

### OCCUPIERS OF WALL STREET :

### GAME CHANGERS OR LOSERS ?

Published by Bhaskar Sarkar, at Smashwords

Cover art: Sarita Sharma

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Copyright Author Bhaskar Sarkar 2012

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### DEDICATION

This book is dedicated to the poor and middle class Americans who have lost their jobs to outsourcing and globalization and financial losses incurred by small scale US businesses as a result the neo-liberal capitalistic policies followed by the US Governments since the presidency of Ronald Regan

### CONTENTS

Prologue

Chapter 1: Occupiers of Wall Street

Chapter 2: Protest and Protesters

Chapter 3: The Tea Party

Chapter 4: The Politicians Corporate Nexus

Chapter 5: Corporate Excesses

Chapter 6: Budget Deficit and Austerity

Chapter 7: Where Have the Jobs Gone

Chapter 8: Need for a Public Sector

Chapter 9: Strategy for Bringing Change

Epilogue

PROLOGUE

_"_ _I am here to celebrate the 30_ _th_ _day of this protest against corporate power_... We are c _oncerned about the egregious Wall Street bonuses — particularly after the industry accepted a tax-payer bailout and the middle class continues to be squeezed — I believe it's time for a fairer system that provides health care, education, and opportunity for all, and rejects corporate influence over government._ _" – Karanja Gacuca, a former Wall Street analyst who is one of the organizers of the "Occupy Wall Street" movement on 17 October 2011_

The American people are finally showing some signs of disillusionment with the Neo-Liberal capitalism preached and followed in their country. The "Ninety Nine Percent" have seen their prosperity slide downwards since 1980 when "Reganomics" and Neo-liberalism took over. But even with 99 percent adult literacy, and 98 percent households owning television, the "Ninety Nine Percent" have, till now, chosen to suffer their dwindling prosperity in silence. They have agitated against wars but they have never agitated against poverty, against hunger, against dwindling facilities at public schools, against government policies which favor the rich and the corporations at the expense of the "Ninety Nine Percent". They have watched in silence as budgets for education, social security and Medicare are slashed and billions of dollars are spent in providing military and economic aid to Israel, Egypt, Georgia, Ukraine, Pakistan etc and on wars to establish American hegemony across the world. They have watched without protest as corporations, in search of profits, and with government connivance, have shipped manufacturing to the third world, out sourced business processes and employed legal and illegal immigrants at home instead of Americans and left almost 20 million Americans unemployed. They have suffered in silence as corporate greed led to the Sub-prime Mortgage crisis and their homes were re-possessed. Paralyzed, they watched the economic meltdown that followed, ate into their investments and sent household incomes plummeting. They have watched in dismay as Republicans blocked increasing taxes of the rich and corporations and refused to allow the debt ceiling to be raised without cuts in government spending which hurt only the "Ninety Nine Percent.

Executive pay has risen five times the 1980 levels while the average salary for the ordinary American worker has remained what it was in 1980. Did the corporate executives and bankers become five times more productive than they were in 1980 while the worker's productivity remained the same? The rich have been getting richer, the poor have been getting poorer, and the middle class has been getting squeezed as high paying jobs in manufacturing and technology are either shipped abroad or given to H1B visa holders and public sector jobs in education, healthcare, postal services are eliminated in the name of austerity. America ranks one of the highest in child poverty rates in the developed world. Corporate profits are at an all time high, but corporations are paying lower taxes than ever before. Some corporations are not paying any tax at all. At the same time, CEOs, are making record amounts of money. The average CEO makes $11 million a year while the median American income is around $40,000. Why is the "One Percent" paying taxes at a rate lower than their secretaries, their receptionists, the people who clean their offices, teachers who teach their children and health workers who attend to their medical problems?

Republicans continue to protect this twisted system. Why are Republicans including ordinary poor and middle class American Republicans advocating that the greed of Wall Street be put before the needs of the American people? The answer is simple. In the 2010 elections, corporations spent over $ 275 million in getting politicians elected. They also spent almost $3 billion lobbying the American politicians to support their cause. While some of those donations went to Democrats, the vast majority went to Republicans. It's no wonder Republicans want less government controls over banks and businesses and more tax cuts and exemptions for the "One Percent" and multinational corporations. And to add insult to injury, Republican legislators and presidential candidates want to eliminate the protections the middle class gained from the Wall Street Reform and Consumer Protection Act passed by Democrats and signed by Obama.

I thank God that things are changing. I am glad that some of the "Ninety Nine Percent" are sympathetic to the farmers who are struggling, to students who face mounting debt and fewer good jobs. I am glad that people are protesting against a financial system that benefits a handful of banks at the expense of ordinary people, a system where the same people who are responsible for the financial meltdown and recession are getting away with multimillion dollar bonuses. I am glad that some of the "Ninety Nine Percent" have mustered the courage to get on to the streets and protest.

" _Occupy Wall Street" is a people powered movement that began on September 17, 2011._ About 2,000 people rallied in Lower Manhattan and marched up Broadway. Stopping at Zuccotti Park, an estimated 150 stayed the night and began an encampment. Renaming the space "Liberty Square," they kicked off a protest against bank bailouts, corporate greed, and the unchecked power of Wall Street in Washington. As per a recent Time magazine survey, the message of "We are the 99%" has won the hearts and minds of over half of the American People since the movement started and is gaining ground globally. There were 1500 protests in 82 countries till October 15, 2011. Protests filled streets of financial districts from Berlin to Athens, Auckland to Mumbai, Tokyo to Seoul. In the UK over 3,000 people attempted to occupy the London Stock Exchange. 600 people have begun an occupation of Confederation Park in Ottawa, Canada. In Australia, about 800 people gathered in Sydney's central business district, carrying cardboard banners and chanting "Human need, not corporate greed." Some are shouting "Get corporate money out of our leader's pockets"

Critics are calling the movement "class warfare" and socialism. If it is class warfare, so be it. America always had class warfare. The native Indians (99%) fought the European settlers (1%). The "One Percent" won. The super rich (1%) have always exploited the slaves and the workers (99%). The "One Percent" won. The critics of the movement decry the attacks on the corporations or so called "job creators". But the reality is that jobs are not being created by the big corporations. The majority of jobs are created from small businesses, none of which are raking in the salaries of the top 1% of wealthy Americans. So asking the top 1% of wealthy Americans to pay their fair share and pay at least as high a tax rate as their workers is not class warfare or an attack on "job creators" or socialism. It is in fact the American way. The "One Percent" will try their best to preserve this unjust system. It is now time to stand up and fight for fairness for the middle class and a balanced approach for working class families.

The moot question that now arises is whether the movement can survive and win its battle against the "One Percent"? There are huge problems. The people on the streets are too few to really worry Wall Street. There are no identifiable leaders or organization. There are no specific goals to be achieved. There is no action plans to bring Wall Street under control and bring about a fair system. Occupiers of Wall Street have been evicted from "Liberty Square" and other sites they occupied. If the movement is to succeed a lot must change.

This book seeks to suggest what needs to be done and an action plan to achieve the goals. It is an offering of a member of the "Ninety Nine Percent" to the American people.

The Author

Back to Contents

### CHAPTER 1: OCCUPIERS OF WALL STREET

". _... You don't need an economist or the Federal Reserve to tell the American people that the economy is in trouble because they have been experiencing it for years now... We have to stop giving tax breaks to companies that are shipping jobs overseas and invest those tax breaks in companies that are investing in the US,"_ – Barack Obama, American Democrat President in waiting at a debate at University of Texas, Austin on Thursday 21 February 2008.

The Movement

More than three years have passed since Barack Obama became the President of United States. But the economic situation in the United States, in spite of the much publicized upswing, is still grim. Federal and State Government debts are soaring. GDP growth is slow. Unemployment is still very high. Poverty and inequality levels are rising.

