2008 financial crisis was an "avoidable" disaster

“caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a US inquiry….” reports the SMH.

This report makes me wonder: What lessons WILL capital learn from the crisis? How will they propose to reduce the risk of the next crisis? Will it be that the financial sector should be more closely regulated? If so, in what way? And – what will be the consequences, for capital and for labour of their ‘anti-crisis’ measures?

More about the report…

“But the panel was itself divided along partisan lines – there is a majority report and two minority reports – which could blunt the impact of its findings. The panel’s findings will be released today.

The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.

The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben Bernanke, who did not foresee the crisis but played a crucial role in the response.

It criticises Mr Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” in his era as a “prime example” of negligence.

It also criticises the Bush administration’s “inconsistent response” to the crisis – allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank, Bear Stearns – as having “added to the uncertainty and panic in the financial markets”.

The report could reignite debate over the influence of Wall Street; it says regulators “lacked the political will” to scrutinise and hold accountable the institutions they were supposed to oversee.

The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in contributions to the campaigns of political parties.”

The family file by Mark Aarons – a review

The family file by Mark Aarons is a political genealogy of three generations of a family who belonged to the Communist Party of Australia. As the CPA journeyed from being a working class revolutionary party in the 1920s to dissolving itself in 1991, via Stalinism and reformism, several members of the Aarons family were also party members. The central character is Mark’s father Laurie, who had been the General Secretary of the CPA from 1965. After Laurie died in 2003 Mark succeeded in gaining access to his family’s ASIO files, which provided most of the raw material for this book.

The most astounding idea in the book is repeated several times when describing reprehensible decisions or positions of the CPA that baffled their own rank and file, such as support for the Stalin Hitler pact. According to Aarons, the Party had to take these positions, there was no alternative.

I was intrigued, and perhaps naively shocked to read in The family file just how much attention Moscow paid to the CPA, right up until the early 1970s, and how much direction the CPA took from Moscow. After World War II a network of CPA members infiltrated the Australian public service and passed on secret documents from the British and American allies (including Katherine Susannah Pritchard) that Moscow could not get more directly from the UK or the USA. Moscow closely directed and funded failed efforts by the Moscow loyalists to reconquer the CPA after a majority, led by Laurie, voted to criticise (fairly mildly on grounds of national independence, not on grounds of working class independence) the 1968 invasion of Czechoslovakia. CPA reliance on Moscow funding is described in some detail and was such that the party rapidly declined once that funding was shifted to the new Moscow line Socialist Party of Australia after the split over Czechoslovakia.

Conspiracy and secrecy abounded from the 1930s onwards, not out of necessity for activists trying to rouse Australian workers, but to conceal connections with Moscow. Laurie took up golf with his comrades, as conversations were hard for spies to overhear on the golf course. In the Cold War it was the connection with Moscow that was subversive and attracted such a large volume of ASIO surveillance. Both the CPA and the Australian government (similarly to other western governments) mixed up the foreign affairs threat implied by the CPA’s allegiance to Moscow, and the threat of civil unrest at home instigated by Communists.

The fascinating aspect of this book is that it depicts frustrations and dilemmas of significant individual CPA members trying to balance the demands of Moscow with the realities of Hitler, World War II, the Soviet invasions of Eastern Europe, particularly Czechoslovakia, and class struggle in Australia.

But it is frustrating and dissatisfying that Mark Aarons avoids taking advantage of hindsight to try to give a political account of these dilemmas, or of the changes in point of view of Laurie or himself. It recounts changing loyalties within the trajectory of Stalinism. The book is glib about the murderousness and treachery of the Stalinist regimes, as if their crimes were incidents in a work of fiction, with no serious consequences, and no need for rigorous analysis.

Laurie’s reaction to Kruschev’s secret speech was anti-climactic. “I don’t recall being terribly shocked in the sense that it shattered my whole world…It seemed to make sense to me. A lot of things that I’d read were now explained: the fight against the Troskyites and the ‘crimes’ of Tukhachevsky, Radek, Bukharin, Zinoviev and the others, this made it sound rational. I was convinced it was right.” “I don’t think it seems that bad to me” he said of Kruschev’s revelations. (179-180)

According to Kruschev, Stalin had claimed to be fighting Trotskyism, long after the danger of Trotskyism had been vanquished, as a cover for the purges which were really in aid of Stalin’s personality cult. What a comforting thought for anti-Trotskyists such as Laurie, there was no real Trotskyist threat after all. The book is astonishingly silent on how a regime that the CPA and the Aarons family still called “Marxist” could have perpetrated a reign of terror on a scale larger than Hitler’s? How could it not be “that bad”?

