Friday, March 25, 2011

The Reason For Alberta's Deficit-Big Oil

Just like back in the nineties when Alberta gave big tax breaks to big oil, we went into a deficit. And Deja Vu if it didn't happen again.

Canadian Energy Research Institute (CERI) paints a picture of declining production and royalties from Alberta's natural gas industry for the rest of the decade, but sharply rising oilsands royalties.

Royalties from natural gas and the oilsands totalled more than $8.8 billion in 2009, but just over $4.6 billion in 2010 -a big cause of the provincial deficit.

"The government is running a province which assumes they will take in $6 billion to $8 billion a year, and this is not happening," CERI CEO Peter Howard said.

Premier Ed Stelmach has said the province aims to balance its budget by 2013. CERI's estimates suggest that will be a challenge if they are depending on royalties.

The institute estimates Alberta will be back to 2009 royalty levels by about 2016, when oilsands royalties will be more than $7.2 billion, with just $1.1 billion coming from natural gas.



Yep Big Oil gets Royalty breaks that resulted in the deficit and schools get cuts!

Alberta Premier Ed Stelmach says school boards may have to "hold some of their labour costs low" in coming years as the province looks to rebuild its coffers, but critics blame the Tory government for looming teacher layoffs.

Why Canada is in Libya; F-35

Even Harper's original Political Military advisor Derek Burney questions Canada's role in bombing Libya. Burney is also a lobbyist for the Military Industrial complex in Canada so if he doesn't know why we are bombing Libya he is either being disingenuous or he no longer has the confidence of the PMO.

The man who once led Stephen Harper's transition team is questioning the government's military entanglement in Libya.

"We have jumped into Libya with our eyes wide open but does anyone know where it will lead or why Canada is so directly engaged?" Derek Burney, who headed the transition team when the Conservatives took power in 2006, writes in a new paper for the Canadian Defence & Foreign Affairs Institute.

"The emotions and humanitarian instincts to do 'something' are understandable but so, too, are arguments advocating prudence."

Burney, one-time chief-of-staff to prime minister Brian Mulroney and former ambassador to the United States, even wonders whether the Harper government committed air power to Operation Odyssey Dawn to regain global ground after last year's embarrassing loss in the bid for a seat on the UN Security Council.

"Is it because we were snubbed for a Security Council seat and want to re-establish our credentials for 'peacekeeping'?

"Is it because we regard ourselves as an architect of the (UN) Responsibility to Protect concept?" which obligates states or the international community to protect civilian populations.


Well the straight forward anwser is that it might have something to do with the Harper Government (c)(tm)(r) wanting to buy F-35's which are stealth combat planes, not really what Canada needs for Defense of its claims to Arctic sovereignty, or for its defense of North America. But certainly what would be needed to change our role from Peacekeeping, to 'peace-making' which is simply Orwellian Harper speak for war making.

Only a handful of fighter interceptors remain of the many U.S. and Canadian squadrons once available. NORAD’s founding raison d’ĂȘtre, standing by to fight a vast air defence battle, is also gone. Long gone. Those arguments for retaining NORAD are not strong, though, and it is even harder to argue that NORAD is functionally essential for Canada-U.S. defence co-operation. In other words, Canada does not need to be part of a binational aerospace defence command. Nor is a binational homeland defence command necessary.

As Canada uses its outdated CF-18's to bomb Libya it gives the Harpocrites justification to say that they need to upgrade to F-35's.

The other reason is that it is good for his masculine tough guy image. Just as he did in 2006 after first getting elected, he donned his Khaki's and went to Afghanistan for a photo op.

And with a pending federal election being a tough guy internationally helps his tough guy image at home. Of course that means he probably won't be wearing sweater vests this election campaign, unless they are Khaki.



Premier Clueless

Koch Industries registers to lobby Alberta gov't - CBJ.ca - The Canadian Business Journal

Koch Industries registers to lobby AB govt :: The Hook

Billionaire Tea Party financiers register to lobby Alberta government

Alberta premier says he doesn't know Koch brothers or who they are lobbying |


Gee I guess Mr. Ed hasn't been reading the press lately, its so lonely at the top, surrounded by sycophants who read the news and interpret it for you. And who they are lobbying is your Government Mr. Ed.

Koch Industries Handles 25% of Canada Tar Sand Oil

OpEdNews - Article: Koch Industries, Keystone XL Tar Sands Pipeline...BP on the Prairie?
Nope never heard of them says Mr. Ed.

Gee did he cut them a Royalty cheque?

The Tyee – The Kochs: Oil Sands Billionaires Bankrolling US Right

Where is Wisconsin?

Billionaire Conservative Koch Brothers Behind Wisconsin Union Busting?

Class War in Wisconsin - Auburn Journal
The Koch brothers, who own Koch Industries Inc, and whose combined worth is estimated at $43 billion, have now been tied with Walker's election and his push to eliminate collective bargaining rights for public workers. The Kochs have long backed conservative causes and groups, including Americans for Prosperity which organized the Tea Party and which launched a ‘Stand with Scott Walker’ website recently.


ALBERTA FEDERATION OF LABOUR | Alberta unions condemn Wisconsin decision to strip collective bargain

Sounds like they would feel right at home in anti-union Alberta.

ALBERTA FEDERATION OF LABOUR | Unions ask Stelmach to confirm he's not considering U.S.-style attack

Unions defend middle class | Comment | London Free Press

The war in Wisconsin

What does all of this have to do with Canada?

In the past two weeks, major news outlets have published columns echoing the Tea Party attack on unions.

Don't expect guys like the Koch brothers to stay out of Canada's politics. They may already be funding the Wildrose Alliance and Tory leadership candidates in Alberta. (We can't know for sure, because both parties refuse to reveal their donors).

So, be prepared for the war on unions and the middle class to move north.



And of course Alberta is the home to the Anti-Climate Change lobby so the Koch Brothers will feel right at home

Kochs Profit from Canadian Eco-Nightmare

Koch Brothers Behind Environment Killing Measures

What has been less widely reported is that as soon as Walker entered office, he cut environmental regulations and appointed a Republican known for her disregard for environmental regulations to lead the Department of Natural Resources. Walker is opposed to clean energy job policies that might draw workers away from Koch-owned What has been less widely reported is that as soon as Walker entered office, he cut environmental regulations and appointed a Republican known for her disregard for environmental regulations to lead the Department of Natural Resources. Walker is opposed to clean energy job policies that might draw workers away from Koch-owned interests. What has been less widely reported is that as soon as Walker entered office, he cut environmental regulations and appointed a Republican known for her disregard for environmental regulations to lead the Department of Natural Resources. Walker is opposed to clean energy job policies that might draw workers away from Koch-owned interests. interests.

Monday, March 21, 2011

The Job Creator Myth

The Harper Government (c)(tm)(r) has spent months promoting the Liberal tax cuts it inherited as being job creators. Well reality of course is a smack in the face with a wet dishrag sometimes, and in the case of tax cuts to corporations=job creation well, that smack you hear is a hard dose of wet reality.

Canadian CEO's were surveyed by the Globe and Mail about how they will use the upcoming tax cuts they get from the Harpocrites and job creation was not a priority in fact doing the same old same old, that is by definition NOT adding productivity to their operations (something the Bank of Canada has complained about) but just pocketing the tax breaks.

While these CEO's in the same survey challenged the government to invest more in R&D, with their pending tax cut they put the same amount into R&D as they proposed to put into hiring, the very source of productivity. In other words 'please sir can I 'ave some more" say the real begging class; the government should invest in areas we are not willing too. Can you say corporate welfare. These are the so called job creators the Harpocrites are using to justify their Liberal tax cut.

What will you do differently as a result of the corporate tax cut?

No change: 31%

Re-invest in business: 26%
...
Don’t know: 11%

Other: 11%

Grow business: 10%

Research and development: 6%

Hire more people: 6%

Almost three in five executives said investing in education and training should have a high priority in the budget, while 52 per cent said investing in research and development is key. Transportation and infrastructure were a top priority for 42 per cent of those who responded, while attacking the deficit came in fourth place – a high priority for 39 per cent of executives.

Saturday, March 19, 2011

Harper Government (c)(tm)(r)

Welcome to the Orwellian World of the Conservative Government. The Canadian Government becomes the Harper Government (c) (tm)(r) a decision made in 2009 but only revealed this month. As they quietly implemented it across various departments in their continuous use of taxpayer programs and funding for their permanent election campaign.

The “Harper Government” moniker rose to prominence in 2009, when its use was noted in light of a controversy over Conservative MPs posing with giant, mock government cheques bearing the party logo and MPs’ signatures. The mock cheques were consigned to the dust bin, and the “Harper Government” handle went into partial hibernation.

Since December, the “Harper Government” has returned with a vengeance, sprouting like mushrooms across departmental communications.

