Widening social inequality exacerbates housing crisis in California

Kevin Martinez

According to a recent study published by the California Budget & Policy Center, almost all income gains in the state since 1989 have gone to the top 1 percent of income earners.

In every geographic region, both urban and rural, the bottom 99 percent of households fell behind. The most unequal areas of the state included San Francisco, Silicon Valley, and Los Angeles, where the top 1 percent of household made on average more than 30 times the amount of money made by the bottom 99 percent.

The study, titled “The Growth of Top Incomes Across California” looked at three metrics: the growth of inequality between the top 1 percent and the bottom 99 percent, the change in average incomes between the two groups since 1989, and the share of the total income captured by the top 1 percent since 1989.

The wealthiest Californians fared the best in regions that saw economic growth over the last few decades, especially the San Francisco area. In the largest and richest urban centers like San Francisco, Los Angeles, and San Jose, inequality was the highest in the state. The top 1 percent of households in the San Francisco metro area made on average $3.6 million in 2013, 44 times what the average income was for the bottom 99 percent at $81,904.

Over the past generation, the wealth of the top 1 percent has soared over the rest of the population in nearly all of the state’s regions. Even in areas with smaller income gaps, like the Riverside-San Bernardino-Ontario metropolitan area, the top 1 percent’s income was nearly 13 times the average income of the bottom 99 percent.

In some areas, the only segment of society to see any significant income gains since 1989 was the top 1 percent. In San Jose, the top 1 percent increased their wealth by 248 percent, while the bottom 99 percent increased their wealth by only 23 percent. In the Los Angeles area, the top 1 percent increased their wealth by 55 percent, but the rest of the metropolitan area saw their average income plummet by 12 percent.

Even more troubling is that the top 1 percent has increased their share of the total growth in incomes over the last 25 years. With the exception of the Easter Sierra region, mostly rural Alpine, Inyo, and Mono counties, the share of income going to the top 1 percent increase in every region of California.

The highest share of income going to the top 1 percent was in the San Francisco metropolitan area, with 30.8 percent of the region’s income going to the wealthiest households in 2013, double the 1989 share of 15.8 percent.

A significant contributing factor to rising inequality is the rising cost of rent, especially in the large urban areas like Los Angeles and San Francisco. A study by Apartment List found that California had the fastest growing rents in all the US. A spokesman said, “California rents are growing nearly twice as quickly as the national average,” adding, “Rents have increased 5.7 percent over the last year compared to 3.3 percent nationwide, based on two-bedroom units.”

Rent increased in Los Angeles by 6.7 percent since the start of this year according to Apartment List. The two cities with the highest rent growth were San Jose with 8.9 rent increase and Anaheim at 9.2 percent.

An average two bedroom apartment in San Francisco costs $4,760; in San Jose, $2,700; and in Los Angeles, the average two bedroom apartment costs $2,650. In Los Angeles, the low median individual income was $27,749, making rent there and in California the least affordable in the United States, according to UCLA researchers, a result of the wide gap between income and costs.

In San Francisco, authorities have made clear their callous attitude toward the poor and homeless. City workers there cleared out a tent city under the Central Freeway this week after a deadline announced by public health officials passed last week. The homeless were told to leave the area within 72 hours before the San Francisco Police Department arrived to remove anyone who stayed behind.

The city moved 25 homeless people to Pier 80, a homeless shelter that can only house up to 150 people. The city also offered to take their belongings, dump them, or leave their things with the city’s operations yard, where they would be held for up to 90 days. Democratic Mayor Ed Lee said the city would remove at least two more tent cities in the coming weeks.

In Los Angeles, local authorities have promised millions of dollars to fight homelessness, but revealed their true aim with recent plans to crack down on tiny houses provided for free by private individuals. Although far from a solution to the problem of homelessness, the tiny houses are shelters the size of a garden shed which many homeless prefer over tents and sleeping bags.

City officials declared the tiny homes to be a threat to public health and safety and used allegations of drug use and crime to begin tearing them down. Many of the homeless were not told where to go upon losing their shelters.

While the city has pledged hundreds of millions of dollars to house the homeless, it has never been specified where the funds would come from, making the proposal untenable, at best. The homeless population in Los Angeles, the largest in the country, increased by 12 percent in the last two years, according to the Los Angeles Homeless Services Authority. The number of makeshift encampments has increased by 85 percent in the same time.

The rise in homelessness can be directly attributed to economic factors, especially the rising costs of renting an apartment or home, in addition to falling wages and mass unemployment. Politically, this process has been facilitated and, in fact, accelerated by the policies pursued by both the Democrats and the Republicans in federal, state and local governments, whose common goal is to ensure the protection of the interests of capital at the expense of the vast majority of society.

From the slashing of vital social programs that provide assistance to the poor to the bailout of banks for the enrichment of a tiny parasitic financial oligarchy, such policies have only exacerbated the immense class divide in California.

European Union threatens summary mass deportations of refugees

Alex Lantier

Yesterday, European Council President Donald Tusk issued a blunt warning that the European Union (EU) intends to seal off its borders and summarily deport masses of desperate refugees fleeing imperialist wars that are devastating the Middle East.

Speaking from Athens after meeting with Greek Prime Minister Alexis Tsipras, Tusk said: “I want to appeal to all potential illegal economic migrants, wherever you are from. Do not come to Europe. Do not risk your lives and your money. It is all for nothing. Greece, or any other European country, will no longer be a transit country.”

Tusk then traveled on to Turkey. At a joint press conference with Prime Minister Ahmet Davutoglu in Ankara, he called for setting up a system for summary mass deportations of refugees from Europe. “We agree that the refugee flows still remain far too high,” Tusk said. “To many in Europe, the most promising method seems to be a fast and large-scale mechanism to ship back irregular migrants arriving in Greece.”

Tusk’s attack on refugees as “irregular” or “illegal economic migrants” is a slander against hundreds of thousands of innocent men, women and children fleeing bloody conflicts stoked by the US and European powers. Such attacks are designed to allow the EU to shift far to the right, adopting policies previously associated with neo-fascistic forces. Fundamental democratic rights, like the right to asylum, are to be trampled, and extrajudicial deportations based on racial or national origin are to become EU policy.

The flow of refugees from war-torn Syria and Iraq is continuing to increase, with 131,724 arriving in Greece in the first two months of 2016 alone. This is more than the number that fled to Europe in the first six months of 2015. Under these conditions, the hostility of all factions of the European bourgeoisie to the refugees is coming fully into the open.

