Monopolisation of wealth by UK super-rich accelerates

Barry Mason

The Office for National Statistics (ONS) has released its latest survey of the wealth of private households in the UK. Known as the Wealth and Assets Survey, the latest report covers the period July 2012 to June 2014. According to the ONS, the survey is compiled “by gathering information on, among other things, levels of savings and debt, saving for retirement, (and) how wealth is distributed across households …”

Its main findings showed that the total wealth of private households in the UK, which includes wealth from private pensions, was over £11 trillion. However, the wealthiest 10 percent of households owned 45 percent of the wealth whilst the least wealthy 50 percent of households held only 9 percent of total aggregate household wealth.

The concentration of wealth is expressed in the survey findings that show the top 1 percent of wealthiest households have as much wealth as the poorest 57 percent combined. The poorest 1 percent of households has just 0.05 percent of total wealth.

The ONS report notes the disparity in the distribution of wealth: “The distribution of wealth is highly skewed towards the top—the wealth held by the richest 10 percent of households combined was just under £5 trillion. … Conversely the combined wealth of the bottom half of households … was less than £1 trillion. … The wealth held by the top 10 percent of households was … over 875 times greater than that of the least wealthy 10 percent of households.”

There are around 26 million households nationally, with the super-rich in just 260,000 households now monopolising most of the UK’s wealth.

On average, each household in the top 1 percent of wealthiest households holds wealth of around £24 million. For the top 10 percent of wealthiest households the figure is around £1 million, whilst for the poorest 10 percent the value of their assets was £12,600 or less.

The total measure of aggregate wealth covering the survey period shows an increase of 18 percent over the previous survey period of July 2010 to June 2012, with the median total wealth figure increasing by 4 percent to £225,100. However, the increase is skewed sharply towards the richest households. The wealth of the top 10 percent of wealthiest families increased by 21 percent, but for the least wealthy 50 percent of households the increase in their aggregate was a mere 7 percent.

The ONS figures note the regional disparities of household wealth, with the average figure for the north-east being £150,000, while for the south-east the figure is more than double at £342,000.

Duncan Exley, the director of the Equality Trust, which monitors the impact of inequality, told the Guardian: “When such a huge chunk of the country’s wealth is found in the hands of so few people, it is clear something has gone terribly wrong. Aside from the disproportionate power this provides the richest, we know this vast inequality also weakens our economy and damages our society.”

The Equality Trust commentary on the latest ONS figures published December 21, headlined “Richest 1,000 wealth increase could pay for Christmas for everyone”, highlighted the sheer scale level of inequality in the UK. It notes: “[I]t’s even more shocking when you look at the super-rich. The richest 1,000 people in the UK have more wealth than the poorest 40 percent and the richest 100 more than the poorest 30 percent. Last year the wealth of the richest 1,000 people increased by around £28 billion.

“Let’s imagine that this wealth was used more equitably. Perhaps unsurprisingly it turns out £28 billion goes quite a long way. In fact £21.5 billion would cover the total Christmas spend of all households in the UK, that’s all food, drink, cards and presents paid for, with a few billion left over. In other words, a single year’s increase in the wealth of just 1,000 people could essentially ‘pay for Christmas for everyone’.

“You don’t even have to look at the richest 1,000, the top 10 will suffice. They saw their wealth increase by £3.25 billion last year. That’s enough to pay for the festive food and drink for over 20 million households. It could also pay for all the presents given by nearly 5.5 billion households, or a greater necessity, December’s gas and electricity bill for every household in the UK.”

For many households their main measure of wealth came from their ability to buy a home. Currently around 65 percent of people own their own home, but this is down from 73 percent in 2007. Again there are regional differences, with many in London and the south-east priced out of the market as property prices soar, driven in many instances by speculators piling in, regarding property as a lucrative way to rapidly increase their wealth.

For the majority of people house prices have been outpacing earnings for the last 20 years. This has accelerated especially since the global financial crisis of 2008 and the squeeze on earnings for millions of workers.

A Resolution Foundation report published December 19 highlights the difficulties faced by first-time buyers. Titled “Dealing with the housing aspiration gap”, the report notes: “[B]uying a home appears an ever more distant dream for millions. … low to middle income households saving 5 percent of their disposable a year were able to accumulate the deposit required for an average first time buyer home over the course of around three years in the 1990s. Today that figure is 24 years.”

Citing a Bank of England survey the report notes: “It shows that just under half (46 percent) of the one third of families who don’t already own their own home believe they’ll never do so …”

The growing gap between a rich elite and the majority is acknowledged by the government’s own Social Mobility & Child Poverty Commission report published this month. It notes: “There is a growing social divide by income and by class … the income share of the top 10 percent has increased from 28 percent to 39 percent since 1979 and the income share of the top 1 percent has more than doubled from 6 percent to 13 percent over the same time period.”

Pointing out that the concentration of wealth exploded under both Labour and Tory governments, the report adds: “[T]he wealth share of the top 10 percent has increased from 59 percent to 66 percent since 1991 and the wealth share of the top 1 percent has increased from 19 percent to 23 percent. … At the very bottom of society there are more than 1 million children living a life of persistent poverty. They are excluded from sharing in the many opportunities that life in modern Britain affords.”

These reports and surveys all point to the fact that such extremes of wealth and income are an entrenched feature of British capitalism. Society is sharply polarised, with a fabulously wealthy elite at one end, and broad sections of the population, with many surviving on next to nothing, at the other.

America’s richest 400 households paid a 16.7 percent tax rate in 2012

Tom Eley

In 2012, the top 400 U.S. taxpayers—those who took home more than $100 million—paid an effective tax rate of under 16.7 percent. These 400 households collectively comprise 0.0001 percent of taxpayers, but accounted, by themselves, for roughly 1.5 percent of all income.

In 2013 George W. Bush-era tax cuts expired, increasing the capital gains tax upward from 15 percent to 23 percent, which drove the effective tax rate for the super-rich up to 22.9 percent—still far lower than the statutory marginal rate of 39.6 percent that is supposed to be paid on incomes of over $415,000.

Anticipating the change, which was the result of a deal worked out between Republicans and the White House early in the Obama administration in order to avoid the so-called “fiscal cliff,” the super-rich “sold assets before the deadline to avoid higher taxes, leading to a huge surge in income in late 2012,” notes the Wall Street Journal. In that bonanza year the average income of the top 400 taxpayers was $336 million—$70 million more than in 2013.

The effective tax rate for the super-rich is lower than the statutory marginal rate imposed on working class families. Single workers pay a tax rate of 25 percent, after payroll deductions, for income of over $36,000; for single workers who earn more than $88,000, the income tax rate rises to 39.6 percent

How is it that the super-rich pay a lower tax rate than many working class Americans? Put simply, it is because the rich don’t work. Tax rates on income generated in dividends and capital gains—profits gained by stock market performance and by flipping property such as securities and large real estate holdings—are far lower than they are on tax rates imposed on labor.