The most irritating thing about the book is the reference by Stalinist epithet to around five or so former comrades as ‘trotskyites’ (unindexed unfortunately), including Wally Moor . Aarons never gives recognition or credit to Trotskyists for seeing back in the 1930s that Stalin was an enemy of working class struggle and of human freedom, motivated primarily to protect and increase his own power at the expense of anyone who might get in the way. Those baffling and criminal decisions about the Spanish Civil War, fascism and social democracy that were directed by Moscow and supinely followed by the CPA still prompt no rethink about the murderous treatment meted out to Trotskyists who challenged and explained them.

Laurie, Mark, other Aarons family members and indeed other CPAers no doubt were sincere in their hope for a more equal society, improved living standards for workers and the poor, and freedom from oppression for women, aborigines, gays. The CPAers wasted decades, and led many others to waste decades too by following Moscow when strong independent minded labour movements could have eroded the power of capital and learned about the possibility of creating a socialist world. The tragedy of their story is the tragedy of the Communist Parties outside the Soviet bloc. The party loyalty of members blinded them to the evidence, and deafened them to voices saying that Stalin was no Marxist, that the USSR was not socialist, and the CPs were not revolutionary. They not only insisted that the USSR and Eastern Europe were socialist, but they took sides in debate on the basis of who endorsed the Stalinist regimes. Many good socialists and working class activists had their critical faculties poisoned if they stayed in the CPA for too long.

But all along socialists could choose an alternative to following Moscow. Red Hot the biography of Nick Origlass by Hall Greenland chronicles a parallel story to that of the Aarons family. Nick was a working class fighter in inner Sydney who stood up to the CPA from the 1930s onwards, and a more inspiring character than any who feature in The family file.
_____________________

My personal connection with the CPA

I was a first year university student in 1974 when I joined the CPA.

Rod Webb was the first Trotskyist who I ever talked politics with, about the same time as I joined the CPA. Rod had succeeded Mark Aarons as the editor of Arena, the Macquarie University student newspaper. It was Rod’s role in the 1975 student occupation of the Vice Chancellor’s office from which I gained my first practical experience of rank and file democracy. The occupying students demanded student control of student affairs, and Rod opened up the Arena office space for daily meetings of an occupation committee open to all students who supported the occupation to thrash out what next steps would be proposed to student mass meetings.

Rod called the CPA Stalinist. At first this seemed unwarranted to me. The CPA supported liberation struggles of women, gays and aborigines. I came to understand Stalinism as defined not by advocacy of Stalin’s repression, but by the domestic policies of the CPA which chose ‘popular’ cross class alliances, at the expense of trying to develop specifically working class solidarity and policies, and even at the expense of actual working class struggles. Reading Aarons book I now understand that even in 1974 an informed anti-Stalinist calling the CPA ‘Stalinist’ had more reasons for doing so. The CPA had not so much cut ties with Moscow, as Moscow had cut ties and funds from it, and redirected them to the more loyal faction that founded the Socialist Party of Australia. To someone who did not know the very recent history or appreciate its tangible significance, the ‘Stalinist’ label could be seen to be sectarian name-calling on the left.

I was tantalised by Mark Aarons’ references to the Left Tendency which developed in the CPA around the same time I was a member. The family file shows the Left Tendency as being more critical than most CPA leaders, of the reformism of the ALP. However the Left Tendency seems not to have been the source of any coherent analysis that could sustain any core of support, and to have vanished even before the CPA dissolved itself. When Mark’s brother Brian (a Sydney based official of the CPA) called me to his office to tell me off for ultra-leftism in 1975, for being critical of the ALP and its leader Whitlam who had been sacked, I had only heard rumours of the Left Tendency and not discussed ideas with any of its advocates. I resigned from the CPA soon after the meeting with Brian Aarons.