Tusk’s comments came a day after NATO commander General Philip Breedlove accused refugees of being enemies of NATO in the service of Russia and Syria, which are “deliberately weaponizing migration in an attempt to overwhelm European structures and break European resolve.”

No fabrication is too grotesque for the EU powers. A conference organized by Austria and nine Balkan countries agreed to designate all refugees fleeing Afghanistan, a country devastated by an ongoing civil war and NATO military occupation, as “economic migrants.”

German Chancellor Angela Merkel, who at the beginning of the refugee crisis tried to falsely align herself with popular sympathy for refugees by stating that Berlin would welcome large numbers of them, signaled her agreement with a hard line against immigrants on Tuesday.

“There is not a right for a refugee to say: ‘I want to get asylum in a particular country in the European Union,’” she declared. Berlin’s support for the Schengen treaty of free movement of people inside Europe is based on Greece not allowing refugees into Europe in the first place, she stressed: “When I say we have to return to the Schengen system, then that means of course that Greece has to protect the borders.”

Tens of thousands of refugees seeking to travel north towards Germany are now trapped in Greece, as Austria and the Balkan states refuse to admit more than a handful of refugees through the border each day. Greek authorities estimated that the number of refugees trying to reach central Europe but trapped in Greece could soon rise to 70,000.

Thousands of refugees have arrived at the Greek-Macedonian border since Macedonian police brutally cracked down on migrants trying to cross the border on Monday. Approximately 12,000 to 15,000 immigrants are therefore blocked at a camp near the border crossing at Idomeni.

“This is a makeshift camp. The transit camp is already at full capacity so people are setting up their tents wherever they can,” Al Jazeera’s Hoda Abdel-Hamid reported from Idomeni. “They’re going to the woods to set up fires when the temperatures fall dramatically. … People are frustrated with each day that passes, they’re getting more and more tired.”

A class gulf separates the chauvinist reaction to the refugee crisis by the European ruling elites from the sentiments of masses of working people. In Athens, workers are donating food and toys, and unemployed workers are donating their time in soup kitchens.

Ethnic conflicts and resentments inside the EU are continuing to build, however, as each national government is seeking to block as many refugees as possible from arriving on its territory and is attempting to send as many of them as possible to other countries.

Greece’s Syriza (“Coalition of the Radical Left”) government, which last year imposed a savage austerity package on Greek workers at the behest of the EU, is again playing a reactionary role.

Greek officials are forcing refugees stopped at the Macedonian border to head south to camps in Athens. Media coverage of the camps has been blocked as the government deploys the army to build them and police the refugees trapped there.

After Greece took the unprecedented step of withdrawing its ambassador to Austria to protest Vienna’s role in preventing refugees from leaving Greece, divisions are now erupting over a German-led plan to deploy warships to stop the flow of refugees from Turkey across the Aegean Sea to Greece.

The deployment, which threatens to cut off Russian access to the Mediterranean, was announced early in February in the context of NATO’s broader military buildup against Russia over the Syrian and Ukraine crises. It came only weeks after a Turkish fishing vessel nearly rammed a Russian warship in the Aegean Sea.

While it was aimed at Russia, the deployment has run afoul of escalating divisions among the NATO powers themselves. Last week, NATO officials were still trying to determine the parameters of the naval deployment, amid bitter territorial disputes between Greece and Turkey. After violations of Greek air space by Turkish fighters, during which Greek and Turkish planes engaged in mock dogfights, NATO Secretary-General Jens Stoltenberg announced that “Greek and Turkish forces will not operate in each other’s territorial waters and airspace.”

On Wednesday, AFP cited multiple anonymous diplomatic sources as stating that Turkish authorities were blocking the deployment to the Aegean. One said that “the Turks refused” to allow NATO vessels into their territorial waters, demanding that the operation’s German commander, Rear Admiral Jorg Klein, “go to Ankara to determine the area where [NATO warships] might deploy.”

The source also denounced Turkey for “showing little to no interest” in taking back migrants picked up by NATO warships at sea as they attempt the crossing to Greece.

Turkish and German government sources denied the AFP report.

China and Brazil: Two expressions of the deepening capitalist breakdown

Nick Beams

In the aftermath of the global financial crisis of 2008 and the rapid downturn in the global economy that followed in 2009, various bourgeois economists and pundits put forward the notion that the so-called BRICS economies—Brazil, Russia, China, India and South Africa—could provide a new basis for the expansion of world capitalism.

The last remnants of this myth collapsed this week with reports that the Chinese government is planning to slash millions of jobs in basic industries amid vast overcapacity, and that Brazil has entered a recession, possibly the deepest contraction in its history.

The assertion that the BRICS group, a series of lower- and middle-income countries beset with problems of economic backwardness and dominated by the centres of imperialist finance capital, could somehow provide a new advance for global capitalism was always economic fiction.

It was able to be sustained for a brief period by the massive stimulus package initiated by the Chinese government, including government spending of half a trillion dollars and the most rapid expansion of credit in economic history.

The China construction boom and the expansion of industrial capacity lifted the price of commodities and provided a boost to commodity-exporting countries. But the collapse of the so-called commodities “supercycle”, reflected most immediately in the plunge in the price of oil since 2014 and extending across the range of industrial raw materials, combined with the outflow of capital from “emerging markets”, has unleashed a wave of economic destruction.

On top on the worsening economic situation in China and Brazil, Russia is in recession as a result of the fall in oil prices. South Africa, hit by the fall in metal prices and the cuts of thousands of jobs in the mining industry, is expected shortly to enter recession. India is still touted as a “bright spot”, with growth rates of more than 7 percent, but its economy is weighed down by bad loans, falling export markets and stagnant wages and private investment.

The contraction in Brazil, amounting to 3.8 percent for 2015, is accelerating, with data released yesterday showing that the economy shrank by 5.9 percent in the fourth quarter of the year compared to a year earlier, as “all of the components of internal demand showed falls,” according to the country’s statistics agency. It is on track to suffer the worst recession since official records began, with another contraction of at least 3 percent expected for this year.

The full significance of the announcements in China and Brazil cannot be grasped by considering these countries in isolation. They are expressions of the deepening crisis of the global capitalist economy as a whole and underscore that the breakdown that began with the crash of 2008 has entered a new stage.

