UK: Greater Manchester devolution agreement sets agenda for private sector bonanza

Robert Stevens

Trafford Metropolitan Borough Council, one of ten authorities that make up local government in northwest England’s Greater Manchester conurbation, is set to announce the privatisation of swathes of its public service provision.

Trafford, the only one of the ten authorities that is run by the Conservative Party, said this week that one or more private companies will be handed contracts to provide services in the area, including refuse collection, street cleaning, street lighting and parks maintenance.

The move was announced within weeks of the decision by Conservative/Liberal Democrat government to hand over the entire £6 billion budget of the National Health Service for the Greater Manchester conurbation to the ten constituent local authorities. When this goes ahead, it will formally end the centralized operation of the National Health Service in England, which has been in existence since 1948. In Scotland and Wales, the NHS is already devolved.

That followed the deal last autumn by the government and the leaders of the 10 Greater Manchester authorities (nine Labour Party and one Conservative), which agreed to the devolving of £1 billion from central government. In what was termed “Devo-Manc”, the £300 million housing budget, £30 million annual business rates for building a new tramline local transport, local apprenticeship funding, and part of the Government’s Welfare to Work Programme are to be devolved.

What is now clear is that this was just the tip of a massive iceberg.

The Trafford deal is being seen as the trailblazer for similar agreements to be reached by all the Greater Manchester councils, resulting in a further massive transfer of wealth from the public purse into private hands. The Trafford contracts are, according to sources, considered to be worth at least £1 billion to the private sector. The Manchester Evening News (MEN) commented, “The move could eventually lead to Greater Manchester’s bins, street cleaning, parks maintenance—and a host of other frontline services—ALL being outsourced in a deal worth up to £5bn.” It notes, “Trafford, facing cuts of £57m in the next three years, is the first council to take such a radical step, but Manchester [City Council] is also asking for bids for domestic waste and street cleaning services”.

The latest announcement by Trafford council confirms the assessment made by the World Socialist Web Site and Socialist Equality Party that the “Conservative/Liberal Democrat government has set out to destroy all the gains in health, education and social welfare conceded to the working class after the last World War, and has found willing accomplices in numerous Labour councils.”

Among the firms competing for Trafford’s contracts, to run for 23 years, are Amey, which has bid to run all available services. Amey currently has the contract for refuse collection and street lighting for the area’s largest authority, Manchester City Council. Amey is bidding to take over the Trafford refuse collection from another private company, Veolia, which has run it since 1992.

Kier MG is competing with Balfour Beatty Living Places to run highways services and street lighting.

Amey and Kier MG have also bid to deliver technical services, including property development, land sales, engineering.

According the to the MEN, the winning bids “have to prove they can meet four aims—delivering the intended savings, saving further cash through finding efficiencies in the future, respond to ongoing budget pressures and protect jobs and maintain service standards.” It added, “Trafford council bosses say around 250 staff will transfer to the chosen firm—or firms—with pay and conditions protected”. As well as those workers, a further total of around 100 workers, employed on the current Veolia waste contract, would also be transferred to whatever firm wins that contract.

Given that councils throughout the UK, including all ten in Greater Manchester, are pushing through massive job losses and reducing and eliminating vitally needed services in response to “budget pressures”, the remit to “protect jobs and service standards” and pay and conditions is a cynical PR exercise.

Trafford has already cut its spending by £75 million since 2010 and it estimates savings of up to £3 million a year will accrue once the newly-privatised contracts are in place. Up to 20 percent of its current outgoings will eventually be saved. All told, £57 million in savage cuts are being planned by the council over the next three years, with £21.5 million to be slashed this year. Nearly 200 jobs are threatened, and among services threatened are libraries, many children’s and youth centres and school crossing patrols.

Particularly brutal is the proposal to slash £8 million from adult social care. As part of the changes, people deemed as “critical or substantial” would still receive support but those classified as being “moderate” or “low” could have their funding cut. Among the proposals to save up to £2.6 million is the re-negotiation of contracts, cancelling the learning disability development fund and reviewing care package. Funding for cleaning, domestic services and shopping, where “reasonable alternatives” are available privately, will go. Supported accommodation services are to be privatised, saving £206,000, while funding for services for those with learning disabilities will be reduced by £71,000. Among other cuts proposed is a £230,000 reduction in support for homeless people. Voluntary and community groups could lose £97,000.

Trafford’s decision to sell off swathes of public services was inevitable and integral to the overall devolution programme agreed with central government. Like that deal, it was concluded behind closed doors without any public consultation or mandate. Such is their determination to exclude the wider population from being able to hear about, and to oppose the measures, that the council barred protesters from a debate on Monday evening that was supposed to be legally open to the public.

In opposition to the carve-up by the private sector of vitally needed publicly funded services, the SEP warned, “Devolved services will facilitate the end to national pay agreements and conditions, as the trade unions offer up their workforces at competitive rates of pay.”

Over the last five years, the trade unions have not lifted a finger in opposition to any of the austerity cuts, including tens of billions of pounds in cuts pushed through by councils throughout the UK. Up to one million public-sector jobs have been lost, with the unions collaborating all down the line, mostly with their allies in Labour-run councils, but also with councils run by other parties.

In order to divert opposition to a struggle against all the political representatives of the ruling elite, including Labour, the Greater Manchester Association of Trades Union Councils (GMATUC) is running a campaign for the “people of the Greater Manchester area to write to/e-mail/phone/tweet/personally lobby their local Councillors and MP’s of whatever Party to do their utmost (including by seeking an emergency Parliamentary debate and emergency Council debates) to slow down, hinder, obstruct and/or in any other way prevent the implementation of any devolution of central Government budgets and responsibilities …” [emphasis added]

To this end the GMATUC called a lobby of Manchester City Council on March 6. Labour-run Manchester City Council pioneered the devolution agreement with the government, on behalf of the Greater Manchester authorities, and has implemented tens of millions of pounds of cuts over recent years. In 2015-16 it plans to impose a further £55 million in cuts.

US to train special police forces in Ukraine

David Levine

Last week, Arsen Avakov, head of the Ukrainian Ministry of Internal Affairs (MVD) announced that Kiev is working with Washington to create a unified special police force analogous to American SWAT teams. The force is to be called KORD (Korpus operativno-raptovoy diy—Instantaneous Tactical Actions Corps). Following its American counterpart, KORD will consist of “assault teams” that execute high-risk police actions with a 15-to-20-minute response time.

The announcement came as the US began sending military equipment to Ukraine. In addition, this week, Ukraine’s parliament voted to approve the presence of foreign peacekeeping forces and military units of foreign states on the country’s soil. The move lays the groundwork for the holding of joint military exercises on Ukrainian territory with US and Polish forces planned for this year.

The creation of US-trained SWAT teams in Ukraine makes clear that Kiev is preparing to suppress popular opposition to its right-wing austerity program and the brutal war the government is waging in the country’s southeast. Earlier this month, the parliament announced plans to cut pensions for working retirees by 15 percent, a move that will impact 20 million Ukrainians.