The protests against inequality and corporate excesses in New York called "Occupy Wall Street" were initiated by the Canadian activist group Adbusters. The protesters gathered at Zucotti Park, New York which was private property. Hence police, who have the authority to remove protesters without protest permits from city parks could not legally force them to move off of it. The participants' slogan "We are the Ninety Nine Percent" indicated that the protesters claimed to represent the economically backwards 99 percent of the American people.

The Adbusters floated the idea of a peaceful occupation of Wall Street in mid 2011 to protest corporate influence on the politicians, address a growing disparity in wealth between the top 1 percent and others, and protest against the absence of legal action against the greedy financial institutions that were behind the recent global financial crisis. The idea was spontaneously taken up by a large number of people in the U.S. It just kind of gathered momentum from there. The demonstrations are leaderless. Other groups like the New York City General Assembly and U.S. Day of Rage joined the protest. The protests brought together people of various political views. The protesters included persons of a variety of political orientations, including liberals, political independents, Democrats, Republicans, anarchists, socialists etc. At the start of the protests, the majority of the demonstrators were young. However, as the protest grew the age of the protesters became more diverse. Some news organizations have compared the protesters to a left leaning version opposite of the Tea Party. Some left leaning academics and activists expressed concern that the movement may be co-opted by the Democratic Party. On October 10 and 11, 2012, the polling firm Penn, Schoen and Borland interviewed nearly 200 protesters. Their report indicated that:

_98 percent of the protesters would support civil disobedience to achieve their goals_.

31 percent would support violence to advance their agenda

Most of the protesters interviewed were employed. Only 15 percent of those interviewed were unemployed

Most had supported Obama

65 percent of people interviewed said that government has a responsibility to guarantee access to affordable health care, a college education, and a secure retirement. They support raising taxes on the wealthiest Americans, but were divided on whether the bank bailouts were necessary

The protests have been compared to the movements that sprang up against corporate globalization at the end of 1990s. The specific goals of the movement are not clear. According to Adbusters, the central demand of the protest is that President Obama order a Presidential Commission aimed at ending the influence of money on the political representatives in Washington. Documentary film maker Michael Moore considers that this protest, unlike others, represents a variety of demands with a common statement, about government corruption and the excessive influence of big business and the wealthiest 1 percent on U.S. laws and policies. Some protesters say that the President has become irrelevant. They feel that the "Ninety Nine Percent" should lead and inspire change in the way America is governed. Some media reports characterize Occupy Wall Street Movement as being opposed to capitalism.

Occupy Oakland is the most militant branch of the movement. They spearheaded a one day action in December 2011, in which thousands of protesters rallied at West Coast ports from San Diego to Anchorage, effectively closing the ports of Portland and Longview, Wash., and largely shutting the Port of Oakland. But the actions have created a rift with the Occupy movement's allies in organized labor. Protests erupted again on January 29, 2012. About 400 people were arrested and three police officers were injured after a weekend protest by members of the Occupy movement in Oakland, Calif., turned into a violent confrontation with law enforcement officers that led to an assault on City Hall. The clashes began about 3 p.m. on Saturday when protesters marched towards a vacant convention center and began to tear down construction barricades, and the violence extended into early Sunday. The Oakland Police Department said in a statement that the crowd was ordered to disperse after protesters "began destroying construction equipment and fencing." One flag was burned in front of City Hall. Police Officers were pelted with bottles, metal pipe, rocks, spray cans, and burning flares," the police statement said. Officers responded by firing smoke and tear gas canisters and beanbags. A member of the group's media committee said that vandalism was not planned but protesters were enraged by the brutality. Protesters in other cities like New York and Washington rallied to show their support for Occupy Oakland.

Opponents of the Movement

Douglas Schoen, a prominent opponent, wrote in the Wall Street Journal that the protesters reflected values that were dangerously out of touch with the broad mass of the American people. Schoen believed that the protesters had a deep commitment to left-wing policies; that they were opposed to free-market capitalism; that they supported radical redistribution of wealth; that they wanted intense regulation of the private sector, and that they wanted protectionist policies to keep American jobs from going overseas. Not all of Schoen's observations were very truthful. When asked, "What frustrates you the most about the political process in the United States", 30 percent protesters had said that influence of corporations, the rich and special interests had on government policymaking frustrated them the most. Only 6 percent said income inequality was the main problem and only 3 percent said that the American democratic and capitalist system was the problem. When asked, "What would you like to see the Occupy Wall Street movement achieve", 35 percent protesters wanted to influence the Democratic Party in the way the Tea Party has influenced the GOP. 11 percent said they wanted to break the two party system. Only 4 percent wanted radical redistribution of wealth.

House Majority Leader Eric Cantor of the Republican Party called the movement as "growing mobs". He blamed President Barack Obama's "failed policies" for the protests. Ex Republican presidential candidate Herman Cain has accused the movement of being anti capitalist and asked the protesters not blame Wall Street or the big banks for not having a job and not being rich. He wants them to blame themselves. In an interview with the Wall Street Journal, Cain also expressed his belief that Occupy Wall Street was "planned and orchestrated to distract people from the failed policies of the Obama Administration", but admitted that he "[didn't] have facts" to back up his accusation.

Republican presidential candidate Mitt Romney admitted that there were 'bad actors,' at Wall Street and that there was a need to identify them and punish them. Yet, he believes that to hold one industry or Wall Street responsible for the economic mess was a mistake and viewed encouraging the Occupy Wall Street protests as "dangerous" and inciting "class warfare". He however says that he understands how the protesters felt.

John Paulson, founder of the hedge fund Paulson &Co., criticized the protesters for "vilifying our most successful businesses", citing that "The top 1% of New Yorkers pay over 40% of all income taxes, providing huge benefits to everyone in our city and state." He does not mention that the top 1 percent has 99 percent of the income.

Supporters of the Movement

Though the protesters claim to represent the "Ninety Nine Percent", the actual support is much less. According to a survey of Zucotti Park protesters by the Baruch College School of Public Affairs published on October 19, 2011 of 1,619 web respondents, one third of the protesters were older than 35, half were employed full time, 13 percent were unemployed and 13 percent earned over $75,000 a year. About 27 percent of the respondents called themselves Democrats, 2.4 percent called themselves Republicans, while the rest, 70 percent, called themselves political independents.

An October 13, 2011 survey by Time Magazine found that 54 percent of Americans have a favorable impression of the protests, while 23 percent have a negative impression. An NBC/Wall Street Journal survey found that 37 percent of respondents "tend to support" the movement, while 18 percent "tend to oppose" it.

An October 2011 poll by Quinniiac University of New York City voters found that 67 percent of New Yorkers approved of the movement with 23 percent disapproving. The results also found 87 percent of New Yorkers find nothing wrong in the protests.

President Obama has said that he thinks that the protest expresses the frustrations the American people feel and supports the protester's demand that the tax concessions given to the rich and corporations should be done away with.

House Democratic Leader Nancy Pelosi said she that supports the growing nationwide Occupy Wall Street movement. Independent Senator Bernie Sanders of Vermont, who often supports the Democratic Party, supports the protests. He felt that there was a desperate need for the working people to come together and stand up to Wall Street. He felt that there was a need to rebuild the middle class in the country.

Republican Ron Paul came out to refute Cain by saying, "the system has been biased against the middle class and the poor...the people losing jobs, it wasn't their fault that we've followed a deeply flawed economic system."

One time Republican presidential hopeful, Buddy Roemer has expressed support for the movement, saying, "We have almost permanent unemployment. They say it's nine percent, but the real unemployment rate is more like 16 percent. These are people there are no jobs for, or they have to work part time to try to make ends meet. It's disturbing. The Wall Street protest is unshaped, unfocused, but there's a lot of power in it."

On October 18, 2011, Republican presidential hopeful Gary Johnson visited with the protesters in New York and expressed his support for the movement, saying he accepted that the government doled out tax payers money unfairly, and that is why corporations were doing well in America.

