The Return of the Aging Crisis: a Diversion From Inequality

Dean Baker

Photo by Matt Bennett

Back in the 1990s, whining about the impending disaster from the retirement of baby boomer cohorts was all the rage. Private equity billionaire Peter Peterson’s polemics were big sellers, as very serious people struggled with how we could deal with this tidal wave of retirees. The basic story was that a rising ratio of retirees to workers would create a crushing burden for the younger people that were still in the labor force.

This argument went somewhat out of style over time. In part, the projection of exploding healthcare costs that drove the horror story turned out not to happen. Back in 2000, the long-term projections showed that healthcare would account for roughly one-third of total consumption spending by now. In fact, actual healthcare spending is less than 25.0 percent of total consumption. The difference between the 2000 projection and actual healthcare spending leaves about $1.5 trillion on the table (around $12k per family, each year) for us to spend on other things.

The second reason this demographic horror story went out of style was the slow recovery from the Great Recession. It took us over a decade to return to full employment following the collapse of the housing bubble. The problem for the economy in this decade was not that spending was too high, but rather that it was too low. (This is known as the “which way is up?” problem in economics.) If we had larger deficits during the last decade it would have provided a boost to growth and led to less unemployment.

Finally, the impending retirement of the baby boomers was no longer impending as they began to retire in the last decade. At the start of the decade the oldest baby boomers were already age 64. By 2020, the oldest baby boomers were age 74 and the youngest were already age 56. A substantial portion of the baby boom generation was already retired and the world had not ended.

The Return of the Demographic Crisis

But, as they say in Washington, no bad idea ever stays dead for long. In recent months the demographic crisis from retiring baby boomers seems to be everywhere. The major news outlets are filled with piece after piece telling us that we are running out of workers, at least when they are not telling us how the spread of robots and AI will create mass unemployment. (Yes, those claims are contradictory, but don’t tell any elite intellectual type.)

Anyhow, the basic story of the aging crisis is that workers will have to turn over a large portion of their paycheck to cover the costs of a growing population of retirees. This concern is supposed to lead us to cut Social Security and Medicare benefits and tell workers that they have to work later in life.

There are a couple of important points to be made at the start of any serious discussion. First, we have already raised the age at which people are eligible for full Social Security benefits. It had been 65 for people born before 1940. It has been gradually raised to 67 for people born after 1960. So, we have already taken account of people’s increased longevity in setting the parameters for Social Security.

The second point is that the gains in life expectancy have not been evenly shared. For people born in 1930 the gap in life expectancy, at age 50, between the top income quintile and the bottom income quintile for men was 5.0 years, and for women was 3.9 years. For the cohort born in 1960, the gap had increased to 12.7 years for men and 13.6 years for women. This means that almost all the gains in life expectancy over the last half century have been for those at the top of the income ladder. Those further down have seen little or no gains in life expectancy.

Next, it is important to have some idea of the dimensions of the aging “crisis.” We all know about the widely touted projected shortfalls in Social Security and Medicare. Let’s imagine that we made them up by raising the payroll tax. (That’s not the best way to deal with the problem, but this is just a hypothetical exercise.)

Suppose we raised the payroll tax by 4.0 percentage points tomorrow. Given current projections, this would be roughly enough to make the Social Security and Medicare trust funds solvent forever.

The graph below shows the current annual wage for a person getting the median wage, working full-time full year (50 weeks at 40 hours a week). It also shows what this worker would be getting if the median wage had kept pace with productivity growth, as it did in the long post-war boom from 1947 to 1973. And, it shows what this pay would have been if, in this scenario, we increased the payroll tax by 4.0 percentage points.[1]

Source: Economic Policy Institute, BEA, BLS, and author’s calculations.

Given the current median wage of just over $24 an hour, the full-year pay, net of payroll taxes (7.65 percent on the worker’s side) would be just under $46,600. By contrast, if their pay had kept pace with productivity growth over the last half-century, it would be over $79,700 net of payroll taxes.

If we said that it was necessary to raise the payroll tax by 4.0 percentage points (half on the employer and half on the employee) to deal with the cost of supporting an aging population, then the annual wage would fall to $76,500.[2] That would still be more than 70 percent above its current level.

The reality is that most workers stand to lose an order of magnitude more income due to upward redistribution than what they could conceivably risk from the changing demographics of the country. If we think that an aging population poses a risk to the living standards of younger workers, then upward redistribution is a disaster.

The Causes of Inequality

The hawkers of the demographic crisis story seem to want us to believe that inequality just happened and we just have to live with it. Of course, that is a lie. Inequality was the result of deliberate policy choices. We could have pursued different policies that would have not led to the rise in inequality we have seen over the last half century.

My book, Rigged, goes through the story in more detail, but I will quickly outline the basic picture. First, we have redistributed a massive amount of income upward with longer and stronger patent and copyright monopolies and related protections. Bill Gates would likely still be working for a living (actually, he could be collecting Social Security) if the government didn’t threaten to imprison people who made copies of Microsoft software without his permission.