In 2013, the 400 richest individual taxpayers received, by themselves, 5.3 percent of the entire national income in dividends, and 11.2 percent of all income derived from capital sales. For 2012, the same group accounted for 8.34 percent of taxable dividends and 12.26 percent of capital gains. Had these profits been taxable at the rate of salary or wages, super-wealthy taxpayers would have seen their tax liability more than doubled.

The super-rich’s efforts to avoid taxes have created an industry in itself, a December 29 analysis in the New York Times points out. “[T]he very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes,” write authors Noam Scheiber and Patricia Cohen. “Some call it the ‘income defense industry,’ consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.”

Among the tax-dodge mechanisms used by the top 400, according to the Times, are “convoluted partnerships and high-end investment funds,” “opaque family trusts,” and “foreign shell corporations.” But the basic strategy is to convert “one type of income into another type that’s taxed at a lower rate.”

As one example, the Times cites hedge fund manager Daniel S. Loeb, who “has invested in a Bermuda-based reinsurer—an insurer to insurance companies—that turns around and invests the money in his hedge fund. That maneuver transforms his profits from short-term bets in the market, which the government taxes at roughly 40 percent, into long-term profits, known as capital gains, which are taxed at roughly half that rate. It has had the added advantage of letting Mr. Loeb defer taxes on this income indefinitely, allowing his wealth to compound and grow more quickly.”

There is also the tried-and-true tax shelter known as “philanthropy.” The top 400 taxpayers account for, by themselves, 6 percent of all tax deductions claimed for charitable donations.

The exploitation of the US tax system by the mega-wealthy is surpassed only by tax cheating by the firms they control. According to an October, 2015 report by the PIRG Education Fund and Citizens For Tax Justice, the vast majority of America’s Fortune 500 hid profits in offshore tax havens in 2014—especially the Cayman Islands and Bermuda. These companies, the report concludes, reported an accumulated $2.1 trillion in offshore income solely for tax avoidance purposes. Fortune 500 corporations likely have dodged $620 billion in federal income taxes on these offshore profits, the study concludes—a figure about 8 times greater than Obama’s proposed spending on education in the 2016 federal budget.

The claim that such profits are actually “earned” in these Caribbean island statelets is absurd on its face. US Fortune 500 profits in Bermuda and the Cayman Islands amount “to 1,643 percent and 1,600 percent respectively of each country’s entire GDP,” the report notes.

The biggest single tax dodger is tech giant Apple, which has avoided paying $59.2 billion in US taxes through stashing $181.1 billion offshore, much of it hidden in Ireland.

So effective are US corporations at dodging the federal statutory corporate rate of 35 percent, that their effective tax rate now stands at roughly 17 percent, according to data compiled by economist Gabriel Zucman in his recent book, The Hidden Wealth of Nations.

US corporations are leading the way in a global phenomenon of tax dodging. Zucman uses a simple method to demonstrate that there are trillions of dollars in hidden wealth circulating in the global economy. Mathematically, financial liabilities should be cancelled out by assets for a net zero, and vice versa. But Zucman found that reported liabilities, globally, are $6 trillion larger than reported assets. He concludes the disparity is owed largely to money hidden in tax havens.

The super-rich and their corporations achieve these ends through domination of the US political system. As recently as December 18, a year-end fiscal package was signed into law by President Obama that included another $383 billion in tax cuts for corporations and businesses. Meanwhile, in the coming decade, federal spending is expected to decline by $8 trillion—much of it owed to cuts in health care and social spending. However, these “savings” will be largely offset by… declining tax revenue, meaning that the federal deficit will still grow by $7.7 trillion, according to 2014 projections by the Senate Budget Committee.

Both parties are fully in the service of the super-rich. The Times notes that the heads of various hedge funds favor, alternatively, Republican and Democratic candidates. James Simon gives to Democrats. Robert Mercer gives to Republicans. Simon’s hedge fund, currently under investigation by the IRS, is managed by Mercer. George Soros gives millions to Democrats, and claims taxes should be raised on the wealthy, even as his $24.5 billion hedge fund exploits tax loopholes. He and his hedge fund manager Stanley Druckenmiller give hundreds of thousands to Republicans.

The current state of affairs is the outcome of a longer process. In 1961, the high-end marginal tax rate for the wealthiest Americans stood at 91 percent. The liberal administrations of Democrats John Kennedy and Lyndon Johnson, responding to the first signs that the post-World War II global economic system was failing, reduced the tax rate of the top income bracket to 75 percent, and also cut corporate taxes from their statutory rate of 50 percent.

The assumption was that the rich and corporations would redirect this cash into investment. Instead, the tax cuts set the stage for the mergers and acquisitions wave of the late 1960s, and accelerated the outflow from the US economy of dollars that found more profitable returns overseas, exacerbating the underlying crisis of the Breton Woods system, by which the dollar was convertible to gold at the fixed rate of $35 per ounce.

The shift away from commodity production and toward parasitic financial speculation, at a certain point, went from being a policy error to a policy goal. A milepost was passed in 1979 when Federal Reserve chief Paul Volcker, Democrat Jimmy Carter’s appointee, raised the Fed’s benchmark overnight bank lending rate past 20 percent, redirecting investment from basic industry to finance.

The finance industry—which makes nothing tangible and whose principal “service” is simply the movement of money—has doubled its share of the US economy in the past half century, and, over the past 30 years, it has grown at a rate six times as fast as the rest of the economy—decades that correspond to a dramatic polarization of wealth in the US. All of this has been facilitated by the tax policies implemented by presidents, senators and congressmen of both parties.

“Lawmakers kept encouraging financial innovation,” the Washington Post noted in a recent analysis. “They did that by… loosening restrictions on the kinds of financial activities that the titans of Wall Street could engage in.” “Financial innovation” is, of course, a euphemism for swindling.

According to economists Thomas Philippon and Ariel Reshef, until the early 1980s Wall Street bankers were paid no more than other private sector professionals. Their research shows that the average Wall Street salary has gone from just under $50,000 in 1981 to over $350,000 in 2012. Today there are about two times as many “financial professionals” in the top 1 percent of US income earners as there were in 1979, and about 1 in 5 members of the richest .1 percent of Americans “work” in finance.

This has not been a socially neutral process. The growth of “complex financial products has served primarily to boost income for the firms themselves” Philippon’s research shows.

According to another recent study carried out by economists at Harvard and the University of Chicago, every dollar doled out to Wall Street executives actually makes the US economy 60 cents worse off.

2016 will be a year of escalating class struggle

Jerry White

Class conflict will become an ever-more dominant feature of life in 2016 as the ruling classes in the US and around the world demand that workers pay for the global economic crisis and the cost of endless and expanding war.

Last year was marked by significant initial expressions of growing opposition among workers internationally. Among the most critical battles was the fight of autoworkers in the US, the center of world capitalism.