Federal Reserve Chairman Ben Bernake said in October 2011 that the people are quite unhappy with the state of the economy and what's happening. They blame, with some justification, the problems in the financial sector for getting Americans into this mess. They're dissatisfied with the policy response here in Washington and he could not blame them. Dallas Federal Reserve President Richard W Fisher said that he was "somewhat sympathetic" to the views of the protestors, and added, "We have too many people out of work. We have a very uneven distribution of income. We have a very frustrated people, and I can understand their frustration."

Many Unions have pledged their support for demonstrators. Transport Workers Union President John Samuelsen said, "We're down with these protesters. We support the notion that rich folk are not paying their fair share of taxes." Unions and protesters can work together to create a progressive movement that "effectively taps into the rising feeling among many Americans that economic opportunity has been squashed by corporate greed and the influence of the very rich in politics".

Ray Dalio, the founder of Bridgewater Associates, the world's largest hedge fund said, "I think the number one problem is that we're not having a quality dialogue...I certainly understand the frustration, I understand the dilemma, I understand the discontent". Vikram Pandit, head of Citigroup, called the protesters' sentiments "completely understandable" and that Wall Street had broken the trust of its clients. Bill Gross, manager of PIMCO's Total Return Fund, the world's largest mutual fund, agreed that it was class warfare by the 99 percent. He admitted that they had the right to fighting back after being shot at for 30 years. PIMCO's co-CEO Mohamed El-Erian argued that (business) people should "listen to Occupy Wall Street".

Several wealthy supporters have joined to support the protest, and have started a blog, "westandwiththe99percent" in which they say, "I am the 1%. I stand with the 99%." H. L. Hunt's granddaughter, Leah Hunt-Hendrix, 28, a doctoral student at Princeton joined the protesters, and said. "We should acknowledge our privilege and claim the responsibilities that come with it." Farhad Ebrahimi, 33, has been participating in the Occupy Boston protest wearing a T-shirt that says, "Tax me. I'm good for it."

On September 19, Roseanne Barr, the first celebrity to endorse the protest, spoke to protesters calling for a combination of capitalism and socialism and a system not based... on that goddamn Ayn Rand book."

Agenda for the Occupiers of Wall Street

The "Occupiers of Wall" Street movement has failed to clearly spell out an agenda. Where as their grievances are understandable, they do not provide goals which the movement seeks to achieve. In the absence of such goals, the movement could well peter out. Some of the goals of the movement are:

Reduce corporate influence on the politicians, and government policy.

Address a growing disparity in wealth between the top 1 percent and others.

Protest against the absence of legal action against the greedy financial institutions that were behind the recent global financial crisis.

The agenda unfortunately does not dwell on how the growing economic disparity can be checked, how corporate influence of politicians can be reduced, how action can be taken against greedy financial institutions and corporate criminals or how jobs can be created. It makes the movement Quixotic and impractical.

Organization and Leadership of the Movement

Even at the time of writing, the movement has neither an organization nor a leadership. It moves from one protest site to another like a rudderless ship on the vast ocean buffeted by waves of police action. They are beaten up and arrested and are desperately looking for funds to bailout the arrested and pay for the legal cost. Without organization and leadership, the Movement is drifting and could soon become a thing of the forgotten past.

Conclusion

The group's Web site, Occupywallst.org, describes themselves as a leaderless resistance movement with people of many colors, genders and political persuasions. The one thing its participants have in common is that they are the 99 percent that will no longer tolerate the greed and corruption of the 1 percent. The 1 percent refers to the haves: that is, the banks, the mortgage industry, and the insurance industry. The 99 percent refers to the have-nots: that is, everyone else.

The political impact of the movement has been minimal. Democrats have offered cautious support and Republicans have been generally critical, but both parties seemed to agree that the movement was changing public debate.

The "Occupy Wall Street" movement has gone off the media headlines. It is difficult to say whether it is dead or hibernating and whether it will be back on the streets as the weather in the United States improves and as the race to elect the President of United States hots up.

Back to Contents

### CHAPTER 2: PROTESTS AND PROTESTERS

Social and economic exploitation of the 99 percent by the 1 percent is as old as the history of the world. There always was a disparity of wealth and privileges of different classes in the society. The disparity was there under feudalism, imperialism, capitalism, socialism and communism. The disparity is there in democracies and autocracies. The disparity will remain and is accepted by all classes. But whenever there have been great economic difficulties due to wars, famines or plagues or tyranny of the rich and the powerful, the 99 percent has raised the banner of protest. Some protests achieved their aims. Others were brutally put down. But they all left a message for posterity. In this chapter we study some of the protests and protesters and see if we can identify some lessons for the "Occupiers of Wall Street".

Jacquerie Revolt of 1358

Much like 2011, around 1300, centuries of European prosperity and growth came to a halt. A series of famines and plagues, such as the Great Famine of 1315 and the Bubonic plague between 1348 – 1350 reduced the population of Europe by as much as half according to some estimates. Constant wars among the European powers along with depopulation resulted in great economic difficulties and consequent social unrest. France and England experienced serious peasant risings against the feudal lords, the privileged classes and kings.

One of the most important among them was the "Jacquerie Revolt" which took place in Northern France in 1358. To tide over the economic difficulties caused by the Hundred Years War, famine and plague, the French privileged classes, the nobility, the merchant elite, and the clergy, forced the peasantry to pay ever increasing taxes and to repair their war damaged properties without compensation. The passage of a law that required the peasants to defend the castles of the nobility was the immediate cause of the spontaneous uprising. There was terrible violence with over 150 of the nobility being tortured and killed and their women raped. Retribution came swiftly and over 20,000 peasants were killed.

The Great Rising in Britain 1381

The Jacquerie Revolt of France was followed by the Peasants' Revolt or the Great Rising of 1381 in Britain. The revolt was precipitated by King Richard II's heavy handed attempts to enforce the "Poll Tax" and large scale corruption in his government. Shortage of labour after the plague enabled the surviving laborers to demand higher wages and fewer hours of work. Some even asked for their freedom. The privileged classes suffered financially. In 1351, King Edward II summoned the Parliament to pass the "Statute of Laborers" which pegged wages to pre-plague levels and restricted the mobility of peasants. Enforcement of the exploitive law angered the peasants and became the third reason for the revolt. An attempt to collect the poll tax was first refused and then the collectors were attacked. Soon Essex and Kent were in full revolt. A group of rebels stormed the Tower of London and summarily executed those hiding there, including the Lord Chancellor, the Archbishop of Canterbury, and the Lord Treasurer and destroyed some London buildings. Next day King Richard promised to negotiate. Once the rebels dispersed, the King broke his promise. The nobles quickly organized an army of 7000 and re-established their control. Most of the rebel leaders were pursued, captured and executed. Although the Revolt did not succeed, it showed the nobles that the peasants were dissatisfied and that they were capable of wreaking havoc. In the longer term, the Revolt helped to form a radical tradition in British politics and end feudalism.

The French Revolution 1789-1793

The French Revolution is one of the rare instances when the "99 Percent" took on the "1 Percent" and comprehensively defeated them. The absolute monarchy that had ruled France for centuries collapsed in three years of protests. The French society underwent an epic transformation as feudal, aristocratic and religious privileges evaporated under a sustained assault from left wing political groups, masses on the streets, and peasants in the countryside. Old ideas about monarchy, aristocracy and religious authority were abruptly overthrown by new principles of equality and inalienable human rights.