Scores of recent news releases — from the Canada Revenue Agency to Fisheries and Oceans, Finance, International Trade, Health Canada and Industry Canada — are all headlined by “Harper Government” actions.

Even the Treasury Board Secretariat is using the term.

In this video clip former Minister for the Treasury Board, Stockwell Day deny's, denys, denys--it's the standard Government policy to deny until one is caught.

OdaLies


A 7 million dollar program is cut because the Minister doesn't like it spending less than a million on advocacy. Even though her department mandarins recommend funding Kairos, she cuts the entire program. Claiming it did not meet CIDA objectives, pardon me, it was CIDA that recommended they continue funding Kairos as they had for forty years. Whose objectives did Kairos offend why the Harper Government (c) (tm) (r) of course.

And then she says it was her idea....falling on her sword for the PMO.


While at the same time she cut their funding Jason Kenney delivers a speech in Jerusalem, denouncing Kairos as anti-Semitic. Because they support the call for Israel to end its occupation of Palestine, funny that it is a UN Resolution.

And it was all her idea, yeah sure, this is the same Minister who cut funding to Women's Groups the Conservatives opposed.

Instead of funding advocacy groups, Oda said taxpayers' dollars should go toward programs that " help women in their daily lives, to help them in their communities."


She is the PMO hatchet cutting funding to groups that the PMO considers liberal or left wing which they term; 'advocacy', That they do it is to be expected, that they cover it up with the claim that the groups don't meet their funding objectives is a weasel way out. That the Minister claims it was her idea, is also a denial that this is Harper Government (c) (tm) (r) policy.

Ms. Oda said Friday she personally rejected the Kairos application because it did not fit with CIDA’s objectives. While the application for funding contained some positive elements, there were also some aspects that were of concern.

“For example, over $880,000 was to be used for advocacy, training, media strategies and campaign activities here in Canada,” Ms. Oda told the committee. “I believe this is not the best way to spend public funds intended to help those living in poverty in developing countries.”

Around the same time, Kenney made a speech in Jerusalem, calling Kairos anti-Semitic and hailing the government’s funding cut to the group as evidence of the Conservative battle against anti-Semitism.

KAIROS’ officials also testified on Friday, saying they have asked for an apology from Kenney for calling the group anti-Semitic. Oda, for her part, said Kenney didn’t talk to her about his speech or the funding decision and she learned of his remarks through the media.

In another letter to be published here tomorrow, a writer “commends” the government for cutting funding to KAIROS because it allegedly gets money “funneled” to it by Status of Women Canada which “promotes feminist ideologies, pro-abortion agendas and ‘reproductive rights’.”


Another salvo from the anti-abortion community won’t detract from the seriousness of what Oda has done. It does, however, recall the Tory government’s insistence on tying Harper’s noteworthy policy on overseas aid to women and children to prohibition of birth control.


Modern birth control methods will serve to greatly reduce sexually transmitted diseases racing through parts of the underdeveloped world. Soaring birth rates in those areas threaten to destabilize the world’s ability to feed, house and care for billions living in poverty. This does not seem to matter to Harper.


If KAIROS’s sin in his eyes, and Oda’s, is having worked to educate the Third World to life-saving help, it does not deserve to be cut off by Ottawa.

Prime Minister Stephen Harper has been accused of systematically undermining women in this country by stripping their advocacy groups of tens of millions of dollars and targeting those critical of his government’s anti-abortion stance on the world stage.

In the past two weeks, the federal government has ended funding to 14 women’s groups, including a non-governmental agency that was funded by the Canadian International Development Agency (CIDA) for more than 30 years.

Which, in a way, applies to Kairos, a gaggle of mainstream Canadian Churches, and Liberals, NDP and Bloc Quebecois politicians, outraged over the Tory decision to zap the group’s $7 million annual gift from Canadian taxpayers.

They are outraged that the Tories have also looked in a mirror and have seen Kairos for what it is - a radical, pro- Palestinian movement with a decidedly far- left political agenda.

Like any group, of course, they are entitled to believe whatever they want. But they aren’t entitled to do it with public money and the government has every right to say so. During the 1970s, 80s and 90s, successive federal governments routinely dispatched multi-million dollar cheques to prop up radical left-wing advocacy groups purporting to represent the interests of Canadian women.

United Church moderator Mardi Tindal, for example, wrote to International Cooperation Minister Bev Oda last week saying she was “dismayed” by the government’s decision, adding that Kairos “has also had its good name attacked - again with no credible explanation.”

Oh, there is an explanation. Kairos was outraged in late 2009 when Immigration Minister Jason Kenney accused it of playing a leadership role in a movement to boycott, divest and sanction Israel for its supposed human rights abuses against Palestinians.

Kairos flatly denies this - and its denials are echoed by its many apologists. The facts, alas, belie their claims of innocence. Just as the United Church general council meeting where Tindal was elected moderator in 2009 also criticized Israel - but not its’ apparently peace-loving neighbors - and encouraged its congregations to “study, discern and pray” and undertake anti-Israeli initiatives, “which may include economic boycotts” (against Israel), Kairos has consistently been critical of Israel while conveniently turning a blind eye to the murderous actions of its neighboring enemies.

Kairos, to cite just one example of its anti-Israeli penchant, openly promotes a campaign against Canadian companies “doing business in Israel or the Occupied Palestinian Territories (that are contributing directly or indirectly to violence, occupation or other human rights abuses in the region) ..

Tuesday, March 15, 2011

Deny, Deny, Deny

The worst nuclear crisis ever is upon us, but Tokyo continues to deny the reality of what it faces. As does the International Atomic Energy Agency (IAEA).

IAEA: No Indication of Nuclear Reactor Meltdown in Japan


However under current Japanese leadership it is but a lap dog of Tokyo.
"Yukiya Amano, a veteran Japanese diplomat who heads the IAEA, said the agency was discussing details with Tokyo."

Both their assurances that nothing 'serious' is occurring flies in the face of reality. Over the weekend they went from one to two to three nuclear plants blowing up,

Japan crisis: third explosion raises spectre of nuclear nightmare
Japan's nuclear safety agency said Tuesday's explosion at the plant's No.2 reactor was caused by hydrogen. There was no immediate word on damage, but Jiji news agency quoted the trade ministry as saying radiation levels remained low after the blast, the third at the plant since Saturday.

And as coolant ran out and nuclear power rods were exposed to the atmosphere still denial from Tokyo and IAEA.

Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), expressed confidence Japanese authorities were doing all they could to restore safety at the sites and said a Chernobyl-style disaster was "very unlikely."

He spoke as Japan scrambled to avert a meltdown at a stricken nuclear complex after a hydrogen explosion at one reactor and exposure of fuel rods at another, just days after the devastation that killed thousands.

I have been following the nuclear disaster in Japan as soon as it occurred on Friday, posting updates on my Facebook page. Through out this period as news of the damage to these reactors was reported, the official line, which continues even today, has been deny, deny, deny.

The Japanese government and their UN lacky continue to insist that they 'have it under control', they reassure us that nothing serious or to terrible is occurring,.

The reality as report after report shows is that Japanese authorities and their electrical companies are not in control and lack the resources to actually deal with this crisis.

TOKYO, March 15 | Tue Mar 15, 2011 6:29am EDT

TOKYO, March 15 (Reuters) - Japan's prime minister was furious with the power firm at the centre of the nuclear crisis for taking so long to inform his office about a blast at a stricken reactor plant, demanding "What the hell is going on?".

Kyodo news agency reported that Naoto Kan also ordered Tokyo Electric Power Co on Tuesday not to pull employees out of the Fukushima plant north of Tokyo, which was badly damaged by last week's earthquake and has been leaking radiation.

"The TV reported an explosion. But nothing was said to the the premier's office for about an hour," a Kyodo reporter quoted Kan telling power company executives.

But being too proud to ask for help, which would incur obligation (giri), which is why they have not responded to international offers of help. They would rather deny they require help in dealing with this disaster because that would oblige them to admit to weakness.

Daily denials of the serious nuclear crisis they are facing is belied by hourly reports of yet another explosion, or continuing lack of water to cool the nuclear power rods.

The word Meltdown has been used since Friday, and they deny the reality. Their plants are in critical condition, their are indeed melting down. Whether they are equivalent or like Chernobyl or Three Mile Island or Hanford, is irrelevant. They are in the process of critical collapse. Only if their containment shells hold and the superheated rods are cooled, will there be no meltdown.

Should there be a melt down or two or three, then this situation will be a completely different scenario , another reason reassess Nuclear Power and especially policies regarding closing old plants like these.

These plants were built in the 1970's and even then were problematic.

In 1972, the first warning was issued about the vulnerability of the sort of General Electric reactors used in Fukushima in Japan

Government regulators knew of a heightened risk of explosion in the type of nuclear reactors used at the Fukushima plant in Japan from the moment they went into operation.