Plans to create a Ukrainian SWAT force were first announced last October by the public relations office of the People’s Front, a political party formed last year by current prime minister Arseniy Yatsenyuk. MVD head Avakov is also a member of the People’s Front. According to the October announcement, the Ukrainian SWAT force will be formed primarily out of the Ministry of Internal Affairs volunteer battalions and squadrons, which began serving as special forces units in the country in April 2014.

Since last August, these units have been armed with heavy weaponry from the country’s Ministry of Defense and have played a key role in fighting the ongoing civil war. Many of them, such as the Azov Battalion (now a unit of the Ukrainian National Guard), have gained worldwide notoriety for their open embrace of fascist insignia, as well as murderous attacks on civilian targets.

There are more than 30 such units in the Ministry of Internal Affairs, ranging up to 500 members each. Other volunteer units exist within the Ukrainian Defense Ministry and National Guard. Still others have not been formally incorporated into state structures but have fought alongside government forces. KORD will bring all of the Ministry of Internal Affairs special units into a unified national force.

According to Avakov’s statement last week, the United States has allocated $26.4 million for the restructuring of Ukraine’s police and the creation of the SWAT teams. US Ambassador to Ukraine Geoffrey Pyatt noted that American police specialists have already been involved in this work.

“The agreement is not just about $26 million,” Pyatt added, making clear that the US State Department foresees a US police/military presence on Ukraine’s border with Russia. “It’s also about long-term support by the United States for the Ukrainian people and specifically this government of Ukraine. This agreement also will make it possible for us to collaborate in support for [Ukrainian] border guards.”

Specialists from the United States, as well as from Georgia, Israel, and other countries, have already participated in the training of the volunteer forces in Ukraine, and American military personnel will begin working with units of the Ukrainian National Guard this spring. Signs of the presence of American mercenaries in Ukraine have been reported since as early as March 2014—before the start of the armed conflict in the Donbass.

The US-trained SWAT teams in Ukraine will be used not simply as paramilitary units for the suppression of the rebellion of the Donetsk and Luhansk People’s Republics. The American police are to share with their Ukrainian counterparts their rich experience in quelling civil disorder and suppressing political dissent.

In Konstantynivka, a city in the Kiev-controlled part of Donetsk Province, civil unrest erupted on Monday after a group of Ukrainian army troops riding in an infantry fighting vehicle ran over and killed an eight-year-old girl. At least two other people, a woman and a child, were also injured in the accident. A preliminary investigation discovered that the driver of the vehicle had been drunk. Shortly after the accident, approximately 100 Kostyantynivka residents gathered near the incident site and the Ukrainian military’s barracks to protest the ongoing militarization of the city by the Ukrainian government.

The protests in Konstantynivka, which involved the burning of at least two police vehicles, provoked a sharp response from local police and the capital. Illya Kiva, a local Interior Ministry representative, blamed Russian-backed separatists for what he called provocations and pleaded for citizens not to join the protests. Avakov’s adviser and Rada deputy Anton Herashchenko stated, “If somebody in Konstantynivka comes out with a gun in his hands against the Ukrainian government, taking advantage of this auto accident for mass disorder, then there will first be one warning shot, and then we will shoot with deadly force. If there won’t be enough time for a warning, then deadly force will be applied immediately.”

Canadian oil workers laid off without warning

Roger Jordan

A thousand oil construction workers were laid off at a site in Alberta last week without warning. The workers, based at Husky Energy’s Sunrise project around 60 kilometres north of Fort McMurray, were informed by dismissal notices slipped under their doors at 3 AM.

They were in the final stages of constructing the oil sands facility and had been due to continue at the site until the summer. But in the layoff notice they were informed that they all had to pack up and leave that same day. After being bussed to a private airstrip, they were offered flights to Edmonton, Calgary or Toronto, with any further travel arrangements left up to the workers to organize for themselves.

Many workers were compelled to leave their tools and other personal belongings behind due to luggage restrictions on the flight. At least one third of the employees were in the middle of their seven-day break in their rotation so were not even present to hear the news. Scandalously, the laid-off workers will receive just four hours’ pay by way of notice.

In a similar development, a smaller group of about 25 oil workers at a remote Canadian Natural Resources Ltd (CNRL) site in northern Alberta were left stranded for days after their contractor, Pacer Promec, went into receivership and refused to provide them with transport home. Following the announcement on Tuesday last week, they waited two days for chartered buses that never showed up.

After being told to make their own way offsite, which as one worker told the press could have cost anything up to $1,200 for those living in eastern Canada, the company finally agreed to fly the workers the 160 kilometres to Fort McMurray. CNRL, which had contracted Pacer Promec to do the work, initially refused to take any responsibility for the workers’ travel and demanded that Pacer Promec pay. The contracts of the workers explicitly provided for their travel to and from the work site to be covered by their employer, according to a worker who spoke to CTV. “To treat people like that is just not fair,” he commented.

These incidents illustrate the ruthless exploitation of oil workers by the major oil corporations in Canada and internationally. This has found sharpest expression in the six-week oil workers’ strike in the United States, where the oil giants have refused to concede even the most basic safety and wage demands of the 30,000 oil workers.

Just a week prior to CNRL’s refusal to provide travel home for the oil workers, the company announced annual profits of $3.9 billion. Canada’s second largest oil producer expanded production by 183,600 barrels of oil per day in 2014. For its part, Husky unveiled a quarterly profit increase of 11.5 percent last October.

While the energy corporations make billions in profits, the impact of the oil price drop and deepening economic crisis is being felt by the thousands of Canadian oil industry workers who have been laid off since the decline began last September. In Alberta alone, provincial statistics suggest that 20,000 energy sector jobs have been eliminated, and this does not include announcements at companies where less than 50 job cuts were made.

CNRL announced plans in January to lay off a thousand oil workers, and Shell is dismissing three hundred from its oil sands operations. On Tuesday, 300 job cuts were announced at Chinese-owned energy company Nexen in Calgary, with a further 40 to go in Fort McMurray and the United States. And yesterday, Talisman Energy said it will eliminate 150 to 200 jobs at its Calgary head office, after slashing its 2015 capital spending by almost $1 billion.

Alberta’s jobless rate rose above 5 percent for the first time in three-and-a-half years last month and is widely predicted to surpass 6 percent by the summer.

At the end of February, CNRL President Steve Laut declared in a speech to the Fort McMurray Chamber of Commerce that the oil industry had to embrace “disruptive change” and dramatically slash costs to avoid entering a “death spiral.” Claiming that oil companies had to be more “innovative” and less concerned about scheduling, he stressed the need for companies to slash production costs. “The energy sector,” said Laut, “has long been criticized for being satisfied with incremental change, not disruptive change when it comes to production and extraction methods. And if there is a true desire to do things differently—on all levels—it will require something revolutionary, rather than evolutionary.”

The collapse in oil revenues is being utilized by the provincial Progressive Conservative government of Jim Prentice to launch a massive austerity program. Later this month, his government is due to present the provincial budget, with anticipated spending cuts for education, health and other public and social services of 5 percent. When population growth and inflation are taken into account, this will translates into a real cut of 9 percent. The estimated budget shortfall due to the energy price collapse is $7 billion.

