What’s Behind the Rise in Income Inequality? Technology or Class Struggle?

Matt Vidal

Over the past three decades, income inequality has risen in most of the 34 member countries of the Organization for Economic Cooperation and Development. A recent analysis of 22 OECD countries from 1985 to 2013 found that inequality increased in 17 of them (including the US, UK, Canada and Germany), underwent little change in four (Belgium, Netherlands, France, Greece) and declined in only one (Turkey). Over the same period, in the 17 richest countries GDP growth primarily benefitted the top 10% of the population, with the bottom 40% receiving little from a quarter century of growth.

The prevailing explanation for rising inequality – the mainstream economics explanation – is that technology did it. There are no capitalists making investment decisions, no managers making employment decisions and certainly no class struggle. Only technical change, supply and demand. Here I want to make the case for the centrality of class struggle in driving inequality.

According to Harvard economist N. Gregory Mankiw, “Most economists agree that a leading cause [of rising inequality] is skill-biased technological change — the tendency of new technologies to increase the relative demand for skilled workers.”

A more sophisticated and convincing version of the technology story is the “task approach” of MIT economist David Autor and colleagues, which is about the automation of jobs. Computerization is able to easily replace routine jobs, which happen to be those in the middle of the skill distribution (e.g. clerical work and bookkeeping). Both higher-skill jobs (e.g. professionals, managers and technical workers) and lower-skill jobs (e.g. cooks and cleaners) are nonroutine jobs, hence unable to be replaced by automation.

The task version of the technology story well fits the data showing polarization of the job structure into high-wage and low-wage jobs, and it is an important part of the story. But it’s not the most important part of the story.

If technical change is the main driver of income inequality, then either version of the technology explanation predicts that inequality should trend similarly in countries that are comparable in terms of level of economic development, industrial structure and vocational training and educational systems.

To examine this, I’ve plotted income inequality for Canada, the UK and the USA. In addition to having similar industrial structures, these countries are all conventionally understood to be institutionally similar, highly liberal economies with minimal government intervention and only a residual social safety net. Further, they have comparable vocational training and education systems with similar outcomes on a range of indicators.

As a measure of inequality I used the Gini coefficient, in which perfect equality has a value of zero (0) and complete inequality a value of one (1). Using OECD data, the only measure available for all three countries going back to the early 1970s is the Gini for net income (after taxes and transfers). The Gini for gross income would have been better, because it would display the picture produced before government transfers. However, all three countries have similar levels of government income transfers, so the net income measure will suffice.

Source: OECD (Canada and US) and Institute for Fiscal Studies (UK).

The trends in the chart are not easily squared with the prediction of the technology story. From the early 1970s to the present, income inequality has risen more or less continuously in the US, while in Canada it was stable for two decades until around 1994, rising continuously thereafter. In the UK inequality rose faster than the US until 1990, thereafter remaining comparatively stable while it continue to rise in the US.

In a bit more detail, in Canada the trend in inequality was largely flat for 21 years, fluctuating only 0.019 points between from 1976 to 1997. Over the same period, inequality in the US rose more or less continuously, a full 0.062 points. In the UK, inequality rose even faster than in the US in shorter period of time: shooting up 0.101 points in just 13 years between 1978 and 1991.

Compared with Canada, variation from low point to high point in the Gini coefficient over the 21 years from 1976 to 1997 was three times higher in the US and five times higher in the UK.

A more plausible explanation for the variation in income inequality trends across the OECD would refer to the distinct political economy of each country. Because such an explanation requires an in-depth analysis of each country, I focus the remainder of this short article elaborating a class struggle argument for the US case.

The skill-biased technical change story is an extension of human capital theory. According to the latter, wages are determined by the skill levels of individual workers; according to the former, technology increases the productivity of skilled workers, hence increasing demand for them. Human capital theory suggests the rise in low-wage jobs would be driven by a rise in low-skill jobs. However, in a recent academic paper I found that from 1960 to 2005, there was a 15 percent decrease in the low-skill job share of total employment.

In short, compared with previous decades, the contemporary American economy has a lower proportion of low-skill jobs yet a higher proportion of low-wage jobs. What gives?

The US Case

A high corporate profit rate in the 1950s and ‘60s allowed a class compromise: Capital provided secure jobs, rising real wages and opportunities for training and promotion; labor provided industrial peace and cooperation with management leading to continuous productivity improvements. The class compromise was forged within the corporation.

Sociologists have shown that there is no single version of economic rationality. Rather, people come to understand their interests through particular ideologies or cultural logics. In the 1950s and ‘60s, corporate managers understood their business interests to include not simply maximizing shareholder value but also sales growth and market share. The dominant logic of corporate organization was one of vertical integration.

The logic of vertical integration included internalizing employment: the development of internal labor markets and the protection of workers from market forces. As a result, many low-skill jobs in large manufacturing corporations provided security, opportunities for training and promotion, and decent pay through administratively-determined wages (patterned on union contracts in the auto sector).

Vertical integration led to high levels of industry concentration. It has been demonstrated that industry concentration ratios have a remarkably strong negative correlation within inequality, a full –0.8 in the US from 1950 to 2006. Inequality is reduced by high concentra­tion due to the substitution of administrative policies regarding wages for market determination.

However, the profit rate began dropping due to a combination of increasing capital intensity in the economy (pushing the profit rate down) and increasingly high wages associated with the class compromise (cutting into the profit rate). From a postwar high of 26.8 percent in 1951 the corporate profit rate dropped to a low of 9.4 percent in 1982.

Source: BEA data (corporate profit/corporate net capital stock).

Under intensified international competition and a declining profit rate, capital abandoned the class compromise and began to recover profits out of wages.

One of the most well-known outcomes of capital’s assault on labor was deunionization, which played a central role in rising inequality, the former explaining up to one-fifth of the latter in the US.

Equally important, under the rise of the ideology of shareholder value, the dominant logic of employment became one of externalization. This included outsourcing, downsizing, and lean staffing strategies (which reduced opportunities for training and promotion) along with increased use of part-time and temporary employment.

Most important was a return to the market-determination of wages even for full-time, long-term jobs. This provides an explanation for the increase in low-wage work despite a decrease in low-skill work: under the class compromise, low-skill jobs provided decent wages because they were shielded form market forces. Under the ideology of shareholder value and the logic of employment externalization, market competition now forces the wages of low-skill workers down as far as possible.

A central outcome of these measures has been a steady decline in the wage share of total national GDP (leading to a rise in the profit share) from a high of 59.9 percent in 1970 to just 50.7 percent in 2011. This is behind the partial recovery of the profit rate.

In sum, much of the rise in inequality is the result of class struggle, as capitalists and their managers have attempted to recover profits out of wages. This happens through real people making real decisions – what industries and regions to invest in, how to organize the corporation, how to structure employment contracts – not by the impersonal march of technology.

To be sure, there are structural dynamics driving these decisions – the UK and Canada experienced similar declines and rises in profit rates and employment costs, and engaged in similar responses, though with different timings and magnitudes. Nonetheless, it remains the case the decisions of a small class of capitalists are behind rising inequality and stagnating living standards.

Rains Become A Nightmare!

Mohammad Ashraf

(Once welcome as a boon from the Gods, the rains these days give nightmares to the people!)