During the latter months of the year, the corporations and the United Auto Workers union were only able to overcome mass opposition to pro-company contracts at Fiat Chrysler (FCA), General Motors and Ford through a campaign of lies, intimidation and reports of vote-rigging. Even so, workers at FCA voted down a national contract backed by the UAW for the first time in 32 years.

The anger of auto workers reflected not only hostility to the new four-year labor agreements—which maintain the hated two-tier wage and benefit system and contain labor cost increases to below the rate of inflation—but deep discontent in the working class as a whole over growing social inequality, stagnating wages and unending attacks on health care and pension benefits.

The fight of US autoworkers was part of a broader renewal of the class struggle on an international scale. Last year saw the eruption of major strikes and protests in the advanced capitalist countries in Europe, Australia and Canada as well as the so-called emerging markets of China, Brazil, India and Turkey.

In the face of a major economic downturn, strikes and protests rose steadily in China’s garment, electronics, mining and construction industries, reaching a high of 301 incidents in November 2015, according to Hong Kong-basedChina Labour Bulletin. The majority of workers’ actions were over demands for back pay and benefit and pension obligations at companies that were closed or swallowed up in mergers.

Mass layoffs also provoked strikes by autoworkers in Brazil, and other walkouts hit the banking and state-owned petroleum industry, as the country faced a second consecutive year of economic contraction for the first time since the 1930s. General strikes erupted in Greece, India, Argentina, Uruguay and Burkina Faso last year.

In Germany, the year ended with strikes at warehouses operated by the US-owned online retailer Amazon, following walkouts in November by Lufthansa airline workers and a year of public-sector strikes by train drivers, postal workers and kindergarten and nursery school teachers. The strikes, which coincided with rising industrial action in France and the UK, were described as a threat to the long-standing “German model” of labor-management relations.

Euro zone economists polled by the Financial Times last week set out the agenda for the New Year with a call for a renewed push for so-called “structural reforms” of the labor market. This means scrapping remaining regulations governing wages and working conditions and reducing workers to the status of a cheap labor force.

In every country, workers are coming into conflict with the national-corporatist trade unions, which have worked to contain any manifestation of class struggle and prevent it from developing into a conflict with the capitalist system. In Greece and other countries, mass hostility to austerity and the dictates of the banks has thrust workers into a collision with pseudo-left parties such as Syriza.

Increasingly, the class struggle will break free from the constraints imposed by the reactionary unions and their political allies. This tendency found initial expression in the US auto workers struggle, where thousands of workers turned to the World Socialist Web Site and the WSWS Autoworker Newsletter to arm them with the truth and a strategy to fight the gang-up of the companies, the corporate-controlled media, the UAW and the Obama administration.

The development of the class struggle in the United States has international implications. The American ruling class, which is spearheading a global redivision of the world, has long had a free hand to attack the working class at home due to the collaboration of the trade unions. However, it will become increasingly apparent that the financial aristocracy on Wall Street does not have its “own house” in order.

The militancy of autoworkers and other sections of American workers—including the oil refinery workers who waged a months-long strike in the face of the sabotage of the United Steelworkers (USW)—is fueled by powerful economic and social impulses, which will only escalate in the New Year. This includes the ongoing impact of the 2008 financial meltdown and a supposed “economic recovery” that has benefited only the super-rich.

Nominal wages (not adjusted for inflation) of private-sector workers rose only between 2.0 and 2.5 percent in 2015 and every other year since the official recovery began in 2009. Real wages remained flat. While US workers have suffered through the longest period of wage stagnation since the Great Depression, nearly all of the income gains since 2009 have gone to the top one percent of the population.

Last year began with warnings by think tanks, the media and various business and political figures about the danger of a “wages push” by millions of US workers with contracts expiring in 2015-16. In addition to autoworkers, this includes workers in the telecom, steel, airlines, grocery and health care industries, as well as US Postal workers, teachers, state employees and other public-sector workers.

Working with the Obama administration, the AFL-CIO and other unions deliberately blocked any struggle, organizing only 11 strikes involving 1,000 or more workers last year. The 2015 strike figure was tied with 2014 for the second-lowest number on record since 1947.

Fearing an autoworkers-style rebellion by 30,000 workers at US Steel and ArcelorMittal, the new year begins with the USW deliberately isolating the nearly five-month lockout of Allegheny Technology workers in Pennsylvania and several other states. The USW has announced that it has reached an agreement with US Steel but has not released any details and is working behind the scenes to push through a contract as quickly as possible.

Meanwhile, Verizon telecom workers, Chicago teachers and more than half a million US Post Office workers continue on the job without contracts or with extended agreements.

While completely ignored by the mainstream media, the growing mood of opposition has found many expressions. Last month, 12,000 Southwest Airlines flight attendants voted by 87 percent to reject a contract brought back by the Transport Workers Union. Their old contract expired three years ago. American Airlines flight attendants voted down a contract twice before their union accepted mandatory arbitration, while the contract for United flight attendants expires on February 28.

Eight thousand pilots at Southwest voted their contract down by a two-to-one margin in November, while talks are resuming at Delta after 65 percent of pilots voted to reject a new three-year agreement. UPS pilots have authorized a strike, while pilots and mechanics at United are currently voting on deals.

Workers at all the major freight railroads have contracts expiring this year, as do Volvo truck workers and 75,000 State of New York employees.

These struggles cannot be taken forward within the framework of the pro-company labor syndicates that comprise the AFL-CIO and the official unions. Workers need new organizations of self-representation and struggle, including rank-and-file factory committees.

Above all, workers confront critical political issues as they enter a new period of struggle. As vital as determination and willingness to fight are, workers must have a thoroughly worked out political strategy to oppose the policies of war and austerity being pursued by the ruling classes and their political representatives in every country. In the US, this means the development of a political movement of the working class against the Obama administration, both big business parties and the capitalist system they defend.

The struggles of American workers must be consciously linked to the struggles of workers all over the world in a common fight for international socialism.

Middle East tensions escalate in wake of Saudi mass beheadings

Bill Van Auken

Tensions within the war-ravaged Middle East have escalated sharply in the wake of Saudi Arabia’s January 2 mass executions of 47 prisoners, including a prominent Shia cleric who had criticized the ruling monarchy and its suppression of the country’s Shia minority population.

Saudi Arabia cut all diplomatic ties with Iran on Sunday, using angry protests against the beheading of the Shia cleric, Sheikh Nimr al-Nimr, as the pretext. Demonstrators Sunday stormed the Saudi embassy in Tehran and firebombed a consular facility in the Iranian city of Mashhad. At least 50 of the protesters were arrested and no Saudi functionaries were injured.

On Monday, the Saudi monarchy followed up its severing of diplomatic links with the announcement that it is also banning all flights to and from Iran and also cutting trade ties.

The Saudi actions were followed Monday by Bahrain and Sudan severing diplomatic ties with Iran as well. Bahrain, which is host to the US Fifth Fleet, is a majority Shia country ruled by a dictatorial Sunni monarchy. Saudi troops and tanks played the decisive role in suppressing mass protests that swept the country in 2011.