Although Alberta has profited in recent years from the oil boom, the province’s growth has been characterized by extreme levels of social inequality as well as rampant environmental destruction. The province has one of the lowest minimum wages in Canada and repressive labour laws that have gone unchallenged by the trade unions.

Canada’s national economy is also suffering under the impact of the oil price decline. In January, the federal Conservative government of Stephen Harper announced that it was delaying the presentation of this year’s budget from February until April or later, so as to get a better idea of revenues. The Conservatives, who have implemented sweeping austerity measures for the past five years, announced an income-splitting tax “reform” last fall skewed to further enrich the wealthy, touting it as the reward for their “balanced budget” drive. However, the oil price drop has roiled Harper’s plans to focus the Conservatives’ campaign for the 2015 federal election on their supposed adroit stewardship of Canada’s economy.

Steel union sellout leaves oil workers at mercy of energy giants

Jerry White

The sellout agreement the United Steelworkers reached with lead industry bargainer Shell last week has been a signal for the rest of the energy companies to demand even greater concessions from oil workers on a plant-by-plant basis. This will result in essentially breaking up the industry wide labor agreement and the common expiration date for contracts won by oil workers in 1966.

The wholly predictable outcome of this betrayal has been to leave oil workers entirely at the mercy of the oil giants, which are now whipsawing workers in different refineries against each other in a fratricidal race to see who will accept the worst conditions and lowest wages. In an industry where refineries and petrochemical plants regularly change hands, oil workers face the prospect of never-ending demands for givebacks in the name of “saving jobs” and remaining “competitive.”

The world’s largest oil company, ExxonMobil, is demanding workers at its Beaumont, Texas refinery accept a contract with a separate expiration date from the rest of the workers in the national oil bargaining agreement. This would deprive Beaumont workers of any leverage to oppose the oil giant’s effort to strip workers of their longstanding rights.

Prior to the USW reaching a four-year settlement with Shell, ExxonMobil had demanded a five-year deal. It is now demanding that it be extended to six years as a precondition for the expansion of the refinery.

According to Reuters, USW local 13-243 negotiators countered with an offer to accept the current four-year national agreement, plus the next national agreement, which would amount to a seven- or eight-year contract for workers at the Beaumont refinery. “It's unprecedented,” USW local 13-243 President Robert Hill said. “It could be a seven- or eight-year deal.”

An Exxon spokesman said the company would like an agreement not tied to the pattern bargaining cycle. “We seek to maintain the competitive position and unique advantages of the Beaumont refinery, which drive our interest in moving to a non-pattern term,” Exxon spokesman Todd Spitler told Reuters.

ExxonMobil previously separated workers at its Baton Rouge, Louisiana and Baytown, Texas refineries from the national agreement. Having long taken the measure of the USW—whose selective strike policy specifically excluded the two largest US-based companies, ExxonMobil and Chevron—the company now essentially believes the sky is the limit.

The USW local’s suggestion that a seven- or eight-year deal would align Beaumont workers with the rest of the industry in 2022-23 is a fraud. The logic of the USW pro-company policy is the decimation of any industrywide contract and the endless pitting of worker against worker.

A veteran refinery worker in Beaumont told the World Socialist Web Site, “ExxonMobil first said they needed a five-year deal for labor stability in order to expand the refinery. Now they feel so bold that they are admitting they want us off the pattern. It’s blatant; they are just out to screw us.

“The USW International all of a sudden went belly up. Earlier last week they were talking tough. Then they signed an agreement with nothing but vague language about safety and staffing and not much money. If I had been up in Houston or Galveston walking the picket lines for weeks, I would be livid. It is beyond me how we are going to take a small fraction of the workforce out and then settle for nothing.

“The union said they did not want a national strike because they didn’t want the government getting involved. If it were a Republican president, you’d be concerned. But with my way of thinking we had a Democrat in the White House who is our friend. Now I don’t think that way anymore. The union did not want a confrontation because Obama is not our friend.

“We had an opportunity to pull out all the oil workers and the dockworkers on the West Coast together. But we lost that opportunity and we were pulled out of the fight all of a sudden. The companies knew what the USW would come up with. I’ll be retiring soon but I got kids and grandkids. I grew up in a refinery home. We didn’t have everything, but we were comfortable. Now the way it is going the young ones are going to be in the lower class. It’s a two class system with the haves and the have-nots, and the haves have a silver spoon in their mouths.”

The USW is moving rapidly to isolate those workers who remain on strike in order to blackmail them into signing the sellout deal it reached with Shell or local agreements containing even more egregious demands. The deal was pushed through Tuesday at facilities owned by Motiva Enterprises—a joint venture between Shell and Saudi Aramco—in Port Arthur, Texas and Norco and Convent, Louisiana. Workers are expected to return to their jobs by early next week.

While the USW claimed it received “unanimous” backing for the deal in Port Arthur—the largest refinery in the US—the union no doubt concealed the details of the pact from workers. It is open to question whether there is really a contract rather than some type of memorandum of understanding reached to shut down the strike. Workers have been told they will receive a miserly 12 percent increase in wages over four years, barely keeping up with the rate of inflation, and that the companies made meaningless promises to hold “discussions” and “semi-annual” meetings with the USW about excessive overtime, fatigue and the hiring of non-union contractors.

Industry spokesmen have gloated that the deals holds the oil companies to nothing, and that they will maintain the “flexibility” to hire contractors with no job security, health benefits or pensions.

At the locations in Texas, California, Indiana, Ohio, Washington State and Kentucky where workers are continuing to strike, BP, Marathon, Tesoro and LyondellBasell are taking a hard line in negotiations for local contracts.

Negotiators for LyondellBasell walked out of talks Saturday and have said they will not even look at the national agreement until local issues are resolved. USW officials said the company’s walkout is a “stalling tactic” and that it seeking to cut overtime pay rates. The Pittsburgh Post Gazette cited a “source familiar with the talks,” who said the company may be waiting to see if more workers cross the picket line at the plant.

Joshua Lege, a USW 227 coordinator at LyondellBasell, told the Houston News that representatives from both sides were in the middle of negotiating Saturday when company officials got up and left the room. “At the request of the company a federal mediator has been involved in the local negotiations from the start,” Lege said. “Everyone assumed they were taking a break until the federal mediator came back and told the USW local reps that LyondellBasell’s people were leaving and said they needed a ‘cooling off’ period.” Company officials reportedly told the local USW representatives they would call when they were ready to meet again.

At Marathon’s Texas City plant near Houston a federal mediator has also been brought in, but local talks are going nowhere, with the sub-director for USW District 13, W.E. Sanders, telling Reuters, “The company refuses to offer the pattern unencumbered.”

If all of the gains won by generations of oil workers are not to be decimated rank-and-file workers must initiate a campaign to defeat the remaining local contracts and fight for a general strike by all oil workers in defiance of the USW. The sellout agreement must be overturned and the fight broadened into a mobilization of the working class against the Obama administration, both corporate-controlled parties and the profit system they defend. Only in this way can workers secure the social right to a decent-paying, secure and safe job.