Recently Yasir Ashraf did a front page story in the paper titled, “Rains no more welcome in Kashmir”! According to him, people living in the areas where the Jhelum had breached its embankments were living in fear. The breaches had been plugged only with sand bags and no action had been taken for strengthening these with concrete embankments. In fact some people were frantically trying to get inflatable boats as a safety measure. The Government had wasted 18 months and still there was no sight of permanent measures being taken. The dredging of the Jhelum and the flood spill over channel had been recently taken up under the orders of the Governor. However, the pace is abnormally slow and it will take years. What is needed is an accelerated job on a fully mechanised basis round the clock. Reportedly a Kolkata based firm has been engaged for mechanised dredging and they are supposedly employing three machines. The extent of the River would require more than a dozen machines, with an equal number of JCBs and fleets of trucks (dumpers) to remove the mud and silt and deposit it away from the River at safe places.

Equally important are the embankments especially along the banks of the River all along the city of Srinagar. These need to be strengthened with embedded concrete piles or with concrete walls. Apart from dredging the stretches near the source and near the other end in Baramulla, the River embankments have to be made impregnable and its depth increased by at least ten feet or so along its course through the City of Srinagar to contain and channel flood waters safely. The same treatment has to be given to the flood spill over channel. Except for big projects such as the flyover construction, most of these works are allegedly assigned by the concerned engineers to small contractors on political considerations. A road stretch of few kilometres gets divided among four to five contractors. This results in delay as one contractor completes the job earlier while as the other one dithers. Then there is the problem of quality control.
The entire project of flood prevention which includes dredging, strengthening of embankments needs to be allotted to a major resourceful organisation on a turnkey basis with a stipulation of a time frame with huge penalties for default. In fact, the organisation constructing the fly over could be asked to take up the work of concrete embankments as they already have enough equipment and manpower. The flyover completion may get slightly delayed but that is a better choice than getting it totally washed away! This could be done by the Governor directly by exercising the residuary powers vested in him under the constitution. An instant of this nature occurred during late seventies in Gulmarg. The skiing was dependant on a ramshackle rope tow. A French Ski lift company owner Mr. Montaz visited Gulmarg and met Sheikh Sahab. He asked him if he could put some ski lifts on priority in Gulmarg. Mr. Montaz said he could do it within a month. Sheikh Sahab directly assigned him the work and three ski lifts were imported and installed in Gulmarg. Had this not been done, Skiing in Gulmarg would have never attained national and international status which it has at present!

Regarding the flood panic, it is mistimed. Severe floods do not occur in winter as it usually snows in higher reaches. The worst period of floods is late summer and early autumn. At that time it rains all over and the water has only one channel to go and that is the River. All other outlets are closed due to the ripening of the rice crop. Also last time there were other factorssuch as the combination of the western disturbances with the monsoon spill over from the South. The recent climate change has made the occurrence of such freak events a strong possibility. So there is still time to complete the job of protecting the habitations from the flood fury. In fact, to guarantee right to life is the first constitutional duty of a government. Other niceties come later.

This job should have been the priority number one in the so called developmental agenda of the last Government which is now in limbo! They did absolutely nothing and dithered for months on end. They are still bargaining for their existence without bothering about the fate of the people. If the Governor accelerates the pace of development and takes up the flood prevention measures on a war footing within a stipulated time frame people may prefer the Governor’s or even President’s Rule to an elected government of self-serving greedy politicians!

On Burning Ground: The Human Cost Of India’s Push to Produce More Coal

Fred Pearce

India’s state-owned coal company is ramping up production at the nation’s coal mines, such as this open-pit operation in Jharia, to fuel economic development. (Photo: Fred Pearce)

“Come,” says Raju. “Let me show you my house.” His clean white shirt, well-brushed hair, and calm demeanor belie the almost apocalyptic landscape in which he and his family lived.

We are standing on the edge of a 650-foot unfenced drop into an open-pit coal mine that is shrouded in dust. As we gingerly approach his home, a two-room brick hut just 30 feet from the precipice, we have to clamber over the rubble of collapsed houses and avoid deep fissures and spots of hot earth from which smoke is erupting. What remains of the once-rural village of Lantenganj — now deep inside India’s largest coalfield in the mining state of Jharkhand — is being consumed by underground fires that burn the coal beneath. The government-owned company Bharat Coking Coal, whose mines are responsible for the fires, wants the villagers to leave — for their own safety, the company says, and so the mine can be expanded.

But Raju’s family and the 50 others that cling on here say they will not go without proper compensation and new homes near to their jobs in these mines. “We’ve got nothing from the government,” Raju tells me, as we inspect a crack that has opened up in his living room floor. “We want a better deal or we will not move.” Until, presumably, their houses fall into the abyss below.

These are economic boom times in India. The government of Prime Minister Narendra Modi is presiding over 7-percent annual growth, fueled by the coal that generates most of the country’s electricity and powers heavy industries like steel and motor manufacturing that dominate Jharkhand, one of India’s industrial heartlands. To keep the growth going, Modi last year called for the state-owned company Coal India, whose subsidiaries include Bharat Coking Coal, to double its production by 2020.

Many fear the climatic consequences of India’s drive for coal-powered growth. Other major coal mining nations like the United States and China are cutting back on burning the dirtiest of the fossil fuels. But India, the world’s third largest coal producer and fourth largest greenhouse-gas emitter, stood out as a climate bad guy at the United Nations’ climate talks in Paris in December. It has set itself on an energy growth path that will increase emissions by an estimated 60 percent by 2030.

That is bad enough. But there is a local price to pay too — in polluted air and damage to the lungs and living conditions of people, like Raju, whose homes are in such mining areas as the 108-square-mile Jharia coalfield that includes Lantenganj. According to Gurdeep Singh, of the Indian School of Mines University in Dhanbad, the biggest nearby city, Jhaira is probably the most densely populated coal-mining area in the world, with up to half a million inhabitants.

The Jharia coalfield is gigantic. Its nine large open pits and dozens of deep mines and smaller pits are responsible for about a quarter of India’s coal production, including almost all of its highly prized bituminous coal, which is burned in the blast furnaces of the country’s major iron and steel corporations, such as Mittal and Tata.

As I experienced during a trip to the Jharia coalfield early this month, nearby communities are frequently shrouded in a noxious fog of smoke and dust that catches in the throat and dramatically reduces visibility. A study last year by the Central Institute of Mining and Fuel Research in Dhanbad found widespread evidence of lung diseases and other health impacts.

The problem is worsened by the fires that lurk underground in about a tenth of the coalfield. Aside from blackening the air, they cause widespread subsidence as they eat away the coal and cause the ground above to fissure and collapse. Over the years, they have consumed an estimated 37 million tons of coal , according to Glenn Stracher of East Georgia State College in Swainsboro, an expert on underground coal fires, who rates the Jharia conflagrations among the worst in the world.

The fires typically ignite spontaneously when minerals in the exposed coal are oxidized and heat up. Some have been burning since the British began deep mining here over a century ago. But the subterranean conflagrations have dramatically worsened since independent India began open-pit mining in the 1970s.

Official reports mention 70 long-standing major fires. But in the plush air-conditioned local offices of the government-run Mines Rescue Station, the people whose main job is to contain and extinguish fires in productive mines by sealing them off told me that the current tally is 84. They are losing the battle.