Safety inspectors at America's Atomic Energy Commission (AEC) warned as early as 1972 that the General Electric reactors, which did away with the traditional large containment domes, were more vulnerable to explosion and more vulnerable to the release of radiation if a meltdown occurred.

Michael Mariotte, director of the Nuclear Information and Resource Service, said: "The concern has been there all along that this containment building was not strong enough and the pressure containment system was not robust enough to prevent an explosion."

The ageing GE reactors are regarded as less resilient then newer models. Dr Arjun Makhijani, president of the Institute for Energy and Environment Research, said: "They are not designed to contain these explosions. They are not designed to contain an aircraft crashing into it. Modern reactors are significantly different. Designs built from the 1980s onwards don't have the vulnerabilities of mark one reactors."

All six of the reactors at the Fukushima Two plant, which has suffered two explosions, are GE-designed boiling water reactors. Five are the original mark one design and went on line from 1971 to 1979.

And that is also part of their denial, the reality that the reason these plants are so hard to shut down is that they are past their prime and the technology is flawed by comparison to modern nuclear power plants. And despite knowing their shortcomings the Japanese electrical industry and the government kept them operating hoping nothing terrible would ever occur. That is not contingency planning nor risk planning.

Japanese campaign groups have also warned of problems at the Fukushima 2 plant including a failure of the generator when the plant lost power in June last year.

In addition to the Fukushima 2 plant, eight reactors of the same design are in use in Japan at nuclear facilities at Tsuruga, Hamaoke and Shimane. Like the Fukushima plants, all three are also on Japan's main Honshu island.

Nuclear reactors of the same design are in widespread use in America.Of the 104 reactors currently in use, 23 are of the same GE mark two design, according to the US Nuclear Regulatory Commission. Twelve more are a modified version of the boiling water reactor.


And instead of being taken offline they were used beyond their time. This is the core problem of why these plants now are a danger to Japan and the whole planet.

Japanese isolationism and xenophobia are the problem, they no longer are an isolated culture on an isolated island, an island unto themselves. Having entered the atomic age, their island culture now has an impact on the whole planet. Their culture of doing things Japanese style now threatens the planet.



Sunday, March 13, 2011

Food Crisis Behind Revolts

The rapidly rising cost of food is leading to revolts around the world and not just the Middle East.

The cost of food while making profits for Big Agri-Business cartels and those infamous Hedge Funds and Bankers, is impoverishing people.

The global food crisis which began at the end of 2010 mirrors the one in 2008 and the usual reaction to recourse to growing outputs in the hope that prices will go down is insufficient and short-sighted, said De Schutter at a press briefing yesterday.

The “real reason people are hungry” is poverty, he said, because “we have impoverished” small-scale farmers. Policies have favoured a small number of large producers, and now is the time to stray away from an unbalanced agricultural system that maintains poverty, leads to pollution and is heavily dependent on fossil fuels, he said.


And food revolts, which resulted in creating most of the historic revolutions since the French Revolution, the Russian Revolution and even the Iranian Revolution, may be coming to developed advanced Capitalist countries including Canada.

While there are those who blame natural disasters for the problem the real issue is capitalism treats food as a commodity, and trades it on the futures market.

The Food and Agriculture Organization under the United Nations issued a rare alert last month that the drought in north China could put at risk wheat production and also put pressure on wheat prices.

Further, wheat futures in Chicago have soared more than 60 percent in the past year and last month jumped to the highest level since 2008. Corn and soybean prices have also witnessed steep increase.

Food prices are soaring to record levels, threatening many developing countries with mass hunger and political instability. Finance ministers of the Group of 20 leading economies discussed the problem at a meeting in Paris last week, but for all of their expressed concern, most are already breaking their promises to help.

After the last sharp price spike in 2008, the G-20 promised to invest $22 billion over three years to help vulnerable countries boost food production. To date, the World Bank fund that is supposed to administer this money has received less than $400 million.

Food prices are now higher than their 2008 peak, driven by rising demand in developing countries and volatile weather, including drought in Russia and Ukraine and a dry spell in North China that threatens the crop of the world’s largest wheat producer. The World Bank says the spike has pushed 44 million people into extreme poverty just since June.


A senior economist at HSBC has warned that Britain could experience riots if food prices continue to soar in line with the cost of crude oil.

Karen Ward told Sky News that amid "very low" wage growth in the developed world, failing to compensate workers for recent rises in food and energy prices could provoke social unrest in the U.K.

Energy markets -- where prices are near their highest levels since 2008 as battles rage in oil-rich Libya -- are "a significant contributor" to higher food prices, Ward told Sky Tuesday.

Food price inflation has helped spark the uprisings in North Africa and the Middle East that toppled longstanding rulers in Tunisia and Egypt.

Last week, the United Nations said food costs are at their highest point since the agency began tracking them 20 years ago.

"The Great Food Crisis of 2011" is here. That's what the highly respected magazine Foreign Policy is calling the rampant food inflation that is causing problems worldwide.

The British government just completed a two-year study involving 400 experts from 35 countries to assess the global food situation. The results are scary. Here's what the report said:

By 2050 global food supplies will not be sufficient to feed an expanding population. The UN estimates that food production must rise by 70 percent to feed a world population of more than nine billion in 2050. [But] rising demand and surging global population coupled with increasing resource conflicts over land, water, and energy will hamper food production.

And the United Nation's Food and Agriculture Organization (FAO) states that the "double whammy of high food prices and the global economic slump pushed an additional 115 million people into poverty and hunger." Over 1 billion people go hungry every day and it's rising.

2008 was also a bubble year for many commodities as U.S. food prices were up 5.5%. But 2011 isn't as simple as a bubble -- supply-and-demand economics suggest long-term imbalances. We have a real crisis when we combine the dismal long-term outlook with short-term supply shocks caused by the forces of Mother Nature and, arguably, climate change. It is time to be prepared.

The ongoing popular uprisings in North Africa and the Middle East poses the question if other developing countries, including Ghana, may experience similar or other forms of uprisings in the light of the imminent global food crisis of 2011.

In order to answer this question one needs to look at the underlying drivers for the uprisings in both 2008 and now.

In 2008 riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world's attention.

Although food prices eased by the end of 2008, the UN’s Food and Agricultural Organization (FAO) convened a World Summit on Food Security at its headquarters in Rome in November 2009, noting that food prices remain high in developing countries and that the global food security situation has worsened.

In January 2011 it became clear that the world was experiencing a second food crisis and that prices have risen to levels close to or above those prevalent in 2008.

The rice wall

In broad terms, food prices today are at the highest level ever recorded by the UN.

Wheat has risen by 58 per cent in the past 12 months, while corn has soared 87 per cent. Raw sugar prices are up 37 per cent.

Overall the UN food price index climbed by over one-third in the past year, with all food goods advancing.

So why aren't we as bad off as we were in 2008? For one reason only: the key staple of more than half the world's population has not taken off along with the others. Rice.

It has gained only a modest 6.5 per cent in the past 12 months.

"I've never loved rice more than now," gushed Abdolreza Abbassian, a senior economist at the Food and Agriculture Organization in Rome. "Probably rice is the commodity separating us from a food crisis."

In the aftermath of 2008, some Asian countries began stockpiling rice more effectively. But we still need to be hyper-vigilant as today's rising oil prices, combined with some weak harvests, are starting to affect local prices.

Bangladesh, Indonesia and China, for example just announced rice increases of over 20 per cent.

If that seems like dull reading, just pause for a moment to contemplate what the current unrest in the world would be like if Asia were also to boil over should rice shortages become an issue.

At one point in 2008, Britain's MI6 foreign intelligence unit warned that as many as 70 countries might be unhinged by food costs.

Since then intelligence agencies have been keeping a close watch on rising food prices because of two events that tend to follow in their wake: widespread political unrest and mass financial devastation.

The milk rally that sent prices up 49 percent this year, more than any agricultural commodity, may be ending as farmers respond with record production and the costliest cheese in a quarter century curbs demand.

Output in the U.S., the world’s second-largest producer, may rise 1.7 percent to 196 billion pounds in 2011, enough to fill about 34,500 Olympic-sized pools, the Department of Agriculture estimates. Demand will weaken as restaurants cut promotions and grocers raise prices, said INTL FCStone Inc., a New York-based broker. Futures may drop 14 percent to $16.86 per 100 pounds by Dec. 31, a Bloomberg survey of 10 analysts showed.

Dairies are missing out on profits from milk’s biggest rally since at least 1996 as the surge in grain that drove world food prices to a record, contributing to protests in northern Africa and the Middle East, also boosted the cost of feeding cows. While income for grain and cotton growers will rise more than 20 percent this year, earnings at dairies may drop 13 percent, the government estimates.