For its part, Sudan, a former ally of Iran, switched allegiances last year after heavy Saudi investments in the Sudanese economy, including a reported deposit of up to $4 billion from the Saudis and their Gulf Cooperation Council into Sudan’s central bank.

Another Sunni gulf oil sheikdom, the United Arab Emirates, downgraded its diplomatic relations with Tehran, but stopped short of severing all ties with Iran, which is a major trading partner.

Iran’s Foreign Ministry condemned the Saudi regime for using the protests as a pretext to cut ties and ratchet up tensions. “Saudi Arabia sees not only its interests but also its existence in pursuing crises and confrontations and attempts to resolve its internal problems by exporting them to the outside,” ministry spokesman Hossein Jaber Ansari said Monday.

He insisted that Iran was committed to providing diplomatic security, adding, “Saudi Arabia, which thrives on tensions, has used this incident as an excuse to fuel the tensions.”

Evidence emerged Monday that, indeed, the mass executions and the subsequent breaking of relations were part of a well-planned Saudi provocation.

The British daily Independent made public the contents of a leaked Saudi government memo showing that the ruling monarchy “knew the mass execution of 47 people would spark an angry backlash and ordered its security services to be on full alert before going ahead.”

The memo, directed from the head of security services to police agencies across the desert kingdom, placed the regime’s extensive repressive apparatus on a high state of alert.

The British human rights group Reprieve, which first received the leaked memo, said it pointed to the “politically motivated” character of the mass beheadings.

“This letter shows the level of preparation the Saudi authorities went to ahead of Saturday, having predicted the outrage that would follow their politically motivated executions of protesters,” said Maya Foa, head of the death penalty team at Reprieve.

Mass protests have continued in the wake of the state killings. A crowd of several thousand gathered in Tehran again on Monday, while demonstrators in Iraq besieged the recently reopened Saudi embassy in Baghdad’s Green Zone and took to the streets of the predominantly Shia cities of Basra, Karbala and Najaf.

In a disturbing sign that the Saudi action is stoking sectarian strife, two Sunni mosques in the area of Hilla, 50 miles south of Baghdad, were rocked by bomb blasts. A muezzin was killed at one of the mosques. In a separate attack, the Sunni imam of a mosque in Alexandria in central Iraq was shot and killed by gunmen.

Meanwhile, the Saudi regime itself reported a deadly shooting incident in Sheikh Nimr’s hometown of Awamiya, in Saudi Arabia’s predominantly Shia Eastern Province, on Sunday night. While the regime claimed that its security forces had come under fire, the only victims reported were a civilian who was killed and a child who was wounded.

As the linchpin of repression and reaction in the Arab world, the Saudi monarchy has been the foremost instigator of sectarianism, deliberately exacerbating and exploiting tensions between Sunni and Shia as a means of dividing popular opposition within the country and isolating Iran, its principal regional rival.

Until now, the ruling monarchy has refrained from murdering leading figures within the Shia community—arresting and harassing them, suppressing demonstrations, but ultimately releasing them in an attempt to assuage anti-regime sentiments.

The beheading of Nimr, together with the 46 others, was clearly organized for political ends. He himself had been in prison since 2012, while the bulk of those whose heads were chopped off or were shot to death were Sunni accused of involvement in Al Qaeda attacks inside the kingdom. They had been jailed for upwards of a decade. Joining Nimr’s execution with theirs was meant to signal that Shia opposition to the monarchy’s absolute rule was tantamount to terrorism.

The political purposes of this bloody provocation are both foreign and domestic. It was staged barely three weeks before Syrian peace talks were set to begin in Geneva and less than two weeks before UN-brokered talks on a settlement of the bloody nine-month-old Saudi war in Yemen were due to resume.

The Saudi monarchy, which has been a principal financier and sponsor of the Al Qaeda-linked Sunni Islamist militias unleashed in the war for regime change in Syria, has no interest in ending the nearly five-year-old conflict short of toppling the government of President Bashar al-Assad, Iran’s principal Arab ally.

Nor does it want to end its war in Yemen under the present conditions, with the Houthis, a Shia-based insurgent movement, undefeated. The mass beheadings coincided directly with the Saudi announcement that a supposed ceasefire declared on December 15 had formally ended.

The war in Yemen has claimed nearly 6,000 lives since the Saudi military began launching indiscriminate air strikes last March. The US has aided the intervention with arms, intelligence and midair refueling of Saudi bombers, which have dropped American-made cluster bombs on civilian targets and struck at least 100 hospitals. While it is an increasingly costly debacle for the Saudi monarchy, to end the war without defeating the Houthis would be seen as a humiliating defeat.

Ultimately, the aim of the Saudi regime is to disrupt any rapprochement between Washington and Iran in the wake of the recent nuclear deal and, if possible, to drag US imperialism into a wider war against Iran itself.

Domestically, the fomenting of sectarianism and clashes with Iran serves as a means of diverting explosive social tensions away from the monarchy itself. The kingdom faces an increasingly intractable economic crisis driven by the collapse in oil prices for which its own policies bear major responsibility. It has already implemented cuts in gasoline subsidies and increases in fees for water and electricity in an attempt to confront its fiscal crisis. More drastic austerity measures, aimed at social subsidies used to quell popular unrest, are expected.

Within official Washington, the reaction to the mass beheadings and the judicial murder of Sheikh Nimr has been muted at best. There has been no direct condemnation of the grisly mass killings, and no senior official has so much as issued a statement.

Within the ruling political establishment, policy toward the Saudi monarchy, the number one arms market for the US and Washington’s closest Arab ally, is, like most basic foreign policy questions, an issue of conflict and divisions.

This was expressed Monday in editorials published by the Wall Street Journal and the Washington Post.

The Journal, expressing the views of the most right-wing layers within ruling circles, as well as the constituency of the military-industrial complex and finance capital, which have both reaped super profits off the Saudi monarchy, posed the issue not as a matter of Saudi crimes or even crisis, but rather of the supposed danger of Iran and Russia “toppling the House of Saud,” and the question of whether the Obama administration “would do anything to stop them.”

The Journal editorial chided the Obama administration for having “walked back” sanctions against Iran over recent ballistic missile tests. While acknowledging problems in Saudi support for the export of Wahhabism, the ideological underpinnings of Al Qaeda, ISIS and similar outfits, the Journal concluded: “But in a Middle East wracked by civil wars, political upheaval and Iranian imperialism, the Saudis are the best friend we have in the Arabian peninsula. The US should make clear to Iran and Russia that it will defend the Kingdom from Iranian attempts to destabilize or invade.”

The Post took a somewhat more concerned approach, recognizing that the execution of Nimr “was an act that appears bound—and maybe was intended—to further inflame conflict between Shiites and Sunnis across the Middle East.” It warns against the Saudi ruling family “sowing chaos in an already stricken region while undermining itself.”

However, it attributes Riyadh’s “reckless moves” to “Saudi perceptions that the United States is no longer willing or able to stop Iran’s drive for Middle Eastern hegemony, forcing Sunni regimes to act in their own defense.”