The problems which faced France in 1789 and led to the Revolution were economic. The problems included hunger, malnutrition and food inflation (price of bread rose 50 percent in a few months). Several years of poor grain harvests caused in part by extreme weather and volcanic activity caused food shortages. Inadequate transportation system hindered the shipment of foods products from rural areas to large population centers and contributed greatly to the destabilization of French society. The second problem was the governments near bankruptcy caused by the enormous cost of wars with England and French participation in the American Revolutionary War. The national debt had risen to between 1,000 to 2,000 million French francs. The government was unable to manage the national debt due to an inadequate system of taxation. To obtain money to head off default on the government's loans, the king had called an assembly of his expanded advisory council in 1787. The king did reduce government expenditures, but his opponents in the parliament successfully thwarted his attempts at enacting much needed tax reforms. Another factor which increased the resentments of the peasants, laborers and the middle class (the "99 Percent") toward the traditional privileges possessed by the nobility and the Church's (today's rich and big business) influence over public policy and institutions. Aspirations for social, political and economic equality also played its part.

King Louis XVI (like President Obama) ascended the French throne in the midst a financial crisis. He failed to enact reforms or sort out the financial mess. His Comptroller General of Finance realized that the country's tax system subjected the lower classes to a heavy burden, while numerous exemptions existed for the nobility and clergy. It was exactly the same situation that exists in the United States today. He argued that the ordinary people could not be taxed higher. He proposed that tax exemptions for the nobility and clergy (read the rich and the corporations) must be reduced. He also proposed that borrowing more money would solve the country's fiscal shortages. The proposals were not received well by the King's ministers, the nobility and the church. The King replaced his Comptroller General of Finance. But all his attempts to raise taxes to tackle the financial crisis failed due to opposition from the nobility and clergy. Faced with opposition from the members of the parliament, the King could not take any effective steps to end the crisis.

In July 1779, riots, chaos, and widespread looting began in Paris. The mobs soon had the support of some of the French Police, who were armed and trained soldiers. On 14 July, the insurgents captured the Bastille fortress, which was also perceived to be a symbol of royal power. The King, alarmed by the violence, accepted the demands of the protesters and introduced a new governmental structure known as the "commune".

The next few years were dominated by tensions between ordinary people and a right wing monarchy intent on thwarting major reforms. Finally, the people revolted. A republic was proclaimed in September 1792 and King Louis XVI was executed the next year. Popular sentiments radicalized the Revolution and a virtual dictatorship was established. Between 16,000 and 40,000 members of the nobility and the church were killed during the reign of terror from 1793 until 1794. Semblance of order was established in 1795. Napoleon took control of the government in 1799.

Analysis

The social, economic and political conditions which prevail in the United States today are very similar to that of France just before the French Revolution. Hunger stalks the streets. There are great social, economic and political inequalities. The national debt is at an all time high and there is pressure on the government to reduce its budget deficit. The rich, the corporations and the Republicans are unwilling to give up their tax exemptions and concessions. Most of the ordinary Americans like the teachers and nurses, pay a higher rate of taxes than the rich and big business who have overwhelming influence over politicians and government policies. There is almost total polarization between the "1 Percent" and the "99 Percent".

The French revolutionaries were not satisfied with trying to influence the government. They used peaceful protests and violent means to take control over the government, change government policies and put the "1 Percent in their place". Will the occupiers of Wall Street be able to do the same?

The African-American Civil Rights Movements

These protest movements in the United States aimed at ending racial discrimination against African Americans and restoring their voting rights in the Southern States and enabling them to live with racial dignity, economic and political freedom and freedom from oppression by white Americans. The movement was characterized by non violent protests, civil disobedience and civil resistance. The forms of protest and included boycotts such as the Montgomery Bus Boycott (1955–1956) in Alabama; "sit-ins" such as the Greensboro "sit-in" (1960) in North Carolina and marches, such as the Selma to Montgomery marches (1965) in Alabama. Important legislative achievements of the Civil Rights Movement were passage of Civil Rights Act of 1964, that banned discrimination based on "race, color, religion, or national origin" in employment practices and public accommodations; the Voting Rights Act of 1965, that restored and protected voting rights; and the Fair Housing Act of 1968, that banned discrimination in the sale or rental of housing.

Whites in the Southern States found the end of slavery painful and equal status for the ex-slaves totally unacceptable. They had used intimidation and violence to prevent the African Americans from voting during the disputed elections of 1876. The election resulted in Democrat Samuel J Tilden being elected president of United States. With a Southerner as president, the Whites in the South regained political control of the region. They systematically disfranchised the African Americans in Southern states from 1890 to 1908. As a result African Americans in the Southern States were not able to elect anyone to represent their interests in Congress or local government till President Johnson signed the "Voting Rights Act in 1965". The white Democrats imposed racial segregation in the Southern States by law. Violence against blacks increased. While problems and civil rights violations were most intense in the South, social tensions affected African Americans in other regions as well. African Americans rejected this discrimination and began to protest it in numerous ways.

The situation for blacks outside the Southern States was somewhat better. In most northern states they could vote and have their children educated, though they still faced discrimination in housing and jobs. From 1910 to 1970, African Americans sought better lives by migrating north and west. A total of nearly seven million blacks left the South in what was known as the Great Migration.

Seeking Rights Through Legislation

The National Association for the Advancement of Colored People (NAACP) was founded in 1909. It fought to end racial discrimination through litigation, education, and lobbying efforts. It took them 45 years to register their first major legal victory in the Supreme Court decision in the case "Brown v. Board of Education" (1954). The Supreme Court ruling rejected separate white and colored public school systems and permitted colored students to attend public school for white children. The "Brown v Board of Education" was not implemented for years. Frustrated, the African Americans increasingly rejected legalistic approaches as the primary tool to end segregation. They were forced to adopt a combined strategy of direct action or protests and non violent civil disobedience. Thus the African-American Civil Rights Movement for restoration of fundamental rights was born.

Seeking Rights Through Boycotts

Churches which were the centers of the African American communities, local grassroots organizations, and black owned businesses came to the forefront of the movement. They mobilized volunteers to participate in Protests. In 1952, the Regional Council of Negro Leadership (RCNL), led by Mr. Howard, a black surgeon, entrepreneur, and planter, organized a successful boycott of gas stations in Mississippi that refused to provide restrooms for blacks. The RCNL encouraged blacks to deposit their money in the black owned Tri State Bank of Nashville. The bank gave loans to civil rights activists who were victims of a "credit squeeze" by the "White Citizens' Councils". The "Montgomery Bus Boycott 1955-56" led by Dr. Martin Luther King Jr. to protest against introduction of separate busses for white and black passengers managed to keep the boycott going for over a year until a federal court order required Montgomery to desegregate its buses in 1956. The success in Montgomery made Dr. Martin Luther King Jr. a nationally known figure. Kings eloquent appeals to Christian brotherhood and American idealism created a positive impression on people both inside and outside the South. It also inspired other bus boycotts, such as the highly successful "Tallahassee Bus Boycott 1956-57" in Florida.

In 1957 Dr. King and Rev. John Duffy joined with other church leaders to form the Southern Christian Leadership Conference (SCLC) with its headquarters in Atlanta, Georgia. It offered training and leadership assistance for local efforts to fight segregation. The headquarters organization raised funds, mostly from Northern sources, to support such campaigns. Non-violence continued to be the primary method of confronting racism.

Desegregation of Schools

On September 4, 1957, nine African students sued the State for the right to attend an integrated school, the Little Rock Central High School, Arkansas. The nine students had to be escorted to the school by military personnel in jeeps. The governor of the state took his stand against integration and against the Federal court order that required the State to allow integration and called out the National Guards to stop the students from attending school. President Eisenhower was determined to enforce the orders of the Federal courts. Eisenhower federalized the National Guard and ordered them to return to their barracks. Eisenhower then deployed elements of the 101st Airborne Division to Little Rock to protect the students. In 1959, the Little Rock school system decided to shut public schools completely rather than continue to integrate. Other school systems across the South followed suit.

