO of Capital One Financial, the giant credit card company that's awaiting the finalizing of its acquisition of North Fork Bancorp. At completion of this deal, the Wall Street Journal reported on March 24 this lucky fellow will realize a gain of $249.3 million from stock options he exercised last year. That's in addition to the $56 million he earned in 2004. What on earth will he spend it on, and how many less fortunate ones will have to ante up to pay for this in the de rigueur job cuts that always follow big acquisitions.

And what will all those other lucky CEOs and top executives spend theirs on as well. If you're not already gagging, let me make you choke. According to a study just released by two Ivy League academics based on interviews with CEOs and top managers of the largest 1,500 public US companies, the top five executives collectively at those companies pocketed $122 billion in compensation from 1999-2003 plus at least $60 billion more in supplemental benefits from SERPs (Supplemental Executive Retirement Plans). Also, other data show average annual CEO pay rose from about $1 million a year in 1980 to an estimated $14.4 million in 2001 and rising - plus all those juicy benefits. I repeat - what on earth can they spend it on. They could never even count it.

Reasons for This Unabated Downward Trajectory

The reasons for this decline were as follows:

The shift away from manufacturing to services.

The growth of so-called "globalization" sending many jobs abroad including high-paying ones.

The decline of unions to levels last seen before the mass unionization struggles of the 1930s because of government and corporate antipathy toward them and corporations using the threat to close plants and move jobs offshore to force workers to take pay cuts and accept lower benefits. And then they still move jobs abroad.

Deregulation of key industries including transportation, communications and finance, which opened these industries to low cost competition that put pressure on unions and forced workers to accept lower pay and benefits to keep their jobs.

The growth of high technology allowing machines (mainly computers) to do the work of people, thus reducing the need for them.

The effects of racism and sexism (in a society with deep-rooted racism, sexism and classism) as seen in the data showing 30% of black workers and 40% of Latino workers earning poverty wages with women in both categories most affected. And the average black family owns only 14% as much as the average white family.

The unabated downward trajectory of workers' real income already discussed. The only family income gains have come from two income households, in many cases because wives were forced to enter the workforce out of necessity.

Statistics Documenting the Decline

Hot off the press from the latest US Federal Reserve triennial survey (and most comprehensive one of all) of household wealth published in late February, 2006:

--Median American family income grew a paltry 1.5% after inflation between 2001 and 2004, but there was a widening gap between upper and lower income households.

--While the richest 10% rose an inflation adjusted 6.5%, the bottom 25% fell 1.5%.

--Stephen Brobeck, Executive Director of the Consumer Federation of America, explained - "While the typical American household basically ran in place, less affluent households actually lost ground."

Even hotter off the press, the US Department of Labor and Congressional Budget Office reported in late March that in the last 5 years ending year-end 2005, inflation adjusted GDP per person rose 8.4% but the average weekly wage fell 0.3%. Following a long-term trend since the 1970s, those in the upper income percentiles gained the most while those in the lower half of them lost the most. And the income gap between rich and poor continued to widen.

--The racial disparity was especially dramatic. The median white family's net worth in 2004 was $140,700 compared with $24,800 for the typical nonwhite family.

According to the 2005 Federal Poverty Guidelines, 12.7%, or 37 million people, lived in poverty in 2004. However, because of an acknowledged flawed model to measure poverty, the true number is far higher - at least many millions more and increasing even in times of prosperity.

In December, 2004 the New York Times reported the US ranked 49th in world literacy, and the US Department of Labor estimates over 20% of the population is functionally illiterate (compared to about 1% in Venezuela and Cuba, two of the countries we demonize the most). It's also true, as discussed above briefly, that the quality of public education has been in decline in urban schools for many years. In addition (also mentioned), the extent of racial segregation is now as great as in the 1960s, despite supposed but unrealized gains from the civil rights legislation of that time. Further, state and local education budgets aren't keeping up with a growing need or are being cut. It's also no better for those needing college aid as federal Pell grants have been frozen or cut for three straight years, and it was just reported in late March by public college finance officials that state higher education funding has fallen sharply from $7,121 per student in 2001 to $5,833 in 2005. It means a growing number of lower income students are now deprived of a chance for higher education - and it's getting steadily worse.

The World Health Organization ranked the US 37th in the world in "overall health performance" and 54th in the fairness of health care. And in 2004 about 46 million people had no health insurance and millions more were underinsured. These appalling numbers are in spite of the fact that the US spends far more on health care per capita than any other country. And all developed countries in the world, except the US and South Africa, provide free health care for all its citizens paid for through taxes.

The European Dream reported US childhood poverty ranked 22nd or second to last among developed nations.