“Grain farmers are having some of the best years they’ve had in a long time profit-wise, but you couldn’t say that for dairy,” said Bob Cropp, an economist at the University of Wisconsin in Madison who has been studying the industry since 1966. “Dairy facilities are running at the maximum. With a little softening in demand, prices are going to come down.”

Milk futures on the Chicago Mercantile Exchange closed on March 11 at $19.65, a 32-month high. Prices are up 54 percent from a year earlier as importers from Mexico to China increased buying and the rebounding U.S. economy bolstered domestic demand.

Commodities Rally

Milk’s 2011 rally has exceeded those of all agricultural futures traded in New York and Chicago including cotton, which surged 42 percent and reached a record last week. The Standard & Poor’s GSCI Index of 24 commodities advanced 11 percent, and the S&P 500 Index of stocks rose 3.7 percent. As of March 10, Treasuries gained 0.1 percent this year, a Bank of America Merrill Lynch index shows.



MARK COLVIN: We've heard plenty about how the uprisings in the Middle East and north Africa may affect the price of oil, much less about how the price of wheat may have caused them.

Fred Kaufman is a contributing editor at Harper's Magazine, who's published a number of long articles about what he calls the "food bubble".

He points out that when food prices peaked in 2008, there were riots in more than 60 countries. Prices have now gone past that peak again.

I asked him on the line from New York if that was a contributing factor to the revolts in Egypt, Tunisia, Libya and elsewhere.

FRED KAUFMAN: Well I would say so. I mean the food sector inflation rate in Egypt for the two months previous to the revolution was 17 per cent each month.

And of course we know that revolutions are traditionally led by middle class, angry people and in this case what you have is a situation where the price of wheat goes up, all of a sudden, the price of vegetables goes up and milk and if you no longer can feed your kids milk and fresh meat you're going to get very angry if you're a middle class person.

MARK COLVIN: The obvious parallel I suppose is the French Revolution where the price of bread just went up and up and up until people could take it no longer.

FRED KAUFMAN: Or even look at 1848 when the entire content of Europe goes into revolution and this is directly related to tremendous amounts of famine across the continent. Now I'm not saying there's famine, because now the situation with food has changed, which is that people aren't really going hungry because there isn't enough food. One thing we have to realise is that there is more than enough food; there's more than enough food to feed double the world's population.

The issue is not enough food; the issue is can you afford the food? And of course this leads directly into what I've been talking about for the past year and a half, which is speculation in global wheat and food markets.

MARK COLVIN: You call it the food bubble I think. What does that mean?

FRED KAUFMAN: Well, what it means is that there are exterior forces at work forcing up the price of wheat, forcing up the price of global wheat. Because remember that the last food bubble we had in 2008, when all was said and done, the wheat harvest of 2008 was the greatest the world had ever seen and in fact as the statistics are coming in from Russia and as the out, you know, we're seeing what's probably going to happen now that rain and snow has hit China it's looking as though we're going to see quite a good wheat harvest for this year too.

So that there's something else going on and what I discovered was actually there's a tremendous and a new kind of speculation going on by the largest banks in the world, who now perceive food as one of the last bastions of real value on Earth.

MARK COLVIN: Who's driving it then; which banks?

FRED KAUFMAN: They are the usual suspects. I mean of course Goldman Sachs was the first one who came up with this particular sort of food derivative in 1991, but of course as soon as Goldman had figured this thing out and it became very lucrative for them, they were followed by everybody; by JP Morgan, Chase, Deutsche and Barkleys and of course Lehman and AIG in America, which were part of the great financial debacle.

These financial products, what I call food derivatives, really hijacked the global wheat markets, because what they did is they put a tremendous demand pressure on wheat and on wheat futures that was exterior to any supply and demand natural pressure and these products were made, these are what are called long-only products, in other words they were made only to buy wheat futures. There's no mechanism in these products ever to sell and so of course when there's five times the year there's a tremendous demand of hundreds of billions of dollars to buy; this is of course going to have an effect on the global price.

MARK COLVIN: That's extraordinary; a product that you can buy but not sell?

FRED KAUFMAN: Yeah they're called the long only commodity index. And as I say Goldman masterminded this product in 1991 but of course the markets were not completely deregulated throughout the 1990s these are the American futures markets, and so what happened by the end of the 1990s is that the markets were deregulated and so large banking institutions were suddenly allowed to take huge stakes in food futures, which they had not been allowed to do since really before the Great Depression, since the financial regulations had been in place since then.

And after those position limits were given exemptions for these banks they went whole hog and then of course what happened was a perfect storm after 2005, with all the other derivatives and mortgage backed securities and stock markets and currencies tanking, where was a safe haven, where was a refuge? Well it was in commodities.

MARK COLVIN: Are these though like the derivatives that none of us understood before the global financial crisis but which led to it?

FRED KAUFMAN: Well you know what's so interesting is that actually a wheat future is the world's first financial derivative. So derivatives have been around for a long time and in fact these financial derivatives are not all bad in the sense that they help people who actually buy and sell wheat, the farmers and the processors, they help them manage their risks.

The problem with derivatives is when they subvert the market. In other words when they're no longer being used by what are called the bona fide hedgers, the people who actually have a stake in the markets, and this is what the banks have done. They realised, there's a way that we can eke money out of this mathematically and they eked out tremendous profits.

The current crop of deposed heads of state may have Wall Street to thank for their forced retirement. While the causes of helter-skelter commodity prices are complex -- natural disasters such as floods and droughts can play a big role, as can interest-rate shifts engineered by central bankers around the globe -- rapid-fire trading and speculation on the Street can magnify the problem.

In an era when vast pools of capital shift in and out of markets for basics like food and oil with the a few computer keystrokes, trading can cause prices to see-saw in ways that are sometimes harrowing and hard to control.

And this wouldn't be the first time. Less than three years ago, another food crisis was marked by rampant financial speculation that helped cause prices to skyrocket and prompted regulators to examine whether traders were also gaming oil prices. At the time, governments were also flush with enough cash to boost food subsidies and calm protesters. This time around, governments ravaged by the crisis lack the financial wherewithal to tamp down prices with subsidies.

Wall Street says that trading keeps food and energy markets liquid, allowing farmers to plan ahead when planting their crops or helping oil producers to know how much crude they can ship. Often, of course, that's true. But there also can be a more brutal calculus at work: big price spikes are good for traders holding onto wheat or oil contracts, allowing them to stuff more money into their wallets while families struggling to make ends meet thousands of miles away suddenly find that it's become too expensive to feed themselves.

The top lobby group for the derivatives industry, the International Swaps and Derivatives Association, says it supports financial regulatory reform, but resists blame for pricing problems. "Although speculation is often blamed for causing problems in markets, the economic evidence shows that it is in fact a necessary activity that makes markets more liquid and efficient," ISDA Head of Research David Mengle wrote in a September memo.

Meanwhile, derivatives trading remains a largely under-regulated affair, even though such gambling was a major cause of the financial crisis in the United States and broadened the severity of the entire debacle.

It is now widely accepted that speculation helped fueled the price hikes of 2008: Economists at Princeton University, World Bank, the European Commission, the Peterson Institute for International Economics, the International Monetary Fund, Rice University, the Massachusetts Institute of Technology, and the Texas A&M University Agricultural and Food Policy Center have all published studies indicating that speculation played a role in 2008's commodity-price swings.

"Look, you have no market without speculators, so I like speculators," CFTC Commissioner Bart Chilton told HuffPost. "But it's more like a casino right now than anything else."

Libya A Diversion

The civil war in Libya is acting as a convenient cover for more repressive American backed regimes in the Middle East to continue their oppressive regimes and attack their citizens who are protesting. By focusing on Libya the silence of the International community is deafening when it comes to these attacks on legitimate protests.

Police fired tear gas to disperse hundreds of anti-government demonstrators blocking access to the financial district of Bahrain's capital on Sunday, as sectarian tension escalated in this tiny island kingdom.

The Persian Gulf kingdom, home to the headquarters of the U.S. Navy's 5th Fleet, has seen weeks of demonstrations led by Shiites, who make up a majority of the population but say they are discriminated against by the Sunni royal family.

The confrontations Sunday were among the most violent since the military killed seven protesters on Feb. 17. They followed similar clashes Friday when security forces fired what protesters said were rubber bullets, and pro-government gangs armed with sticks beat back several hundred protesters near the royal palace.

At least one person was killed and scores were hurt on Sunday when Yemeni police fired live rounds and tear gas at protesters in Sanaa demanding an end to President Ali Abdullah Saleh's 32-year rule, medical sources said. Meanwhile, protests continued in Saudi Arabia, Bahrain and Oman.

Four people, including a 12-year-old boy, were killed in protests around Yemen on Saturday, bringing the total number of dead during two months of unrest to above 30.