In the end both editorials point to the same supposed remedy for the destruction and bloodshed wrought by both US imperialism and its Saudi client state in the Middle East: the escalation of militarism and the preparation of new and even wider wars directed against both Iran and Russia.

Deepening social crisis in New Zealand

Jeremy Lin

The latest Child Poverty Monitor report, released on December 14 by New Zealand Children’s Commissioner Russell Wills, paints a grim picture of New Zealand society, with 305,000 children now living in poverty.

Using a poverty threshold based on 60 percent of median disposable household income after housing costs, the child poverty rate was 11 percent in 1986. The most recent data, from 2014, has child poverty at 29 percent, or nearly one in three New Zealand children. Previous measures have seen child poverty run consistently at 25 percent, following the 2008 financial crisis, with a spike in 2010 to 30 percent.

The report points out that of those children in poverty, 37 percent live in households with at least one adult in paid employment. For these families, simply getting a job is not a way out of poverty.

On December 15, Treasury released its half-year economic and fiscal update. While it purports to provide a positive long-term outlook, unemployment is forecast to increase to 6.5 percent next year. Almost invariably since 2008, Treasury forecasts have proven to be too optimistic. The economic “rebound” predicted by Treasury depends on a rosy scenario of stability in the global economy, especially China, and a recovery in dairy prices.

In September, Reserve Bank Governor Graeme Wheeler warned that a dramatic slowdown in China or a serious drought resulting from the current El Niño weather pattern could push New Zealand into recession. On December 10, he emphasised that “in the primary sector, there are risks that dairy prices remain weak for longer, and the current El Niño results in drought conditions and weaker output.” Dairy products currently account for more than 20 percent of the country’s exports. This year dairy prices fell to historically low levels and in December still remained lower than in any other year since 2009.

The slowdown in rebuilding after the 2010–2011 Christchurch earthquakes will exacerbate any economic downturn. Up to 14,000 construction jobs are expected to be lost in the South Island city during the coming period.

As elsewhere around the globe, the rich continue to increase their share of wealth, even under conditions of reduced economic growth. The National Business Review Rich List, released in July, revealed that the collective wealth of New Zealand’s richest 184 individuals and families increased by $3.8 billion 2014–2015 to an estimated $55 billion. This is the biggest proportional increase since the Rich List first appeared in 1986. Last year saw the founding of at least four elite social clubs for the young rich.

The recent book Wealth and New Zealand by journalist Max Rashbrooke illustrates the growing gap between rich and poor. The richest one percent of the country hold nearly a fifth of all the wealth (18.1 percent). The top 10 percent own 53.4 percent, while the poorest half of the country—about 1.7 million adults—have just 3.8 percent.

A relentless onslaught on working conditions, wages, social welfare and housing affordability over the past 25 years has resulted in a massive transfer of wealth from the working class to the wealthiest echelons of society. Rashbrooke notes that the average New Zealand worker earns $10,000 less today than if they had maintained the share of national income from the early 1990s.

During 2004–2010, with Labour in power for four of those years, almost all gains went to the upper 50 percent. This was largely a result of the uncontrolled property boom, with about half of wealth in NZ locked into housing. Interviewed on TV3 economist Shamubeel Eaqub said there was a “massive divide opening up in New Zealand between the landed gentry and the rest.” The “rest” is the more than 50 percent of the voting-age population who now live in rented properties (57 percent in Auckland).

Exorbitant house price inflation along with stagnant, increasingly insecure wages means there is a whole generation of New Zealanders trapped outside the property market. “That is going to spell financial trouble for them as New Zealand Super [superannuation] was designed to be just enough for people who own their own homes,” Eaqub said. A Salvation Army report, published December 1, warned that the number of pensioners who need an accommodation supplement to help pay their rent could triple to 100,000 by 2025.

For the wealthy, investing in rental property is a lucrative business, with few regulations on the quality of rental housing stock. A Unicef New Zealand press release on December 9 reported that 12 percent of children live in homes with serious cold, damp and mould problems. “Every year there are 40,000 hospitalisations linked to socio-economic status and much of this is due to poor quality housing and the inability to heat homes,” the report concludes.

An increasing number of people are unable to find any accommodation at all. The Citizens Advice Bureau reported in November that it received more than 3,000 emergency housing enquiries nationwide in the year to June, double what it received five years ago. “These are inquiries from families, pregnant women, and children living in cars or garages even after seeking help from the Ministry of Social Development and Housing New Zealand,” the report notes.

While the government touted its May budget as focusing on alleviating poverty, with an increase of some welfare payments above the rate of inflation, in reality, the budget continued to deepen the austerity measures that have been imposed on the working class since the 2008 financial crisis. Thousands of welfare beneficiaries have been removed from benefit lists as a result of the government’s stringent new “work test” regulations. A layer of young workers has been forced into low-wage, part-time employment on “zero hour” contracts—that is, with no guaranteed hours of work.

All the establishment parties are culpable for the deepening social disaster. The policies of market liberalisation that initiated the assault on the social position of working people were brought in by the 1984–89 Lange government. During its last term in office from 1999–2008, when it was propped up by the “left wing” Alliance and supported by the Greens, Labour continued the attacks on the living standards of working people. Its 2004 Working For Families package, which has been kept in place by National, subsidised employers by topping up the low wages of working families and pushing people to remain in the workforce, while discriminating against benefit-dependent children.

Labour has exploited the present social crisis to whip up hostility towards immigrants, particularly those from China, who it has scapegoated for soaring house prices. The party has formed a de facto alliance with the anti-Asian racist New Zealand First Party.

The end result of the sustained attack on the social position of the working class by successive National and Labour governments was evident in the increasing numbers of people this Christmas queuing at foodbanks and social welfare agencies for emergency support. Over Christmas week, more people than ever were lining up outside the Auckland City Mission at dawn every day, waiting for up to six hours for emergency food parcels and children’s gifts. The charity helped over 3,000 people during the week. City Mission head Diane Robertson told TV3 that what most alarmed her was that a third of the people seeking assistance had not been to a food bank before.

Germany: Poverty of welfare recipients increases

Dietmar Henning

The real value of already low welfare payments under Germany’s Hartz IV welfare benefits system has continued to fall year on year. In calculating the standard rates for 2016, the government has ignored both a 2014 Supreme Court judgment and its own laws.

With the new year, the so-called standard rate for single adults has been raised by €5 to €404 euros a month. The payment for children will be between €237-306 per month, three to four euros more than last year. However, these slight increases cannot hide the fact that “Hartz IV welfare recipients today have less to live on than when the Hartz IV system was introduced in early 2005”, according to a recent study by the German Trade Union Federation (DGB).

Introduced in 2005 by the Social Democratic Party-Green Party federal government under Gerhard Schröder (SPD) and Joschka Fischer (Green Party)—in collaboration with the trade unions—the Hartz IV welfare benefits are paid to adults who are unemployed for longer than one year, as well as their families.