This sounds as though it would be bad for business. Indeed, the fires have reportedly cut off some 1.5 billion tons of coal from future mining. But Jharia businessman Ashok Agarwal, who campaigns for the rights of those who are losing their homes to the fires, told me he believes the mining company sees the fires more positively – as a means to force out villagers who get in the way of expanding the mines to increase production. “The fires are being used to secure more and more land,” he said. “As they spread, the people are forced to evacuate.”

The company, which did not respond when contacted by Yale Environment 360, reportedly denies this motive. But the Jharia coalfield has a tradition of brutality. It and the neighboring steel city of Dhanbad are notorious in India for being the home of coal mafias. These are criminal gangs that reputedly control trade unions, money lending, a huge clandestine trade in coal — and politics. In 2012, Bollywood made a movie based on the local mafiosi, called Gangs of Wasseypur .

An hour’s rickshaw ride away from Jharia, serried ranks of four-story apartment blocks make up Belgaria, a township under construction by the government’s Jharia Rehabilitation and Development Authority since 2006 to house evacuees from the advancing mines and fires. It currently has 2,300 households, each family having been given a free one- or two-room apartment for life. But it could grow to many times that size if the government’s aim to shift 100,000 people from the coalfield is ever carried out.

The township has a bank and a school, and much cleaner air than on the coalfield — but no jobs. Evacuees have to commute back to the coalfields to find even casual labor. Yet many – like Pandey, who came from the mining village of Bokapahari five years ago – have more or less given up trying to find work. “There are no jobs now,” he said.

Life in the township remains surprisingly rural, with chickens and cattle roaming the streets. In his tiny apartment, Pandey’s daughter was cooking a lunch of leafy green vegetables and rice; I noticed her stove burned dried cattle dung, rather than coal.

An hour later, I was in Pandey’s former home village of Bokapahari, its remaining houses sandwiched between an abandoned mine and one still growing. As I watched smoke billow from a subterranean fire just meters from his home, Mohammed Ansari told me that his family would be happy to move. “But the people in charge of the relocations want bribes, and we won’t pay,” he said, with a dismissive snarl.

The slow progress in moving people away from the hazardous and unhealthy coalfield suggest that government in Jharkhand is characterised less by ruthlessness than by inefficiency and corruption. The state has been condemned by Human Rights Watch as one of India’s most corrupt.

Beyond Jharia, the state is peppered with coal mines: giant open pits descending for hundreds of meters, a few old underground shafts, and many drift mines, which are reached down steep slopes from the surface. Close to the village of Kujju, north of the state capital of Ranchi, I met Bhodo, a member of the Oraon tribal group, whose members originally moved there to work on tea estates, but now labor in the mines.

After washing off the grime from his shift at the Kujju mine in a nearby river, Bhodo was walking home along a road made impassable to our car by subsidence from an underground fire in the mine. Though more than 50 years old, he said he continued to work underground operating machinery — a job he inherited from his father.

He went home, put on a shirt, and got in the car, and we headed to the steep sloping entrance of the drift mine. “The mine isn’t safe with the fires,” he said as we drove. “There are 10 kilometers of tunnels in there, and you can easily get lost in them.”

At the mine, the hard-hatted manager, who did not give his name, said the 150 miners, working in three shifts, brought around seven tons of coal to the surface every hour. It was a relatively small enterprise of Central Coalfields, another subsidiary of Coal India. Even so, I was shocked to see two children playing unattended amid the heavy machinery. Nobody seemed concerned.

India may fancy itself as the new China, driving toward becoming a 21st-century nation. But in a journey of several days across the coalfields of Jharkhand, it more resembled an industrialized caricature of the old India.

Most astonishingly at odds with the new image were the coal cycle-wallahs. I first came across them on the road north out of Ranchi, pushing specially strengthened bicycles loaded with bags of coal. There were dozens of them – some on their own, and some in groups. Each bike carried about a quarter-ton of coal. Uphill was very hard work, though freewheeling downhill looked fun if you could steer the load.

One group of cycle-wallahs, resting halfway up a steep incline, told me they were taking coal more than 40 miles from mines at Urimari to Ranchi, a journey that took two days. Each load cost them around 600 rupees, or $9, to purchase at the mine and would be sold on arrival to brokers for 1,500 rupees, making a profit on the journey of a paltry $13.

Kuntala Lahiri-Dutt, of the Australian National University in Canberra, who has analyzed Jharkhand’s cycle-wallahs, estimates that most of them are members of tribal minorities and that they transport more than 3 million tons of coal each year. Far from diminishing, the volumes they carry may have doubled since Lahiri-Dutt first started investigating a decade ago, and she says more children are now involved in what are often family businesses.

Cycle-wallahs handle only an estimated 1 or 2 percent of all the traded coal. But their continued role in an industry said to be central to India’s economic progress seems to encapsulate both the sheer human endeavour and resourcefulness of those at the bottom of India’s society and the dysfunctional nature of an economy that would rely on them.

Jharkhand today graphically illustrates the huge disparity between Modi’s growth agenda for India, and the stark reality of the social and environment conditions across this country of more than a billion people. If the prime minister’s modernization project — and the role of coal in it — moves forward, India would seem set to create a mounting tide of victims — from the cycle-wallahs and the refugees of Jharia’s coal fires, to the country’s air quality, to the planet’s climate.

New Burmese president installed amid tensions with the military

John Roberts

Burma’s (Myanmar) parliament, the Assembly of the Union, on Tuesday formally elected the county’s new president and two vice-presidents, who will take up office and lead the new government from April 1.

The new president is Htin Kyaw, a close confidante of National League for Democracy (NLD) leader Aung San Suu Kyi. He will replace Thein Sein, a former general who led the military-backed United Solidarity and Development Party (USDP) government that was routed in last November’s national elections.

Suu Kyi, who has said she will run the government through her presidential nominee, was excluded from the presidency by the country’s constitution because her two children have foreign citizenship. The NLD leader will choose the cabinet ministers, with the exception of the three important posts reserved for the military—defence, border security and the interior.

Htin Kyaw has two key qualifications for the presidency. He is loyal to Suu Kyi and will not unduly upset the military. He has known Suu Kyi from childhood and has longstanding family connections with the NLD. He is not a well-known political figure. Until his selection as the NLD’s presidential candidate, he had not made a public political speech.

A trained economist, Htin Kyaw worked in the junta’s foreign economic relations department, where he served as deputy director before resigning in 1992 to assist Suu Kyi. He played no significant role in the mass protest and strike movement in 1988 that shook the foundations of military rule.

Right up until the last moment, Suu Kyi had been seeking to cut a deal with the military that would allow her to assume the presidency. Following last year’s election, she held three closed-door meetings with military chief Min Aung Hlaing and offered additional cabinet posts to the military, in return for a constitutional fix to remove or temporarily suspend the clause excluding her from the presidency.

Last December, Suu Kyi met with the former military dictator Than Shwe and assured him that she would not focus on the past—that is, she would not pursue the military for its crimes including the brutal suppression of the 1988 uprising. In turn, Than Shwe endorsed her as “Burma’s future leader.”

The military’s stance has since hardened. On March 9, a senior NLD upper house member told the media: “[Suu Kyi] believed that she would be able to work with the military, but after the last meeting with the commander-in-chief [Hlaing], she realised that she cannot negotiate with them.”

The differences between the NLD and the generals are routinely presented in the international media as a conflict between “democracy” and the autocratic military. In reality, the two sides represent competing factions of the country’s ruling elite, each intent on defending their class interests.