Sit-ins and Freedom Rides

The next important protest was a "sit in" at Woolworth's Store in Greensboro, North Carolina at the segregated lunch counter to protest Woolworth's policy of excluding African Americans from lunch facilities. The "sit-in" soon inspired other sit-ins in Richmond, Virginia; Nashville Tennessee; and Atlanta, Georgia. The local authority sometimes used brute force to physically evict the demonstrators from the lunch facilities. In 1960 the technique succeeded in bringing national attention to the movement. By the end of 1960, the sit-ins had spread to every southern state and even to states like Nevada, Illinois and Ohio. Demonstrators began "sit-ins" not only on lunch counters but also on parks, beaches, libraries, theaters, museums, and other public places. Upon being arrested, student demonstrators made "jail no bail" pledges, to call attention to their cause and to reduce the cost of protest. Jailing protesters saddled their jailers with the financial burden of prison space and food.

In April, 1960 a conference at Shaw University in Raleigh, North Carolina led to the formation of the "Students Nonviolent Coordinating Committee (SNCC). SNCC took the nonviolent confrontation further with "freedom rides." Freedom Rides were journeys by Civil Rights activists on interstate buses into the segregated southern United States to test the United States Supreme Court decision that ended segregation for passengers traveling in interstate buses. The first Freedom Ride of 1960s left Washington D.C. on May 4, 1961. Some of the attempts proved to be dangerous missions. One bus in Anniston, Alabama was firebombed, forcing its passengers to flee for their lives. In Birmingham, Alabama, the local police commissioner gave the Ku Klux Klan members fifteen minutes to attack an incoming group of freedom riders before deploying police protect them. The riders were severely beaten up. The violence temporarily halted the rides, but SNCC activists from Nashville brought in new riders to continue the journey from Birmingham. Public sympathy and support for the freedom riders led the Kennedy administration to order the Interstate Commerce Commission to issue a new desegregation order which took effect on November 1, 1960. Passengers were permitted to sit wherever they chose on the bus; "white" and "colored" signs came down in the terminals; separate drinking fountains, toilets, and waiting rooms were integrated; and lunch counters began serving people regardless of skin color.

Voters Registration Campaign

After the "Freedom Rides" came "Voters Registration". Local black leaders in Mississippi and other states asked SNCC to help register black voters and to build community organizations that could win a share of political power in the state. In the fall of 1961, SNCC organizer began the first such project. Their efforts were met with violent repression from state and local policemen, White Citizens' Council, and Ku Klux Klan in the form beatings, hundreds of arrests and the murder of voting activist Herbert Lee. White opposition to black voter registration was very intense. Registrars used the literacy tests to keep blacks from voting by creating standards that even highly educated people could not meet. In addition, employers fired blacks who tried to register as voters and landlords evicted them from their homes. By 1963, voter registration campaign in Mississippi became an important part of the Movement. The campaign used a variety of nonviolent methods of confrontation, including sit-ins, kneel-ins at local churches, and a march to the county building to mark the beginning of a drive to register voters. The city council, however, obtained an injunction barring all such protests. Convinced that the order was unconstitutional, the campaign defied it and prepared for mass arrests of its supporters. Rev. Martin Luther King Jr. opted to be among those arrested on April 12, 1963. King was held in solitary confinement.

The voter registration program in Selma, Alabama started in 1963, but had made little headway in the face of opposition from Selma's sheriff. In 1965, local residents asked the SCLC for assistance. Rev. King Jr. went to Selma to lead several marches. At one he was arrested along with 250 other demonstrators. The marchers continued to meet violent resistance from police. This set the stage for the march from Selma to Montgomery, the state capital. On March 7, 1965, a march of 600 people began to walk the 54 miles from Selma to the Montgomery. Only six blocks into the march, state troopers and local police, some mounted on horseback, attacked the peaceful demonstrators with clubs, tear gas, rubber tubes wrapped in barbed wire, and bull whips. They drove the marchers back into Selma. At least 16 marchers were hospitalized. The national broadcast of the news footage of lawmen attacking unresisting marchers seeking the right to vote provoked a national response. Eight days after the first march, President Johnson delivered a televised address to support the voting rights bill he had sent to Congress. The marchers were able to obtain a court order permitting them to make the march without incident two weeks later. But some supporters of the march were killed in the violence that followed the march.

President Johnson signed the Voting Rights Act of 1965. The 1965 act suspended poll taxes, literacy tests, and other subjective voter tests. It authorized Federal supervision of voter registration in states and the election process. The act had an immediate and positive impact for African Americans. Within months of its passage, 250,000 new black voters had been registered, one third of them by federal examiners. Within four years, voter registration in the Southern States had more than doubled. In 1965, Mississippi had the highest black voter turnout at 74 percent and led the nation in the number of black public officials elected.

Integration of Mississippi universities, 1956–1965

Beginning in 1956, black students tried to enroll at a number of Southern Universities but without any success. In September 1962, a black student won a lawsuit to secure admission to the segregated University of Mississippi. His attempts to enter campus were blocked by Mississippi governor, who said that integration in Mississippi University would not take place while he remained governor. The Fifth U.S. Circuit Court of Appeals held the Governor and Lieutenant Governor in contempt and fined them $10,000 for each day they refused to allow the student to enroll. On September 30, 1962, Attorney General Robert Kennedy sent in a force of U.S. Marshals to escort the student into the campus. Students and other whites began rioting that evening. They threw rocks and then fired on the U.S. Marshals guarding the student. Two people, including a French journalist, were killed; 28 marshals suffered gunshot wounds; and 160 others were injured. After state police placed for protection of the marshals withdrew from the campus, President Kennedy sent regular U.S. Army forces to the campus to quell the riot. The student began classes the day after the troops arrived. On June 11, 1963, the Governor of Alabama tried to block the integration of the University of Alabama. President John F. Kennedy sent a force to make Governor step aside and allow the enrollment of two black students.

Desegregation of Markets

In 1963, SCLC attempted the desegregation of downtown merchants in Birmingham, Albany. The attempt was met by the brutal response of local authorities. The campaign, however, was faltering because the movement was running out of demonstrators willing to risk arrest. The SCLC turned to a controversial alternative to train high school students to take part in the demonstrations. As a result, more than one thousand students skipped school on May 2 to meet at the 16th Street Baptist Church to join the demonstrations, in what would come to be called the Children's Protests. More than six hundred ended up in jail. In the first encounter, the police acted with restraint. On the next day, however, another one thousand students gathered at the church. When they started marching, police dogs were released on them. The city's fire hoses turned water streams on the children. Television cameras broadcast to the nation the scenes of water from fire hoses knocking down schoolchildren and dogs attacking individual demonstrators. Widespread public outrage led the Kennedy administration to intervene more forcefully in negotiations between the white business community and the SCLC. On May 10, 1963 the parties announced an agreement to desegregate the lunch counters and other public accommodations downtown, to create a committee to eliminate discriminatory hiring practices, to arrange for the release of jailed protesters, and to establish regular means of communication between black and white leaders. Parts of the white community reacted violently. They bombed the SCLC's headquarters, and the home of King's brother. The Ku Klux Klan members bombed a Baptist Church in Birmingham, killing four young girls. In June 1963, President Kennedy addressed the nation on TV and radio with his historic civil rights speech. The next week, as promised, on June 19, President Kennedy submitted his Civil Rights bill to Congress.

March on Washington, 1963

The 1963 march on Washington D.C. was a collaborative effort of all of the major civil rights organizations, the more progressive wing of the labor movement, and other liberal organizations. The march had six official goals, meaningful civil rights laws; a massive federal works program; full and fair employment; decent housing; the right to vote, and an integrated education system. The Kennedy administration applied great pressure on black leaders Randolph and King to call it off but without success. The march was held on August 28, 1963.

National media attention also greatly contributed to the March's national exposure and impact. By carrying the organizers' speeches and offering their own commentary, television stations literally framed the way their local audiences saw and understood the event. The March was a success. An estimated 200,000 to 300,000 demonstrators gathered in front of the Lincoln Memorial. King delivered his famous "I have a dream" speech. Many speakers applauded the Kennedy administration for the efforts it had made toward obtaining new, more effective civil rights legislations protecting the right to vote and outlawing segregation. After the march, King and other civil rights leaders met with President Kennedy at the White House. The Kennedy administration appeared sincerely committed to passing the bill. When President Kennedy was assassinated on November 22, 1963, the new President Lyndon Johnson followed Kennedy's legislative agenda.