It is common for economists to claim that technology was a major factor in upward redistribution. That is not true, it was our rules on technology that drove the upward redistribution. There are other, arguably more efficient, mechanisms for supporting innovation and creative work. These would likely not lead to as much inequality.

We also have pursued a narrow path of globalization where we quite deliberately put our manufacturing workers in direct competition with low-paid workers in the developing world. This had the predicted and actual effect of lowering the wages of manufacturing workers and non-college-educated workers more generally.

At the same time, we maintained or even increased the protections for highly educated professionals, like doctors and dentists. As a result, our doctors earn twice as much as doctors in other wealthy countries.

If we didn’t want to increase inequality, we could have pursued a course of globalization that focused foremost on reducing the barriers that protected our most highly paid workers. But these professionals, unlike manufacturing workers, have enough political power to ensure that trade deals will not be structured in ways that threaten their livelihood.

Our financial sector is a cesspool of waste and corruption. An efficient financial sector is a small financial sector. Instead of pursuing policies to promote efficiency, we have pursued policies that have encouraged bloat in this sector, which is the source of many of the biggest fortunes in the country.

When the market would have massively downsized the financial industry in the financial crisis, leaders of both political parties could not move quickly enough to rush to its rescue. There were no market fundamentalists when the great fortunes in the industry were in jeopardy.

We have also structured rules on corporate governance in ways that allow CEOs to rip off the companies they work for. The corporate directors, who are ostensibly charged with making sure CEOs and top management aren’t overpaid, for the most part, don’t even see this as part of their job description.

The bloated pay for CEOs warps the pay structure more generally. When a CEO can get $30 million and third-tier execs can get $2-$3 million, it creates a situation where even heads of charities and universities can command multi-million dollar paychecks.

High unemployment has also been a tool for lowering the pay of the typical worker. The only times where the pay of the median worker has outpaced inflation in the last half century have been when the unemployment rate was close to or below 4.0 percent.

The fact that anti-trust policy has been little used in the last four decades has likely also played a role in the recent shift from wages to profits. It will be interesting to see if the more aggressive policies pursued by the Biden administration have any effect in this area.

In short, we have made a series of policy decisions that have led to a massive upward redistribution of income in the last half-century. The impact of this upward redistribution on the income of young workers dwarfs the impact of demographics. Unfortunately, our news outlets seem more interested in highlighting the demographic issue than the causes of inequality.

There is one final point. We absolutely should be spending more money on daycare, healthcare for pregnant women and young children, early childhood education, and a variety of other areas that would benefit the young. However, there is no reason to believe that spending on the elderly is the obstacle preventing more spending in these areas.

US Fed pauses interest rate hikes amid rising bond yields

Nick Beams

The US Federal Reserve has paused its interest rate hikes for the second meeting in a row and sent out some mixed signals about whether it will lift rates at its last meeting for the year in December.

Federal Reserve Chairman Jerome Powell. [AP Photo/Tom Williams, Pool]

In response to questions at his press conference, though not in his prepared remarks, Fed chair Jerome Powell indicated that risks were evenly balanced. That was taken by some market commentators as an indication that, while not officially announcing it, the central bank’s hiking cycle had come to an end.

On the other hand, Powell left open the door for a further rate increase, saying that given the “uncertainties we face the Committee is proceeding carefully.”

On the issue of the labour market, the key issue for the Fed in its so-called fight against inflation, Powell said the labour market remained “tight” but supply and demand conditions continued to come into “better balance.”

Nominal wage growth had shown “some signs of easing” and job vacancies had declined but, although the jobs to workers ratio had narrowed, “labor demand still exceeds the supply of available workers.”

One of the aims of its policy aims since it started raising rates in March last year, lifting them to their highest level in 22 years, has been to increase that supply by trying to slow the economy and create unemployment if necessary.

A key factor in the decision to keep interest rates on hold appears to be the recent selloff in the bond market which has sent the yield on the benchmark 10-year US Treasury bond close to 5 percent on occasions—its highest level since before the global financial crisis of 2008.

It is considered that the rise in interest rates in the bond market has similar effects to an increase in the Fed’s rate, meaning it could pull back somewhat.

Powell indirectly pointed to these considerations in his remarks.

“Financial conditions have tightened significantly in recent months, driven by higher longer-term bond yields, among other factors. Because persistent changes in financial conditions can have implications for the path of monetary policy, we monitor financial developments closely. In light of the uncertainties and risks, and how far we have come, the Committee is proceeding carefully.”

No doubt Powell had in mind the experience of last March when the fall in bond prices and the rise in yields (the two move in opposite directions) led to three of the four largest bank failures in US history when Silicon Valley Bank, along with two others, collapsed and the major global bank Credit Suisse had to be taken over.

Confirmation of the serious nature of the March crisis came yesterday when the head of the Swiss National Bank Jordan Thomas said its intervention was “crucial” in avoiding a “financial crisis” worldwide.