Suu Kyi and the NLD speak for layers of the Burmese bourgeoisie whose interests were marginalised by the military’s domination of the economy and advocated a turn to the US and the opening up of the country to Western investment.

As the Obama administration implemented its confrontational “pivot to Asia” against China, the junta tilted its foreign policy away from Beijing and toward Washington. It released Suu Kyi from house arrest in 2011, allowed carefully-managed elections and initiated a raft of pro-market reforms to encourage foreign investment.

Suu Kyi collaborated with the military, serving as its de facto ambassador to present Burma as a “developing democracy” that is open for business. Nevertheless, sharp differences remain. The military is prepared to allow the NLD to formally assume power but is determined to keep it on a tight leash.

The military not only has significant economic interests of its own. It is fearful that the NLD will not be able to contain the popular opposition that will inevitably emerge to the government’s pro-market agenda. The military’s control over the defence and interior ministries ensures that it can intervene directly to suppress any social unrest.

Significantly, the interior ministry has sweeping powers over government at all levels. Its General Administration Department handles coordination and communication for all ministries and controls appointments to all regional and state-level government bodies, as well as for thousands of towns and villages.

The manner in which the president and vice-presidents were chosen also ensured that the army would have its nominee in a key political post. The military’s choice of hardliner Myint Swe, who was elected vice-president on Tuesday, is particularly ominous. He headed Than Shwe’s feared military intelligence and oversaw the violent suppression of the 2007 “Saffron” protests of Buddhist monks. He is still subject to US sanctions.

The NLD’s choice of Henry Van Thio for the second vice-presidential post indicates that Suu Kyi and her party will continue to make concessions to the military. Van Thio is an ex-army major with close ties to one of the junta’s business cronies. As an ethnic Chin, he was also installed to make a pitch for support from the parliamentary representatives of the country’s various ethnic minorities.

Tensions between the NLD and military will continue. The army has a long list of demands, including that its officers be appointed as chief ministers in Arakan, Shan and Kachin states, as well as the city of Rangoon, the centre of the nation’s economic activity.

The generals are also acutely sensitive to any exposure of their corrupt practices and many other crimes. Last month the entire military lower house delegation stood up in protest at allegations by NLD members that the Thein Sein administration had mismanaged contracts.

The gesture was an obvious threat to pull the plug on the limited democratic reforms if the NLD did not drop the issue. One NLD member told the media: “We were scared when the military stood up … my heart just dropped … The situation was very tense.”

Glasgow City Council workers strike against cuts and poverty wages

Steve James & Minnie Watson

Two groups of Glasgow City Council (GCC) workers struck against poverty-level wages this week. The 130 primary school and nursery janitors are holding a three-day strike in pursuit of payments for heavy lifting and removal of dangerous materials from playgrounds. Since January, workers have been refusing to remove the materials.

Eighteen CCTV operators are also holding a 48-hour strike seeking allowances for their 24/7 monitoring shifts. Both groups of workers are employed by GCC’s so- called arms’-length agencies (ALEOs).

The janitors’ action follows years during which these workers have been deprived by Cordia—the ALEO set up by the City Council to run support and caring services in the city—of payments made to other groups of workers employed directly by GCC. The Working Context and Demands payment is worth between £500 and £1,000 annually. Similarly, the shift allowances being demanded by the CCTV operators from Community Safety Glasgow (CSG), another ALEO, are paid to other groups of CSG and GCC workers. Shift allowances can amount to £7,500 annually.

The janitors’ and CCTV workers’ stance expresses the huge tensions building up between the Scottish government, local authorities and their trade union accomplices on the one hand, and hundreds of thousands of local authority workers and the millions dependent on council services on the other.

Another round of spending cuts imposed by the Scottish National Party (SNP) administration on behalf of Tory central government and passed on by both SNP and Labour local authorities is likely to cost as many as 15,000 job losses. They will result in incalculable social misery in towns and cities where services have already suffered years of cuts and restrictions. Over the next two years, up to £1 billion worth of cuts are to be imposed across Scotland’s 32 local authorities, on top of cuts that have slashed 42,000 local authority jobs since 2008.

Glasgow alone intends to cut £133 million from spending through 1,500 job losses, and restrictions to overtime payments, holiday entitlement, and increased demands for “flexibility”. GCC’s financial crisis was further exposed with the publication by the Evening Times of a leaked e-mail earlier this month in which GCC “suggests” that Glasgow charities, which run a host of essential services, could be asked to repay money paid to them by the city’s Integrated Grant Fund.

Scotland’s other 31 local authorities are also planning brutal cuts. Edinburgh City Council has announced around 2,000 job losses, and Falkirk Council is expected to announce in excess of 400 more. In Argyle and Bute, all the council’s secondary school librarians have been made redundant. Dundee City Council is shedding 200 council posts. Cuts will be made to children and family services, domestic waste recycling, roads and street lighting.

Moray Council was considering raising council tax by 18 per cent and ignoring the SNP’s council tax freeze. It backed down after Scottish finance minister John Swinney warned them, and all councils, they would simply lose much of their government funding if they refused to comply. Moray has now set a budget and intends to raise the cost of school dinners and music tuition fees this year, and further cuts are being scheduled. Inverclyde Council delayed setting its budget for a month but in the end agreed to £6 million cuts and 50 job losses.

The trade unions have been a vital component in this sustained, year-on-year assault on council workers and service users. The main unions, Unison (which has 10,000 members in GCC alone), GMB, Unite, the EIS teachers union and builders union UCATT have opposed any struggle. The union executives are solely concerned with maintaining their close relations with local authority management and their Labour or SNP leadership.

Every struggle, which could not be entirely avoided, has been left isolated, with workers left to fight on alone, despite the identical threats and challenges faced by tens and hundreds of thousands of workers employed by the same organisations and in the same unions.

One expression of this is that Glasgow’s striking janitors picketed the City Chambers twice this week, but on different days from the CCTV workers, who are also Unison members.

Most of the city council’s workforce has not even been asked to vote for industrial action of any kind. As late as March 12, Unison’s Glasgow branch secretary announced only, with regard to the assault on workers’ holidays, “We’re now in the process of moving towards a strike ballot”. Unison will undoubtedly attempt to close down the janitors’ and CCTV workers’ disputes before risking any broader dispute.

The GMB union did hold a “consultative ballot” of 1,000 of its members in street cleaning, refuse and parks. Eighty percent of workers voted in a huge turnout, and of these, 95 percent backed industrial action. GMB official Benny Rankin conceded, “There has never been such a level of support for strike action in living memory”. Presented with a massive endorsement of industrial action, Rankin demanded GCC reverse its cuts or “we will move to a formal ballot for strike action”.

The reality is that neither Unison nor the GMB has the slightest intention of prosecuting a serious struggle in defence of its members. Rather, both are seeking a marginally altered funding package that can be sold to their members as a great victory.

Covering for the unions the pseudo-left led Defend Glasgow Services Campaign is calling for GCC to set a “balanced no-cuts budget”. In January, Unison Glasgow and its pseudo-left leaders and supporters called for councils, and indeed the Scottish government, to set budgets in defiance of central government guidelines. This, Unison claimed, “would allow time and space for the building of a national campaign to win the money required to fully fund jobs and services”.