The total meltdown of the global economy, in the wake of the worst financial crisis since the 1930s, was only prevented by the injection of trillions of dollars of cash into the financial system by the world’s central banks in order to prop up the banks and finance houses, along with the economic expansion of China.

This process has come to a shuddering halt. As the BRICS “growth model” disintegrates, so the conditions are emerging for another financial disaster. The former governor of the Bank of England, Mervyn King, recently warned that the collapse of 2008 was the “failure of a system,” and that without a resolution of the “disequilibrium” in the world economy a new catastrophe was likely “sooner rather than later.”

Instead of a return to so-called “normal” conditions, the financial system is becoming ever more dysfunctional, with the program of “quantitative easing” (i.e., the flooding of markets with cash) now extending to the introduction of negative interest rates and negative yields on bonds.

Around a quarter of global gross domestic product is being produced in countries experiencing negative interest rates, following the decision at the end of January by the Bank of Japan to start charging for money deposited with it.

Instead of providing a boost to the financial system, the decision by Japan has thrown markets into turmoil. There are growing concerns over how long the business models for major banks, pension funds and insurance companies, which invest in government securities, can remain sustainable in what a Financial Times article characterised as the “La La Land” of negative rates. “Investors are supposed to buy super safe bonds to avoid the risk of making losses on riskier bets. Now, they’re lining up to make a guaranteed loss on that super safe paper,” the article noted.

The mounting economic and financial crisis is bringing violent political upheavals. This week, in the wake of further evidence of deflation and continuing stagnation, and the possibility of the exit of Britain from the European Union, economists at Credit Suisse warned in a research note entitled “Close to the Edge” that recession in Europe could bring about the collapse of the eurozone. “If the euro area were to relapse back into the recession, it is not clear it would endure,” they said.

In Latin America, the downward spiral of the Brazilian economy is part of the shipwreck of the “left turn” in bourgeois politics, which was dependent on exports to China. In the US, the deepening crisis of the economic and political system has led to the emergence of a fascistic contender, Donald Trump, as the leading presidential candidate for the Republican Party.

Nowhere is the utter bankruptcy of the capitalist order more graphically expressed than in China. The Chinese Stalinist regime pledged that the restoration of capitalism would open the way for the country’s “peaceful rise” and overcome the legacy of decades of economic backwardness. Its program has turned into a disaster.

On the one hand, China’s economic growth has placed it directly in the crosshairs of the American military juggernaut, which regards its rise as a threat to US military and political dominance. On the other, Chinese capitalism does not have “special characteristics” but has turned out to be beset with the same contradictions that afflict the system as a whole and which now directly threaten the jobs and livelihood of hundreds of millions.

As last weekend’s meeting of the G-20 demonstrated, the bourgeoisie and all its agencies have no economic solution to the mounting crisis. Rather than collaboration in the face of mounting problems, the world capitalist system as a whole is characterized by increasingly bitter conflicts. But on one thing they are agreed: that the working class must be made to pay for the chaos of the system over which they preside.

There is no solution to the economic breakdown within the present political order. Global capitalism is heading for a catastrophe, a fact increasingly recognised even in ruling economic and political circles. But as Marx explained, no problem ever arises in the course of mankind’s development without at the same time the material conditions emerging for its resolution.

That is the significance of the massive growth of the international working class over the past three decades—the outcome of globalisation of capitalist production. This includes an increase of 265 million new workers in China, Brazil and India alone between 2000 and 2010. The enormous objective strength of the working class, however, can only become actualised through the political struggle for its unification on an international socialist program, carried forward through the building of the International Committee of the Fourth International as the World Party of Socialist Revolution.

Notes on London’s housing crisis

Allison Smith

Surging London home prices decimate living standards

Recent employment growth and low inflation helped increase overall incomes in London by 2.9 percent since 2008. However, the high cost of housing in the capital city has pushed the region to the bottom of the league table for living standards in the United Kingdom.

Most Londoners have in fact suffered falling living standards, especially when the slant towards rising incomes for the wealthy is taken into account.

Matthew Whittaker, chief economist at Resolution Foundation remarked, “Londoners have experienced some of the strongest income growth in recent years, with typical household incomes now well above pre-crash levels, but the wider picture on living standards changes completely once housing costs are included. On this measure living standards have actually fallen over the last seven years, and by far more than anywhere else in the UK.”

House prices leapt 9.4 percent last year, pushing the average cost of a London home to a record £536,000, while average rents jumped up to an average all-time high of £1,301, far outpacing every other U.K. region.

In many areas of London, landlords are renting out sheds and rooms without windows, smoke detectors, or hot water—and even, as in one case in east London’s Newham borough, a converted walk-in freezer.

Record number of evictions nationally, with most in London

The Ministry of Justice reports that tenants living in 42,728 rented households across England and Wales were forcibly removed from their homes last year—a 53 percent increase since 2010 and a record number since statistics began to be reported in 2000.

Most of the evictions took place within 16 London Boroughs—mostly by social landlords. This is a result of stagnating or declining wages and cuts to benefits, at the same time that the cost of living is skyrocketing, especially rent. Councils have a dwindling supply of social housing units available due to the forced selloff of high-value council properties.

Increasingly, poor tenants are finding it unaffordable to move and forced eviction is fast becoming the only way they can secure new housing, as councils require them to demonstrate they are homeless before they are allocated emergency housing.

Emergency housing is often bed and breakfast or hostel accommodation that are unsuitable for families with children. The charity Shelter reports that nearly 4,000 families are now living in hostels and the most dramatic rise is in central London.

22,000 London homes left empty

A Freedom of Information request revealed that 22,000 houses lay empty in 31 out of 33 London boroughs. However, this could be considerably higher as local authorities do not require owners to declare their properties uninhabited.

Helen Williams, chief executive of the charity Empty Homes, told the Guardian, “With so many people priced out of decent housing across London it makes sense to make the most of existing properties as we build new homes to address the capital’s housing needs.”

London’s free newspaper City A.M. reported that one offender, the Crown Estate, “is sitting on over £800m worth of empty properties in London alone… exposing the scale of the developer’s property footprint in the capital. The monarchy’s portfolio of property and land includes 312 vacant properties in the Greater London area, according to a Freedom of Information request, ranging from rooms on Regent Street and other prime central London locations to garages and commercial space.”