Against considerable opposition, the Swiss National Bank threw away previous agreements on the liquidation of major banks, wiping out bondholders while giving payments to stockholders, contrary to common practice, in organising the bailout.

“The SNB’s willingness and ability to provide liquidity was crucial in managing the acute crisis at Credit Suisse and thus avoiding a financial crisis with serious economic consequences for Switzerland and the rest of the world,” Thomas told an event in Bern, Switzerland.

Of course, none of these experiences were mentioned by Powell in his remarks on the ramifications of bond market tightening—that would contradict the official mantra that the banking system is “sound and resilient”—but it would have been one of the factors in the Fed decision not to add to that tightening by lifting rates.

While third quarter GDP rose at an annual rate of 4.9 percent, largely on the back of a surge in consumer spending, there are signs that the underlying trend in the US economy is a slowdown.

 Powell said after a boost in the summer, activity in the housing sectors was “flattening out” and remained well below the levels of a year ago “largely reflecting higher mortgage rates” while higher rates “also appear to be weighing on business fixed investment.”

Evidence of a slowdown was contained in the latest purchasing managers’ index issued by the Institute for Supply Management. The index, which tracks factory activity, fell to 46.7 last month, a fall of 2.7 points from September. This was well below expectations of a reading of 49, with below 50 indicating a contraction. It is the 12th consecutive month the index has fallen.

The chairman of ISM’s business survey committee Timothy Fiore said of the six biggest manufacturing industries, only one—food, beverage and tobacco products—showed growth.

While the increase in bond yields meant the Fed could ease back on further hikes it is very much a two-edged sword.

The selloff on the bond market means that interest payments on government debt consume an ever-greater portion of its revenue. This is under conditions where there is increasing nervousness as to how much government debt financial markets can absorb. In other words, will there be a sufficient buyers for new bonds.

These concerns were reflected in another event yesterday—the announcement by the US Treasury of its plans to issue new bonds.

Normally this hardly rates a mention because the Treasury market is considered to be highly liquid, that is, even major moves have little effect. But this is no longer the case because, as a recent Fed report noted, liquidity in Treasury markets is “challenged” and so the announcement was carefully watched without causing any disturbance as took place in August.

As the Financial Times warned in a recent editorial, sharp shifts in financial markets pose risks “particularly when Treasury liquidity remains below historic norms.”

“Investors looking to lock in high yields may be reticent to buy if they think prices could fall further. The risk of sharp yield movements could also threaten institutions holding large bond losses and stoke distressed Treasury sales.”

It said the US had to exercise “fiscal prudence”—a call for spending cuts—and warned that high interest rates combined with “lax fiscal policy and political chaos” were a recipe for a vicious cycle of rising government yields. This was evidenced in Britain a year when the attempt by the short-lived Liz Truss government to fund tax cuts for the wealthy without spending cuts threw markets into chaos.

It warned that “if the US has its own Liz Truss moment, the damage will not be contained to its shores.”

The FT did not indicate where the spending axe should fall.

But the agenda of powerful sections of finance capital was laid out by billionaire investor Stanley Druckenmiller in comments made on the business channel CNBC yesterday.

The US government was “spending like drunken sailors” and entitlement programs that make up almost half of spending had to be cut, particular Social Security benefits for retirees. “I want to go after entitlements,” he said. “It’s where the money is. This generation has to take a cut.”

Right now, he continued, seniors were getting 100 cents on the dollar, and it was “not unreasonable” for that to be reduced.

But at the same time, articulating the program of war abroad and war against the working class at home, Druckenmiller said he was “actually happy” to see the government announcement of $106 billion of military support for Ukraine and Israel.

Death toll in Jabaliya refugee camp massacre soars to 195

Jordan Shilton

Palestinians try to pull a girl out of the rubble of a building that was destroyed by Israeli airstrikes in Jabaliya refugee camp, northern Gaza Strip, Wednesday, Nov. 1, 2023. [AP Photo/Abed Khaled]

One day after its brutal bombardment of the Jabalia refugee camp in Gaza, the Israeli regime intensified its onslaught on the Palestinians, including with a second strike on the camp. The official death toll among civilians from the more than three weeks of constant air strikes is likely to pass 9,000 today, as Secretary of State Antony Blinken prepares to make another trip to the region to reaffirm US imperialism’s unconditional support for the Israeli regime’s genocide.

The two strikes claimed at least 195 civilian lives, with over 120 still missing as of late Wednesday evening. According to Gaza’s Government Media Office, a further 777 people were wounded in the twin attacks on the enclave’s largest refugee camp.

Al-Jazeera reported that most of the victims were being treated at the Indonesian Hospital, which like almost all health facilities in Gaza now operates without fuel. Al-Shifa Hospital, the largest in Gaza, “has announced that in a few hours it will completely stop operating because of a shortage of fuel,” the broadcaster noted.

Responding to the indiscriminate slaughter of civilians, the UN Human Rights Office declared that the air strikes “are disproportionate attacks that could amount to war crimes” due to the “high number of civilian casualties and the scale of destruction.” Chris Gunness, the former spokesman for the UN agency for Palestinian refugees (UNRWA) told Al-Jazeera that Gaza is rapidly becoming “the world’s largest open-air death camp.”