US stocks surge as Fed signals slower rise in interest rates

Barry Grey

US stock and bond prices rose sharply Wednesday in response to signals from the Federal Reserve's policy-making Federal Open Market Committee (FOMC) that interest rate hikes might be delayed and will likely be smaller than previously indicated once they begin.

The Dow Jones Industrial Average, which was down 124 points when the Fed issued its policy statement at 2 PM, immediately jumped nearly 250 points and ended the trading day up by 227 points (1.27 percent) over the previous day’s close. The total swing in points pre- and post-FOMC statement was more than 350.

The other major indexes, the Standard & Poor’s 500 and the Nasdaq, registered similarly hefty gains for the day.

Banks, hedge funds and global speculators were nervously anticipating that the FOMC would drop the assurance from its two previous statements that it could be “patient” in beginning to raise the Fed’s benchmark federal funds rate, which has remained at zero-to-0.25 percent since the height of the world financial crisis in December of 2008.

Any tightening of the central bank spigot of virtually free credit threatens to bring the record bull market, and the windfalls for the rich and the super-rich provided by astronomical stock prices, crashing down.

In the event, the Fed did remove the word “patient” from the statement it issued at the conclusion of its two-day meeting. But it included new language making clear there would be no change at the FOMC’s April meeting and seeming to set the bar higher for beginning to raise interest rates later in the year.

Even more significantly, the Fed issued a new set of estimates for the federal funds rate by the end of 2015, 2016 and 2017 that were sharply lower than the estimates it released last December. The US central bank forecast a rate of 0.625 percent at the end of this year, a drop of 500 basis points, or more than 40 percent, from its December projection of 1.125 percent.

Such a difference in rates can mean billions of dollars in increased profits for bankers and big investors.

The Fed has come under intense pressure from financial interests and major US corporations to slow down its plans to begin raising rates from their record lows to more normal levels. This pressure has intensified along with the sharp increase in the value of the dollar, which has risen, on a trade-weighted basis, by more than 22 percent since last July.

The upward spiral of the dollar is partly the result of the divergence of US monetary policy from that of Europe and Japan. While the Fed has for months been signaling an intension to gradually raise US rates and recently ended its money-printing “quantitative easing” operation, the European Central Bank and the central bank of Japan have been slashing their rates and launching their own “quantitative easing” bond-buying programs. As a result, capital has flowed into the US seeking higher rates, pushing up the dollar.

At the last FOMC meeting at the end of January, the Fed was besieged by complaints from major US corporations, including Microsoft, Caterpillar, DuPont, Procter & Gamble and United Technologies, that its talk of raising rates was undermining their export sales and profits by making the dollar, and their goods, more expensive on world markets. That meeting provoked a sharp sell-off on US markets, because Wall Street and corporate America felt the FOMC statement did not contain a sufficiently strong signal that any increase in rates would be delayed at least until the latter part of the year.

That there has been no let-up in corporate lobbying against an early rate hike was demonstrated by the front-page lead article in Wednesday’s Financial Times, bearing the headline “Fed rate rise risks 1937-style market slump, says fund chief.” The entire content of the article was a warning issued by hedge fund billionaire Ray Dalio that a Fed rate increase could crash the stock market.

The markets appeared to be somewhat surprised and delighted to see, based on the statement issued by the FOMC on Wednesday, that their message had been received. The committee’s statement began with a dramatically more somber economic assessment than that made following its January meeting. At that time, the Fed spoke of “solid growth.” Wednesday’s statement began: “Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat.”

The statement went on to characterize household spending as rising only “moderately” and describe the housing sector as “slow.” Indirectly referencing the upwardly valued dollar, it noted that “export growth has weakened.”

It then acknowledged that inflation “has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices.”

New economic projections released by the Fed at the same time as the FOMC statement underscored the central bank’s negatively revised view of the US economy. The Fed downgraded its projection for growth of the gross domestic product by the end of this year from 2.6 percent-3.0 percent to 2.3 percent-2.7 percent. It projected that consumer price inflation in the fourth quarter would by only 0.6 percent-0.8 percent, well below its already low December forecast of 1.0 percent-1.6 percent.

A series of economic reports over the past week suggest that the US economy may be slowing even more dramatically. Retail sales have fallen for three consecutive months. Industrial production barely grew in February, after shrinking in December and January. Manufacturing has declined for three months in a row. And housing starts fell 17 percent in February from the previous month.

Underlying the continuing stagnation in the real economy, despite the officially hyped “recovery,” is the devastating social crisis and decline in the living standards of millions of working people. The boom in stock prices and corporate profits is based largely on speculative activities divorced from any serious growth of the productive forces. Thus, while the official unemployment rate has declined to 5.5 percent, most of the new jobs created since the 2008 Wall Street crash have been low-paying, part-time or temporary.

There are presently 6.6 million part-timers who want to work full-time but can’t find full-time jobs—nearly 50 percent more than in 2007, before the recession began.

These conditions explain the depressed state of consumer spending, including home-buying, which makes impossible any sustained economic growth.

The signs of stagnation and slowdown in the US economy tend to mitigate against an early rise in interest rates. Of particular importance is the Fed’s insistence that inflation must show signs of moving toward the central bank’s target rate of 2 percent before it will begin raising rates.

Under conditions of stagnant growth internationally and continuing slump in the real US economy, as opposed to the financial markets, there is no sign of this happening any time soon. According to the Fed’s preferred gauge, prices rose just 0.2 percent over the past 12 months. Inflation was minus 0.2 percent in January.

The key paragraph in the FOMC statement that set off a buying spree on the stock market was the following:

“Consistent with its previous statement, the Committee judges that an increase in the target range for the federal fund rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.” [Emphasis added].

In a letter to clients, Dan Greenhaus, chief strategist at BTIG, pointed to this paragraph as lowering the chances of a rate hike in June. “What’s important about this part of the statement is that it clearly says the FOMC is looking for ‘further’ improvement, meaning the economy and labor market have not yet met whatever criteria necessary to warrant a rate hike.”

In her press conference following the release of the FOMC statement, Fed Chairwoman Janet Yellen sought to further reassure Wall Street that any rate increase would likely be delayed to the latter part of the year. While not ruling out an increase at the June meeting of the FOMC, she said, “Dropping ‘patient’ from the statement does not mean we are going to be impatient” in deciding when to move.

Right-wing Israeli parties begin talks on coalition

Patrick Martin

Israeli President Reuven Rivlin announced Wednesday he would meet with Israeli party leaders beginning Sunday to discuss the formation of the next coalition government, once the vote count has been finalized from Tuesday’s parliamentary election. Votes from Israeli soldiers, prisoners and hospital patients were still being counted Wednesday.

All indications are that Prime Minister Benjamin Netanyahu will head a six-party right-wing coalition government as a result of the March 17 vote. Netanyahu’s Likud Party won 30 seats in the Knesset, the most of any party.

Likud gained ten seats over its showing in the last election, in 2013, while the Zionist Union, a merger of the Labor Party and the small Hatnua Party of former Foreign Minister Tzipi Livni, gained three seats, as did the United Arab List, a merger of four Arab parties spanning a spectrum from Islamist to Stalinist.