Housing charity sells off affordable housing to developers

Glasspool Charity Trust auctioned off apartments currently occupied by low income and benefits tenants at the Butterfields Estate in the north London borough of Walthamstowe.

A statement said, “As trustees of the Glasspool Charity Trust we sought assurances regarding our tenants, their rights and protection from our selling agents at the time of the negotiations. We were assured that they would be protected within the law. We have no power to prevent a new owner from reviewing their position with the existing tenancies post-sale.”

In 2012, the Shelter housing charity found that in 25 percent of all London areas, rents increased by an average of £300 a year. As demand grows for rented accommodation, many more residents are being priced out of decent homes and forced into deplorable conditions and, increasingly, homelessness. Last year, Shelter researched the huge emotional and financial costs of the lack of affordable housing on low income households.

Nearly 30 percent of renters moved three times in five years

According to a Shelter and YouGov study, 27 percent of renters in the United Kingdom have moved three or more times within the last five years—the equivalent of 400,000 families.

One report described it as almost a nomadic form of existence. Alarmingly, nearly half of parents in rental accommodations were forced to borrow money to move or had fallen behind on rental payments. Sixty-five percent of families report having to change schools after their last move, and one in four parents say that moving causes distress and feelings of insecurity in their children.

Shelter CEO Campbell Robb said, “With short-term contracts, sudden rent hikes and expensive moving costs putting huge pressure on family life, it’s no wonder that millions of parents are battling to give their children a stable home.”

He added, “We know the vast majority of parents are crying out for longer term tenancies, so it’s about time the government turned this into a reality and gave England’s 11 million private renters a better deal.”

A 2010 study by Queens University in Belfast found that children who move five or more times are at least three times more likely to experience serious mental health issues.

Record low home ownership among young Londoners

Resolution Foundation’s Living Standards 2016 report shows there continues to be a sharp decline in new entrants to the U.K. housing market, with home ownership rates between 2001 and 2014 down an average of 11 percentage points for people under 60 years of age.

Millennials (born between 1982 and 2004) experienced the sharpest home ownership decline—a 49 percent reduction since 1998 and a full 16 points lower than residents in the Generation X group (born between 1965 and 1981).

The figures for young Londoners are devastating, with home ownership among low-to-middle income residents under 35 years of age plummeting by 67 percent to just 13 percent of residents in 2014. The percentage living in private rented accommodation has increased 87 percent, from 37 percent in 2000 to 70 percent in 2014. Londoners in this age group are also more likely to live in social housing as opposed to owning their own home, with 17 percent living in council properties.

Record wait time for council housing

According to recent figures provided by the Department for Communities and Local Government, up to 25 percent of households in some areas of London are on a waiting list for social housing. Although the overall number of applications for housing is down, nearly all those on the list are waiting a record period to be placed into social housing.

In 2015, Camden had the highest percentage of residents waiting for social housing—nearly one-in-four residents, totaling 24,644—up 10 percent from 2014. In Islington, nearly 20 percent of households were on a waiting list, and the equivalent of one-in-six residents were waiting for housing in Barking and Dagenham, Brighton, Bolton, Tower Hamlets, Medway and Reading in 2015.

The overall decrease in the number of households waiting for housing isn’t due to fewer residents needing assistance. Rather, cuts to housing benefits and other government policies, such as the Localism Act 2011 and Right to Buy, have given local councils the power to restrict eligibility for social housing, especially for those residents who cannot prove a connection to the area.

Report warns number of £1 million homes in UK will triple by 2030

A report co-authored by Professor Paul Cheshire of London School of Economics and Santander Bank, forecasts that by the year 2030, the number of £1 million homes in the United Kingdom will triple and the average home price will more than double from £283,565 to £557,444.

The report projects that within fifteen years London home prices will increase by a factor of 16.5 and nearly one-in-four homes across the capital city will sell for £1 million or more. Prices in Kensington and Chelsea and Westminster boroughs are set to increase by 70 percent. Professor Cheshire said, “By 2030, the divide between housing haves at the top and the have-nots at the bottom will be even wider than it is now.”

Young people under 35 years of age are hardest hit by the staggering increase in home prices. The vast majority are only likely to own a property through inheritance. A recent survey of teachers in London reports that one in 10 young teachers still live at home, even after five years of tenure in their career. Sixty-one percent of those surveyed said that the high cost of living might force them to move out of London altogether.

Chinese government prepares to sack millions of workers

John Ward & Peter Symonds

In the lead-up to the National People’s Congress (NPC) starting on Saturday, the Chinese government has announced massive layoffs in state-owned enterprises in coal and steel. Further sackings in other basic industries are being foreshadowed in moves that will result in millions of workers losing their jobs and heightened political and social tensions.

The Chinese Communist Party (CCP) leadership has delayed taking steps to deal with huge overcapacities in heavy industry and so-called zombie companies—state-owned enterprises (SOEs) kept on life support via low-interest bank loans—for fear of triggering widespread social unrest. However, amid a slowing economy and concerns about mounting debt, the regime has signalled a swathe of sackings.

Premier Li Keqiang told top economic advisers in December: “We must summon our determination and set to work. For those ‘zombie enterprises’ with absolute overcapacity, we must ruthlessly bring down the knife.” Li will present his yearly work report to the NPC which will also deliberate on the 13th Five-Year Plan that sets the economic guidelines for the government.

On Monday, the employment and welfare minister Yin Weimin announced that capacity in the coal and steel industries would be drastically reduced with 1.8 million workers losing their jobs—1.3 million coal miners and 500,000 steel workers. The figure was a sharp increase from just a few days before when industry minister Miao Wei declared that one million jobs would go in coal and steel.

A Reuters report on Tuesday based on unnamed government sources indicated that the government is planning to slash capacity in as many as seven sectors, including cement, glass-making and ship building leading to around six million jobs being destroyed in the next three years.

The emergence of huge overcapacities in China’s basic industries is intimately bound up with the continuing worldwide economic slump that has followed the 2008-09 global financial crisis. The CCP leadership reacted to the collapse of exports and the loss of 20 million jobs with massive stimulus packages and a flood of cheap credit that fueled a speculative property bubble.

Like governments around the world, Beijing calculated that the crisis was temporary and export growth would resume once the major capitalist economies recovered. Basic industry expanded, spurred on by infrastructure projects, construction and a continuous supply of cheap credit. However, export markets have stagnated, property and infrastructure investment is slowing and the much vaunted “transition” to a service economy has failed to prop up growth rates.

