Wednesday, March 2, 2011

The Stuctural Adjustment of Wisconsin

What conservatives want to do is to turn Wisconsin into a poor nation like Nicaragua or Chad.  By laying waste to the state, they can plunder its carcass, leaving the tidbits that drop to the ground for working people to fight over.

So, what is "Structural Adjustment?"  Structural Adjustment is a set of policies used on poor nations who have been subjected to debt servitude.  When their economies get into crisis as a result of their incredible debt burdens and a volatile world economy, multinational lending agencies like the International Monetary Fund step in to impose "austerity measures" in the form of structural adjustment.  The policies that generally fall under structural adjustment are:
  • They prescribe cutbacks, “liberalization” of the economy and resource extraction/export-oriented open markets as part of their structural adjustment.
  • The role of the state is minimized.
  • Privatization is encouraged as well as reduced protection of domestic industries.
  • Other adjustment policies also include currency devaluation, increased interest rates, “flexibility” of the labor market, and the elimination of subsidies such as food subsidies.
  • To be attractive to foreign investors various regulations and standards are reduced or removed. 
Now if we take a look at the Wisconsin situation, we can see some painful parallels.  Before we get into all of that, what is the source of the economic downturn that is impacting states like Wisconsin?  Well, for that, we have to turn to some of the economic strategies pursued by the wealthy classes.

To begin, the agreement between business and labor to transfer the gains in productivity to workers wages was broken in the late 70's and early 80's.

The Limping Middle Class

Or, another way to look at it:

The firing of the air traffic controllers who were on strike signaled the all-out assault on unions and working people (remember this for later).  Good, unionized, high paying jobs (manufacturing and government jobs) were disappearing and being replaced with service style jobs with low wages and little if any benefits.  Graphs can be found in this article: The New Face of Capitalism: Slow Growth, Excess Capital, and a Mountain of Debt
As workers were taking home less in wages, corporate owners needed to figure out a way to ensure that people would still buy their useless crap.  Well, if they do not have decent wages and are paying for their own benefits now, they had to figure out a different solution.  The solution was to open up more credit to consumers to replace their lost wages.  Graph below from: The Household Debt Bubble

However, corporations were not feeling the same pinch.  In fact, Unlike Consumers, Companies Are Piling Up Cash.

Corporations have held onto this cash with a death grip, and will not let go: $1 Trillion in Reserves, But Not Hiring 

This hording by corporations and depletion of our wages and benefits has led to a very askew income distribution (see also my previous post).  Shortly after WWII, our incomes tended to rise together.  In the 1970's and 80's, income started to flow upwards toward those that already had a tremendous amount of wealth: By the Numbers

What we are left with is a huge income gap and rapidly accelerating incomes of the very wealthiest.  It's the Inequality, Stupid 

Even the economic crisis did not affect us all evenly.  Tax Data Show Richest 1 Percent Took a Hit in 2008, But Income Remained Highly Concentrated at the Top

The debt burden among those of us that work and this redistribution of wealth created a very weak economic foundation.  The mortgage crisis was the straw that broke the camel's back.

Now, given that economic context, conservatives all over the nation are salivating in anticipation of the deep cuts they will make at the expense of working people.  They will engorge themselves while we bleed, which brings us to Governor Walker's machinations.

Governor Walker mythologizes Reagan and imagines himself as Reagan during the air traffic controller strike.  His delusion of grandeur culminates in the idea that it is his moment in history: Gov. Walker in Prank Call: 'This is Our Moment'.  To realize his fantasy, the governor has taken advantage of the broader economic crisis to create a budget shortfall after he entered office with a surplus (sounds a bit Bushy to me).  While the state is struggling like many others, it is in a relatively sound financial position (see the official budget outlook in Wisconsin  Like any good magician, he used slight of hand to make the surplus go away.  In the process, he flushed $140 million down the toilet where his bourgeois buddies were waiting in the sewers to collect their bounty: Walker gins up ‘crisis’ to reward cronies and Walker Concocts 'Scoop and Toss' Borrowing Scheme to Pay for $140 Million in Special Interest Spending.

So, Walker has created a debt situation that is characteristic of the poorer nations of the world.  All he has to do is to spin this straw into gold.  This is where he pulls out the structural adjustment, austerity measures.

If you remember from above, part of the process is to privatize property that the government previously owned or operated.  Essentially, the government sells things that used to be a source of revenue.  In the legislation Walker is attempting to ram through, he includes a provision that allows state property to be sold without any oversight.  "Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state" Shock Doctrine, U.S.A. and Walker proposes selling state-owned power plants.  Corporate vultures are waiting to pounce on these soon-to-be carcasses so that they can profit handsomely from their death.  Everywhere these privatizations happen, we see services decline, costs rise and corruption flourish.  See Enron, Bolivia and the privatization of water, public vs private nursing homes or prisons (Judges Plead Guilty in Scheme to Jail Youths for Profit), etc.

Another part of the process is to minimize the role of the state.  In this case, many social services (Wisconsin protests: Scott Walker proposes budget cuts) are facing cutbacks including education (Wis. governor: Ax $900 million from education).  While Walker is handing out corporate welfare, he is gutting the social supports and infrastructure necessary for Wisconsin to flourish and recover from the economic downturn.  Economic crisis is an excuse to attack those programs that do not directly enrich the wealthy.

The most contentious austerity measure being implemented in Wisconsin is the attempt to increase the "flexibility" of the labor market.  What this means is workers should be helpless in the face of corporate demands.  Corporations should be free to set wages, benefits and termination policies as they please.  Anything less than complete control by corporations is viewed as a "distortion" of the market.  Unions are viewed as an inefficiency because they are able to bargain collectively for wages and benefits.  With the power of collective bargaining, corporations are not free to pay starvation wages and fire people on a whim.  This is clearly the point of Walker's proposals (Thousands descend on Wisconsin Capitol in protest).

To add the cherry on the top of this fecal pie, Walker considered (and is perhaps still considering) agent provocateurs to delegitimatize the protest movement.  In a prank phone interview, Walker admitted to considering planting people in the crowds to create disturbances, "'KOCH': We’ll back you any way we can. What we were thinking about the crowd was, uh, was planting some troublemakers.
WALKER: You know, well, the only problem with that —because we thought about that. The problem—the, my only gut reaction to that is right now the lawmakers I’ve talked to have just completely had it with them, the public is not really fond of this…My only fear would be if there’s a ruckus caused is that maybe the governor has to settle to solve all these problems…" Gov. Walker in Prank Call: 'This is Our Moment'.

So there you have it.  The conservative agenda to turn Wisconsin into a struggling, "Third World" nation by the same means used to keep poorer nations under the jackboot of wealthy nations' economic domination.  Good luck Wisconsin, you are going to need it and a lot of social movement activity.

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