A statement from the pseudo-left Trade Unionist and Socialist Coalition (TUSC) seeks to maintain the same illusions in Glasgow’s Labour Party administration and the Scottish government. “It’s long past time that so-called ‘anti-austerity’ politicians from Labour and the SNP stood up and stopped playing pass-the-parcel with Tory cuts”.

In the event, not a single council set a no-cuts budget.

Council workers should reject the bankrupt policies of the trade unions and their pseudo-left apologists. In opposition to them, they should establish independent workplace committees to take up a genuine campaign against the onslaught of cuts, and against the Scottish government and council leaders who are implementing them.

Such a struggle must be based on uniting workers and service users across local authorities throughout the UK and would seek the support and active involvement of the widest sections of the working class against the austerity policies of the government, Labour and the SNP.

Constitutional crisis in Poland continues

Clara Weiss

Poland's conservative-nationalist PiS (Law and Justice Party) government has refused to recognize the decision of the Constitutional Court rejecting the recent judicial reform as unconstitutional.

The EU’s Venice Commission has sided with the Constitutional Court, and US officials have also condemned the PiS government for its attack on the Constitutional Court. On Saturday, there were renewed opposition protests in Warsaw and other Polish cities, with tens of thousands of people taking part.

After its election victory in October, the PiS rapidly carried through a bloodless coup, bringing the intelligence agencies and public media under its control, and blocking the Constitutional Court. Jarosław Kaczyński's party is trying to arm itself against rising social tensions by building an authoritarian state, resorting to rapid militarization and threatening war against Russia.

The rightward shift of the Polish government has exacerbated the crisis in the EU and has escalated tensions with Germany in particular. For the first time in its history, the European Commission has imposed the so-called rule of law mechanism on Poland. It will give the Polish government recommendations for a change in some laws; if Warsaw refuses to comply, Poland could lose its voting and veto rights in the EU.

Now the Court has declared unconstitutional the 22 December 2015 legislative amendments, with which the PiS sought to regulate the operation of the Constitutional Court in summary proceedings. These prescribe that all meetings of the Court must be attended by at least 13 of the 15 judges, deal with all cases in chronological order, and decisions are reached by a two-thirds majority. The Constitutional Court justified its rejection of these changes on the basis they make its regular functioning impossible.

The PiS government has refused to either recognize or publish this ruling. A judgment of the Constitutional Court only becomes legal in Poland when it is published. The PiS argues that the Court’s decision was reached illegally, because it had not followed the 22 December guidelines it has declared illegal.

Shortly after the ruling of the Constitutional Court, the Venice Commission confirmed the EU’s attitude towards it. The assessment of the Venice Commission had been requested by the Polish Foreign Ministry after protests by the EU and especially Germany in December.

The Venice Commission concluded that the changes in the law made “effective” action by the Constitutional Court difficult, if not impossible, threatening “democracy” and “human rights.”

The PiS has already announced it will not recognize the Venice Commission's assessment, and several prominent officials said they would not tolerate “foreign interference” in Polish affairs.

Meanwhile, some US senators have expressed relatively mild criticism of the Polish government. Republican and Democratic senators have sent a letter to Prime Minister Beata Szydło expressing concern about the state of democracy and the rule of law. Szydło rejected the criticism as being an interference in Polish affairs.

The US government has kept noticeably quiet in recent months and expressed no official criticism of the PiS government, which places even more importance than its predecessors on an alliance with the US in the confrontation with Russia. Among others things, a permanent NATO troop presence in Poland is to be agreed at the NATO summit in Warsaw in July. Washington will not put this alliance in jeopardy at any cost.

At the same time, a letter by US senators, including John McCain, who is known for his anti-Russian positions, expresses concern that the political crisis in Poland is spiralling out of control and could undermine US strategy in Eastern Europe.

Both the EU and the US are concerned about the economic orientation of the PiS, which aims to limit the influence of foreign capital in the Polish economy in the interests of Polish small business.

On the other hand, the opposition movement, led by the Committee for the Defence of Democracy (KOD) and supported by the neo-liberal parties Civic Platform (PO) and Nowoczesna, speaks for sections of the bourgeoisie and the urban middle class, who profited from EU membership and the opening up of the country for international capital and who see their interests threatened by the policy of PiS.

Encouraged by the position taken by the EU in support of the Polish Constitutional Court and the intervention of some individual US representatives, the opposition in Poland held more protests in Warsaw and other cities on Saturday. The Warsaw protests, among the largest since the beginning of the so-called democracy movement, were attended by some 15,000 people according to the police. The opposition put the figure at 50,000.

As with previous demonstrations, the protest march consisted of a sea of Polish and EU flags. Some US flags were also to be seen. Members of KOD, which organized the protest, were seen selling Polish and EU flags on the fringes of the demonstration.

The demonstrators did not chant slogans, but made noise with vuvuzelas, daubed red and white, the colors of the Polish national flag. Posters mostly attacked President Andrzej Duda and PiS head Kaczyński. Many KOD badges repeated the slogan that had dominated the 1989 demonstrations: “We are the nation.” After protesters passed in front of the presidential palace, the demonstration gradually dissolved after a little over two hours.

It speaks volumes about the political and social orientation of the KOD movement that it holds up the EU and the US as guarantors of “democracy” and “human rights”, in a situation in which they are depriving millions of people of their homes through war and treating those fleeing worse than animals.

UK Budget: Austerity for workers pays for tax breaks for corporations and the rich

Robert Stevens

Conservative Chancellor George Osborne’s annual budget proposal, announced Wednesday in the House of Commons, consists of give-aways for big business and the super-rich and austerity measures on working people.

As well as billions of pounds in additional spending cuts, education provision is to be opened up to the private sector on an unprecedented scale—with all schools forced to become Academies. All primary and secondary schools in England will be “set free from local education bureaucracy” and must become academies by 2020 or have plans to do so by 2022, said Osborne.

The budget was announced under conditions of marked economic decline, with the economy now £18 billion smaller than projected by the Office for Budget Responsibility (OBR) just three months ago. GDP growth for this year has been revised down to 2 percent from 2.4 percent and will fall to 2.2 percent for 2017.

As a result of slower growth, lower tax receipts and declining real wages, it is estimated that the national debt will increase by £50 billion over the course of the parliament. The Financial Times editorialised Wednesday that Osborne was delivering his budget in an “atmosphere of fiscal claustrophobia.”

Osborne warned, “Financial markets are turbulent,” the “outlook for the global economy is weak” and it makes “for a dangerous cocktail of risks.” He was obliged to cite the warning of the International Monetary Fund this month that the global economy is “at a delicate juncture” and faces a growing “risk of economic derailment.”

While noting these dangers, Osborne proceeded to outline policies that will only lead to a further slump in the UK economy.

A massive decline in public spending and in the incomes of millions of working class people is to be imposed under conditions in which, as Osborne boasted, “Last autumn’s Spending Review” delivered “a reduction in government consumption that is judged by the OBR to be the most sustained undertaken in the last hundred years of British history—barring the periods of demobilisation after the first and second world wars.”

His budgets over the last five years had “reduced the share of national income taken by the state from the unsustainable 45 percent we inherited, to 40 percent today,” he gloated. “My spending plans in this Parliament will see it fall to 36.9 percent by the end of this decade.”

The budget was trailed with predictions that around £4 billion in cuts would be made to disability benefits, but Osborne announced larger cuts still. £1.2 billion is to be cut immediately from the 640,000 disabled recipients of Personal Independence Payments (PIP). This will rise to a total £4.4 billion cut from PIP by 2020. Many people receiving PIP, who need help with dressing themselves or using the toilet, face losing up to £150 per week. These cuts follow on from the £28.3 billion already taken from the disabled over the past five years.