Crowds, freedom and utopian democracy

See Nicholas Gruen article in SMH opinion on mon 10 Jan.
Group think or the wisdom of crowds? Solidarity vs free expression
of critical thoughts. Nicholas Gruen says that these opposites
can go together very well if there is a democratic process where
people can express different points of view, and an accepted way of
making the decision to be carried out. It is a very nice idea that a
company decision may be opposed openly by employees but accepted as the majority decision. Problem is employees get no vote on the
company decision. Nicholas Gruen could be labelled a utopian
democrat (like utopian socialist). He has imagined a state of
affairs that is appealing, but those who have the power to make
decisions now, such as bosses, aren’t going to hand over decision
making because it is a nice idea. Decision making power would have to be taken by the people who would be better at making decisions.

Trying WordPress app for iPad – posts are not uploading

It will be much easier to blog more regularly if I can compose posts using WordPress App when I am offline, and then send draft posts to blog once back online. That was the theory. But nothing happens when I save my draft post in the wordpress app even when I am online. And worse, I drafted a second post, using the app, and the first post was wiped out. Only one draft post at a time?

I can see that my blog is connecting to the app because when I go to the website and publish a post, it appears in the list of posts in the app.

I am hunting forums etc for solution. Any advice anyone?

Private child care operators oppose quality child care

Private child care operators did not plan for extra staff because because they expected their lobby groups to succeed yet again in preventing overdue reform. (SMH 3 Jan 2011) Under 2 years old have been looked after in groups of five per carer in NSW child care centres. At last the ratio will be 4:1 from 2011.

The child care workers union LHMU has long been in favor of the reform, as have parents and child care researchers. Privatised care means not only that individual owners have to make a profit, but that their lobby groups have organised to demand that governments make policy to ensure profitability also. Child care is not the only service with this problem – it’s the same in schools, vocational education, universities and health care. Unionists and service users can not afford to leave these private lobby groups unchallenged.

Neither can unions afford for public and private sector workers to undermine each others employment. Common policies for working conditions, such as the child to carer ratio in the child care sector – would help in many areas of education and health where there is now ‘competition’. The UNSW and Macquarie Uni NTEU campaigns for a limit on casual employment fit this bill. NSW Teachers Federation would do well to look to how private sector VET teachers can be supported to lift their conditions to match TAFE, rather than setting a target for governments to push down conditions and education quality to a bare minimum.

Quality and competition for profit are not a good fit, when every person deserves quality, but some people have more money to buy it.

NAIRU for Reserve Bank – 5% unemployment = full employment

Marx’s concept of the reserve army of labour is applied under a different name in current management of capitalism. It’s the NAIRU, acronym for Non Accelerating Inflation Rate of Unemployment. It means the lowest unemployment can fall before there is a danger of workers being able get higher wages because they have more bargaining power. The main controversy about NAIRU is whether a precise number for the rate of unemployment can be determined. But what the NAIRU debaters do not dispute is that economic policy makers do make decisions based on balancing growth, inflation and unemployment, aiming to keep unemployment high enough to hold wages down.

Read more about it here – http://www.businessspectator.com.au/bs.nsf/Article/RBA-sees-flexibility-in-labour-supply-AW9SH?OpenDocument

“The Reserve Bank of Australia (RBA) has an open mind about how much more the labour market has to give to the current upswing – at least that’s what its latest monetary policy statement implies.

In its latest monetary policy statement, the RBA makes numerous references to “spare capacity”.

Even when it is not spelled out explicitly, this is generally a reference to spare capacity in the labour market – the pool of workers available to satisfy industry’s demand for labour as output expands.”

It is generally thought that “full employment” is reached when unemployment falls to about five per cent.

If it falls below that, the story goes, the mismatch between supply and demand will drive wages upward, feeding into a vicious cycle of wage-driven inflation.”

A movie that I'm looking forward to seeing – The Trotsky

David Harvey – Crises of capitalism – animation

A very engaging synthesis and animation of complex ideas.

It’s so impressive in form, that it could be a distraction from the content. I’m trying to work out if Harvey is suggesting that there need not be “excessive financial profits”, or if it’s just a poor turn of phrase. Discussing “imbalance” in a system, sounds as though “balance” could be restored, but Harvey is arguing that the capitalist system needs replacing not rebalancing.

The most dangerous man in America

Daniel Ellsberg was seen by President Richard Nixon as the most dangerous man in America. This documentary by Judith Ehrlich and Rick Goldsmith tells the story.