Yemeni security forces also fired tear gas and live ammunition for a second day in a bid to force students to vacate a protest camp near Sana'a University. Eyewitnesses say police and pro-government supporters also used wooden clubs and knives to attack the protesters. Dozens of casualties were reported.

Al-Jazeera TV reported that protesters in the southern Yemeni port city of Aden attacked and set fire to a police station for the second time in 48 hours. Al-Arabiya TV reported anti-government protesters also clashed with police in the city of Taiz, north of Aden, injuring several.

Yemeni protesters across the country have been demonstrating since mid-February, amid calls for the resignation of veteran President Ali Abdallah Saleh, who has offered sweeping concessions to the protesters.

In Lebanon, tens of thousands of supporters of the anti-Syrian March 14th coalition turned out in Beirut’s Martyr’s Square to commemorate the 2005 Cedar Revolution that forced Damascus to withdraw its troops from the country.

- Morocco's King Mohammed VI promised sweeping constitutional reforms, including real powers for a popularly elected prime minister instead of a royal appointee, as well as a free judiciary.

In his first speech after uprisings across the Arab world and less than a month after protests erupted in Morocco for more social justice and limits on royal powers, the king Wednesday pledged to draw up a new draft constitution.

The live broadcast was the first time the king has delivered an address to the nation since thousands of people demonstrated in several cities on February 20 demanding political reform and limits on his powers.

There have been other peaceful rallies since then, including in the capital Rabat and the country's biggest city Casablanca, with young activists campaigning for greater democracy using the Facebook social network to call for new demonstrations on March 20.

Six people were killed in unrest that erupted after demonstrations on February 20, including five found burned to death in a bank set ablaze by people whom officials labelled vandals.

Another 128, including 115 members of the security forces, were wounded in the violence and 120 people were arrested, the interior ministry said.

Dozens of vehicles and buildings were also damaged or set alight.



F35 boondoogle

So the Parliamentary Budget Office declares that the Harpocrites have low balled the costs of their F35 fighter purchase, which they sole sourced. They say prove it...that's hard to do when the DOD fails to provide the PBO with any cost estimates, being under the cone of silence imposed by the PMO.

The F35 is a white elephant that has not gotten off the runway yet, you want too know the costs of this ,OK that's easy you just have read the press...
The American and International press that is. Something the PBO did while the Harpocrites continue to deny, deny, deny....So what did Lockheed Martin promise the Harpocrites?

After all Lockheed Martin now also does the information collection for Stats Canada as it does for Stats UK.


Ironically the only persons to protest the mandatory census law in Canada and get charged, which the Harpocrites used to justify the canceling of the Long Form census, were Anti-War/ Anti-Lockheed Martin protesters.


Gates Shakes Up Leadership for F-35 - NYTimes.com

McCain Says F-35 Cost Overruns Have Been `Obscene': Video - Bloomberg


The cost overrun on the main engine for the Lockheed Martin Corp (LMT.N) F-35 fighter jet has grown by $600 million over the past year, despite tough cost-cutting measures by engine maker Pratt & Whitney, a unit of United Technologies Corp (UTX.N), a Navy document shows.

The total cost to complete the Pratt F135 engine is now estimated to be $7.28 billion -- $2.5 billion more than the $4.8 billion initially projected for the engine, according to the document, which was first reported by Aviation Week magazine on its website on Wednesday.

That is an increase of $600 million from the $1.9 billion cost overrun that was reported last year by the House Armed Services Committee.

Pratt spokeswoman Erin Dick said she was not familiar with the new number, and emphasized that the company's aggressive cost-cutting measures were taking effect.

Pentagon officials disclosed last week that the F-35 joint strike fighter program so far has exceeded its original cost estimates by more than 50 percent.

These revelations come as no surprise considering the history of this program. The Government Accountability Office concluded that F-35 estimated acquisition costs have increased $46 billion and development extended two-and-a-half years compared to the program baseline approved in 2007.

The price per aircraft projected at $69 million in 2001 is now up to $112 million, according to GAO. The Pentagon plans to acquire 2,443 jets for the Air Force, Navy, and Marine Corps. Foreign nations also are expected to buy the aircraft.

A congressional auditor said Thursday that the Joint Strike Fighter, the Pentagon's most expensive weapons program, "continues to struggle with increased costs and slowed progress," leading to "substantial risk" that the defense contractor will not be able to build the jet on time or deliver as many aircraft as expected.

Michael Sullivan, the U.S. Government Accountability Office's top analyst on Lockheed Martin's jet fighter, also known as the F-35 Lightning II, told the Senate Armed Services Committee in a hearing that the cost of the program has increased substantially and that development is 2 1/2 years behind schedule.

The United States plans to buy about 2,400 of the fighter jets for the Air Force, the Marine Corps and the Navy. The projected cost for the program appears to have increased to $323 billion from $231 billion in 2001, when Bethesda-based Lockheed won the deal, according to Sullivan. Eight other countries -- Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- also plan to buy the jets.

The cost to build the plane is now expected to be $112 million per aircraft, according to a GAO auditor.



US Joint Strike Fighter (F-35) Hits Afterburners on Cost Overrun


POSTED BY: Robert Charette / Fri, March 12, 2010

The US Department of Defense officially announced that the Joint Strike Fighter aka F-35 Lightning II will breach a Nunn-McCurdy Amendment critical threshold on 1 April - an appropriate day, I think.

The Nunn-McCurdy Amendment says that a major defense program is considered to have incurred a "critical breach" if it exceeds the current baseline cost estimate by more than 25% or the original baseline cost estimate by 50%.

Defense officials told the US Senate Armed Services Committee in a hearing yesterday that the estimated cost per F-35 aircraft had risen from $50.2 million to somewhere between $80 to $95 million in 2002 constant dollars. The program has also slipped its schedule by at least two and a half years as well for the USAF and Navy versions of the aircraft (it was slipped by 2 years in 2004 as well).

As a result of the breach, the DoD must certify to the US Congress that the program is essential for national security, which it will, of course; and Congress - which is very unhappy with the program's management (the government's program manager was recently fired) - will continue to fund the F-35 because there is little other choice.

The other eight nations participating in the program - Australia, Canada, Denmark, Italy, the Netherlands, Norway, Turkey and the U.K. - aren't going to be happy about the cost increases either. I suspect some sweetheart deal will be made to make them less unhappy.

The F-35 program, which has a total life cycle cost of over $1 trillion dollars, was promised to be a "model acquisition program" which would avoid the cost overruns and schedule slips of past aircraft programs like the F-22 Raptor and provide an "affordable next generation strike aircraft."

The JSF website says that, "The focus of the program is affordability -- reducing the development cost, production cost, and cost of ownership of the JSF family of aircraft."

They may want to now amend that sentence.


The Australians are now seriously reconsidering their purchase of the F35

Because the RAAF’s Hornets are aging, Canberra approved the purchase of
Super Hornets as an interim aircraft between the classic Hornet and the
F-35. Aerospace industry and military officials contend that without the
Super Hornet to make the task of integration incremental, the shift
from Hornet to F-35 would likely have become a nightmare of increased cost, complexity and schedule overruns.


And yes Joe and Janey Canuk there is an alternative to this overpriced piece of war machinery...And Japan is looking at buying it....

The F-35, otherwise known as the ball and chain seemingly the entire Western world finds itself chained to, is probably not looking so good to Tokyo right now.

Now, delays suggest the F-35, another stealthy, state-of-the-art option, will not be available until 2020, which could leave a longer-than-acceptable gap for Japan.

Enter the Eurofighter, which is not as advanced as the F-22 or F-35 _ known as fifth-generation fighters_ but is already in service.

The supersonic aircraft, which made its first flight in 1994, is used by six countries: Germany, Italy, Spain, Britain, Austria and Saudi Arabia. Its makers are looking to sell the fighter to Greece, Denmark, Romania, Qatar and India. It is believed to cost about $100 million per aircraft.

A big part of the Eurofighter sales pitch is that it will not tightly restrict the transfer of technology, which means some of it could eventually be built in Japan _ a significant plus for Japanese planners concerned with domestic industry. The U.S. options may not be as generous.

"The Eurofighter group has offered Tokyo lots of sweeteners, including industrial participation," he said. "If the U.S. side can't come up with something equally attractive, then I think it will be difficult for Tokyo to choose a less beneficial deal."

Christopher Hughes, a Japan specialist and political scientist at the University of Warwick, said he believes Tokyo may go for the Eurofighter as a gap-filler, then buy the F-35 once it is ready.

"My feeling is that the Eurofighter might have a chance, but not as the main F-X," he said. "It ticks a lot of boxes and is ready to go, and whilst not cheap, probably nowhere near as costly as the F-35."

Besides budget Hawks like McCain even the Conservative think tank the Hudson Institute is critical of the F35 boondoggle.