The US ranked last among the world's 20 most developed nations in its worker compensation growth rate in the 1980s with conditions only slightly better in the 1990s.

The New York Times reported 12 million American families, over 10% of all households, struggle to feed themselves.

The NYT also reported the US ranks 41st in world infant mortality.

All this and many more depressing statistics are happening in the richest country in the world with a 2005 Gross Domestic Product of $12.5 trillion.

The dramatic effects of social inequality in the US are seen in the Economic Policy Institute's 2004 report on the State of Working America." It shows the top 1% controls more than one-third of the nation's wealth while the bottom 80% have 16%. Even worse, the top 20% holds 84% of all wealth while the poorest 20% are in debt and owe more than they own.

Corporate Gain Has Come at the Cost of Worker Loss

Not coincidentally, as workers have seen their living standards decline, transnational corporations have experienced unprecedented growth and dominance. And that trend continues unabated. How and why is this happening? Begin with the most business-friendly governments the country has had over the last 25 years since the "roaring" 1920s when President Calvin Coolidge explained that "the business of America is business." He, and two other Republican presidents then did everything they could to help their business friends. But they were small-timers compared to today, and the size, dominance and global reach of big business then was a small fraction of what it is now. And back then, job "outsourcing", GATT and WTO type trade agreements, and the concept of globalization weren't in the vocabulary. Now they're central to the problem as they've put working people in corporate straightjackets and created a severe class divide in the country (not to mention the developing world where it's far worse) that keeps widening.

How World Trade Agreements Destroy Good Jobs and the American Dream

World trade between nations is nothing new, and the General Agreement on Tariffs and Trade (GATT) has been around since it was formed in Havana, Cuba in 1948. But with the signing of NAFTA that went into effect on January 1, 1994, the notion of so-called globalization emerged big time. NAFTA brought Mexico into the 1989 Canada-US Free Trade Agreement as part of a radical experiment to merge three disparate economies into a binding one-size-fits-all set of rules all three had to abide by regardless of the effect on their people. To sell it to each country's legislators and people, NAFTA's backers made lofty pie-in-the-sky predictions of new jobs that "free trade" would create. They never were nor was this a plan to do it. It was a scam to outsource jobs and thus eliminate many others, enrich the transnationals and make working people pick up the tab and take the pain.

NAFTA was just the beginning. It was planned as a stalking horse and template for the World Trade Organization (WTO), that replaced the GATT one year after NAFTA went into effect. The WTO along with an alphabet soup of trade agreements (passed and wished for) like GATS (covering all kinds of services), TRIPS (for intellectual property), MAI (on investments and most all-encompassisng and dangerous one of all if it ever passes even in separate pieces) and all the regional agreements like CAFTA and FTAA are intended to establish a supranational economic "constitution." It's to be based on the rules of trade the Global North nations want to craft that would override the sovereignty of all WTO member nations. In other words, the plan was and still is for the US primarily, along with the EU, Japan and other dominant Global North countries to establish a binding set of trade rules (a global constitution) they would write for their benefit for an integrated world economy and then force all other nations to abide by them. NAFTA, and what was to follow, were and are not intended to create jobs and raise living standards in the participating countries, despite all the hype saying they would and will. These agreements are solely plans to benefit big corporations, legally allowing them the right to dominate world markets, override national sovereignty to do it, and exploit people everywhere for their gain. Bottom line - these "agreements" mean big corporations win and people everywhere lose.

So far the jury is very much out on whether the grand plan will succeed as key countries in the Global South have caught on to the scam and aren't buying it - Brazil, India, Venezuela, Argentina, Bolivia and others. And China is big enough to be a club member, agree to the rules, and then bend them at times to protect its own interests.

But if NAFTA was a template to disguise a WTO attempted world "hostile takeover," look at all the carnage it's created so far. Instead of creating jobs in all three countries, it destroyed hundreds of thousands of them. In the US alone it's responsible for the loss each year of many thousands of high paying, good benefit manufacturing jobs now exported to low wage countries like Mexico, China, India and many others. And most of the workers losing them only are able to find lower paying ones with fewer or no benefits if they can find any job at all. This is an ongoing problem in good as well as poor economic times and gets worse every year. It's also led many older workers, who wish to work but can't find jobs, to drop out of the work force or take lower paying part-time ones when they can find full-time ones.

The result has been a huge shift upward in income, wealth and power in the US (and in Canada, Mexico and all other WTO member countries) benefitting the business elites and corrupted politicians. And it's cost working people billions of dollars, many thousands of good jobs and a permanent drop in the average American worker's standard of living. It's also created an enormous migration problem all over the world comprised of desperate people looking for work because there's none at home. I wrote at length about this in the US in my recent article called The War on Immigrants. The problem gets worse every year including in the US. And here a low unemployment rate hides the fact that many workers have dropped out of the work force or must take whatever part-time jobs they can find because they can't get full-time ones as mentioned above.