The slowing Chinese economy, now the world’s second largest, is already reverberating internationally. Falling Chinese demand for basic industrial inputs has contributed to the collapse in world commodity prices which is now severely impacting on commodity exporting countries such as Brazil, Russia, South Africa, Australia and Canada.

The excess capacities in China are enormous. Estimated steel overcapacity jumped from 132 million tonnes per year in 2008 to 327 million tonnes in 2014—a figure that is more than three times greater than the total output of Japan, the world’s second largest producer. Over the same period, overcapacity for cement nearly doubled from 450 to 850 million tonnes, for oil refining leapt from 77 to 230 million tonnes and for flat glass jumped from 76 million to 215 million weight cases.

According to the Financial Times, 42 percent of all SOEs lost money in 2013. Total profits for such groups fell in absolute terms last year for the first time since 2001. The gap in return on assets between SOEs and private firms is now the largest in two decades. Government intervention to slash overcapacity could place further stresses on the financial and banking system as SOEs account for an estimated 50 percent of all commercial debt.

Already there are deep concerns about mounting bad loans. A report last month by the European Chamber of Commerce in China stated that non-performing loans (NPLs) had risen by $US76 billion during the first ten months of 2015 to about $291 billion, a 35 percent increase.

The Chinese government’s plans to slash overcapacities and jobs will hit some areas of the country much harder than others, exacerbating regional tensions. Provincial and local governments have often kept “zombie” SOEs afloat through the provision of loans so as to avoid mass layoffs and rising social unrest. The so-called rust-bucket region in the northeast of the country where unemployment is already high will be particularly badly affected.

The CCP is seeking to forestall widespread resistance in the working class by providing funds for retraining and job seeking. Industry minister Miao Wei announced last week that 100 billion yuan ($US15.3 billion) would be provided to support displaced steel and coal workers. However, steel worker Gao Jianqiang told the China Daily last week: “There are just too many factories that are not doing well. One-hundred billion yuan sounds like a huge sum, but I do not think it will solve problems for everyone.”

Many of those who lose their jobs will simply not find work elsewhere. In January, China International Capital Corp (CIIC), the country’s largest merchant bank, predicted that 30 percent of the 10 million people employed in the coal, steel, electrolytic aluminium, cement and glass industries would lose their jobs in the next two years.

The CIIC report concluded that a million of these workers would not find a new job. That estimation was based on the results of the last round of mass job losses in SOEs in the late 1990s when 21 million workers were sacked. Only two thirds found work or were transferred to other jobs.

China’s growth rate in the 2000s, however, averaged 10 percent and peaked at over 14 percent in 2007. Now, however, it is officially 6.9 percent and slowing. Jobs are being destroyed not only in heavy industry but also in the manufacturing export sectors. The official unemployment rate is 4 percent but some estimates, such as research by the National Bureau of Economic Research, put the real figure at close to 10 percent.

The Business Insider last week reported that millions of migrant workers were returning after the New Year break to an uncertain future, “as smaller factories in particular struggle to cope with anemic orders and rising inventories.” Exports from Guangdong province, one of China’s major manufacturing hubs, are predicted to grow by just 1 percent this year.

There are already signs of growing opposition among workers to plans for mass retrenchments. Figures produced by the Hong Kong-based China Labour Bulletin have shown a sharp rise in the number of strikes for 2015 to 2,774, twice as many as for 2014. In January, 504 strikes were recorded. The statistics are only a partial record as they rely on media and social media reports as well as local contacts.

Significantly on Tuesday, the day after the announcement that 1.3 million mining jobs would be destroyed, hundreds of coal miners in Anyuan in southeastern China marched through the city of Pingxiang. The local state-owned mining company has cut back production, laid off workers and told others to stay home on drastically reduced pay. As reported by the Washington Post, up to 1,000 workers from three mines carried banners declaring: “Workers want to survive, workers need to eat.”

Who Is My Neighbour?

John Scales Avery

Are we losing the human solidarity that will be needed if our global society is to solve the pressing problems that are facing us today? Among the symptoms of loss of solidarity is the drift towards violence, racism and aggressive foreign policy that can be seen in the United States. Another warning symptom is the inhospitable reception that refugees have received in Europe and elsewhere.

Tribalism

Human emotional nature evolved over the long prehistory of our species, when our remote ancestors lived small tribes, competing for territory on the grasslands of Africa. Since marriage within a tribe was much more frequent than marriage outside it, each tribe was genetically homogeneous, and the tribe itself, rather than the individual, acted as the unit upon which the forces of natural selection acted. Those tribes that exhibited internal solidarity, combined with aggression towards competing tribes, survived best. Over a long period of time, tribalism became a hard-wired part of human nature. We can see tribalism today in the emotions involved in football matches, in nationalism, and in war.

The birth of ethics

When humans began to live in larger and more cosmopolitan groups, it was necessary to overwrite some elements of raw human emotional nature. Tribalism became especially inappropriate, unless the scope of the perceived tribe could be extended to include everyone in the enlarged societies. Thus ethical principles were born. It is not just a coincidence that the greatest ethical teachers of history lived at a time when the size of cooperating human societies was being enlarged.

All of the major religions of humanity contain some form of the Golden Rule. Christianity contains an especially clear statement of this central ethical principle: According to the Gospel of Luke, after being told that he must love his neighbour as much as he loves himself, a man asks Jesus, “Who is my neighbour?”. Jesus then replies with the Parable of the Good Samaritan, in which we are told that our neighbour need not be a member of our own tribe, but can live far away and can belong to a completely different nation or ethnic group. Nevertheless, that person is still our neighbor, and deserves our love and care.

The central ethical principle which is stated so clearly in the Parable of the Good Samaritan is exactly what we need today to avoid disaster. We must enlarge our loyalties to include the whole of humanity. We must develop a global ethic of comprehensive human solidarity, or else perish from a combination of advanced technology combined with primitive tribalism. Space-age science is exceedingly dangerous when it is combined with stone-age politics.

The need for global solidarity comes from the instantaneous worldwide communication and economic interdependence that has resulted from advanced science and technology. But advanced technology, our almost miraculous ability to communicate through the Internet, Skype and smartphones, could weld the world into a single peaceful and cooperative unit. But we must learn to use global communication as a tool for developing worldwide human solidarity.