Do you know "Cheop's Law"? Named for the Pharaoh who built the great pyramid, and postulated by the author Robert Heinlein, it runs:"Nothing ever gets built on schedule or within budget." Anyone who questions the wisdom of this maxim should examine the Defense budgets of the world's democracies, apart from the average home remodeling project.

The US should be getting better results for the money it spends. The quality of an F-22 air superiority fighter , for example, is not in question, but if the President and Congress decide that we can only afford 187 of them, compared to a certified need for 380, then something is terribly wrong. The same problem of excessive costs leading to a severely curtailed procurement, afflicted the B-2 bomber: only 21 were bought when the air force needed about 120. Today, the F-35 Joint Strike Fighter is in danger of being canceled or curtailed due to an estimated overall 65% cost increase since 2002.
The problem with the military projects in the US is that it is their form of state capitalism, which Eisenhower called the 'Military Industrial Complex.'

"Big military contractors, like Lockheed Martin, Northrop Grumman or Boeing, have a relationship with the government that is unusual and tight. In some ways, they operate almost as wholly-owned subsidiaries of the Pentagon, which can provide the bulk of their revenues."

Friday, March 11, 2011

Herbert Hoover and the Labor Movement

Since the racist reactionary neo-conservative right wing, the so called Tea Party, has taken over the Republican party during the "worst recession since the Great Depression" and is behind the recent attacks on union rights and the public sector in Wisconsin and around the U.S.

Let's go back to the Republican President during that time; Herbert Hoover, and see what his relationship was to the Labor Movement of his day and his political economic solution to America's post war problems.

The whole of Hoovers chapter on Labour from his Memoirs is posted below.


My views on labor relations in general rested on two propositions which I ceaselessly stated in one form or another:

First, I held that there are great areas of mutual interest between employee and employer which must be discovered and cultivated, and that it is hopeless to attempt progress if management and labor are to be set up as separate "classes" fighting each other. They are both producers, they are not classes.

And, second, I supported continuously the organization of labor and collective bargaining by representatives of labor's own choosing. I insisted that labor was not a "commodity."

On September 5, 1925, I stated:
It is my opinion that our nation is very fortunate in having the American Federation of Labor. It has exercised a powerful influence in stabilizing industry, and in maintaining an American standard of citizenship.


He was on good terms with Samuel Gompers, the founder of the AFL and even asked for his help when Democrats were smearing him during an election. Gompers died in 1924, so this must have occurred during an election campaign earlier than the 1928 election.

"The Democratic underworld made a finished job at these low levels with several favorite libels Another attack was laid on with a defter touch. Some years before, I had taken an interest in a group of young men to enable them to buy a ranch near Bakersfield, California. From over devotion, they had named it the "Hoover Ranch" and had painted the name on the gatepost. Agents of the Democratic County Committee painted a sign "No White Help Wanted" and, hanging it on the gate below the name, had it photographed and distributed the prints all over the country. The reference was to the employment of Asiatics. The ranch never had employed any such help. Through my friend Samuel Gompers, I at once secured an investigation by the Kern County labor union leaders. Their report was an indignant denial, but we were never able to catch up with the lie. This smear was used for years afterwards."
The Presidential Campaign of 1928
Hoover was proud of his relationship to the American Labour Movement, and despite having to intervene in the Great Rail Strike he placed the blame squarely on finance capital, the bankers on Wall Street.

In a statement from his memoirs his critique of finance capital is as pertinent today as it was then.
He blames the continued conflict not on the owners or workers, Hoover was of the progressive school that saw government as a partnership of the productive classes; workers and owners. Instead he blames continued conflict in the rail industry on the Stock Brokers and Investment Bankers of the day.

It is a safe generalization for the period to say that where industrial leaders were undominated by New York promoter-bankers, they were progressive and constructive in outlook. Some of the so-called bankers in New York were not bankers at all. They were stock promoters. They manipulated the voting control of many of the railway, industrial, and distributing corporations, and appointed such officials as would insure to themselves the banking and finance. They were not simply providing credit to business in order to lubricate production. Their social instinct belonged to an early Egyptian period.
Hoover thus exemplified the early 20th Century American Producer ideal, that all Americans were producers, either farmers or workers, even the capitalist. Producerism resulted in political economic ideologies of wealth redistribution popular at the end of WWI; both Social Credit and the ideal of Cooperative Socialism.

Hoover offers a liberal / utilitarian compromise between these two. Hoovers ideas came from his engineering background, which was the new management ideal that developed immediately after WWI.

It is reflected in Hoovers ideal of a scientific solution to American economic problems.
typical is the picture of the engineer presented by J.E. Hobson, Director of
Stanford's Research Institute in the 1950:" the engineer is not playing with
scientific matters for the pleasure he derives from his studies he has a very
specific purpose an objective in mind: that of applying his technical knowledge
to an economic problem".

This concept of scientific social engineering is an American phenomena reflected in Scientific Management that resulted in Fordism , and the idea of Technocracy based on Thorstien Veblen's (a Wisconsinite)
"The Engineer and the Price System

Hoover was no Tea Party Republican, nor was he an Ayn Rand individualist nor did he embrace the economics of the Austrian School, he embraced scientific management of the political economy while having a similar distrust of finance capital as Veblen.


His American Individualism was not that of the American Libertarian Right nor the current Republican leadership.We would call him a Progressive Conservative in the Canadian context or a Liberal Democrat in the UK. Something Left Wing Historian William Appleman Williams goes to great pains to document.

The Postwar Need of the United States for Reconstruction

It was apparent that from war, inflation, over-expanded agriculture, great national debt, delayed housing and postponed modernization of industry, demoralization of our foreign trade, high taxes and swollen bureaucracy, we were, as I have said, faced with need for reconstruction at home. Moreover, not only were there these difficulties arising from the war but there was the letdown from the nation's high idealism to the realistic problems that must be confronted. Deeper still was a vague unrest in great masses of the people.
Our marginal faults badly needed correction. We were neglecting the primary obligations of health and education of our children over large backward areas. Most of our employers were concertedly fighting the legitimate development of trade unions, and thereby stimulating the emergence of radical leaders and, at the same time, class cleavage. The twelve-hour day and eighty-four-hour week were still extant in many industries.
During my whole European experience I had been trying to formulate some orderly definition of the American System. After my return I began a series of articles and addresses to sum up its excellent points and its marginal weaknesses.
Constantly I insisted that spiritual and intellectual freedom could not continue to exist without economic freedom. If one died, all would die. I wove this philosophy, sometimes with European contrasts, into the background of my addresses and magazine articles on problems of the day. Along with these ideas, I elaborated a basis of economic recovery and progress. I did not claim that it was original.2
It involved increasing national efficiency through certain fundamental principles. They were (a) that reconstruction and economic progress and therefore most social progress required, as a first step, lowering the costs of production and distribution by scientific research and transformation of its discoveries into labor-saving devices and new articles of use; (b) that we must constantly eliminate industrial waste; (c) that we must increase the skill of our workers and managers; (d) that we must assure that these reductions in cost were passed on to consumers in lower prices; (e) that to do this we must maintain a competitive system; (f) that with lower prices the people could buy more goods, and thereby create more jobs at higher real wages, more new enterprises, and constantly higher standards of living. I insisted that we must push machines and not men and provide every safeguard of health and proper leisure.
I listed the great wastes: failure to conserve properly our national resources; strikes and lockouts; failure to keep machines up to date; the undue intermittent employment in seasonal trades; the trade-union limitation on effort by workers under the illusion that it would provide more jobs; waste in transportation; waste in unnecessary variety of articles used in manufacture; lack of standard[s] in commodities; lack of cooperation between employers and labor; failure to develop our water resources; and a dozen other factors. I insisted that these improvements could be effected without governmental control, but that the government should cooperate by research, intellectual leadership, and prohibitions upon the abuse of power.
I contended that within these concepts we could overcome the losses of the war.
Aside from the better living to all that might come from such an invigorated national economy, I emphasized the need to thaw out frozen and inactive capital and the inherited control of the tools of production by increased inheritance taxes. We had long since recognized this danger, by the laws against primogeniture. On the other hand, I proposed that to increase initiative we should lower the income taxes, and make the tax on earned income much lower than that on incomes from interest, dividends, and rent.
I declared that we should have governmental regulation of the public markets to eliminate vicious speculation, and that we must more rigidly control blue sky stock promotion.
At that time these ideas were denounced by some elements as "radical."

2 Twenty years later an economic institution in Washington, with loud trumpet-blasts of publicity, announced this as a new economic discovery.