So-called “supplementary support” is paid to workers who earn less than this guaranteed minimum income and to pensioners whose pensions fall beneath this level. In November 2015, six million people received Hartz IV benefits. Almost half of Hartz IV recipients of working age (15 to 64) have been receiving support for four years or more. Millions live for years in this government-mandated poverty.

The standard rate is supposed to cover current and one-off needs for food, clothing, personal care, household goods, electricity (not including heating) and for the needs of daily life, including participation in social and cultural activities.

The DGB has compared the development of the Hartz IV standard rates to the rise of general consumer prices, and especially to food prices. In calculating the standard rates, the government looks at the expenditure of the poorest fifth of households by income. But on average, these still have more money than Hartz IV recipients who often need to buy special food products and beverages with their money.

The amount allowed for food in the standard rate is a little more than one-third of the calculated expenditures of the poorest fifth of households (35.5 percent, or 143.42 euros, i.e. 4.78 euros per day). “While the standard rates have risen by 15.7 percent since 2005 to 2015, the price of food increased by 24.4 percent,” writes the DGB. The difference was smaller with consumer prices overall as higher-priced consumer goods (e.g. electrical items) have a dampening effect since they are purchased less frequently.

Hartz IV recipients are particularly affected by energy prices (household electricity), which they must pay themselves. "The household energy costs have increased by about 54 percent since 2005”. Hartz IV recipients have therefore suffered a high loss in their real purchasing power in the last decade.

Children are particularly affected. Nearly one in six children under 15 in Germany lived in a household dependent on Hartz IV benefits in 2015. In metropolitan areas or some parts of the former East Germany, the proportion of poor children is higher. In Berlin and Bremen, about every third child lives in families who receive Hartz IV benefits.

The children’s charity Deutsche Kinderhilfswerk had already criticized the increase in the standard rates for children this year as totally inadequate. “Two euros more for child benefit and a three euros increase for children in the Hartz IV rates are a mockery. Some three million children and adolescents [up to 18] in Germany affected by poverty are a disgrace for our country,” stressed Thomas Krüger, the president of Deutsche Kinderhilfswerk.

He also pointed to growing social inequality. “Due to the tax exemption for children, the monthly net tax relief for high earners is already much higher than child benefit.” Here, a gap of approximately 100 euros arises. “If we grant 2.94 euros daily for food and drink for a 5-year-old child under the Hartz IV payments and 19 cents for health care for a 13-year-old, this has nothing to do with a socio-cultural subsistence level,” said Krüger.

The pittance paid by the Hartz IV system has never secured the subsistence level in Germany which had been set relatively arbitrarily in 2005. The proviso was set to starve the unemployed, so that they would take on even the most poorly paid work. This not only aggravated the poverty of the unemployed, but also created a huge low-wage sector as a result. The minimum wage of €8.50 an hour (or €1,400 gross monthly) introduced in 2015 only eliminated some of the most blatant conditions of exploitation.

In 2010, the Supreme Court had declared the Hartz IV standard rates to be unconstitutional and called for a recalculation. The government re-calculated, and through various computational tricks arrived at rates that were not noticeably any higher.

In July 2014, the Supreme Court subsequently ruled that the standard rate would “still” secure the subsistence level. However, it warned that as far as household electricity costs were concerned, the legislature must make an adjustment of the standard rates for short-term price increases. The government has not responded to this to date.

In the current increase in the standard rates, the government has again interpreted its own laws to the detriment of those in need. The recalculation must be carried out every five years, in each case based on the data of current income and expenditure. In between, 70 percent of the annual adjustment is determined by the “price history of relevant goods” and 30 percent according to the development of net wage increases over the previous year.

The standard rates for the period 2011 to 2015 used data from 2008 onwards. At the beginning of September 2015, the Federal Statistical Office published the new income and expenditure statistics for 2013. According to the Social Security Code, the government should have re-calculated the standard rates based on this new data. That did not happen. Once again, only the average increase was implemented.

Student accommodation costs rocket in UK

Thomas Scripps

Half of Britain’s students are struggling to pay their rent, according to the Private Tennant Report published by the charity Shelter. Around 40 percent have been forced to borrow money beyond what their government-funded maintenance loan provides.

The average price of accommodation has soared in recent years. Student housing charity Unipol, for example, reported a rent rise of 25 percent in purpose-built student accommodation between 2010 and 2013. That is nearly double the rise in the rental sector as a whole in that period (13 percent).

The National Union of Students (NUS) noted that the three years from 2012 to 2015 also saw a 25 percent increase, taking the average rent for university housing to £123.96 per week. That is £5,244 a year: 95 percent of the maximum available student maintenance loan for 2014/15 of £5,555.

A larger loan is available to students studying in London, but prices are much higher compared to the rest of the country. According to a University of London survey in August, students in the capital are spending an average of £150 a week in rent, roughly £6,150 a year and 80 percent of the maximum loan for London students, £7,751.

Particularly harmful for students and their families on lower incomes is the eradication of low-cost accommodation. Since the academic year 2009/10, rents for budget rooms have increased by an average of 23 percent, according to Unipol. The most severe increases have come at London institutions. The London School of Economics (LSE), for example, saw its cheapest accommodation rise £1,263 over the past three years to £4,282 per year. Some universities now no longer even claim to offer low-cost accommodation.

Soaring rents are the result of both a broader housing crisis—driving rents and house prices to absurd levels, especially in London—and of recent investment trends in the student housing market specifically.

The Guardian reported in October that rents across the country had risen between 6.5 percent and 8.3 percent on average last year and are now hitting record-breaking levels. House prices have increased around 7 percent and the National Association of Estate Agents has predicted a further rise of 50 percent over the next decade. In such a market, where developers can expect to pay a premium for every square foot of residential property, expanding university accommodation is an expensive business. However, these costs are being passed on to students through exorbitant rents.

Private enterprises have latched on to the potentially lucrative student accommodation market. Roughly £5.7 billion has been invested in the UK student housing market this year, an increase of more than 300 percent over the £1.7 billion invested in 2014.

According to real estate advisers Savills, this has been driven by foreign investment, 80 percent of which came from North America. The two biggest deals were the Canada Pension Plan Investment Board’s $1.7 billion purchase of the Liberty Living Portfolio, with sites across the UK, and Greystar’s purchase of the Nido London Portfolio for $920 million. Speaking on the subject of the UK student housing market, experts at the RBS bank described it as a sector “bubbling with opportunity” (for investors). Property consultancy Jones Lang LaSalle labelled investment in this area as the “must have asset class” of 2015. Accommodation providers Pure were more ebullient in their appraisal, marketing the students in their halls as “Pure gold”.

Investors are responding to the profits available due to the increased enrolment of foreign students in British universities—particularly in the top 20 Russell Group universities—and the expansion of privately rented halls. The number of foreign students at Britain’s top universities doubled between the 2005/2006 and 2013/2014 academic years. These students tend to come from wealthy families who are able to afford the soaring cost of tuition for non-European Union residents and demand a high-class standard of living.