Likud’s likely coalition partners include the ultra-right Jewish Home and Yisrael Beitenu, with eight and six seats respectively, the ultra-orthodox Shas (seven seats), United Torah Judaism (six seats) and Kulanu, a breakaway from Likud, which won ten seats. The resulting coalition would have a majority of 67 seats.

Four parties will be in opposition: the Zionist Union, with 24 seats, the Yesh Atid party of broadcaster Yair Lapid, which won 11 seats, the middle-class “left” Meretz, which barely made the cutoff to enter parliament, with four seats, and the United Arab List, whose 14 seats made it the third-largest grouping in the Knesset.

President Rivlin had previously expressed support for a national unity coalition including both Likud and Zionist Union, which would enjoy a top-heavy majority, but both Netanyahu and Zionist Union leader Isaac Herzog dismissed the possibility.

The near-final results gave the newly formed Kulanu party (“All of Us” in Hebrew), led by Moshe Kahlon, a former Likud cabinet minister, a pivotal role. Kahlon broke with Netanyahu last year over economic policies, seeking to appeal to working class and lower-middle class Sephardic voters concerned over stagnant wages and soaring housing costs.

Kahlon made demagogic promises of a “social revolution” in government policy to favor hard-pressed lower-income families, and won a significant vote. He criticized Netanyahu’s constant invocations of the threat of an Iranian nuclear bomb, declaring, “I haven’t seen a young person leave Israel because of the Iranian threat or because of Islamic State, but I have met a lot of young people abroad who left because they had lost hope.”

This electoral posturing has been quickly discarded for horse-trading over cabinet posts. Kahlon said Wednesday he had already spoken with Netanyahu and would hold formal coalition talks on joining the next government, with himself as finance minister.

A majority coalition including Zionist Union, Yesh Atid, Meretz and Kulanu was mathematically possible, but only with the participation or support of the United Arab List. Zionist Union leader Herzog foreclosed that option by conceding defeat Wednesday, saying voters had “pronounced our verdict” and that his party would lead the opposition.

Herzog’s speedy capitulation was of a piece with the entire campaign waged by the Zionist “left,” which defends the interests of the Israeli financial aristocracy just as fervently as Likud and the ultra-right, albeit with tactical differences over how best to maneuver with US imperialism and its various client states in the Middle East.

Analysis of the distribution and pattern of the voting suggests that Netanyahu, who was trailing in pre-election polls, was able to win a response with his last-ditch appeals to security fears and anti-Arab racism. Mid-morning on Election Day, he made a widely publicized appearance at Har Homa, a Jewish suburb of East Jerusalem built illegally on Arab land, to warn that his right-wing government was in danger because of a high turnout by Israeli Arab voters.

As late as 6 p.m. Israeli time, voter turnout was actually below that of the previous election in 2013. But in the final four hours there was a surge in voting, with the result that turnout reached nearly 72 percent, as compared to 67 percent in 2013. This was still well short of the 1999 mark of 78 percent.

Much of this late-hour surge was not captured in exit polls, which reported a virtual tie between Likud and Zionist Union. It seems likely this late vote favored Likud and its allies.

According to one analysis of voting patterns, Netanyahu “won this election by convincing over 200,000 voters who were planning to vote for Jewish Home, Shas, Kulanu and Yahad to change their minds in the last six days of the campaign.”

Yahad, a breakaway from Shas, narrowly failed to make the 3.25 percent required for representation in parliament, and each of the other three parties lost seats compared to the pre-election poll predictions.

The geographical distribution of the vote reveals many of the intractable contradictions of Israeli society. Tel Aviv, the largest city and the commercial center, voted heavily for Zionist Union and the liberal Meretz Party, with only 18 percent of the vote for Likud. Yesh Atid, which had been the leading party in Tel Aviv in 2013, fell to fourth place, as its voters turned back to Zionist Union.

In Jerusalem, the balance was the opposite, with Likud leading with 24.2 percent of the vote, followed by United Torah Judaism at 12.1 percent and Zionist Union trailing with 8.4 percent. Zionist Union led narrowly in Haifa, with 25.3 percent to Likud’s 20.7 percent.

Outside the three big cities, however, Likud led almost everywhere, sweeping southern Israel with nearly 40 percent of the vote compared to 12 percent for Zionist Union, and carrying towns in Galilee such as Kiryat Shmona, Nahariya, Afula and Safed.

The United Arab List swept over 90 percent of the vote in predominately Arab towns like Nazareth, Taybeh and Umm al-Fam. Arab voter turnout increased sharply, to more than 60 percent, compared to 53 percent in 2013.

The nearly 400,000 Israelis living in settlements on the West Bank voted overwhelming for Jewish Home, Yisrael Beitenu and the ultra-orthodox parties. Settlers are heavily over-represented in the Knesset, comprising more than ten percent of its members although only 4.4 percent of Israelis live on the West Bank.

Massive police mobilization against anti-austerity protest in Frankfurt, Germany

Christoph Dreier & Alex Lantier

German police launched a massive crackdown on protests against austerity in Europe on Wednesday. Between 10,000 and 20,000 people in Frankfurt participated in a demonstration that coincided with the opening of the new headquarters of the European Central Bank (ECB).

Sixty buses from 39 European cities came to Frankfurt for the rally. A special train from Berlin brought almost 900 demonstrators.

Police responded with a massive deployment of 8,000 officers, the largest mobilization in the history of the Frankfurt security forces. They completely blocked off the new, €1.3 billion ($1.4 billion) ECB building, ringed it with barbed ware and transformed the entire city into a high-security area.

Police ran identity checks throughout the city the night before the protest, and numerous buses carrying demonstrators were stopped and searched by police.

Police fired tear gas, water cannons and rubber bullets against groups of protesters on the way to the central demonstration locations. Clashes broke out as protesters set police cars alight. According to organizers, at least 130 demonstrators were injured, while police reported that 15 officers were injured in scuffles or by stones thrown by protesters.

Police carried out mass arrests—350 people by noon, according to a police spokeswoman. On Uhlandstraße, police surrounded about 200 demonstrators, mostly Italians, and checked their papers. Police repeatedly attacked the surrounded demonstrators with pepper spray.

At 2:00 pm, the Frankfurt Fire Department reported that there were 47 fires. It was reported that there were attacks on fire trucks.

Protesters held up signs that read “European Monetary Fascism” or “Caviar for All,” protesting the leading role of the ECB in imposing austerity in Europe, particularly in the indebted euro zone countries of southern Europe such as Greece, Spain and Italy. The ECB has cut credit to these countries’ banks and governments, citing the global economic crisis and their high indebtedness, causing a credit crunch and forcing them to apply for bailouts. The bailouts have been made conditional on deep cuts in social programs that have reduced tens of millions of people to poverty.

The organizations designing these cuts—the so-called “troika” consisting of the ECB, the European Union (EU) and the International Monetary Fund (IMF)—are widely hated across Europe.

“It’s important to be here and show that the troika’s policies are not being done in our name,” said Judith, a 30-year-old protester. “We can’t always make cuts at poor people’s expense and call them lazy Greeks, but we need to stand by in solidarity with them.”