I came across the Hoover memoirs thanks to this interesting article;

John L. Lewis as Herbert Hoover's Secretary of Labor


In *The Memoirs of Herbert Hoover: The Cabinet and the Presidency
1920-1933,* pp. 221-2, Hoover wrote as follows concerning his choice of a
Cabinet after his election in 1928:

"When I formed the Cabinet, I came under strong pressure to appoint John L.
Lewis Secretary of Labor. He was the ablest man in the labor world. In view,
however, of a disgraceful incident at Herndon, Illinois, which had been
greatly used against him, it seemed impossible. He, however, maintained a
friendly attitude. As he stated publicly in later years, 'I at times
disagreed with the President but he always told me what he would or would not
do.' Lewis is a complex character. He is a man of superior intelligence with
the equivalent of a higher education, which he had won by reading of the
widest range. He could repeat, literally, long passages from Shakespeare,
Milton, and the Bible. His word was always good. He was blunt and even brutal
in his methods of negotiation, and he assumed and asserted that employers
were cut from the same cloth. His loyalty to his men was beyond question. He
was not a socialist. He believed in 'free enterprise.' One of his favorite
monologues had for its burden: 'I don't want government ownership of the
mines or business; no labor leader can deal with bureaucracy and the
government, and lick them. I want these economic royalists on the job; they
are the only people who have learned the know-how; they work eighteen hours a
day, seven days a week; my only quarrel with them is over our share in the
productive pie.'

"If Lewis's great abilities could have been turned onto the side of the
government, they would have produced a great public servant."


(There is no "Herndon, Illinois"; this is obviously a misprint for "Herrin,
Illinois." See http://en.wikipedia.org/wiki/Herrin_massacre and
http://www.geocities.com/Heartland/7847/massacre.htm for the details of the
1922 "Herrin massacre.")

Anyway, Hoover decided to re-appoint the Harding-Coolidge Secretary of Labor,
James J. Davis. http://en.wikipedia.org/wiki/James_J._Davis But in November
1930, a second opportunity arose to appoint Lewis. Davis was elected to the
US Senate from Pennsylvania and Hoover had to choose a succesor.

According to Irving Bernstein, *The Lean Years: A History of the American Worker,
1920-1933*, p. 354

"The American Federation of Labor had traditionally regarded the Department
of Labor as its own and the Secretary of Labor as its voice in the Cabinet.
Gompers had played the decisive role in the creation of the Department on
March 4, 1913. No one from outside the AFL had ever been Secretary of
Labor...Shortly after the Davis announcement, [William] Green [Gompers'
successor as head of the AFL] called at the White House to ask the President
to name a man from the Federation. He suggested five prominent leaders:
William L. Hutcheson of the Carpenters, John L. Lewis of the Miners, Matthew
Woll of the Photo-Engravers, John P. Frey of the Metal Trades, and John R.
Alpine of the Plumbers. Green urged Hoover to 'maintain the precedent set by
your predecessors.'

"The President, however, chose to break with tradition. He appointed William
N. Doak of the independent Brotherhood of Railroad Trainmen as Secretary of
Labor. In Hoover's judgment the AFL could be ignored even on an issue of
moment."

The idea of Lewis as Hoover's Secretary of Labor intrigues me in part because
the two men were philosophically compatible in many ways. I don't just mean
Lewis' opposition to socialism and communism--that was commonplace among
American trade unionists. What was more unusual is that Lewis shared the
engineer Hoover's enthusiasm for technological advance and modernization.
Notoriously, many labor leaders opposed the introduction of new technology
for fear it would put people out of work. Lewis, however, wanted the coal
industry to become more modern even if that meant employing fewer coal
miners. Mechanization would help put out of business the smaller, less
efficient mines that were driving down coal prices and wages. As Lewis put
it, "We decided it is better to have a half million men working in the
industry at good wages...than it is to have a million working in the industry
in poverty." (Bernstein, p. 225) Moreover, Lewis endorsed Hoover for the
presidency not only in 1928 but for re-election in 1932 as well (despite
Hoover's having turned him down for Secretary of Labor twice). Lewis'
politics later in the 1930's could hardly have pleased Hoover, but in 1940
they were allies again--Lewis even trying to get the Republicans to nominate
Hoover for president on a stay-out-of-the-war platform.


The Memoirs of Herbert Hoover: The Cabinet and the Presidency

1920-1933,


CHAPTER 15
___________________________________________________________
LABOR RELATIONS
From a technical point of view labor problems were in the hands of the Secretary of Labor, James J. Davis. He was a most amiable man who through his natural abilities had climbed from the ranks on the ladder of labor union politics. He was skillful in handling industrial disturbances—"keeping labor quiet," as Mr. Coolidge remarked. He proved to be good at repair of cracks. He had a genuine genius for friendship and associational activities. If all the members of all the organizations to which he belonged had voted for him, he could have been elected to anything, any time, anywhere.
When I accepted membership in the Harding Cabinet I had stipulated that I must have a voice on major policies involving labor, since I had no belief that commerce and industry could make progress unless labor advanced with them. Secretary Davis was very cooperative. I have already related my part in the Economic Conference of 1921, which bears upon these activities.
My views on labor relations in general rested on two propositions which I ceaselessly stated in one form or another:
First, I held that there are great areas of mutual interest between employee and employer which must be discovered and cultivated, and that it is hopeless to attempt progress if management and labor are to be set up as separate "classes" fighting each other. They are both producers, they are not classes.
And, second, I supported continuously the organization of labor and collective bargaining by representatives of labor's own choosing. I insisted that labor was not a "commodity." I opposed the closed shop and "feather bedding" as denials of fundamental human freedom.

I held that the government could be an influence in bringing better relations about, not by compulsory laws nor by fanning class hate, but by leadership.
The labor unions in that period were wholly anti-Socialist and anti-Communist. On September 5, 1925, I stated:
It is my opinion that our nation is very fortunate in having the American Federation of Labor. It has exercised a powerful influence in stabilizing industry, and in maintaining an American standard of citizenship. Those forces of the old world that would destroy our institutions and our civilization have been met in the front-line trenches by the Federation of Labor and routed at every turn.1

UNEMPLOYMENT INSURANCE
One result of the Industrial Conference of 1919 was an attempt on my part to convince the private insurance companies that it was to their advantage as well as that of the people at large to work out a method of unemployment insurance. I spoke on the subject at the Metropolitan Life Insurance Company managers' conference on January 27, 1923, stating my belief that in some industries, such as the railways and the utilities, the fluctuations in employment were not widespread, and that there was in them actuarial experience which would give a foundation and a start to such an insurance. However, the companies did not wish even to experiment with it.

CHILD LABOR
The Federal statutory prohibition of child labor had been declared unconstitutional by the Supreme Court. I had joined during 1920 in several efforts to secure a new Constitutional prohibition. Soon after I entered the Cabinet Senator Lenroot consulted me about the text of a new Constitutional amendment which he proposed to introduce into the Congress. I objected to his draft, as he had placed the age limit— eighteen—so high as to generate great public opposition. I agreed that this standard was ultimately desirable, but I feared that the lunatic fringe was demanding two years more than was attainable.

Senator, however, refused to change it and passed the amendment through the Congress. I was proved right as to the strength of the opposition. I spoke several times in support of the amendment, for instance, in April and December, 1921, and June, 1922.
When I became President I urged the adoption of the amendment by the states, but some of them, particularly the Democratic-controlled ones, would not ratify it. Roosevelt during his four years as governor of New York did not give more than lip service to its passage.
In the meantime, the agitation, particularly of the American Child Health Association, drove many of the Republican states to pass better laws prohibiting child labor. By the end of my administration in 1932 this evil was largely confined to the backward states.