The Higher Education Statistics Agency reported that the number of residents living in private halls more than doubled between 2007 and 2014—from 46,000 to 102,000—a trend predicted to continue. The dramatic upswing has been fuelled by the inability of university-managed accommodation to keep pace with student numbers. The average rent paid in private halls in the capital, as found by a University of London survey, is £233 per week, £83 more than the average rent paid by all students in London.

Out of this developing market, major businesses are building a lucrative luxury student living sector. Blocks of rooms with any combination of flat screen TVs, en suite bathrooms, breakfast bars, private gyms, balconies and cinemas are being rented out at exorbitant rates. Studio flats near St. Pancras owned by one firm, Unite, cost £299 a week. Assam Place in East London is one of the most expensive, at up to £800 a week.

Outside London, in Staffordshire, luxury rooms were on sale at The Majestic Court for 75 percent more than the average room rate in the area. At a development in Exeter city centre, students can pay as much as £10,710 a year for a room. Rents are being forced up across the board as private investors work to monopolise swathes of potential accommodation, expecting a significant return on investment. This has a knock-on effect on university managed properties, unable to expand without significant expense and driven to charge higher rents.

Students are beginning to organise to fight for their basic social right to fairly priced, good quality accommodation. At University College London (UCL), residents collectively received £400,000 compensation (roughly £1,250 each), protesters at Strathclyde in Scotland received nearly £200,000 and SOAS students (London) between £110 and £450 each.

Forcing universities to hand over thousands, even hundreds of thousands of pounds worth of compensation is an achievement, but cannot resolve the fundamental cause of student grievances—the organisation of resources according to profit, not social need. If students are to alleviate rent concerns entirely, or to achieve even the 40 percent reduction in rates proposed by UCL campaigners, they must consciously oppose the capitalist class and all its representatives.

Over the last decade, the NUS have worked tirelessly to disorientate mass movements of students on issues like tuition fees, the Education Maintenance Allowance and violent policing. Their current campaign (Cut the Cost) against Conservative plans to abolish maintenance grants is based on petitioning local MPs to oppose the bill. These are the same MPs who are imposing vicious attacks on working people and young people, including students.

The Labour Party offers no alternative. It was Labour that introduced tuition fees and which, under previous leader Ed Miliband, proposed a cut in fees that would still leave them at £6,000 a year. Jeremy Corbyn was elected Labour leader with plans to abolish fees altogether and extend available grants, and received support from many young people for these policies. But as his record over war in Syria, Trident and austerity shows, such promises cannot be believed. Gordon Marsden, Labour’s shadow universities minister, has already felt obliged to state with regard to tuition fees that Corbyn’s promise “will not automatically become policy”.

CDC report: Worsening drug abuse epidemic across US

Douglas Lyons

A recent report by the Centers for Disease Control and Prevention (CDC) describes the worsening epidemic of drug abuse across the US, especially the use of opioids. With nearly 48,000 drug overdose deaths, 2014 has eclipsed all other recorded years as the most deadly. From 2013 to 2014, opioid overdose deaths increased by 14 percent, while overall drug overdose deaths increased by 6.5 percent.

In a public statement on issuing the report, CDC Director Tom Frieden said, “The increasing number of deaths from opioid overdose is alarming.” He added, “The opioid epidemic is devastating American families and communities. To curb these trends and save lives, we must help prevent addiction and provide support and treatment to those who suffer from opioid use disorders.”

The authors begin the report: “The United States is experiencing an epidemic of drug overdose (poisoning) deaths. Since 2000, the rate of deaths from drug overdoses has increased 137 percent, including a 200 percent increase in the rate of overdose deaths involving opioids (opioid pain relievers and heroin),” totaling almost half a million deaths.

Over half of all these overdoses resulted from drugs that are classified as opioids, including heroin. Most of the states with the highest rates and sharp increases of drug overdoses lie within the Rust Belt and the coal mining region of Appalachia—West Virginia (35.5 deaths per 100,000), New Mexico (27.3), New Hampshire (26.2), Kentucky (24.7) and Ohio (24.6). States that experienced a sharp increase in the rate of drug overdoses from 2013 to 2014 include: Alabama, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Mexico, North Dakota, Ohio, Pennsylvania and Virginia.

Overdose deaths have increased for both males and females, persons aged 25-44 years, and those 55 years and older, as well as for non-Hispanic whites and blacks.

The WSWS has reported previously on the overdose epidemic afflicting West Virginia, with Huntington infamously holding the title as the overdose capital of the state. West Virginia has the highest rate of unemployment and the lowest labor force participation rate in the US, and with the price and demand of coal plummeting, more layoffs will hit the region.

In Buffalo, New York, another rust belt city, opioid overdosing has likewise reached epidemic proportions.

The report states that there are “two distinct but interrelated trends [in the data]: a 15-year increase in overdose deaths involving prescription opioid pain relievers and a recent surge in illicit opioid overdose deaths, driven largely by heroin.”

Overdose deaths from synthetic opioids have almost doubled between 2013 and 2014, while natural and semisynthetic opioids, including the frequently prescribed opioid pain relievers oxycodone and hydrocodone, are still implicated in more overdose deaths than any other opioid-type drug.

The increase in synthetic opioid deaths, the report notes, is related to the increase in the accessibility of illicit fentanyl—a synthetic opioid mainly issued for sedation during medical procedures, which is 100 times stronger than morphine and 50 times stronger than heroin. The drug can also be counterfeited and sold as OxyContin or Percocet pills, and perniciously mixed with heroin. Philadelphia, Pennsylvania, Florida, Maryland, Maine and Ohio have seen a spike of illicit fentanyl seizures, along with paralleling overdose deaths.

Heroin overdose deaths have tripled in four years as more and more people begin using the drug nationwide, partially a result of opioid pain reliever misuse and dependence. “Past misuse of prescription opioids is the strongest risk factor for heroin initiation and use, specifically among persons who report past-year dependence or abuse,” the report notes.

As a result, those who become dependent on painkillers frequently turn to heroin because of its ease of availability, its inexpensive price, and high purity, which are all causes for the increase in heroin use and overdose.

At the end of the report, the authors present some palliatives to solve the epidemic, such as “efforts to improve safer prescribing of prescription opioids must be intensified … expanding access to and use of naloxone (a safe and effective antidote for all opioid-related overdoses) … increasing access to medication-assisted treatment, in combination with behavioral therapies … Efforts to ensure access to integrated prevention services,” and a collaboration of public health agencies, coroners, medical examiners and law enforcement to “improve detection of outbreaks of drug overdose deaths.”

But these measures offer no long-term solutions to the ongoing problem. In fact, while some of these measures have already been implemented, the overdose rate has increased. For instance, Pennsylvania had at least 800 people overdose on heroin in 2014, with expected numbers for 2015 to surpass the previous year. State and local governments, however, have tried to decrease deaths by allowing police departments to use the life-saving drug naloxone, which reverses the adverse effects of heroin. The drug has already saved the lives of 500 people.