I'm now working on a new article in which I discuss the view of some US economists who explain that if the unemployment rate today was calculated the same way it was during The Great Depression when it rose to a peak of 25% of the working population, the true current figure would be about 12% instead of the reported 4.7%. The current calculation method includes part-time workers who work as little as one hour during the reporting period. It also excludes discouraged workers who wish to work but who've stopped looking because they can't find jobs.

One might logically wonder why big US corporations run by smart people wouldn't be trying to ameliorate this problem to build rather than weaken the purchasing power of people in their home country - the ones they need to buy their products and services. It's not just for their obvious need to control or reduce costs to enhance profits. It's because these companies are only nominally US ones. They may be headquartered here, but they could as easily be home based anywhere. The US may be their biggest market and most important source of revenue and profit, but their operations and markets span the globe. If they desired, they could pick up and leave and set up shop in Timbuktu or Kathmandu. That's why they're called "transnationals."

Once Our Government Protected Working People

At one time US governments had a social contract with its citizens, imperfect as it was. Most governments in Western Europe still do, although they're being weakened. But since the 1980s and especially after the election of George W. Bush, that contract here is being dissmantled, program by program, year after year with the ultimate goal of making every one self-sufficient with little or no safety net for protection. The most vulnerable poor are hurt most and their numbers grow each year, but the middle class is suffering too as those in it are declining as a percent of the total population. And the very definition of a middle class is changing as the wealth gap keeps widening between top and bottom along with the hollowing out of the middle.

Bush and his cabal of acolytes are so intent on destroying the US social contract with its citizens that their motto might as well be: you can have anything you want - as long as you can afford to pay for it. If not, you're on your own.

The Balance Sheet Documenting Corporate Gains

Worker loss has been corporations' gain - big time. In 2004 the world's largest 500 corporations posted their highest ever revenues and profits - an astonishing $14.9 trillion in revenue and $731.2 billion in profits. And top corporate officials, mainly in the US, are raking it in, rewarding themselves with obscene amounts of salaries, bonuses in the multi-millions and lucrative stock options worth even more for many of them. That level of largesse is only possible at the expense of working people here and everywhere. Oliver Stone may have been thinking of them when he made his 1980s film, Wall Street. In it was the memorable line spoken by the character portraying the manipulative investor/deal-maker when he explained that "greed is good."

Except for two brief and mild recessions, corporations in the US have prospered since the 1980s in a very business-friendly environment under both Democrats and Republicans. The result has been rising profits to record levels, enhanced even more by generous corporate tax cuts (and personal ones as well mostly for the rich), especially after the election of George Bush. Under this president, one of their own in the White House, US corporations have never had it better. It's been so good that 82 of the largest 275 companies paid no federal income tax in at least one year from 2001-2003 or got a refund; 28 of them got tax rebates in all 3 of those years even though their combined profits totaled $44.9 billion; 46 of them, earning $42.6 billion in profits, paid no tax in 2003 and got $4.9 billion back in tax rebates. And the average CEO pay for these 46 companies in 2004 was $12.6 million.

Along with big tax cuts and generous rebates, big corporations are on the government dole big time in the form of subsidies, otherwise known as "corporate welfare." It's also known as socialism for the rich (and capitalism for the rest of us). In 1997 the Fortune 500 companies got $75 billion in "public aid" even though they earned record profits of $325 billion. They got it in many forms - grants, contracts, loans and loan guarantees and lots more. Today there are about 125 business subsidy programs in the federal budget benefitting all major areas of business.

Some examples of this government largesse include:

Selling the rights to billions of dollars of oil, gas, coal and other mineral reserves at a small fraction of their market value.

The giveaway of the entire broadcast spectrum to the corporate media, valued at $37 billion in 1989 dollars.

Charging mostly corporate ranchers (including big oil and insurance companies) dirt cheap grazing rates on over 20 million acres of public land.

Spending many billions of dollars on R & D and handing over the results to corporations free of charge. "Big Pharma" is notorious for letting government do their expensive research and then cashing in on the results by soaking us with sky-high prices and rigging the game with through WTO rules that get them exclusive patent rights for 20 years or longer when they're able to extend them through the courts.

Giving the nuclear industry over $100 billion in handouts since its inception and guaranteeing government protection to pick up the cost in case of any serious accidents that otherwise might cost the company affected billions and possibly bankrupt it.

Giving corporate agribusiness producers many billions in annual subsidies.

You and I, the individual taxpayers, pay the bill for this generosity. But we actua