When Ellsberg leaked the Pentagon papers to the New York Times in 1971 he exposed the secrets and lies of four US Presidents who had bombed and invaded Vietnam and Laos. For the previous 15 years Ellsberg had worked for the US military, including several years helping to plan the US war effort for the Pentagon.

Yet President Nixon was re-elected by a landslide in 1972 even after the Pentagon papers had been on the front pages and top of TV news bulletins for a solid fortnight, and American voters must have known that Nixon had lied.

After the publication of the Pentagon papers Nixon was angry and feared that other secrets might be leaked. He set up a “special investigations unit,” which was to become the subject of the Watergate inquiry. Ellsberg was a target, and in the movie Nixon’s voice, the subject of his own telephone taps, orders that Ellsberg be stopped by any means necessary. We also hear Nixon advocating using nuclear weapons in Vietnam.

Nixon hung on until 1974, resigning to avoid impeachment. Then in April 1975 the US withdrew from Vietnam.

One of the themes of the documentary is Ellsberg’s role in the downfall of Nixon and the end of the Vietnam War, through his action as a whistlebower, exposing government secrets. The exposure of the secrets seemed to do more to galvanise and propel the anti-war activist minority than it did to persuade a majority of Americans that Nixon and the war were both wrong. Nixon’s own reaction to being exposed was to behave not just anti-democratically but so blatantly illegally, that he brought about his own downfall.

Another theme is Ellsberg’s transformation from military adviser to anti-war activist. “It wasn’t that we were on the wrong side, we were the wrong side,” he came to say. Ellsberg’s doubts as an adviser began when US Defense Secretary Robert MacNamara lied to TV cameras that the war was proceeding well for the USA, immediately after he had acknowledged to Ellsberg the value of intelligence which categorically contradicted that view.

Then Ellsberg heard draft dodger Randy Kehler speak when he was about go to jail. This set Ellsberg thinking about what sacrifice he would be willing to make to stop the war. He decided to risk jail himself, by spending several months smuggling and Xeroxing 7000 pages of top secret documents, before handing them to the New York Times. He went on to be active in various non-violent protests against the Vietnam war, and to speak widely to the media, especially making a point of beginning with how many tons of bombs had been dropped. He expected this factual information to persuade listeners to oppose the war.

What struck me about Ellsberg was that from being a military adviser to being an anti-war activist, he was constantly curious, inquiring, wanting to understand and know the truth. It was his own energy in pursuing knowledge that made him so shocked by denial or concealment of the truth. And it was his contact with the anti-war movement that enabled him to translate his shock and disillusion into constructive radical activism.

This documentary is narrated by Ellsberg, and deftly combines interviews from the period and contemporary material, news reports, wire tap recordings, re-enactments to present a story of an activist of integrity that is worth understanding.

Stay IN AND Speak OUT!

Juvie Minister  Graham West  resigned because, according to the Sydney Morning Herald  he wants “to be able to speak a bit more freely.” I can’t help but wonder at how much more it would stir politics up if West had not resigned but spoken out from office. It would put the pressure right back on Keneally, the Labor machine, Head of Commerce and senior bureaucrats. It seems that Labor MPs who start out with some decent intentions, or hope for making reforms, get sucked into the secrecy of political processes.  This allows all the factional  deals and pressure from advisers and lobbyists to prevent changes that might  be unpopular with the press or with large investors. Open policy discussion and debate by advocates of working class interests and social justice is the necessary antidote.

And by the by – the media don’t help – there is much more coverage of the resignation of Ian McDonald and his snout in the trough of travel largesse, than there is of West whose resignation is over policy. Ho hum!

He was pissed off when discovered that the Department of Commerce had not informed him that they had scrapped a tender for his project to establish bail houses to keep young people charged with offences out of detention. He is not standing for his seat at the next election ” I know Graham West is no radical, but his plans for reforms to Juvenile Justice do challenge the punitive law and order views that dominate popular media and grip most politicians. I don’t know the detail, but they seem worthy reforms that could reduce imprisonment of youth.

But by resigning, he is not increasing his ability to fight for these reforms, he is weaker. Speaking out from office against the government would be far more potent than continuing to speak no longer in office. It concedes that Labor politicians cannot or should not be voices of dissent from the parliamentary Labor Party. Dissent is essential if  the interests of anyone other than the powerful are going to be asserted.