The opening of the bank itself appears to have been a debacle, with ECB chief Mario Draghi speaking to only 19 invited guests. The Hessen state’s economy minister, Tarek Al-Wazir of the Green Party, and Frankfurt’s Social Democratic Party Mayor Peter Feldmann spoke, while media representatives were largely excluded.

“People are going through very hard times,” Draghi noted blandly in his official remarks, saying that the ECB had become a “focal point” for public anger. “That may not be a fair charge—our action has been aimed precisely at cushioning the shocks suffered by the economy,” Draghi claimed.

“We must listen very carefully to what all our citizens are saying,” he added.

Draghi’s democratic posturing is a pack of lies. In fact, European officials have repeatedly stressed that they intend to continue ruthlessly imposing austerity in complete defiance of popular opposition. After the election of a government led by the pseudo-left Syriza party in Greece, which campaigned on the basis of promises to end EU austerity policies in that country, EU officials have said that they intend to continue with austerity demands in defiance of election results.

German Foreign Minister Wolfgang Schäuble, one of the leaders in the European austerity drive, bluntly stated: “Elections change nothing... There can be no democratic choice against European treaties.”

The only way forward to fight the EU austerity diktat is to mobilize the working class internationally in a struggle for socialism. The bankruptcy of attempts to resolve the crisis on a capitalist basis has been exposed by the abject capitulation of Syriza to the EU’s austerity demands.

Shortly after its election victory in January, having campaigned on the basis of pledges to end austerity, Syriza declared its readiness to negotiate new social cuts in Greece with the ECB and the other European institutions.

While the Frankfurt protest reflects broader opposition to austerity in Germany and throughout Europe, the perspective of the protest organizers themselves offers no way forward and is not, in fact, opposed to austerity.

The demonstration was organized by the “Blockupy Alliance,” founded in 2012, which includes unions, pseudo-left groups such as the Attac antiglobalisation movement, and the German Left Party. It was also supported by Syriza in Greece and its Spanish ally, the Podemos Party.

Podemos and the Left Party have both hailed Syriza’s agreements with the EU to continue imposing austerity measures against the working class. On February 27, for the first time, the German Left Party voted in favor of an extension of the EU-led financial bailout for Greece, which is responsible for the social devastation of the country and will allow the ECB to continue imposing austerity measures.

The deputy president of the Left Party fraction in parliament, Sahra Wagenknecht, summed up the perspective of the organizers of the demonstration. “The ECB could put the whole of Europe on a sustainable course of growth and combat deflation without using up the savings of the middle class, producing new speculative bubbles or fueling a global currency war,” said Wagenknecht, who spoke at the demonstration.

The Left Party and its allies across Europe, including Syriza, are seeking only to secure tactical shifts in the policy of the EU and euro zone institutions such as the ECB. As Syriza’s sudden repudiation of its pledges to end austerity makes clear, this is a dead end for the working class.

Obama set to veto any cuts to Pentagon war machine

Bill Van Auken

The Obama administration is prepared to veto any cuts to the 2016 Pentagon budget, Defense Secretary Ashton Carter told the House Armed Services Committee in testimony Wednesday.

Carter said that President Barack Obama would reject any proposal that includes the sequestration caps imposed by the 2011 Budget Control Act, which the Democratic president supported and signed into law following the staged crisis over the debt ceiling that year.

The statement came as both major parties sought ways to circumvent the mandated cuts in military spending.

Obama, significantly, has made no threat to veto budget proposals imposing spending caps on vital social services. Indeed, while traveling the country touting relatively minor programs that are likely to be trimmed or eliminated in budget negotiations with the Republican congressional leadership, his administration is proposing to implement some $400 billion in cuts to future Medicare and Medicaid spending, even as he seeks to slash corporate tax rates by up to 10 percent.

The president’s threat to veto sequestration for the military while remaining silent over social spending dovetails with Republican policy, which centers on raising arms spending while offsetting it with even deeper cuts to domestic programs.

While the White House is arguing for ditching sequestration when it comes to military spending, the House Republicans this week made an attempt to square the circle with their budget proposal. It leaves the sequestration caps in place but adds tens of billions of dollars to the so-called Overseas Contingency Operations (OCO) budget, a kind of off-the-books slush fund that pays for US military interventions abroad.

The Obama administration has requested $561 billion for the Pentagon base budget, and OCO war funds of $51 billion. The House Republicans have proposed $523 billion—formally adhering to the sequestration spending caps—while pouring $94 billion into the OCO with the idea that the military can dip into it to meet other spending needs. The two combined sums are roughly equal.

The Senate budget committee, meanwhile, submitted its own proposal Wednesday explicitly rejecting the OCO gimmick proposed by fellow Republicans in the House. Likewise pretending to abide by the budget caps for the Pentagon, it introduced its own gimmick, creating a “deficit neutral reserve fund,” which has no appropriations but serves as a placeholder for additional military spending to be negotiated later this year.

Carter’s testimony Wednesday capped a series of appearances by both the uniformed chiefs and civilian secretaries of the armed services, all of whom issued the direst warnings of what would happen without substantial increases to Washington’s gargantuan military budget.

Air Force Secretary Deborah Lee James, for example, warned that sequestration “is going to place American lives at risk, both at home and abroad.”

“Missions will take us longer, it will cost us lives and create more injuries,” Army Chief of Staff General Raymond Odierno said.

General Martin Dempsey, chief of the Joint Chiefs of Staff, predicted that the US military’s “forward presence will be reduced by a third,” meaning “less influence” in the world.

In his own testimony, Secretary of Defense Carter stressed the need to fully fund the global reach of American militarism, while making it clear that the Pentagon is preparing for even bigger wars, specifically against China, Russia and Iran.

“Across the world,” Carter told the committee, it is only the US armed forces that “stand between disorder and order.” US troops, he said, “stand up to malicious and destabilizing actors”—i.e., anyone challenging US hegemony—”while standing behind those who believe in a more secure, just, and prosperous future”—i.e., US imperialism’s puppets and client regimes.

The Pentagon’s spending, he insisted, must be driven by the 2014 Quadrennial Defense Review, a document that insisted on strengthening the US military’s “global war-fighting capability” and elevated China and Russia as the most likely targets of US military action.

The Pentagon chief said the proposed budget “puts renewed emphasis on preparing for future threats—especially threats that challenge our military’s power projection capabilities.” He indicated that the reduction of troop levels in Afghanistan and Iraq following a decade of wars and occupations provided an opening to prepare the US military for far greater wars.

“Being able to project power anywhere across the globe by rapidly surging aircraft, ships, troops and supplies lies at the core of our defense strategy,” he said. Such unfettered ability to attack and invade anywhere was key to protecting US interests as well as to assuring “freedom of navigation and overflight” and allowing “global commerce to flow freely.” These last supposed principles have repeatedly been invoked in Washington’s escalating confrontation with Beijing over the South China Sea.

Carter specifically pointed to Russia, China, Iran and North Korea, warning that they “have been pursuing long-term, comprehensive military modernization programs to close the technology gap that has long existed between them and the United States.” He added that “significant investments” in both infrastructure and forces were needed “particularly in the western Pacific.”