Each week, all over the world, congregations assemble and are addressed by their leaders on ethical issues. But all too often there is no mention of the astonishing and shameful contradiction between the institution of war (especially the doctrine of “massive retaliation”), and the principle of universal human brotherhood, loving and forgiving one’s enemies, and returning good for evil.

At a moment of history, when the continued survival of civilization is in doubt because of the incompatibility of war with the existence of thermonuclear weapons, our religious leaders ought to use their enormous influence to help to solve the problem of war, which is after all an ethical problem.

New Arctic Battlelines Drawn As Industry Exploits Fragile Seas

Lauren McCauley

Rapidly melting Arctic ice has opened up enormous swaths of this pristine and ecologically significant landscape to dangerous industrial threats. And as officials meet this week to hammer out new rules that could potentially protect the region, environmental groups are warning that the area known as the "Arctic Galapagos" is already in grave danger.

Scientists have reported that the Arctic is currently warming at nearly double the global average rate, which is one of the key factors driving an unprecedented level of ice sheet loss. In a troubling development, this January saw a record low for sea ice extent.

These newly-open waters have seen a surge in industrial activity, including fishing and shipping, which heretofore have been left largely unregulated, according to green groups.

Greenpeace on Wednesday released an investigation (pdf) which found that industrial fishing fleets are increasingly moving into Arctic waters, particularly the previously ice-covered Barents Sea, off of Norway.

"Sea ice loss in the northern Barents Sea is turning it into a new hunting ground for industrial fishing," Greenpeace states. "Fishing brings with it the threats of habitat degradation and bycatch, potentially wiping out marine life and putting this whole fragile ecosystem at risk."

The northern Barents Sea, known as the "Arctic Galapagos," is home to "a huge diversity of marine life including bowhead whales, walruses and polar bears, along with rare fish and invertebrates," the report states. It is also currently holds the largest cod stock in the world, which international fishing companies are rushing to exploit.

At the same time, environmentalists are raising concern about the uptick in shipping traffic moving through newly-open Arctic channels. Such traffic, warns John Kaltenstein, a marine policy analyst with Friends of the Earth (FOE), invites "the use of heavy fuel oil, harmful air emissions, and invasive species risk."

Less than 1.5 percent of the entire Arctic Ocean has any form of protected status. And while the International Maritime Organization's recently adopted Polar Code aims to establish a standard of safety for ships operating in Arctic waters, Kaltenstein notes that the actual text—expected to enter into force January 1, 2017—"does little to deal with the most urgent and far-reaching problems we face from Arctic shipping."

"Unfortunately, the shipping industry still behaves as if it were in the 1960s or 1970s, and the sad fact is that many countries both domestically and within international venues, such as the U.N.’s International Maritime Organization, coddle it," he states.

"It only takes one big spill to change everything," he continues, "remember Exxon Valdez. Incredibly, environmental policy surrounding Arctic shipping has become the equivalent of 'fingers crossed,' when it comes to grave threats such as heavy fuel oil spills, climate-warming emissions, and invasive species."

The warnings come as delegates from 15 European countries along with the European Union, known as the OSPAR commission, are meeting in Gothenburg, Sweden this week to discuss the formation of an Arctic Marine Protected Area (MPA) in the international waters north of Greenland.

Greenpeace describes the meeting, and the potential agreement, as a "make or break moment for Arctic protection."

"It is crucial that these areas are protected from destructive industrial activities, as they could be devastating for the species dependent on this area for survival," states the group, which notes that the region under consideration for protection "could be a potential habitat for ice dependent species in the future as the ice melts in other places."

Ironically, Greenpeace notes that as international waters, the Arctic is part of the "global commons, belonging to all mankind." However, "there is no protection at all."

Ontario report: Inequality at levels “not seen since the Great Depression”

Dylan Lubao

A report published by the union-backed Ontario Common Front paints a harrowing portrait of the social devastation inflicted on the province’s working class and poor over the course of a single generation. Titled “Falling Behind”, the report documents the impact of years of right-wing government policies that have laid waste to the jobs and living standards of working Ontarians, producing levels of social inequality not seen since the Great Depression.

The report places responsibility for this social disaster on provincial governments both past and present, which have implemented anti-worker policies in the service of big business. Figures included in the report demonstrate that tax cuts for corporations and the wealthy and years of social spending cuts have crippled public services such as health care and education. The resulting crises, such as overcrowded hospitals, sky-high post-secondary tuition fees, the shuttering of community service organizations, and the slashing of social assistance funds, are then blamed on government “waste” and “inefficiency” and used to justify privatization and still greater cuts.

Although the report points to the depth of the social crisis facing millions of Ontario workers, it omits the central role played by the unions and the New Democratic Party (NDP) in facilitating this situation, and thus only tells half the story.

Among some of the starkest findings in the report are the following:

* At 12 percent of its workforce, Ontario has the highest proportion of minimum wage workers (C$11.25 per hour) in the country.

* In 2009, 13.1 percent of Ontarians, or 1,689,000 people, lived under the poverty line, including 14.6 percent of all children.

* Between 1976 and 2004, the bottom 40 percent—600,000 Ontario families—experienced stagnating or declining incomes, while the wealthiest 10 percent saw their incomes rise by an average 41 percent.

* Public spending per capita in Ontario is the lowest in the country, at C$9,000 per person.

* Almost 400,000 Ontarians used food banks in 2011.

* Almost one quarter of unemployed Ontarians are out of work for six months or longer.

* Child care costs and university tuition fees in Ontario are the highest in the country.

The gap between the wealthiest and the poorest in Ontario is now at its greatest since the 1930s. The ruling class of Ontario, like its counterparts at the national and international level, has accomplished this by effecting a massive transfer of wealth from the bottom to the top, using the 2008 financial crisis as a pretext to accelerate its austerity drive.

Between 1976 and 2004, the chasm between the rich and poor grew ever wider. In 1976, the wealthiest 10 percent of Ontarians earned “just” 27 times more than the poorest 10 percent. By 2004, this had exploded to 75 times more. In the span of one generation, the top 10 percent have experienced a 41 percent increase in net wealth, but the poorest 10 percent have suffered a staggering 150 percent decline.

With almost one third of Ontarians earning within C$4 of the miserable C$11.25-per-hour minimum wage and the price of necessities such as housing, food, and utilities steadily rising, workers and their families increasingly find it difficult to meet basic expenses.