Blacks' regaining the power to vote changed the political landscape of the South. When Congress passed the Voting Rights Act, only about 100 African Americans held elective office, all in northern states of the U.S. By 1989, there were more than 7,200 African Americans in office, including more than 4,800 in the South. Nearly every county, where populations were majority black like in Alabama, had a black sheriff. Southern blacks held top positions in city, county, and state governments.

Agitation on Behalf of the Poor

Rev Martin Luther King went to Memphis, Tennessee, in March 1968 to support a strike by sanitation workers. The campaign was for union representation for black workers. A day after delivering his famous "I have been to the mountaintop" sermon, King was assassinated on April 4, 1968. Riots broke out in more than 110 cities across the United States in the days that followed, notably in Chicago, Baltimore, and in Washington D. C. Many black businesses were destroyed. The day before King's funeral, April 8, 1968, Mrs. King and three of the King children led 20,000 marchers through the streets of Memphis, holding signs that read, "Honor King: End Racism" and "Union Justice Now". National Guardsmen lined the streets, perched on M-48 tanks, bayonets mounted, with helicopters circling overhead. On April 9 Mrs. King led another 150,000 in a funeral procession through the streets of Atlanta. Her dignity revived courage and hopes in many of the Movement's members and cemented her place as the new leader in the struggle for racial equality. Mrs. King remarked that Martin Luther King, Jr. gave his life for the poor of the world.

Analysis

The Civil Rights movement by the African Americans to achieve economic and social equality lasted a long time, about 90 years from the end of the American Civil War to 1968 when the "Fair Housing Rights Bill 1968" was passed. It was a non violent struggle consisting of boycotts, sit-ins and marches. It was well led by charismatic leaders like Rev. Martin Luther King Jr. The protestors were brutalized by police and National Guards of the southern states and private vigilantes like the Ku Klux Klan. The movement succeeded in achieving its mission because of the following:

The determination of the African Americans to fight for their rights, come what may.

An effective leadership who formulated strategies and mobilized the protesters and funds for the movement.

Mass participation. Some of the marches had hundreds of thousands of protesters.

Spiritual support of the Baptist Church. Many of the leaders of the protestors were black pastors.

Media coverage of the marches, speeches and sit-ins and the brutality of the state police and national guards which built public opinion in favor of the protesters and assisted in the passing of necessary legislations.

Political support from the Federal Government, particularly the Kennedy and Johnson Administrations. Without this support, American society may not have been desegregated even today if this political support had not been forthcoming.

The Civil Rights Movement has many lessons for the "Occupiers of Wall Street"

Battle of Seattle 1999

The WTO Ministerial Conference to launch a new millennial round of trade negotiations took place on November 30, 1999. The meeting was convened at the Washington State Convention and Trade Center in Seattle. The negotiations were disrupted by massive street protests outside the hotels and venue of the conference. The lowest estimate put the crowd at over 40,000. The demonstrations were considered to be the largest demonstration in the United States against a meeting on economic globalization. The events are sometimes referred to as the Battle of Seattle.

The protest was organized by a group known as the Direct Action Network. On the morning of November 30, 1999, several hundred activists arrived in the deserted streets near the convention center and took control of key intersections. Over the next few hours, a large number of marchers began to converge on the area from different directions. These included a student march and a march of citizens of the developing world. Some demonstrators held rallies while some gave lectures against globalization. The delegates were unable to proceed from their hotels to the Convention Center. The police who had formed a cordon around the convention center were cut off from the rest of the city. The police outside the area eventually tried to break through the protesters' lines. The Seattle Police Department fired pepper spray, tear gas canisters, stun grenades, and rubber bullets at protesters in an attempt to reopen the blocked streets and allow as many WTO delegates as possible through the blockade. The crowd held firm.

The situation became violent around noon, when black clad anarchists began smashing windows and vandalizing storefronts. This set off a chain reaction of sorts, with additional protesters pushing dumpsters into the middle of intersections and setting them on fire. They deflated the tires of police vehicles. Soon non anarchist demonstrators also joined in the destruction of property, and a general disruption of all commercial activity in downtown Seattle. Some protesters tried to stop the vandalism of the anarchists.

Seattle police did not react immediately. They were taken by surprise. While granting permission for the protests, they had been promised by the protest organizers that the protests will be peaceful. The police were also overwhelmed by the number of protesters many of whom had chained themselves together and were blocking intersections. By late morning laborers organized a rally and a march that drew tens of thousands. The permitted march route had them turning back before they reached the convention center. But some protesters ignored the marshals and joined what had become a street carnival like scene in downtown Seattle.

The opening of the Convention was delayed but the Convention itself was successfully completed. The police could clear the streets only in the evening. Seattle mayor imposed a curfew and a 50 block "No-Protest Zone". Over 600 people were arrested over the next few days. The New York Times alleged that protesters had thrown Molotov Cocktails at police. Two days later, the Paper printed a correction saying that the protest was mostly peaceful and no protesters were accused of throwing objects at delegates or the police. An enquiry conducted by the Seattle City Council also dispelled these reports as rumors. Controversy over the city's response to the protests resulted in the resignation of Seattle police chief. Similar tactics, on the part of both police and protesters, were repeated at subsequent meetings of the WTO, and other international organizations. On January 30, 2007, a federal jury found that the city of Seattle had violated protesters' Fourth Amendment constitutional rights by arresting them without probable cause or hard evidence.

Analysis

The Seattle WTO riots, protests, and demonstrations were large scale and well organized. In spite of crowds of over 40,000, the protest did not stop the Convention or Globalization. But it was not totally in vain. Prior to the "Battle of Seattle," there was almost no mention of any "anti-globalization" movement in the United States. The protests made people sir up and think why anybody in the United States would oppose the WTO. The violence and vandalism however did tarnish the image of the protesters.

Direct Action Network

Direct Action Network was an organization of anarchists and anti authoritarian groups that was formed to coordinate the direct action portion or street protests at the anti WTO mobilization in Seattle in 1999. Soon after the Seattle mobilization, several Direct Action Network chapters or branches were formed in 12 cities in the United States and Canada. Their agenda was based on those of Peoples Global Action.

Regional branches were formed of autonomous affinity groups. Affinity groups are associations of 3 to 20 people with a common ideology (e.g., anarchism or Pacifism), a shared concern for a given issue (e.g., anti-nuclear or anti war) or a common activity, role or skill (e.g., legal support or medical aid). The groups were leaderless and operated through consensus. The groups came together when required to protest. Direct Action Network played a key role in organizing the following protests/mobilizations:

Battle of Seattle 1999

Protests against IMF and World Bank, April 8-17, 2000

Protests at Republican National Convention held at Philadelphia , July 29, 2000

Protests at Democratic National Convention held at Los Angeles, August 11, 2000

Protests against inauguration of President George W Bush, Washington, DC, January 20, 2001

Protests held at the meeting of World Economic Forum, New York City, NY, February 2, 2002

The Network began to fall apart in 2001. Its last major mobilization was in New York in February 2002, where remnants of the local chapters were responsible for organizing actions against the World Economic Forum. The protests were attended by between 15,000 and 20,000 individuals. Many former activists of Direct Action Network have continued to play pivotal roles in regional and national mobilizations for anti war demonstrations and other protests in support of economic and social justice.

Analysis

Direct Action Network, like the "Occupiers of Wall Street", was a leaderless conglomeration of affinity groups who got together to protest against a globalization conference in Seattle in 1999. The success of the protests led to their brief expansion into 12 branches. The social and economic injustices and the organizations like WTO, IMF and World Bank which they protested against are still thriving. But they faded away just after three years. It is difficult for loose organizations without a hierarchy, a formal organizational structure and regular funding to survive long enough to achieve their aims.