The government will save a further £2 billion in public sector pension costs by raising planned public service pension contributions, in line with a lower discount rate, while not compensating departments for the additional costs they will face. This will hit all “unfunded” pension schemes in the public sector, including those for the National Health Service, teachers and civil servants.

In contrast, the richest are to be handed a £523-a-year tax cut, by raising the threshold for higher rate income tax by more than £2,500.

Even more wealth is to be funnelled to the rich with Osborne declaring, “Our policy is to lower taxes on business.”

Corporation Tax, currently set at 20 percent was set to fall to 18 percent for the financial year April 2020. Osborne announced, “Today I am going further. By April 2020 it will fall to 17 percent.” Corporation Tax will then have been reduced by 9 percent in the space of a decade, with Osborne stating, “Let the rest of the world catch up.”

Capital Gains Tax is being slashed from 28 percent to 20 percent, or from 18 percent to 10 for basic rate payers. This will only benefit those with substantial capital that has appreciated in value.

In response to demands from North Sea oil companies hit by a collapse in the price of crude, Petroleum Revenue Tax, which stood at 35 percent, is to be abolished. The Supplementary Charge—an added tax on the profits of oil companies—will be halved from 20 percent to 10 percent. In response, the share values of the oil conglomerates surged, with BP up 3.5 percent, Shell 3 percent, and the oil services business Wood Group 4 percent higher.

In his one token gesture, Osborne, in response to concern over obesity and widespread ill-health issues, announced that soft drinks companies would pay a levy on drinks with added sugar. But this will only begin in April 2018 and will have a negligible impact on the soft drinks companies, with the price passed on to the consumer.

Osborne attempted to portray the economy as hit by a temporary blip and presented a series of wildly optimist projections leading to a public finance surplus of £10 billion by 2020. What is certain is that any deficit reduction is premised on a continuation of the attacks on the living standards of workers, pensioners and young people. The OBR noted, “£3.5 billion of as-yet unidentified cuts” are to be “generated by an ‘efficiency review’ that will report in 2018.”

In his response, Labour leader Jeremy Corbyn described Osborne as a “chancellor who has produced a budget for hedge fund managers more than for small businesses.”

Osborne’s was “a budget of failure. He’s failed on the budget deficit, failed on debt, failed on investment, failed on productivity, failed on trade deficit, failed on the welfare cap, failed to tackle inequality in this country.” [emphasis added]

What is the implication of Corbyn including the “welfare cap” in Osborne’s list of failures? His criticism of the Tories for a failure to cut welfare spending was one echoed by Britain’s right-wing media, which insisted on no more retreats in reducing the living standards of millions.

His attack renders null and void the other pro-forma criticisms Corbyn made of the budget. In fact, Labour Shadow Chancellor John McDonnell had foreshadowed Osborne’s budget by making clear that Labour are ready to carry out an austerity programme in government.

McDonnell refused to commit to a penny in public spending under a future Labour government, stating his desire “to ensure that the Government’s debt is set on a sustainable path.” Labour “will commit to ensuring that, at the end of every Parliament, government debt as a proportion of trend GDP is lower than it was at the start,” he pledged. “Let me make it absolutely clear. I will be absolutely ruthless about how we manage our spending,” he told the BBC last week.

French government, trade unions rework reactionary labor reform

Anthony Torres

Faced with growing opposition among youth and workers to the reform of the Labor Code, Prime Minister Manuel Valls presented trade union and business confederations a redrafted version of Labor Minister Myriam El Khomri’s law, hoping to win their approval and support.

Valls insisted that he wanted to promote “social dialogue” between business and trade union groups. He said, “Much has been done on the issue of personal accounts, on workers’ rights, the great principles. There were problems, I admit.” He added, “there was a moment when we did not find the time, the right moment, to present it as we have done in the last few days. We needed to take fifteen extra days to listen and to hear.”

Valls’ presentation of a touched-up law is a cynical maneuver to lull to sleep workers and youth who are opposed to an entirely reactionary reform. The superficial modifications presented by Valls change nothing fundamental about the bill. The key element—it allows the trade union to negotiate contracts at the level of individual firms that violate the Labor Code—was never put in question at any step of the talks.

Fines for improper mass sackings, which the previous bill specified so as to allow companies to engage in improper sackings while calculating their costs in advance, are now to be fixed by an arbitrary government decree. They would be three to fifteen months’ salary, depending on workers’ seniority.

The government refused to change new criteria facilitating mass layoffs. The only modification is that judges will now be allowed to monitor the decisions of a transnational corporation in France, to ensure that it is not using accounting tricks to generate losses in its French operations. However, bitter experience teaches that workers cannot count on the courts to defend them. Judges have many times ruled in favor of mass sackings and, under the state of emergency, for prison terms against workers struggling to defend their jobs.

Finally, programs to assist youths not in employment or training are more cynical smoke and mirrors to try to obtain the student union bureaucracies’ support for the reform. Valls boasted that his “bill was welcomed by the second-largest student organisation,” the Federation of General Student Assocations (FAGE).

After visiting the prime minister at the Matignon palace, Laurent Berger, the national secretary of the French Democratic Labor Federation (CFDT), praised the reactionary reform as a “potential vehicle for progress for youth and workers.”

The Stalinist General Confederation of Labour (CGT) and Workers Force (FO) unions, and the National Union of French Students (UNEF), have called for continued protests.

These bureaucracies’ claims to oppose the reform are based on lies. Calls for protests by the CGT and UNEF are political maneuvers aiming to channel anger among workers and students behind the perspective of yet another renegotiation and slight modification of the reactionary bill with the Socialist Party (PS) government.

Since President François Hollande was elected in 2012, the CGT, the other union bureaucracies, and their political allies like the New Anti-capitalist Party have proven themselves to be the PS’ best allies. They stifled opposition in the working class to France’s most unpopular government since World War II, as it carried out mass sackings, austerity, and war measures.

Over the course of four years, the unions and their allies have not called a single significant national demonstration, as they had in past presidential terms, because they feared they would not be able to contain workers’ anger and might accidentally trigger an uncontrolled protest.

This same fear underlies the decision of Hollande and Valls to rework the labor reform, fearing that discredited unions and political parties could not control the broader movement of workers and students that could ensue.

During the March 9 demonstration in Lyon, students blockaded several high schools, and clashes broke out with police which, under the new state of emergency, blocked the demonstration’s path. At least two protesters were hospitalized after police fired rubber bullets and smashed open a protester’s skull with a police baton.

The central question facing workers and youth on these protests is the need to establish the political independence of the working class from the unions and pseudo-left organizations, and the urgency of building a political leadership for the working class.

As the WSWS indicated in its leaflet addressed to the March 9 demonstration, “All genuine opposition to the reactionary measures of the PS is welcome. It would however be a fatal error for this movement, which is still in its early stages, to limit itself to a national framework, to demanding revisions or even the withdrawal of the El Khomri law by the unions. Talks between these illegitimate bureaucracies and the PS, under the jackboot of the state of emergency and with the permanent threat of NATO military escalation against Russia in Syria and in Europe, will only produce new attacks on the workers. Above all, they will do nothing against the dangers of war and dictatorship that threaten workers in France and around the world.”