The inherent problem rests with the lack of prospects for many people, turning to dependence on drugs to escape the social misery around them. The eradication of decent-paying jobs, quality education, and inequality contribute greatly to such a horrible epidemic. Magnifying the problem is the lack of quality health care and affordable rehabilitation clinics, along with the stigma the ruling class tends to associate with “junkies,” resulting in individuals failing to seek help when it is desperately needed.

As the New Year begins and the social devastation across America continues uninterruptedly, the CDC report is a stark indicator that increasing numbers of people, unable to find any progressive outlet within the confines of the current state of society, are becoming addicted to illegal and prescription drugs and suffering deadly consequences.

Freightliner announces nearly 1,000 layoffs at North Carolina plant

Jerry White

Commercial truck manufacturer Freightliner has told the United Auto Workers that it is laying 936 workers at its plant in Cleveland, North Carolina, reducing the workforce by a third. The last day of work will be Friday, according to a company statement cited by local television news station WSOC 9. The supposed “temporary adjustment” at the Cleveland plant will reduce hourly employment at the plant from 3,100 to 2,200.

The layoff notice follows the announcement by Volvo Trucks North America last month that it is cutting 734 jobs—one quarter of the workforce—at its New River Valley assembly plant in Dublin, Virginia. The layoffs were a shot across the bow of Volvo workers who have voted to approve a strike when their current five-year labor agreement expires on March 16.

Freightliner workers told WSOC 9 that the plant manager called a meeting to announce the job cuts just as the shift began on Monday. “It’s going to hurt a lot of people,” Tezia Purefoy, a mother of two who got a call from her husband after his shift ended, told the station. Her husband, who started working at Freightliner last year, will get full-time pay through March, but she said it will be hard to find jobs that pay that well in the county.

The factory is owned by Stuttgart, Germany-based Daimler AG, which produces Mercedes Benz luxury cars and is the world’s largest manufacturer of heavy-duty trucks. Daimler Truck North America (DTNA) produces trucks under the Freightliner and Western Star brands. DTNA also owns Thomas Built school busses and Detroit Diesel, an engine, transmission and axle manufacturer.

The Cleveland plant, which opened in 1989, is the company’s largest and most profitable facility. It also has truck facilities in Mt. Holly and Gastonia, North Carolina.

“DTNA is reducing output by one-third at the Cleveland Facility in anticipation of a softer North American truck market in 2016, which will be somewhat below the very strong market of 2015,” the company said in an announcement, adding, “DTNA has no further comment on the layoffs.”

The UAW will help the company impose its job cuts. At DTNA, its record of betrayal is appalling.

The UAW became the bargaining agent at the Cleveland plant in 2003 after reaching a so-called neutrality agreement with the company, which allowed the UAW to bypass a secret ballot vote by workers and to gain recognition after a majority of workers signed authorization cards. Unbeknownst to the workers, however, in 2000 the UAW had signed a secret deal with management pledging concessions in exchange for the neutrality agreement.

When negotiations for a new contract began in 2007, Freightliner announced plans to cut 1,200 jobs to press its demands for an expanded two-tier wage structure, cuts to retiree health care, and a pay freeze for the majority of workers. The bargaining committee—unaware of the sweetheart deal the UAW signed to gain recognition—acted on the near unanimous strike authorization by workers and called a walkout on April 2, 2007, the day after the threatened layoffs were to take place.

Within hours, UAW Region 8 Director Gary Casteel and other officials denounced the strike as illegal and threatened that anyone participating could be disciplined up to termination. The UAW forced workers back to their jobs, took over negotiations and push through the deal originally rejected by the elected bargaining committee. When workers voted down the contract, the UAW ordered a revote and then threatened and browbeat workers to secure ratification. Several bargaining committees members were fired with the tacit approval of the UAW, which then tried five local 3520 officials on the charge of “behavior unbecoming of a union member” for leading a strike unauthorized by the UAW International.

In 2013, the International Association of Machinists and several other unions betrayed a three-week strike of Daimler Truck workers in Portland, Oregon after workers rebelled against the company’s concession demands.

In May 2014, the UAW pushed through a four-year deal at the Freightliner’s plants in Cleveland, Mt. Holly and Gastonia, North Carolina, which included miniscule wage increases and allowed the DTNA to dump its future obligations to pay retiree health care benefits.

According to the industry web site Transport Topics, the contract included a 3 percent wage increase in the first and third years, with 3 percent lump-sum bonuses in the second and fourth years, and a $7,000 ratification bonus. As in the auto industry, the truck manufacturer funneled hundreds of millions of dollars into a newly established retiree health care trust fund, known as a Voluntary Employees’ Beneficiary Association or VEBA. Such funds, which put UAW in charge of the rationing of health care to current and future retirees, have been a source of lucrative income and investment opportunities for the businessmen who run the UAW.

Praising the deal, Martin Daum, DTNA’s CEO said in a statement at the time, “The ongoing close collaboration with the UAW has resulted in a contract that will help assure continued manufacturing excellence and market leadership.” Gary Casteel, director of UAW’s Region 8, hailed the new VEBA and returned the praise, saying, “The UAW is thankful to have this collaborative relationship” with DTNA.

In addition to Freightliner and Volvo, the UAW has also overseen the concessionary deals at Mack, Navistar International and Peterbilt truck. In February 2015, despite large profit and sales gains, the UAW pushed a new four-year deal past 1,500 Navistar (formerly International Harvester) workers at a truck assembly plant in Springfield, Ohio; an engine plant in Melrose Park, Illinois; and parts distribution centers in Atlanta, Dallas and York, Pennsylvania.

The deal, which included “lean manufacturing rule changes,” according to the industry analysts was praised by Norwood Jewell, UAW vice president in charge of the Heavy Truck Department, as “an example of how working men and women and companies can work together so that everyone wins.”

UAW International President Dennis Williams has sat on Navistar’s corporate board of directors since 2006. The company pays him $120,000 a year—in addition to his more than $200,000 salary and disbursements from the UAW—to impose its dictates.

“We benefited from the fact that Dennis Williams is on our board of directors,” company Navistar CEO Troy Clarke said after the ratification of the pro-company deal. “He was very supportive of us taking the time needed to negotiate the right agreement…”

Last June, with the sanction of the UAW, Navistar shut its Indianapolis, Indiana foundry and truck engine manufacturing facility, laying off the final 20 workers at the complex, which once employed 2,000 UAW members.

As the recent experience of the 140,000 Fiat Chrysler, General Motors and Ford workers demonstrates, any fight by truck workers will require a rebellion against the UAW, which is tool of corporate management and government that masquerades as a “union.” Workers should build new forms of self-representation and struggle, including factory committees democratically elected and controlled by the rank-and-file, to oppose layoffs and plant closings and begin the fight for the unification of the working class against the profit system.