Knowing full well that its war crimes enjoy the support of all the imperialist powers, the Israeli regime has increasingly given up any pretense of justifying them. In what amounted to a brazen provocation, the Israeli military said of Tuesday’s air bombardment of Jabaliya that it had targeted “tunnels underneath the buildings, which resulted in the collapse of the buildings on top,” according to Times of Israel.

Representatives of the imperialist powers issued typical anodyne statements following the massacre, prefaced as always with declarations of Israel’s “right” to “self-defence.” US President Joe Biden, in remarks that failed to mention the flattening of residential buildings in Jabaliya, stated, “Israel has a right to defend itself in a manner consistent with international humanitarian law.”

German Chancellor Olaf Scholz was no less fulsome in his backing for the Israeli regime, telling Israeli Prime Minister Benjamin Netanyahu in a Wednesday telephone call that he “renewed Germany’s unwavering solidarity with Israel” and “underlined the importance of protecting civilians and humanitarian supplies.”

A mere 61 aid trucks made it into Gaza Wednesday, less than a drop in the bucket for the 2.3 million residents. Israel continues to block all shipments of fuel from passing the Rafah crossing.

A statement from the French Foreign Ministry was one of the few to even mention the bombardment of the refugee camp. However, after stating that Paris was “deeply concerned” by the attack, it restricted itself to the bland declaration that “protection of civilian populations is an obligation of international law, which is binding on everyone.”

Behind such empty references to “international law,” the reality is that the imperialist powers have facilitated Israel’s genocide against the Palestinian people. The multibillion-dollar military aid packages Washington has provided Israel over the years has turned the country into a garrison state for US imperialist interests in the Middle East. Biden has just requested another $14 billion in military assistance to enable the Israeli regime to continue its slaughter. Biden, Scholz and French President Emmanuel Macron have all visited Israel to give Netanyahu their full backing since the beginning of the war. US Secretary of State Antony Blinken is scheduled to pay another visit to Israel Friday to underscore Washington’s support for the genocide.

The Israeli regime clearly felt emboldened by the reaction of its imperialist backers. Late Wednesday, the Palestine Health Ministry reported that a maternity ward at the Al-Helou International Hospital in Gaza City was “bombarded.“ Air strikes also occurred in the vicinity of Al-Quds Hospital, according to the Palestine Red Crescent.

Ground operations have also expanded, with Israeli Army spokesman Daniel Haggari claiming that Israeli forces have “broken through” Hamas defences in northern Gaza. Soldiers are reportedly approaching the outskirts of Gaza City. So far 16 Israeli soldiers have died in the intervention.

While fully endorsing Israel’s pummeling of Gaza and slaughtering of its civilian population, some US officials have sought to give the impression that more clarity is needed from Israel on what its plans are for Gaza after Hamas has been defeated. US National Security Council spokesman John Kirby, for example, answered a question about what would follow Hamas by saying, “We don’t have all the answers to that.”

A letter signed by US senators Bernie Sanders and Elizabeth Warren as part of the debate on the $14 billion in aid to Israel asserted, “Congress needs more information about Israel’s long-term plans and goals, as well as the United States government’s assessments of those prospects.”

The fact of the matter is that Israel has been more than explicit about its plans for Gaza, which consist in exterminating a significant section of the population and forcing the rest to flee to Egypt. Last month, Israel’s Defence Minister Yoav Gallant, who described Palestinians at the outset of the onslaught on Gaza as “human animals,” laid out three phases in the war. After eliminating Hamas’s military and governmental capabilities, Gallant vowed that Israel would remove any responsibility it has for Gaza by creating a new “security reality.” Plans to force Egypt to set up refugee camps in the Sinai Peninsula, where those fleeing Gaza could be housed, are under discussion.

On Wednesday, Galit Distel Atbaryan, a former minister in the Netanyahu government, explicitly called for the “erasure” of “all of Gaza from the face of the earth” in a post on X. “Gazan monsters” have the option of heading to Egypt or dying, she continued, while the occupied West Bank should experience “fire and smoke on the heads of Nazis.”

Zvi Succot of the ultra-nationalist Religious Zionist party was also nominated to head the Knesset (Israeli parliament) Defence subcommittee for Judea and Samaria, which is responsible for security in the West Bank. Succot, a far-right settler activist who has been arrested on several occasions, said on his appointment that he would aim to “expand the settlements as much as possible” and ensure “personal security” for the residents, i.e., continue the brutalization of Palestinians in the West Bank at the hands of settler thugs that has intensified dramatically since the war began.

World Bank warns of possible major oil price hike

Nick Beams

The World Bank has warned that oil prices could rise to as high as $157 per barrel, up from $90, because of the Israeli war on Gaza.