Peoples' Global Action

People's Global Action is the name of a worldwide movement that coordinates radical social movements and grassroots campaigns and physical protests against capitalism and for social and economic justice. It is part of the anti globalization movement. The movement rejects capitalism, imperialism and feudalism. It is against all trade agreements, institutions and governments that promote economic globalization. It rejects all forms and systems of domination and discrimination including, but not limited to, racism and religious fundamentalism of all types. It recognizes the full dignity of all human beings. It has a confrontational attitude, since it does not think that lobbying can have a major impact on the biased and undemocratic institutions like WTO, IMF and World Bank in which transnational capital is the only real policy maker. It calls for physical protests and civil disobedience, supports social movements and struggles and advocates all forms of physical protests which maximize respect for life and rights of oppressed people. It supports the development of local alternatives to global capitalism. Its organizational philosophy is based on decentralization and autonomy.

The main role of People's Global Action has been to coordinate "Global Action Days" or physical protests around the world by popular movements to highlight the ordinary people's opposition to capitalist globalization. The first "Global Action Day" was during the second WTO ministerial conference in Geneva in May 1998. It involved tens of thousands of people in more than 60 demonstrations and street parties on five continents. Other "Global Action Days" have included the "carnival against capital" (June 18, 1999), the third WTO summit in Seattle (November 30, 1999), the IMF/World Bank meeting in Prague (September 26, 2000), the G8 meeting in Genoa (June 21, 2000), the fourth WTO summit in Qatar (November 9, 2001), etc.

The aim of direct action or protests was to block the summits of WTO, IMF and World Bank as this was considered the only form of protest that could adequately express the need to destroy the instruments of capitalist domination. Groups associated with People's Global action have also organized regional conferences, workshops and other events in many regions of the world to explain their objective.

Analysis

People's Global Action has been organizing street protests against WTO and IMF/World bank summits since 1988. It has been able to mobilize tens of thousands of protestors on the streets of the venues of the summits. But what has it achieved after 23 years of confrontation and physical demonstrations? Big businesses are making record profits. The rich are getting richer. The ordinary people continue to loose jobs and see their incomes and prosperity eroded.

The Anti-globalization Movement

The Anti-globalization Movement is a loose coalition of independent individuals like Noam Chomsky, Joseph Stiglitz and organizations and NGOs from all round the world. The participants stand together in opposition to large, multinational corporations who have usurped enormous political power all over the world through funding campaigns of politicians and political parties, lobbying politicians and governments or simply bribing government officials and the media. This power is exercised through trade agreements between countries and economic liberalization which includes reduction of government control on prices, privatization of public sector units and deregulated financial markets, banks and institutions. Specifically, the corporations are accused of seeking to maximize profit by undermining safety conditions and standards at workplaces, deregulating labor hiring and compensation standards, diluting environmental conservation laws and regulation, and compromising the independence and integrity of national legislative authority, and sovereignty. International economic integration achieved by globalization based on investor rights makes the interests of people irrelevant.

The activists' goals are for an end to the legal indemnities and privileges granted to multinational corporations like tax breaks and immunity from persecution and payment of compensation for loss of life or limb in industrial accidents and destruction of environment by deforestation and pollution of ground water, rivers and seas. They also seek the dissolution of free market agreements which affect domestic manufacturing and jobs and the radical economic privatization of the public sector that is insisted upon by the World Bank, IMF and WTO and usually leads to job losses or lower compensation to the workers.

The activists are especially opposed to the international institutions that promote neo-liberalism without regard to ethical standards or welfare of the 99 percent. Common targets of the activists include the World Bank, IMF, the Organization for Economic Co-operation and Development (OECD) and the WTO. Activists point to the inequality between developed and developing nations within the WTO and with respect to global trade, most specifically in relation to the protectionist policies towards agriculture enacted in many developed countries. These activists also point out that heavy subsidization of developed nations' agriculture and the aggressive use of export subsidies by some developed nations to make their agricultural products more attractive on the international market are major causes of declines in the agricultural sectors of many developing nations. It is also pointed out that the United States has a special advantage in the global economy because of the dollar hegemony. Anti-globalization advocates urge that preservation of the natural environment, human rights (especially workplace rights and conditions) and democratic institutions.

Analysis

The Anti-globalization movement has achieved nothing except creating an anti-globalization sentiment among a segment of the global population. It has not been able to slow down globalization let alone stop it. The problem is that the anti-globalization movement lacks coherent goals, and that the views of different protesters are often in opposition to each other. Many members of the movement are also aware of this, and argue that, as long as they have a common opponent, they should march together even if they don't share exactly the same political vision. Human beings, who come together for shared causes, but lack clear goals and objectives, cannot form the basis for a result oriented movement.

The World Social Forum

The World Social Forum is an annual meeting of civil society organizations from all around the world. It was first held in Brazil in 2001. It provides a platform to develop an alternative future by opposing hegemonic globalization. Some consider the World Social Forum to be a physical manifestation of global civil society, as it brings together non government organizations, advocacy campaigns as well as formal and informal social movements seeking international solidarity. The World Social Forum prefers to define itself as plural, diverse, non-governmental and non-partisan platform that stimulates debate, reflection, proposals building, experiences sharing and a permanent space and process to build alternatives to neo-liberalism. Its members come together to coordinate global campaigns, share and refine organizing strategies, and inform each other about movements from around the world and their particular issues. The World Social Forum is explicit about not being a representative of all of those who attend and thus does not publish any formal statements on behalf of participants. It tends to meet in January every year at the same time as its "great capitalist rival", the World Economic Forum's Annual Meeting in Davos, Switzerland. This date is consciously picked to promote their alternative answers to world's economic problems in opposition to the World Economic Forum.

Its Charter was approved and adopted in Sao Paulo, Brazil on April 9, 2001, by the organizations that make up the World Social Forum Organizing Committee, and approved with modifications by the World Social Forum International Council on June 10, 2001. It has also been suggested that the World Social Forum originated in the Battle for Seattle November 1999. Some credit the World Social Forum for the successful holding of the "Global Day of Action" on February 15, 2003 which was an international protest attended by an estimated 12 million people in 700 cities across 60 countries protesting the Bush Administration's plans to invade and occupy Iraq.

In 2011, the World Social Forum was held at Dakar Senegal. 75,000 participants from 132 countries organized around 1,200 activities. Among the speakers were Canadian social activist and author Naomi Klein (a supporter of Occupy Wall Street) and Bolivian President Evo Morales. The World Social Forum has led to the organizing of many regional social forums. The first-ever United States Social Forum took place in Atlanta in June 2007. The 2010 meeting of the United States Social Forum was held at Detroit Michigan in June. All social forums do not adhere to the Charter drawn up by the World Social Forum. The goal of these forums is to decentralize and allow far more people to engage in the open forum atmosphere of the World Social Forum without needing very much money for travel expenses. Some activists attending the Forum in 2001 invaded and destroyed an experimental plantation of genetically modified crops of the Monsanto Company in Brazil. The bigger and wealthier NGOs have far more influence at the form while NGOs from poorer countries were marginalized.

Analysis

The World Social Forum is a high profile platform for protesting globalization and the domination of the corporate world. It has been meeting for ten years and mustered huge gatherings. The meetings have been talk, talk and talk. There has been no concrete action against globalization or multinational corporations. It has produced no results.

Other Revolutions and Protests

There have been many other successful movements around the world like the Bolshevik Revolution of 1917 in Russia, the independence struggles of the colonies, overthrow of the Shah of Iran and the Arab Spring in Tunisia and Egypt. However, America is different. The American people are different. The American political system is unique. Just imagine that you are a Black, God fearing church goer who is anti abortion, anti gay rights and a supporter of the "Occupiers of Wall Street". Who will you vote for? The Republicans are religious conservatives and traditional supporters of Black political rights but are anti tax increase, pro rich and pro business. The Democrats are historically against Black political rights, secular liberals supporting abortion and gay rights but more leaning towards the "Ninety Percent". There is no political party of religious conservatives who support the "Occupiers of Wall Street" and what they stand for. And in America, the winner takes all.