The relentless drive of the banks and corporations to increase profits, in addition to the anemic nature of the so-called economic recovery, has led to the shedding of 318,000 manufacturing jobs since 2000. At least 270,000 new jobs would be required to merely return Ontario’s employment numbers to their pre-recession levels. Instead, corporations have done the opposite, with major layoffs taking place on a monthly basis.

Kathleen Wynne’s Liberal government and its Conservative and NDP predecessors have delivered decades of austerity.

In 2012, the Liberals, led by then-premier Dalton McGuinty, initiated the greatest spending cuts in the province’s history, dwarfing those made by the hated Harris Conservatives in the late 1990s. When the Liberals took office in 2003, they essentially maintained the massive tax cuts for the rich and super-rich, as well as the savage cuts to welfare rates, which had been implemented by their Conservative predecessors.

As a result of these cuts to public services, which include a three-year public spending freeze that began last year and C$7 billion in cuts over the past five years, the social services on which millions of Ontario workers depend have been gutted to the point of near-collapse.

Ontario’s hospitals are the most underfunded in the country, and Ontarians pay more for health care expenses than residents of any other province. More than 30,000 Ontarians at any given moment are waiting for a hospital bed or long-term care, and hospitals regularly operate at or above full capacity.

Social and community services have been hollowed out as a result of drastic budget cuts. Wages within this sector have fallen precipitously as a result of these cuts, to the point that many workers in this sector are forced to use the same services and resources they administer.

“Falling Behind” repudiates the incessant gloating of government and big business representatives about the merits of the “free market” in creating a “just and equitable society.” The real picture that emerges is that of debilitating poverty and hardship for the vast majority of Ontario’s workers, and a feeding frenzy of unprecedented proportions for the wealthy.

At the same time, the Ontario Common Front, which is comprised of 90 community organizations and led by the Ontario Federation of Labour (OFL), maintains an indefensible silence about the role played by the trade unions and the NDP in facilitating this crisis. If “Falling Behind” is a list of crimes perpetrated against the province’s workers and poor, then it is also an implicit indictment of the treachery of the union bureaucracy and the middle class “left.”

The Ontario Common Front was created by the trade union bureaucracy in the wake of the 2011 Occupy protests as a way to corral oppositional and anti-austerity sentiment back behind the pro-capitalist perspective of the union bureaucracy. The participating community groups were solicited so as to give a left-wing gloss to the unions’ thoroughly right-wing nationalist politics.

The unions, while historically tied to the social-democratic NDP, have in one shape or another supported the Liberals’ bids for power since 1998, when many major unions created the Ontario’s Working Families Coalition to muster votes for the Liberals. Driven by fear of the explosive social power of the working class, which threatened to escape their control during the mass anti-Conservative protests between 1995 and 1997, the unions shifted further to the right, playing a critical role in bringing the big business Liberals to power in Queen’s Park.

The stock-in-trade of the union bureaucracy is the promotion of “strategic voting,” urging support for the “lesser evil” Liberals to prevent a hard-right Conservative government. Once in power, the Liberals invariably implement right-wing policies as demanded by the corporations and financial houses that line Bay Street.

Similarly, the NDP and its pseudo-left supporters, while posing as opponents of austerity and allies of the working class, represent the interests of a thin and affluent middle class layer. Dependent on the capitalist system for their privileged social status and hostile to socialism and the interests of the working class, they have rapidly shed their left-wing pretensions in response to the economic crisis and the resurgence of working class opposition to capitalism.

For 18 months between 2012 and 2014, Andrea Horwath’s NDP was in a de facto coalition with the Liberals, enabling the passage of McGuinty’s devastating austerity budget and its use of strikebreaking legislation to impose a cut in teachers’ real wages. Over the opposition of the unions, Horwath only pulled her party’s support in May 2014 in an attempt to salvage what was left of the NDP’s tattered left credentials. This, however, did not prevent the NDP from running its most right-wing campaign ever in the ensuing election.

An exposure of the sordid machinations of the unions and the NDP would completely undermine the Ontario Common Front’s legitimacy, existing as it does as a tool of the union bureaucracy.

Mine disaster in Russia kills 36

David Levine

A series of explosions at the Severnaya coal mine in Vorkuta, Russia, which is about 1800 km northeast of Saint Petersburg and slightly north of the Arctic Circle, caused the deaths of 36 people on February 25 and 28. This included 31 mineworkers and 5 rescue workers, all men between the ages of twenty-four and fifty-five. A three-day official mourning period in Russia’s Komi Republic began Sunday.

A sudden methane discharge and two explosions occurred at the mine on February 25, causing a collapse and fire. At the time, 111 people had been inside the mine, of whom four were killed immediately. Eighty-one were rescued, of whom nine had been injured, while 26 remained “missing,” trapped in mine shafts that had become obstructed in the collapse.

Hundreds of personnel from the Russian Ministry of Emergency Management were deployed for rescue operations at the mine. On Saturday, February 27, some of the rescue workers warned of the danger of further explosions. Later on Sunday, Minister of Emergency Management Vladimir Puchkov told television network Pervyy Kanal, “We are compelled to state that the conditions in [the part of the mine where the miners were trapped] cannot allow a human being to survive. The data show that in the underground area where the 26 miners were located there are high temperatures and no oxygen.” This statement was confirmed by Denis Paykin, Technical Director of mine operator Vorkutaugol.

Komi Republic

As late as the morning of February 28, Vorkutaugol had denied that the trapped mine workers had been given up for dead, claiming that rescue operations were ongoing. However, it emerged later that day that a third explosion in the early morning hours of February 28 had caused the deaths of 5 rescue workers and 1 mineworker, and that an additional 5 people had been injured. After this, rescue operations were halted.

Puchkov, as well as Deputy Prime Minister Arkady Dvorkovich and parent company Severstal President Aleksey Mordashov, had flown out to the mine site. According to Dvorkovich, a preliminary government investigation concluded that the explosions resulted from natural factors. He asserted that officials from the Federal Service for Environmental, Technological and Nuclear Oversight had inspected Severstal just a few days before the disaster; that the issues identified in the inspection were not related to the explosions at Severnaya; and that the methane sensors in the mine had recorded below-critical levels and had not detected any dangers.