The warning is contained in the bank’s Commodities Outlook Report issued on Monday. Rising oil prices will not only lift energy and fuel costs but will increase food inflation, via the impact on fertiliser prices. This would worsen the situation for more than 700 million people, almost one-tenth of the world’s population, who the bank says are already malnourished.

The World Bank says oil prices could be pushed into “uncharted waters” by Israel’s war on Gaza. [AP Photo/Martin Meissner]

Under the bank’s baseline scenario, which it set out before the war, oil prices were predicted to fall to around $81 per barrel while overall commodity prices were projected to decline by 4.1 percent next year.

These forecasts have been thrown into disarray by the war on Gaza and the prospect of an even wider conflict, possibly an attack on Iran, which has been a long-held objective of the US, and which has come closer to realisation with the movement of naval and air forces into the Gulf.

The World Bank said the outlook for commodity prices would “darken quickly” were the conflict to escalate. It set out three possible scenarios.

Under a “small disruption,” such as took place with the war on Libya in 2011, the oil price would increase by 3 percent to 13 percent and reach a range of $93 to $102 per barrel.

In a “medium disruption,” equivalent to what occurred in the 2003 invasion of Iraq, prices would be driven up by 21 percent to 35 percent and oil would fetch between $109 and $121 per barrel.

In a “large disruption,” the global oil supply would contract by between 6 million to 8 million barrels a day. This would drive up oil prices by between 56 percent and 75 percent with the price ranging from $140 per barrel to as high as $157. The record price for crude is $147 per barrel which it reached in 2008 on the eve of the global financial crisis.

The World Bank forecast came in the wake of a recent note by the Bank of America which said the oil price could soar to as high as $250 a barrel.

Indermit Gill, the World Bank’s chief economist, noted that the conflict in the Middle East came on the heels of the biggest shock to commodity markets since the 1970s—the war in Ukraine.

“That had disruptive effects on the global economy that persist to this day.… If the conflict were to escalate, the global economy would face a dual shock for the first time in decades—not just from the war in Ukraine but also from the Middle East,” Gill said.

It is not just fuel and energy prices that are impacted.

“Higher oil prices, if sustained, inevitably mean higher food prices,” said Kose, the bank’s deputy chief economist.

He stated: “If a severe oil-price disruption materialises, it would push up food price inflation that has already been elevated in many developing countries. At the end of 2022, more than 700 million people—nearly a tenth of the global population—were undernourished. An escalation of the latest conflict would intensify food insecurity not only within the region but also across the world.”

Comparisons have been made with the oil shock of 1973 when prices quadrupled as a result of the Yom Kippur war. The percentage of oil supplied from the Middle East is now down to around 30 percent. But as Kose noted in an interview with the Financial Times, that was still a big share.

“When you think about oil prices, what happens in the Middle East does not stay in the Middle East,” he said. “It has huge global repercussions.”

Kose warned that an escalation of the conflict which drove a persistent increase in commodity prices would set off “another wave of inflation” and lead central bankers to further increase interest rates.

While price rises have been trending down over the past period, the last quarter saw a 5 percent increase in the World Bank commodity price index, mainly due to an 11 percent rise in oil prices. This more than offset the fall in price declines for 24 of the 43 commodities in the index.

The bank reported that before the conflict in the Middle East, commodity prices were already 45 percent above their 2015-2019 level in nominal terms and 25 percent higher when adjusted for inflation.

Since the beginning of the Israeli war energy prices have increase overall by 9 percent.

Despite the increase in stockpiles in Europe, natural gas prices were 82 percent above their 2015‒19 average. Fertiliser prices, which are linked to oil and form an important component of food prices, were 85 percent higher than 2015‒19 average levels.

As a recent UN report detailed, much of the elevation in fertiliser prices is due to trading and financial speculation by the giant agribusinesses and commodity traders that dominate the global food market.

Metal prices were forecast to go down, largely because of the slowdown in the world economy, much of it induced by the higher interest rates of the US Federal Reserve and other major central banks.

The World Bank noted that metal prices had edged down by 1 percent since the Middle East conflict began.

“However,” it continued, “gold prices—which usually move in tandem with geopolitical concerns—have increased by 8 percent. An escalation of the conflict would push metal prices up, mainly through indirect channels. Prolonged disruption to energy markets can raise production costs of energy-intensive metals such as aluminium and zinc.”

There could also be “much higher gold prices” as investors shifted to “safe-haven assets” because of heightened geo-political risks.

The initial reaction of central bankers to the prospect of a new inflation wave will be seen on Wednesday when the Fed announces its interest rate policy. At this stage it is expected that it will keep rates on hold as it has done since they were last raised in July following the fastest hiking cycle in four decades.

There is also the view that the selloff on the bond market, which has lifted market interest rates, makes further increases by the Fed unnecessary at this point. But no doubt the remarks and answers at Fed chair Jerome Powell’s press conference following its meeting will be closely followed to see if they provide any indication as to how the central bank will respond to the prospect of a new inflation surge.