Carter ticked off the budgets proposed for the main branches of the armed services and what they would pay for, giving a glimpse of the massive scale of the US war machine.

The Army, he said, would receive a base budget of $126.5 billion, supporting the deployment of over 1 million troops—475,000 active duty soldiers, 342,000 in the Army National Guard and 198,000 in the Army Reserve. In terms of major expenditures, the Pentagon is calling for $4.5 billion to spend on attack and transportation helicopters.

For the Navy and Marine Corps, the proposed allocation is $161 billion for 2016, paying for a fleet of 282 warships that year and 304 by 2020. The force consists of 386,000 active-duty and reserve sailors, as well as 222,900 active-duty and reserve Marines. The Navy’s proposed spending on new warships amounts to $5.7 billion for 2016 and $30.9 billion through 2020, paying for two new DDG-51 destroyers a year and two new Virginia-class attack submarines a year, while supporting 11 carrier strike groups.

The proposed budget for the Air Force is $152 billion, supporting a combined force of 491,700 active-duty, guard and reserve airmen. It includes spending $6 billion in the upcoming fiscal year and $33.5 billion through 2020 to acquire a total of 272 F-35A Joint Strike Fighter planes, which have become the most expensive weapons system in the Pentagon’s history. Another $2.4 billion will go to buy refueling tankers, and $904 million will pay for an additional 29 MQ-9A Reaper drones in 2016. The Pentagon proposes to buy 77 of the remotely piloted assassination weapons by 2020 at the cost of $4.8 billion.

In terms of the $50.9 billion OCO war-fighting fund, the lion’s share, $42.5 billion, will go to cover continuing US military operations in Afghanistan, while $5.3 billion is proposed for the new US intervention in Iraq and Syria. Also proposed is $789 million for a “NATO Reassurance” fund, which is to pay for the escalating series of provocative military operations on Russia’s borders.

Finally, Carter said that the Obama administration’s proposed Pentagon budget includes $1 billion in 2016 and $8 billion by 2020 for a key component in the preparation for global war: ensuring the “security, and effectiveness of our nuclear deterrent, as well as the long-term health of the force that supports our nuclear triad.”

The conflict over the China-backed Asian investment bank

Nick Beams

The decision by major European powers to join the $50 billion China-backed Asian Infrastructure Investment Bank (AIIB) is a significant blow to the United States. It is a clear sign that, amidst deepening global stagnation, the economic mechanisms through which the US has exerted its hegemony are breaking down as other imperialist powers assert their independent interests.

The initial blow came last Thursday when the British government of Prime Minister David Cameron announced that it would become a founding member of the bank. An unnamed White House official responded by denouncing “a trend towards constant accommodation” with China that was “not the best way to engage a rising power.”

The US opposition to Britain’s action was underscored by a comment in the Financial Times which noted that in the lexicon of diplomatic rebukes “accommodation” is only one step below “appeasement.”

US opposition proved to be no deterrent, however, as Germany, France and Italy followed the British decision with announcements that they were also seeking to become founding members of the bank.

Other countries in the Asia-Pacific region, including Australia and South Korea, which refused to sign up after intense US opposition last year, are also actively reconsidering their position. Last October, the Australian government reversed a previous decision to back the bank, following an intervention by US President Barack Obama, Secretary of State John Kerry and Treasury Secretary Jack Lew. Australia is reportedly now on the verge of announcing its participation.

In remarks to Congress, Lew said Washington’s main concern over the bank, which is seen as a rival to the US-dominated World Bank and the Asia Development Bank led by its ally Japan, is driven by concern over whether it would “adhere to the high standards that the international financial institutions have developed,” protect the rights of workers and the environment and “deal with corruption issues appropriately.”

Coming from a representative of the US financial establishment—Lew has held a leading post in Citigroup—the expression of concern over corruption is especially hypocritical. A 2011 US Senate report found that leading US banks and investment houses engaged in what amounted to criminal activity, which played a major role in precipitating the 2008 global financial crisis. The same applies to professed concerns over the environment and workers’ rights.

The real motivation for US opposition is that the China-backed AIIB will weaken US economic dominance of the Asia-Pacific region and undermine its drive to ensure continued military supremacy within the framework of the “pivot to Asia.” It opposed Australian participation on the grounds that infrastructure projects financed by the bank—including ports, airports and railways—could play a role in enhancing China’s military and strategic position.

The European powers have clearly concluded that they see no reason why they should sacrifice valuable economic opportunities in order to fall in line behind American strategic objectives, when the US is unable or unwilling to provide anything in return.

The divergence between the US and the European powers was summed up in a comment by Richard Ottaway, the chairman of the British House of Commons Foreign Affairs Committee. The conflict over the bank reflected the fact that Britain and Europe viewed China differently from the US, he said. “The US sees China in a strategic way—as a maritime power in the Pacific. The Europeans see China in commercial terms.”

With the British economy ever more dependent on the speculative and parasitic activities of its major banks and finance houses, participation in the AIIB is seen as another opportunity for the City of London to profit from enhancing the global role of the Chinese currency, the renminbi, as its economic and financial power increases.

The economic motives of other European powers, while having a different emphasis from the British, are no less powerful. They were spelled out by German Finance Minister Wolfgang Schäuble at a joint press conference with Chinese Vice Premier Ma Kai on Tuesday in Berlin. “We want to make a contribution to the positive development of the Asian economy, in which German companies are actively taking part,” he said.

The significance of the conflict becomes apparent when it is placed within the framework of US strategic objectives over the past 25 years. American imperialism viewed the collapse of the Soviet Union in 1991 as the opportunity to proceed with its drive for global domination—the fashioning of a “new world order” as George H.W. Bush put it during his presidency.

This new order was to be characterized by the global domination of American capitalism. In 1992, the Pentagon laid out its strategic objectives in the post-Soviet world, declaring that the aim of American policy was to prevent any power or group of powers from assuming hegemony in any significant region of the world.

This strategy was the basis of US policies during the Asian financial crisis of 1997-98. When the Japanese government brought forward a proposal for a $100 billion fund to help bail out countries caught up in the turmoil, it was vetoed by the US, which insisted that the Washington-based International Monetary Fund had to direct “economic restructuring” across the region. Faced with a head-on conflict with the US, Japan backed down.

The determination of the American ruling class to maintain its position as global hegemony has run into conflict with the decades-long decline in the global position of American capitalism. In response, the corporate and financial elite has resorted with ever greater recklessness to the use of military force.

The explosive economic expansion of China over the period since the Asian crisis has raised again the question: Who will dominate Asia?

Seven decades ago, when the US put in place the foundations of the post-World War II order, establishing both the IMF and the World Bank, it was the undisputed economic hegemon of global capitalism. That is no longer the case, and the European imperialist powers in particular are once again asserting their interests. As the global economic crisis deepens, the conflicts among the imperialist powers will only intensify.

While it is impossible to make specific predictions, the general tendency of development is clear. The US has suffered what the New York Times described as “stinging rebuff from some of its closest allies.” How will it respond? Not through economic concessions, because it no longer has the wherewithal and capability to make them, but through increased political and military provocations.