On Monday, Dvorkovich explained to a meeting with Vice President Dmitry Medvedev, “It would have been impossible to prevent the explosion at Severnaya. The methane level rose spasmodically. That is, there was a spasmodic discharge. There was no gradual rise in the gas level. The gas sensors didn’t detect anything, and it actually would have been impossible to prevent this particular discharge using safety control measures.”

Nevertheless, the Investigative Committee of Russia has initiated a criminal prosecution over violations of safety regulations. As mine disaster expert Aleksandr Gerusov explained to media agency RBC, “If all safety systems are functioning properly, the likelihood of a methane explosion or rock burst is practically reduced to zero. Statistically, 90 percent of all mine disasters result from the human factor.”

Surviving workers and the families of the killed workers likewise dispute the government’s assessment. Mikhail Momot, a Severnaya mineworker who survived because he was on vacation, told Internet news agency Rus2Web, “Everybody who was working there knew that a large quantity of methane gas had accumulated over recent months. However, the mine’s management for some reason didn’t do anything about it.”

Similarly, Konstantin Pimenov, a miner and Vorkuta City Council member, told Rus2Web, “I had spoken directly with Severnaya miners and technical specialists. They had told me that there was a significant increase of methane emissions going on. All of the officials know this, but they just left it to chance. They hoped that it would pass somehow.”

Darya Tryasukho, daughter of killed miner Vyacheslav Tryasukho, posted on her page on the VKontakte social network website photographs of a portable gas sensor belonging to a Severnaya miner that show a 2.55 percent methane level recorded on February 11, 2016. According to Russian government regulations, the maximum acceptable concentration of methane in a coal mineshaft is 2 percent.

In an interview with news agency LifeNews, Natalia Tryasukho, the widow of Vyacheslav Tryasukho, explained that her late husband had warned of the danger of a disaster in the mine.

“Just a few days before the tragedy, my husband had said that there was the danger of a rock burst. The level of gas in the air was very high, but management had taken all possible measures to keep gas safety sensors from functioning. They covered the sensors up and buried them. They did this because the system is automated, and when the sensors are activated, everything stops. They demanded production, and nothing else. Safety concerned no one,” Natalia Tryasukho explained.

Severnaya miner Sergey Proskuryakov, who survived the disaster because he worked during a different shift, supported the Tryasukhos’ contentions regarding gas sensors. He told Rus2Web that “it’s a well-known fact that they tampered with the sensors that record the methane gas content in the air in the mine. Following management instructions, the sensors were configured so as not to go too high and only to show numbers that fall within the limit. In reality, the methane content in the mine is significantly higher than the safety rules require. Now those who gave the directions to tamper with the sensors should face the relatives of the dead miners.”

Severstal representative Vladimir Zaluzhsky claimed to Business FM that tampering with the gas sensors was unlikely, as they are programmed to detect attempts to modify their functioning and shut off mine operations in case they do detect such activity.

Following a disaster at the Raspadskaya mine in Kemerovo Oblast in 2010, which eventually caused 91 fatalities and 99 injuries, similar assertions had been made that mine workers themselves had been instructed to glue the gas safety sensors so that they could continue production after gas levels in the air reached the critical level.

Vorkuta resident Madlena explained to Business FM, “There were reasons to anticipate a disaster. There had been tremors, and the methane level already exceeded the normal numbers. Everybody knew this. There were warning signs. People came from work just a couple of weeks ago and were vomiting. Some of them had nosebleeds. You understand what it means to work in that kind of atmosphere. Everything was already going in this direction.”

Severnaya coal mine is owned and operated by coal company Vorkutaugol, which itself is a subsidiary of Severstal, which in its turn belongs mostly to Aleksey Mordashov, Russia’s fifth richest person. He owns 79 percent of Severstal and has a net worth of approximately US$11.1 billion. In 2015 Severnaya produced 2.874 million tons of raw coal and 1.5 million tons of coal concentrate, comprising 27 percent of Vorkutaugol’s aggregate production and 15 percent of production in the Komi Republic. 1084 workers were involved in the development of Severnaya, including 668 at the mine itself.

Representatives of Severstal, whose stock fell 3 percent after news of the disaster, have said that they hope to return the mine to operational condition after pumping nitrogen into the disaster area and then evacuating air from it. However, all this will take at least half a year. In the meantime, the surviving workers are to be transferred to nearby mines.

Since it began operation in 1969, there have been three disasters at Severnaya, all within the last 16 years. In 2000, a fire that resulted from safety violations in the conduct of welding operations at the mine administration building led to the deaths of ten people, including an 8-year-old child. A mine collapse in 2004 caused the deaths of five miners. And two miners were killed in another collapse in 2011.

A methane discharge and resulting explosion in 2013 at the nearby Vorkutinskaya mine, also owned by Severstal, caused the deaths of 19 people. Relatives of victims commented that the same person who had been in charge of safety operations at Vorkutinskaya later occupied the same position at Severnaya. Vorkuta resident Madlena, quoted above, confirmed this. “The person responsible for safety at Severnaya had been at the central mine when the explosion occurred at the Vorkutinskaya mine in 2013. They didn’t fire him. They just transferred him to Severnaya.”

Similarly, miner Sergey Proskuryakov commented, “I hope that the commission conducts an objective investigation, so that the guilty parties don’t get away with it, which is what happened three years ago at the Vorkutinskaya mine. That mine’s management was not held accountable. Moreover, after the disaster, the Vorkutinskaya mine administrators were given managing positions at our mine, Severnaya, and continued working there undisturbed.”

Proskuryakov continued, “The mine’s administration is constantly pressuring and intimidating people. ‘If you say too much, you’ll have to leave,’ they say. Company managers behave like slave owners. But everybody keeps quiet and is afraid of getting fired. This is what that silence has led to.”

Vorkuta was the site of Vorkutlag (initially called Ukhtpechlag), one of the Stalinist regime’s largest prison camps, which also had been occupied primarily in the industrial production of coal and at its peak in 1951 held over 70,000 prisoners. A hunger strike initiated by Trotskyists at the camp in autumn 1936 led to an extended conflict that ended in the massacre of 2901 people, including both political prisoners and their family members, in a series of mass executions in spring 1938.

A massive strike that came to be known as the Vorkuta Uprising occurred at the camp in June-August 1953, just a few months after the death of Joseph Stalin on March 5, 1953. The Soviet state’s suppression of that uprising involved the killing of at least 53 strikers.