Pakistan mounting campaign of state harassment and intimidation to expel 1.7 million Afghan refugees

Zayar

Tens of thousands of impoverished Afghan refugees—many of whom have lived in Pakistan for years, even decades—have fled to the country of their birth in recent weeks in order to escape detention and deportation.

With the full backing of Pakistan’s military, the country’s interim government has vowed to expel all 1.7 million “illegal” Afghan migrants starting November 1.

Even before the passing of the official deadline to “voluntarily” leave Pakistan, Afghans who sought refuge in Pakistan from the social catastrophe caused by decades of imperialist-fomented war and neocolonial occupation have been the target of a vicious campaign of state harassment and intimidation.

Afghan refugees aboard a truck heading to the Torkham, Pakistan, border to return home hours before the expiration of an Oct. 31, Pakistani government deadline for those who are in the country "illegally" to leave or face deportation. [AP Photo/Muhammad Sajjad]

In a statement issued Tuesday, Human Rights Watch (HRW) said the government was using “threats, abuse, and detention to coerce Afghan asylum seekers without legal status to return to Afghanistan or face deportation.” HRW researcher Fereshta Abbasi told Al-Jazeera, “Pakistan’s announced deadline for Afghans to return has led to detentions, beatings, and extortion, leaving thousands of Afghans in fear over their future.”

Fearing hefty government fines, landlords have evicted Afghans from their homes, and employers have dismissed them en masse. In Karachi, Pakistan’s largest city, police have carried out mass arrests of Afghan refugees.

Pakistani authorities have rejected appeals from the United Nations High Commissioner for Human Rights, international refugee aid organizations and Pakistan-based human rights groups for the mass deportation campaign to be dropped or at least delayed.

“After November 1, no compromise will be made over illegally staying immigrants,” Interior Minister Sarfraz Bugti told a news conference last week. To underscore this, he menacingly added, “Those leaving the country voluntarily would have lesser difficulties than those nabbed by the state.”

The government has set up deportation centres—in reality, mass internment camps—in all four provinces to “process” and detain “illegal” refugees prior to their expulsion.

With Pakistan facing a devastating economic crisis and its political establishment and state institutions, including the military, largely discredited in the eyes of the masses, Pakistan’s authorities see a vendetta against Afghan refugees as a means of diverting popular anger, while building up the apparatus of state repression.

Pakistan’s anti-immigrant witch-hunt is being mounted by a so-called caretaker government that assumed office in August and, according to the constitution, was supposed to hold power for only 90 days during which national and provincial assembly elections were to be held. However, at the behest of the military and with the support of much of the political establishment, the elections have been delayed until at least the end of January. In the interim, the caretaker government has been tasked with pushing through a raft of highly unpopular austerity measures dictated by the International Monetary Fund.

In victimizing refugees, Pakistan’s ruling elite is lifting a page from the playbook of the imperialist powers, who have responded to the global surge in refugees caused by their predatory wars and capitalist-driven economic collapse and environmental devastation with Fortress North America and Fortress Europe anti-immigrant policies.

This has not stopped Washington and the European Union powers from issuing hypocritical calls for Pakistan to provide sanctuary to those fleeing the repression of Afghanistan’s Taliban regime. “We strongly encourage Afghanistan’s neighbors, including Pakistan, to allow entry for Afghans seeking international protection,” the US State Department declared in an October 19 statement.

US imperialism and the ravaging of Afghanistan

US imperialism bears primary responsibility for the horrendous social and economic conditions that have driven millions of Afghans from their homes over the past four decades. In the late 1970s, Washington began its patronage of Islamist militants to first provoke a Soviet invasion and then weaken the Soviet-backed regime in Kabul. These forces included Osama Bin Laden’s al-Qaida. With Pakistan, then a longtime close US ally serving as the conduit for CIA weaponry into Afghanistan during the 1980s, Washington gave its full support to the brutal anti-working dictatorship of General Zia ul-Haq and his reactionary project to “Islamize” Pakistan.

Following the Soviet withdrawal from Afghanistan, a bloody civil war ensued and the Islamist Taliban ultimately seized power. After September 11, the Bush administration exploited Bin Laden’s presence in Afghanistan to legitimize the brutal invasion and neocolonial occupation of the geostrategically significant country—an occupation which lasted over two decades and claimed hundreds of thousands of lives. Since the US-led war was launched, 5.9 million Afghans have fled the country or been internally displaced, according to the Cost of War project by Brown University’s Watson Institute.

After the ignominious departure of US and coalition troops in 2021 in the face of Taliban resistance and popular opposition to the corrupt neo-colonial regime in Kabul, Washington took revenge on the Afghan people by plunging the country into an economic catastrophe. In addition to sanctions against the Taliban-led regime, the US government illegally seized $7 billion in Afghan Central Bank assets held by the New York Federal Reserve.

More than 60 percent of the Afghan population presently live on less than $1 per day, while a staggering 97 percent have fallen below the poverty line. Wide swaths of the population have been mentally traumatized and thousands physically maimed by the reign of terror experienced by impoverished Afghans at the hands of their US-NATO occupiers. A February 2023 World Food Program report found 4 million people are acutely malnourished, including 3.2 million children under the age of five. Nearly 20 million people, or half of the population, were projected to be acutely food-insecure by March 2023, with 6 million of them in the emergency stage.