At the same time, the other major powers will be forced to the conclusion that in pursuit of their economic objectives they need to enhance their military capacities. The conflict over the AIIB is symptomatic of major geo-economic shifts that will have explosive political and military consequences.

Marijuana: Legalize―Don't Advertise

William John Cox

The War on Drugs has proven to be a monstrous mistake resulting in the waste of a trillion dollars and the shameful criminal conviction and incarceration of thousands of Americans. While the end to drug prohibition may not be entirely possible, the more limited movement to decriminalize the use and possession of marijuana is gaining momentum. Those who support ending drug prohibition, but continue to believe drug use is harmful, have the responsibility to find ways to avoid the advertising and promotion of legalized marijuana.

Given the ways of capitalism and the greed of corporate America, how long will it be before highway billboards, radio and television advertisements, and Internet pop-up ads begin to promote the latest and best in marijuana products? "This bud's for you" will take on a whole new meaning.

The American people have learned that the prohibition of intoxicating liquor only led to the glorification of drinking and criminality. Experience has also shown that education and reasonable regulation has led to a substantial reduction in the use of tobacco products. Both of these substances remain readily available and are widely advertised. What's wrong with this picture?

Even though a society may come to believe the prohibition and criminalization of a product is not the best way to confront the problems it causes, does not mean it should also roll over and allow the product to be promoted. Just because people can legally purchase something does not mean it is necessarily good for them. Products such as alcohol, tobacco and marijuana can become habituating and addicting, causing harm to individuals who are enticed by advertising to crave them.

It may be that one small glass of red wine a day can help reduce the risk of heart disease, or that a couple of tokes of marijuana may relieve the pain of some diseases, encourage the appetite of someone suffering from cancer, or perhaps even prevent cancer. Unrestrained recreational use of these substances will, however, lead to harmful consequences in many people who consume them. While warning labels on cigarette packs and cautions to drink responsibly may provide some benefit, warnings are not as effective as avoiding advertising the product in the first place.

Members of the alcohol industry spend billions of dollars each year in an attempt to secure their market share of the lucrative business. The expenditure exposes young people to thousands of television and magazine ads each year, many of which target this impressionable audience.

Advertising by the tobacco industry exceeds that of the liquor industry, amounting to more than $15 billion per year. The money is ostensibly spent to secure brand and customer loyalty, but it also attracts new users, as older ones die off or learn to stop abusing their bodies with tobacco. With tobacco use killing almost six million people each year, the World Health Organization has called on all countries to ban all forms of tobacco advertising, promotion and sponsorship.

The First Amendment provides the right of free speech, and this right has been extended to corporations that make money supplying these legal, albeit risky and inherently dangerous products. The public also requires truthful and factual information in making decisions regarding the purchase and use of the products. Advertising hype is not designed to supply that need.

Can the public protect itself from being misled by the promotion and advertising of inherently harmful products it chooses to not criminalize? Answering that question requires an understanding of the difference between ideological and commercial speech.

There is a difference between a well-researched and balanced article discussing the benefits of a glass of wine each evening or the medical uses of marijuana, and paid commercial advertising depicting the glamour of drinking or touting a marijuana product that provides the greatest high this side of Colorado. Requiring marijuana products to be sold in plain brown paper bags is not the same as allowing pot to be peddled in a psychedelic package.

As late as 1942, a unanimous Supreme Court ruled that the First Amendment posed no "restraint on Government as respects purely commercial advertising." In doing so, the Court said there was a difference between ideological (harm versus benefits) and commercial (advertising) speech.

The issue was reconsidered by the Court in 1976 regarding a Virginia statute that restricted pharmacies from advertising their prices, as being unprofessional conduct. In overruling the statute, the Court said, "If there is a right to advertise there is a reciprocal right to receive such advertising." The opinion did, however, allow for some circumstances, such as false and deceptive advertising, in which commercial speech could be restricted.

Four years later, the Court expanded on its ruling by finding that commercial speech could be protected "from unwarranted governmental regulation" if it "protects not only the speaker but also assists consumers and furthers the societal interest in the fullest possible dissemination of information."

The Supreme Court went on to decide that Rhode Island could not entirely ban liquor price advertising, nor could the Federal Communications Commission ban casino advertising in states where gambling is legal. The Court left it up to the speaker and the audience to "assess the value of accurate and nonmisleading information about lawful conduct."

The Supreme Court looks to the legislative intent of Congress whenever it reviews the constitutionality of a law. In doing so, the Court starts with a "strong presumption of validity" in favor of the policy judgments that led to the legislation. Thus, it is essential that congressional deliberations justify its choice of policy alternatives, based on evidence it considered.

Given the several sides of the issue, could Congress find it better policy to prohibit the advertising of inherently harmful products, instead of outlawing the actual product? The fact that a deliberate decision is made to deal with a social problem by means other than the criminal justice system could well justify a policy to disallow its being advertised and promoted.

Let us assume Congress decided it was not in the best interests of society for the criminal justice system to deal with the sale, purchase, possession or use of alcohol, tobacco and marijuana products. Congress could also find that it was equally in the public interest that manipulative advertising should not be allowed to tempt people into purchasing the products.

In arriving at these decisions, Congress could hold hearings and consider the factual evidence weighing on the issues. It would not be unreasonable for Congress to conclude that consumption of these products is inherently more harmful, than beneficial, to individual users and society in general. Effective prevention of use in a balanced system of justice can rely on prohibiting advertising of a product, rather than prohibiting its sale and possession.

Although it is difficult to imagine, Congress might find the political courage to actually represent the voters and resist the inevitable lobbying campaign by the industries involved, including the mass media that profits from advertising. Constitutional legislation could be passed prohibiting the advertising and promotion of inherently dangerous products.

Would such a law benefit American society? The government would not punish people for their personal choice to indulge in potentially harmful products, it would just prevent the producers of the products from inducing them to do so. Wine would still be available for those wanting to sip their glass a day to keep the doctor away, but young people would not be enticed to chug the latest sugar-laced wine coolers.

Essentially, the advertising and promotion of risky products are inherently false and misleading, even if they truthfully list price differences and promote brand logos. Consumers may think products are safe, if the government allows them to be advertised. Why should anything requiring a warning label be advertised?

Once the concept is established that it is better to disallow advertising of alcohol, tobacco and marijuana products rather than to criminalize their sale, purchase, possession or consumption, there are other similar products Congress might want to consider for inclusion.

Should gambling, including state-sponsored lotteries, be advertised to compulsive gamblers and the poor, who can least afford the risk? Should prescription drugs be directly marketed to patients, especially for off-label use? Should video games, movies and music containing adult-level violence be marketed to children? Should hard-core, particularly violent, pornography, be advertised at all?

It remains to be seen whether corporations should have any constitutional rights, particularly First Amendment rights of free speech and commercial advertising. But for now, a good first step would be to prohibit inherently harmful advertising from all sources.

The best time to restrict or eliminate the advertising of marijuana is when the initial decision is being made to legalize the product, before it achieves legal status and becomes entrenched in the marketplace.