ABOLISHING THE TWELVE-HOUR DAY
For the practical improvement of working conditions I undertook a campaign to reduce the work hours in certain industries. This black spot on American industry had long been the subject of public concern and agitation. Early in 1922 I instituted an investigation by the Department of Commerce into the twelve-hour day and the eighty-four hour week. It was barbaric, and we were able to demonstrate that it was uneconomic. With my facts in hand I opened the battle by inducing President Harding to call a dinner conference of steel manu-facturers at the White House on May 18, 1922.
All the principal "steel men" attended. I presented the case as I saw it. A number of the manufacturers, such as Charles M. Schwab and Judge Elbert H. Gary, resented my statement, asserting that it was "unsocial and uneconomic." We had some bitter discussion. I was supported by Alexander Legge and Charles R. Hook, whose concerns had already installed the eight-hour day and six-day week. However, we were verbally overwhelmed. The President, to bring the acrid debate to an end, finally persuaded the group to set up a committee to "investigate," under the chairmanship of Judge Gary.
I left the dinner much disheartened, in less than a good humor, resolved to lay the matter before the public. The press representatives were waiting on the portico of the White House to find out what this meeting of "reactionaries" was about. I startled them with the
information that the President was trying to persuade the steel industry to adopt the eight-hour shift and the forty-eight-hour week, in place of the twelve-hour day and eighty-four-hour week. At once a great public discussion ensued. I stirred up my friends in the engineering societies, and on November 1, 1922, they issued a report which endorsed the eight-hour day. I wrote an introduction to this report, eulogizing its conclusions, and got the President to sign it. We kept the pot boiling in the press.
Judge Gary's committee delayed making a report for a year—until June, 1923—although it was frequently promised. They said that the industry, "was going to do something." When their report came out, it was full of humane sentiments, but amounted merely to a stall for more time. I drafted a letter from Mr. Harding to Judge Gary, expressing great disappointment, and gave it to the press. The public reaction was so severe against the industry that Judge Gary called another meeting of the committee and backed down entirely.
On July 3 he telegraphed to the President, saying that they would accede. I was then with Mr. Harding at Tacoma en route to Alaska. He had requested me to give him some paragraphs for his Fourth of July speech. I did so, and made the announcement of the abolition of the twelve-hour day in the steel industry a most important part of the address. He did not have time to look over my part of his manuscript before he took the platform. When he had finished with the American Eagle and arrived at my paragraphs, he stumbled badly over my en-tirely different vocabulary and diction. During a period of applause which followed my segment, he turned to me and said: "Why don't you learn to write the same English that I do?" That would have required a special vocabulary for embellishment purposes. Anyway, owing to public opinion and some pushing on our part, the twelve-hour day was on the way out in American industry—and also the ten-hour day and the seven-day week.
When I became Secretary of Commerce, the working hours of 27 per cent of American industry were sixty or more per week, and those of nearly 75 per cent were fifty-four or more per week. When I left the White House only 4.6 per cent were working sixty hours or more,
while only 13.5 per cent worked fifty-four hours or more. This progress was accomplished by the influence of public opinion and the efforts of the workers in a free democracy, without the aid of a single law —except in the railways.

INDUSTRIAL CONFLICTS
During the years of my service in the Department we had comparatively little labor disturbance. Because of general prosperity and increasing efficiency, wages were increasing steadily in unorganized as well as organized industries—in the former to some degree because employers stood off organization by paying wages at least as high as those in the organized industries. But, in the main, employers willingly shared their larger profits with employees. We had only two bad conflicts.
In 1922, the railway shopmen and the organized bituminous coal miners went on strike at the same time. President Harding assigned the coal strike to Secretary Davis and requested me to negotiate a settlement of the railway strike. I was to learn some bitter lessons. I had arranged that the railway employees' leaders see the President and disclose confidentially to him their minimum demands, which were as usual considerably below the demands which they announced publicly. Through President Daniel Willard of the Baltimore & Ohio Railroad, the chairman of the Railway Managers' Committee, I secured a confidential statement of their maximum concessions. I found that the two antagonists were not far apart and suggested some modifications which seemed to me to be fair. The Employees' Committee believed they could carry the settlement. Mr. Willard's committee agreed to support the settlement on this basis. The railway presidents called a meeting in New York to consider the proposal. Mr. Willard asked me to attend the meeting and give him support. I secured a message from President Harding to open my statement. I was kept waiting outside the meeting for some time and was finally ushered in and introduced by the chairman with an attitude which seemed to convey, "Well, what have you got to say here?" Most of the two hundred men present were very antagonistic. I learned afterwards they had already repudiated Willard and his
committee. Anyway, I certainly had a freezing reception. Paradoxically, my temperature rose somewhat and my preachment upon social relations raised their temperatures and made my exit more welcome.
The railway executives now refused every concession. The men continued the strike until the roads represented by Willard's committee fell away from the rest and gave the men even better terms than the original formula. Then they all gave way.
While thenceforth I was not devotedly loved by certain railway magnates, their lack of affection was more than offset by friendship of others. Especially among these friends was Daniel Willard, who remained unwavering during the quarter-century before his death. He was respected by the whole American people and beloved by every B. & 0. man. There were many fine citizens among the railway presidents. At that time and in later years I had many devoted friends among them, such as Sargent, German, Budd, Crawford, Shoup, Gray, Storey, Downs, Scandrett, and Gurley, mostly western railway presidents. It was a suggestive thing that the railway presidents who led the opposition had their offices in New York City. They have mostly gone to their rest in graves unknown to all the public except the sexton, or they still dodder around their clubs, quavering that "labor must be disciplined."
A by-product of this incident gave me deep pain. An editor of the New York Tribune came to see me after the meeting in New York. He was a man with a fine conception of public right; he was greatly outraged at the whole action of the majority of railway presidents. The following morning the Tribune's leading editorial gave them a deserved blistering. The next day the editor informed me that Mrs. Whitelaw Reid, Sr., who dominated the paper, had ordered his instant dismissal after many years of service. The dear old lady was a righteous and generous woman, but a partial misfit with the changing times. In the science of social relations she was the true daughter of a great western pioneer, Darius 0. Mills. When the editor came to see me in Washington, while he had no regrets, it was easy to see that he was wholly unstrung by his tragedy and distracted by anxieties over growing family obligations and lack of resources. At once we gave him an economic mission in Europe, during which he somewhat recovered his spirits and was able to keep his family going. But he never really regained his grip.
It is a safe generalization for the period to say that where industrial leaders were undominated by New York promoter-bankers, they were progressive and constructive in outlook. Some of the so-called bankers in New York were not bankers at all. They were stock promoters. They manipulated the voting control of many of the railway, industrial, and distributing corporations, and appointed such officials as would insure to themselves the banking and finance. They were not simply providing credit to business in order to lubricate production. Their social instinct belonged to an early Egyptian period. Wherever industrial, transportation, and distribution concerns were free from such banker domination, we had little trouble in getting cooperation.
Others of the Department's services to labor sprang from its broad economic programs. However, our emphasis on the needs and rights of organized labor and our constant insistence on cooperation of employers and employees as the means of reducing the areas of friction brought no little change in public attitudes.

THE RAILWAY LABOR BOARD
It was obvious that we must find some other solution to railway labor conflict than strikes, with their terrible penalties upon the innocent public. Therefore, early in 1926, I began separate conferences with the major railway brotherhoods on one hand, and the more constructive railway presidents, under Daniel Willard, on the other. I discarded compulsory measures but developed the idea of a Railway Labor Mediation Board, which would investigate, mediate, and, if necessary, publish its conclusions as to a fair settlement, with stays in strike action pending these processes. Having found support in both groups, I called a private dinner at my home of some ten leaders, half from each side—and I omitted extremists of both ends from the meeting. We agreed upon support of this idea and appointed a committee to draft a law. We presented it to the Congress, and with some secondary modifications it was passed on May 20, 1926. This machinery, with some later improvements, preserved peace in the railways during the entire period of my service in Washington.

Commenting upon the progress of labor relations I was able to say in an address on May 12, 1926:
There is a marked change . . . in the attitude of employers and employees. . . . It is not so many years ago that the employer considered it was in his interest to use the opportunities of unemployment and immigration to lower wages irrespective of other considerations. The lowest wages and longest hours were then conceived as the means to attain lowest production costs and largest profits. Nor is it many years ago that our labor unions considered that the maximum of jobs and the greatest security in a job were to be attained by restricting individual effort.
But we are a long way on the road to new conceptions. The very essence of great production is high wages and low prices, because it depends upon a widening range of consumption only to be obtained from the purchasing power of high real wages and increasing standards of living. . . .
Parallel with this conception there has been an equal revolution in the views of labor.
No one will doubt that labor has always accepted the dictum of the high wage, but labor has only gradually come to the view that unrestricted individual effort, driving of machinery to its utmost, and elimination of every waste in production, are the only secure foundations upon which a high real wage can be builded, because the greater die production the greater will be the quantity to divide.
The acceptance of these ideas is obviously not universal. Not all employers . . . nor has every union abandoned the fallacy of restricted effort. . . . But . . . for both employer and employee to think in terms of the mutual interest of increased production has gained greatly in strength. It is a long cry from the conceptions of the old economics.
1 The C.I.O., with its socialist and Communist control in its early stages, was not organized until several years later.
2 Indeed, it preserved peace until the presidents failed to give moral support to the Board's recommendations and its potency was largely destroyed.
3 A list of my more important statements upon labor as Secretary of Commerce appears in the Appendix, under the heading Chapter 15.

CHAPTER 15
1921: April 1, article in Industrial Management; Nov. 4, address at New York; statement in Labor on strikes.
1922: Feb. 18, statement on Coal Strike; Aug. 7, on Railroad Strike.
1923: Jan. 27, May 8, addresses at New York.
1925: April 11, address at New York; May 19, on the Seven-Day Work Week; Sept. 5, at American Federation of Labor; Dec. 28, on Labor Arbitration.
1926: May 12, address at Washington.
1927: Aug. Foreword to Year Book on Commercial Arbitration in the United States, 1927 (American Arbitration Association).
1928: Feb. 25, Report to President from Secretaries of State, Commerce, Labor, on immigration.
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