Pakistan’s impoverished Afghan refugee population

The wars and upheavals of the last four decades have resulted in repeated waves of Afghans seeking refuge in Pakistan. According to the UN, more than half a million Afghans crossed over into Pakistan after the Taliban came to power in Kabul in August 2021.

The refugee flows have served to further cement ties between the Pashtun-speaking regions of the two countries. Historically, the Afghan-Pakistan border has meant little to the Pashtun tribes who live on both sides. It was established in 1893 as the result of the machinations of British India’s colonial rulers, and Afghan governments have long argued the so-called Durand line was meant only to indicate spheres of influence, not state boundaries. This has long been a serious bone of contention between Islamabad and Kabul, resulting in armed clashes both under the US-backed regime and the current Taliban-led one.

According to UN High Commissioner of Refugees, about half of the Afghan refugees live in Khyber Pakhtunkhwa, formerly known as the North-West Frontier Province. In 2018, the Federally Administered Tribal Areas (FATA), a semi-autonomous region predominantly populated by Pushtun tribes, were merged with Khyber Pakhtunkhwa. These tribes have fiercely resisted the dividing of their communities across the Afghan-Pakistan border.

Another 24 percent of refugees are living in by far Pakistan’s poorest province, Balochistan. Sharing the poverty of the vast majority of the Pakistani population, many of them are forced to live in mud huts or other makeshift shelters not suitable for living, with little or no educational or health facilities.

The Pakistan government’s announcement of forced deportations created panic and shock waves across the entire Afghan refugee community, including undocumented migrants and those living in Pakistan with documentation. The government has assured the 2.7 million Afghans who do have papers that they will be unaffected by its crackdown on “illegals.” However, even those whom the government concedes have legal status are highly apprehensive. This is principally because of the breadth and indiscriminate character of the chauvinist politics animating the state’s anti-Afghan campaign. A further concern is that roughly 1.4 million refugees have Proof of Registration (PoR) cards that expired on June 30 and which they have been unable to renew due to the incompetence and stalling of the authorities.

The Pakistan government has sought to justify its anti-immigrant crackdown as necessary to suppress and contain an intensifying wave of attacks by the Tehreek-e-Taliban Pakistan (TTP). Government officials have accused the Pakistan-based Islamic fundamentalist militia of receiving support among the refugees without providing a shred of evidence.

Since the Taliban’s return to power in Kabul, terrorist attacks by the TTP, an entirely separate organization from the Taliban despite their ideological connections, have intensified in Pakistan. Islamabad has accused the Taliban of allowing the TTP to operate from Afghanistan and has demanded its suppression.

Government ministers have incited anti-Afghan sentiments by blaming Afghans for recent terrorist attacks. On October 17, Interior Minister Sarfraz Bugti claimed “14 out of 24” suicide bombings this year were carried out by Afghan nationals. The Home Minister in Balochistan’s provincial government, Zubair Jamali, said, “They are involved in destabilising the country, and it won’t be tolerated.”

The TTP is the byproduct of the Pakistan military’s offensive against the anti-US occupation forces in the FATA during the US occupation of Afghanistan. In the 1980s, the region has been a base of operations for the CIA-funded Islamist militia, including Al Qaeda, fighting the Soviet-backed regime in Kabul.

In the aftermath of the September 11, 2001 attack, the Bush administration forced the US-backed Pakistan dictator General Pervez Musharraf to end his support for the Taliban regime in Afghanistan and send security forces into the FATA to establish control of the border. Musharraf used the bloody methods typical of the Pakistani ruling class. On his orders, the military launched indiscriminate air strikes and helicopter gunship attacks, devastating villages and farmlands, imposed collective punishments, and made widespread use of torture and disappearance.

This provoked increasing hostility and armed opposition. More than 2 million people have fled the FATA in a massive internal displacement of the Pashtuns across the country, producing a massive, ongoing humanitarian crisis.

White House in discussions with Israel on deploying US troops to Gaza

Andre Damon

Secretary of State Antony Blinken testifies at the Capitol in Washington on Tuesday, as demonstrators hold up red-colored hands in protest of U.S. complicity in Israel's genocide against the Palestinians. (AP Photo/J. Scott Applewhite)

On Tuesday, Bloomberg reported that the United States and Israeli governments are in active discussions regarding the deployment of US troops to Gaza to act as an occupying force after Israel’s planned crushing of the Palestinian resistance.

“The US and Israel are exploring options for the future of the Gaza Strip, including the possibility of a multinational force that may involve American troops,” Bloomberg reported.

The moves were “impelled by a sense of urgency to come up with a plan for the future of Gaza now that a ground invasion has begun,” Bloomberg stated.

Bloomberg’s report underscores the degree to which the United States is not merely a passive supporter, but an active participant in Israel’s genocide against the Palestinians.