It added, “The struggle against the El Khomri law must be developed into a political struggle against the NATO powers’ war drive, and against the anti-democratic state of emergency decreed after the November 13 attacks. This struggle must be for socialism, based on the working class. The natural allies of the workers and youth in France in this struggle are the workers across Europe and the world.”

Refugees face death and despair on Greek-Macedonian border

Katerina Selin

Scenes like these in Europe are unknown since the end of World War II: thousands of people living in pools of mud and flooded tents, crying babies transported across rivers, entire families wading barefoot through water and mud, fighting their way through bushes and forests in an attempt to cross the Macedonian-Greek border.

The shocking pictures and videos currently transmitted from northern Greece to the whole world reveal the brutal nature of European refugee policy. The closure of the Balkan route denied tens of thousands of people refuge in central Europe. The plight of refugees is being exacerbated by representatives of the European Union in order to deliberately deter people.

The closure of the Greek-Macedonian border cost three refugees their lives on Sunday night. Two men and a woman from Afghanistan drowned in a river while trying to cross the border. The other 23 people in their group were taken to the Macedonian border town of Gevgelija and had to be treated for hypothermia.

On Monday, over 2,000 refugees from the border camp at Idomeni set off to cross into Macedonia at a spot without a border fence, close to the Greek village of Chamilo.

Leaflets were passed from hand to hand with instructions in Arabic on how to cross the Macedonian border. The flyer apparently encouraged people to quit the camp and head for the border. Who issued the leaflet remains unclear; according to Spiegel Online, it may have stemmed from Syrians who had successfully fled to Germany and shared their experiences via Facebook. Unknown “volunteers” have also been linked to the flyers.

Regardless of who was responsible for the leaflets, the reason for the flight to the border was the desperation of the refugees. A twenty-year-old Syrian from a group of refugees who crossed the border summed up the attitude of the refugees. He told Zeit Online: “I know that I might be arrested in Macedonia. But I have nothing to lose,” he said.

Residents in Chamilo watched in horror as families with small children and infants, the elderly, and the handicapped, poorly protected against rain and cold, walked past their houses until late at night. They helped them with blankets, water, food, and even a pram.

At a raging torrent behind Chamilo refugees and helpers erected a rope across a river and with luggage and children on their shoulders struggled through the water. A video shows a boy who tried to cross, without holding the rope: he was immediately swept away by the river’s current and had to be rescued.

At a second river on Macedonian territory, the Mala Reka, about 1,500 people struggled through bushes and managed to cross the border. There, they were immediately surrounded and arrested by Macedonian police and soldiers. Most were taken to a school and other buildings in the Macedonian border village of Moin.

Slowly, details about the refugees’ fate in Macedonia have come to light in the last two days. Police arrested about 60 journalists, photojournalists and helpers and dispatched them to a prison in Gevgelija, so that no witnesses could document their brutal anti-refugee policy. Before the arrested were released, they had to pay a fine of 250 euros for “illegal border crossing” and received a six-month travel ban.

EU leaders are well aware of what was in store for refugees trying to cross the Macedonian border. On March 1, police chiefs from Serbia, Croatia, Slovenia, Hungary and Austria met in Belgrade to discuss methods to deal with refugees.

Two days later Macedonia sent a 12-page list to neighbouring countries detailing its requests for armaments to protect its southern border.

Macedonia’s “shopping list” to deal with refugees included pepper spray, tasers, “special bombs”, grenade launchers, a crowd control dispenser, and armoured vehicles.

Macedonia has announced it will return all the refugees to Greece. According to Greek police, Macedonian security forces have already deported several hundred refugees in military vehicles on illegal forest trails. However, it is still unclear whether all the refugees have been returned to Greece.

Many refugees reported by the brutal treatment by the Macedonian police and military forces. “They yelled and beat us, they put us in military vehicles and returned us at 02.00 in the morning”, one Syrian told the Greek daily Kathimerini, after he arrived back in Idomeni.

Refugees who yesterday walked back to Idomeni told Greek state television ERT of beatings and ill-treatment. They were forced to wait in the rain for hours without food or water and then driven in military vehicles to the border, where they had to crawl through a hole in the fence back to the Greek side.

The aid organization “Save the Children” told the British Guardian that the Macedonian authorities left the shivering refugees in their wet clothes exposed to the elements, without any information for orientation. On their return to Idomeni, rain forced many to spend the night outdoors. “Some people collapsed on the roadside and needed medical assistance on the spot.”

About 400 refugees were unable to cross the border into Macedonia and stayed on the riverbank. The starving people, including many sick children, then trudged back on Tuesday to Idomeni.

After nearly three weeks, around 12,000 refugees wait under catastrophic conditions in the makeshift camp in Idomeni, which is sinking into the mud after days of rain. New tents have been erected, because most refugees prefer to remain in Idomeni rather then move into an official Greek camp. They fear their imminent deportation to Turkey and hope that the Balkan borders will be reopened after the European Union summit on Thursday.

The situation also remains critical at the Greek port of Piraeus, where nearly 4,000 refugees are located. Many are sick and weak. On Tuesday a child with hepatitis A was hospitalized; a few days ago a girl in Idomeni received the same diagnosis.

In Piraeus, many refugees refuse to be placed in other accommodation and are awaiting the results of the summit. The government is trying to convince refugee to move, stressing the allegedly “humanitarian” conditions in reception centers and camps. But according to ERT, refugees have already returned from these camps to Piraeus because of intolerable conditions there.

Mexican union leaders paid over $30 million for imposing cuts on oil workers

Neil Hardt

A March 14 report published in Mexico's La Jornada reveals staggering corruption and payouts between the state-owned oil company Pemex, the Federal Electricity Commission (CFE), and the oil workers and electricians unions.

According to the report, titled "Numerous perks for union leaders of Pemex-CFE," leaders of the National Oil Workers Union of the Mexican Republic (STPRM) and the National Union of Electrical Workers of the Mexican Republic (Suterm) received massive payouts as part of a quid pro quoagreement with the government and the company. In 2015, the trade unions agreed to contract modifications which enforced unprecedented pension and job cuts on Mexican oil workers.

Signed documents cited by La Jornada show that the leaders of the two unions, Carlos Romero Dechamps and Victor Fuentes del Villar, received $21 million USD and $11 million USD in payouts, respectively. The payments, which will be distributed amongst the leaders’ cronies, were disguised as resources for "travel allowance, spending, and celebration."

The payments reveal the key role played by the trade unions in orchestrating a historic transfer of wealth from the working class to the pockets of the Mexican bourgeoisie and their allies on Wall Street and in the multinational oil corporations.

The terms of the deal worked out in November 2015 by the trade unions, the government, and Pemex illuminate the character of the conspiracy against the Mexican working class. The retirement age will be raised from 55 to 60 for those workers with less than 15 years with the company while new hires will be forced to take a defined-contribution plan as opposed to the defined benefit plans that current workers have. In January, Pemex announced 10,533 jobs would be cut in 2016.

The Wall Street Journal salivated over the deal, calling it "the biggest change to the collective bargaining contract since Pemex was created in 1938."

The cuts will open up billions of dollars to be spent on speculation and profiteering. One anonymous senior Pemex official told the Journal that "the overhaul could cut pension liabilities by about 400 billion pesos ($24 billion), or around a quarter of the total liabilities."

The Mexican trade unions are not workers’ organizations, and their leadership lives extravagantly off the payoffs for their betrayals.

For example, the daughter of STPRM leader Romero Deschamps posted a series of photographs of herself traveling via private jet to many corners of the world. The luxurious photos of Paulina Romero Deschamps, known as the "Princess of the PRI" for her father's connections to the ruling Institutional Revolutionary Party (PRI), caused a scandal when they were released in 2013.

The opulent lifestyles of the trade union bureaucracies are funded not only by payoffs from the government and corporations, but also through stealing the wages of the workers themselves. According to political analyst Denise Dresser, Deschamps received $15.3 million in 2011 in oil worker dues money. Despite claiming to make just $1,900 per month in STPRM salary, Deschamps himself owns a $1.5 million mansion in Cancun (which he has described as a "cottage") and reportedly gave his son a $2 million Ferrari automobile as a present.

The conspiracy by the unions, the government, and Pemex against the working class is the culmination of decades of attacks on oil workers who have long been regarded as representing the high-water mark of working class living standards in Mexico.

The expropriation of the Mexican oil industry by President Lazaro Cardenas in March 1938 remains perhaps the most widely celebrated political act in post-revolutionary Mexican history. The expropriation itself was the product of a careful balancing act by Cardenas and broad sections of the Mexican bourgeoisie, who both sought to limit foreign exploitation of oil to create a basis for enriching the national bourgeoisie and to stem widespread socialist sentiment among the working class.

Founded in August 1935, the STPRM was immediately brought under the control of the corporatist Mexican Confederation of Workers (CTM) through the dealings of the infamous Mexican Stalinist Lombardo Toledano. A series of wildcat strikes in 1937 that the STPRM and the Stalinists were unable to contain frightened the Cardenas administration to such a degree that Cardenas declared that the strikes were “due on the part of the workers substantially to the lack of cohesion of the organizations which form the [STPRM].” Furthermore, Cardenas expressed the Mexican ruling class’s fear of socialism when he said that the government felt “anxiety [over] the deception which the workers may suffer at the hands of those who are within the ranks of the workers and who are serving antagonistic interests.”

In response to these concerns, Cardenas announced the expropriation of the oil industry in March 1938 after the foreign companies refused to abide by a ruling from the Mexican Supreme Court granting the right to collective bargaining under the STPRM. In the aftermath of the expropriation, American, English, and Dutch oil interests attempted to orchestrate an international boycott of Mexican oil. The move was greeted with widespread enthusiasm by Mexican workers and peasants, many of whom offered to donate chickens and livestock to pay off the debt Cardenas insisted be paid to the companies. In the aftermath of the expropriation, oil workers were in fact not granted the wage increases for which they had initially struck.

The massive poverty, widespread corruption, and violence that pervade Mexican society today are the product of the decades-long collusion of the Mexican bourgeoisie with imperialism, aided by the corporatist trade unions and their wealthy charro leadership. The product of this corrupt alliance is the drive toward the privatization of the oil industry through intensified attacks on Mexican oil workers.

Argentina sinks Chinese fishing vessel

Bill Van Auken

China’s Foreign Affairs Ministry has expressed “serious concern” and demanded a full explanation for the sinking of a Chinese fishing boat by an Argentine coast guard cutter in the south Atlantic on Monday.

All 32 members of the Chinese vessel’s crew were rescued after the attack, four of them by the Argentine gunboat that attacked them and the rest by other Chinese ships that were nearby. Argentine authorities took the captain of the Chinese ship into custody.

The Argentine Naval Prefecture issued a statement justifying the armed attack on the Chinese fishing boat, which it said was fishing in violation of Argentina’s 200-mile exclusive economic zone off the country’s coast.

The report claimed that the vessel failed to respond to repeated radio messages delivered in English and Spanish, as well as to visual and audio signals, instead turning off its lights and attempting to escape into international waters.

The chase continued for several hours before Argentine cannon fire tore through the Chinese boat’s hull, causing it to sink. The Argentine military sought to justify the attack by claiming that the Chinese vessel had at one point attempted to ram the coast guard ship.

Chinese Foreign Ministry spokesperson Lu Kang said on Tuesday that China’s ruling State Council had attached “high importance to this incident.” Upon its instructions, she added, the Foreign Ministry had expressed “serious concern” to the Argentine government and demanded that it “conduct a thorough investigation” of the attack on the Chinese vessel, ensure the safety and rights of its crew members and “take effective measures to avoid any repetition of such an incident.”

While the Argentine government issued no immediate statement in relation to the incident, the daily Clarin reported that there was “enormous anxiety in the Argentine Foreign Ministry and in the Presidency of the Nation over the transcendence that Beijing is giving to the matter.”

This “transcendence” is in large measure due to the coming to power last December of Argentina’s new right-wing president, Mauricio Macri. During his election campaign, Macri devoted some of his right-wing attacks agains his Peronist predecessor, Cristina Fernandez de Kirchner, to charging that extensive trade and credit deals with China were “lacking in transparency,” and even alleging darkly that there were “secret” agreements with Beijing.

After his election, he and his ministers took the line that trade with China was too important to let politics interfere.

China is the third largest investor in Argentina and its second largest trading partner, after neighboring Brazil. Chinese investments together with merger and acquisition operations in Argentina have risen to $8.3 billion in the last five years.

There have already been signs, however, that Macri intends to shift away from the close cooperation that Fernandez had forged with Beijing.

After Macri’s replacement of the military high command, the Argentine Defense Ministry announced last month that it is urgently seeking to obtain engine replacements and other resources to completely overhaul a fleet of A-4R Skyhawk fighters that it bought from the US in 1994. The announcement indicated that the Macri government is backing out of a deal to buy new Chinese fighters that was to be funded by loans backed by Argentine commodities.

Next week, US President Barack Obama is traveling to Argentina after his much publicized visit to Cuba. The second leg of the journey is seen by Washington in many ways to be as important as the first. It is aimed at capitalizing on the election of Macri and the broader crisis of the so-called left governments of Latin America, including those of Maduro in Venezuela, Morales in Bolivia, Rousseff in Brazil and Correa in Ecuador.

All of these capitalist governments were able to utilize a portion of the increased revenues from the commodity boom to fund limited social assistance programs, while adapting a more nationalist posture in relation to Washington, made possible by increased ties with China. With China’s economic deceleration and the slide of much of the region into recession, the continuation of these policies is becoming untenable.

In an interview with CNN’s Spanish language station, Obama this week hailed Macri’s coming to power as the advent of a “new era.” He charged that Fernandez’s policies “were always anti-American” and that her government had not “adapted to the global economy as effectively” as it could.

Macri’s “adaptation” has taken the form of mass layoffs of public employees, now reportedly totaling over 100,000, attacks on social programs and a move to rapidly pay off the so-called vulture funds, which bought up Argentina’s debt at bargain prices and then refused to settle along with other creditors, holding the country hostage for full face value. Among the principal beneficiaries will be US billionaire and prominent Republican Party contributor Paul Singer, who stands to gain a 369 percent return on his investment.

The Pentagon, meanwhile, views the political shift in Argentina through the prism of the so-called pivot to Asia, with senior military analysts warning that the drive toward military confrontation with China must be extended to repelling Beijing’s growing economic, political and military influence in Latin America.

No doubt within this context, the Argentine sinking of the Chinese fishing boat is being studied with great interest in Washington.