The report gives details of a cryptic comment made by Secretary of State Antony Blinken before the Senate Appropriations Committee. He said, “We can’t have a reversion to the status quo with Hamas running Gaza.”

Blinken added, “We also can’t have—and the Israelis start with this proposition themselves—Israel running or controlling Gaza. Between those shoals are a variety of possible permutations that we’re looking at very closely now, as are other countries.”

As Blinken testified, multiple people sitting behind him held up their hands painted in red, symbolizing the bloody role of the United States government in facilitating Israel’s genocide against the Palestinians.

As Blinken was making these comments, news was filtering in about Israel’s airstrike on Jabalia, Gaza’s largest refugee camp, which killed and injured hundreds of people and prompted a wave of anger around the world.

There are growing indications, as yet unverified, that US troops are actively involved in the fighting in Gaza.

Salman al-Harfi, Palestine’s former ambassador to France, told Sputnik News on Monday that US military personnel said US troops were directly involved in the ground operation against Gaza.

“They not only support [Israel], but are also participating in the war against the Palestinian people,” al-Harfi told Sputnik. “The United States is sending military personnel to the area. They are involved in military operations on the ground in Gaza.”

Bloomberg’s report contradicts the public assertion by Vice President Kamala Harris Sunday that “we have absolutely no intention nor do we have any plans to send combat troops into Israel or Gaza, period.”

On Tuesday, the US announced that it would send 300 more troops to join the more than 40,000 that are already deployed throughout the Middle East.

The troops “are intended to support regional deterrence efforts and further bolster US force protection capabilities,” Air Force Brig. Gen. Pat Ryder said.

Since Hamas’s October 7 incursion into Israel, the United States has surged warships, troops and aircraft into the Middle East without precedent outside of wartime.

On Monday, the Pentagon confirmed that USS Bataan (LHD-5) and USS Carter Hall, two massive US amphibious assault ships, will stay in the Red Sea as part of the troop buildup in the Middle East.

The ships house the 26th Marine Expeditionary Unit, a 2,600-strong force of Marines. In addition to the Carter Hall, three guided missile destroyers are also in the Red Sea. One of these destroyers, USS Carney, is claimed by the US to have shot down multiple missiles and drones launched by Houthi rebels in Yemen on October 19.

The USS Gerald R. Ford and its associated carrier strike group is currently operating in the eastern Mediterranean, and is being joined by the USS Dwight D. Eisenhower, which entered the Mediterranean Sea on Monday.

On Thursday, the US attacked what it claimed were Iran-backed militia sites inside of Syria.

In his testimony on Capitol Hill on Tuesday, Blinken made clear the vital significance of the Middle East in the US’s efforts to subjugate Russia and China.

“For our adversaries, be they states or non-states, this is all one fight,” Blinken said. “If we start to peel off pieces of this package, they will see that, they will understand that we are playing whack-a-mole, while they cooperate increasingly.”

Blinken will travel to Israel Friday “for meetings with members of the Israeli government, and then will make other stops in the region,” the State Department said.

Blinken’s trip takes place as it is clear that the war is expanding in both scope and intensity. On Tuesday, Yemen’s Houthi militia claimed to have carried out a missile attack on Southern Israel, using a “large batch” of missiles and drones.

The massive US troop buildup in the Middle East is accompanied by an intensifying bombing campaign against the population of Gaza. On Tuesday, the New York Times reported that “at least a quarter of all buildings in northern Gaza” appear to be either damaged or destroyed, based on an analysis of satellite images by two university researchers.

They estimate that as many as 44,500 buildings throughout the Gaza Strip have been destroyed. The airstrikes have so far killed more than 8,000 people, according to Gaza health authorities.

Unlike the October 17 bombing of Al-Ahli Arab Hospital, which killed 500 people, the Israeli military publicly took responsibility for the Jabalia refugee camp bombing.

In an interview with CNN, Lt. Col. Richard Hecht admitted that the IDF knew there were civilians in the area it was bombing and proceeded regardless.

“But you know that there are a lot of refugees, a lot of innocent civilians, men, women and children in that refugee camp as well, right?” CNN moderator Wolf Blitzer asked.

“This is the tragedy of war, Wolf,” Hecht replied.

On Tuesday, the director of the UN’s Human Rights Office in New York, Craig Mokhiber, resigned in protest of Israel’s genocide in Gaza. “Once again, we are seeing a genocide unfolding before our eyes, and the Organization that we serve appears powerless to stop it,” he wrote in a letter to UN High Commissioner on Human Rights Volker Turk.

UN Children’s Fund (UNICEF), meanwhile reported that 3,450 children in Gaza had been killed since October 8.

“Our gravest fears about the reported numbers of children killed becoming dozens, then hundreds, and ultimately thousands were realised in just a fortnight,” James Elder, a spokesperson for UNICEF said Tuesday.

“The numbers are appalling; reportedly more than 3,450 children killed; staggeringly this rises significantly every day. ... Gaza has become a graveyard for thousands of children.”