Conclusion

The "Occupiers of Wall Street" must understand that unless their movement has the political support that the Civil Rights Movement had in Washington or the overpowering violence of the French Revolution and the support of the law enforcement agencies and armed forces as in the Bolshevik Revolution in Russia in 1917 and the Arab Spring of 2011 in Tunisia and Egypt, their movement is doomed to fail. The bastions of exploitive neo-liberal capitalism like the G8 governments, WTO, IMF, World Bank and the multinational banks and corporation are too strong to be troubled by the isolated protests of a few hundred thousand rag tag individuals or groups.

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### CHAPTER 3: THE TEA PARTY

The Tea Party Movement is a recent populist American political movement which, in many ways, stands for ideologies which threaten the "Occupy Wall Street" Movement. It is supported by "Conservatives" (those Americans who support the constitution, rule of law, the Republican Party and the Christian religion) and "Libertarians" (those Americans who support individual and political freedom and want to reduce the powers of the government). The Party has sponsored protests and supported Republican political candidates since 2009, the first year of the Obama Presidency. It endorses reduced government spending, opposes tax increases in varying degrees, wants reduction of the American national debt and federal budget deficit. It wants the government to adhere to the original "intent" of the founding fathers of United States (their own interpretation of the United States Constitution). The Daily Mail claims that the Tea Party movement is a mix of "grassroots populism, professional conservative politics, and big money". The name "Tea Party" is a reference to the "Boston Tea Party", a protest by European colonists of America who objected to a British tax on tea in 1773 and demonstrated by dumping British tea taken from docked ships into the harbor.

The Tea Party Movement has members and supporters in the House of Representatives and the Senate of the United States. The Movement does not have any central leadership. It is composed of a loose affiliation of national and local groups that determine their own platforms and agendas. The Tea Party's most noted national figures include Republican politicians such as Ron Paul, Sarah Palin, Eric Cantor and Michele Bachmann. Ron Paul is considered by some to be the "intellectual godfather" of the movement. The Tea Party movement is not, as of 2011, a national political party. Opinion polls show that most Tea Party members consider themselves to be Republicans. The movement's supporters have tended to support Republican candidates in 2010 election. It was part of Tax Day protests held throughout the 1990s. The anniversary of the original Boston Tea Party was commemorated on December 16, 2007, by Republican Congressman Ron Paul's supporters who held a fund raising event for their leader for the 2008 presidential primaries. Ron Paul is an advocate of ending the Federal Reserve System and disengaging from foreign entanglements in Iraq and Afghanistan.

Conservative activist Keli Carender is credited with organizing the first Tea Party protest in February 2009. It was held in Seattle on February 16, the President's Day (The birthday of George Washington, first President of United States). It was the day before President Barack Obama signed the Stimulus Bill 2009 into law. 120 people participated. The next day, the Colorado branch of "Americans for Prosperity", a political advocacy group that supports promotion of an economic policy that is favorable to big business, and restrains regulation by government held a protest at the Colorado Capitol. "Americans for Prosperity" was a major supporter of Republican candidates in the 2010 election cycle and is heavily involved in political activities aimed at reducing regulation of the oil and gas industry. Carender organized a second protest on February 27, 2009.

According to pollster Scott Rasmussen, the bailouts of banks by the Bush and Obama administrations triggered the Tea Party's rise. The movement's anger was centered on the issues of increasing federal spending, increasing budget deficits and taxes being too high. They also complained that no one in Washington is listening to them. The second issue was that no one in Washington listens to the ordinary people. It is the same as that which bugs the "Occupiers of Wall Street". The Tea Party Movement is skeptical about the dangers of global warming and is strongly opposed to government imposed limits on carbon dioxide emissions.

Polls conducted in April 2010 found that just 7 percent of Tea Party supporters approve of how Obama is doing his job compared to 50 percent of the general public and that roughly 77 percent of Tea Party supporters had voted for John McCain, the Republican Presidential candidate in 2008 presidential elections.

The various polls conducted on the movement tend to show that Tea Party supporters are mainly white, male, married, older than 45, more conservative than the general population, and likely to be more wealthy and educated. They are, to a very great extent, more likely to be registered Republican or have a favorable opinion of the Republican Party and an unfavorable opinion of the Democratic Party. A University of Washington poll of 1,695 registered voters in the state of Washington reported that 73 percent of Tea Party supporters disapprove of Obama's policy of engaging with Muslim countries, 88 percent approve of the strict anti immigration law enacted in Arizona, 82 percent do not believe that gay and lesbian couples should have the legal right to marry, and that about 52 percent believed that lesbians and gays have too much political power. Washington Post-Pew Research Center Poll from October 20 to 23, 2011 found that the Occupy Wall Street Movement was supported by 39 percent Americans and opposed by 35 percent. 6 percent supported neither and 20 percent could not make up their minds. On the other hand, the Tea Party had the support of 32 percent Americans and opposed by 44 percent. 64 percent Democrats and 24 percent Republicans supported the Wall Street Movement while 18 percent Democrats and 71 percent Republicans supported the Tea Party. Age did not play any significant role in the support to the opposite parties.

First National Protests

The first national protest organized by the Tea Party Movement was against the governments plan to refinance mortgages. Mobilizing protesters started through websites such as ChicagoTeaParty.com. A Facebook page was developed on February 20 calling for Tea Party protests across the country. Soon, the "Nationwide Chicago Tea Party" protest was coordinated across over 40 different cities on February 27, 2009. The movement has been supported nationally by at least 12 prominent individuals and their associated organizations.

Leadership

The Tea Party Movement is not led by any single national figure. However, many Republican politicians, senators and members of the House of Representatives like Sarah Palin and Ron Paul are associated with it.

Supporting Organizations

The movement has been supported nationally by a number of organizations. The Tea Party Patriots is supposed to be the mother organization of the movement. It has more than 1,000 affiliated groups across the nation. "Americans for Prosperity", established in 2003 is a close associate. The group has over 1 million members in 500 local affiliates, and led protests against health care reform in 2009. "Freedom Works" is another supporting organization that has over 1 million members in 500 local affiliates. It endorses local and national candidate during elections. In July 2010, House Representative Michele Bachmann, a Minnesota Republican, formed the House Congressional Tea Party Caucus which is devoted to the Tea Party's stated principles of "fiscal responsibility, adherence to the Constitution, and limited government". As of March 31, 2011, the caucus consisted of 62 Republican representatives. These representatives have been accused by some of hijacking the movement for their own political motives.

Agenda

The main demands of the Tea Party are:

A balanced federal budget

To limit annual growth in federal spending

Repeal the healthcare legislation passed on March 23, 2010

Reduce Taxes

On the foreign policy front, Ron Paul outlined the views the Tea Party movement. It is against spending trillions on occupying and bullying the rest of the world. It seeks a return to the traditional U.S. foreign policy of active private engagement but government non-intervention in other countries.

Fundraising and Support

Sarah Palin went on bus tours, to raise money for Republican candidates and the Tea Party Express. After the formation of the Tea Party Caucus, Michele Bachmann raised $10 million for campaigns of some Republican Tea Party supporters. In September 2010, the Tea Party Patriots announced that it had received $1 million as donation from an anonymous donor. The billionaire brothers David and Charles Koch and the Koch Industries are providing financial and organizational support to the Tea Party movement through the organization "Americans for Prosperity", which David founded.

Impact on the 2010 Election Cycle

The Tea Party made a major impact in the 2010 election cycle. Tea Party supported candidates upset established Republican candidates in several primaries in states, such as Alaska, Colorado, Delaware, Florida, Nevada, New York, South Carolina and Utah, giving a new momentum to the hard line conservative cause in the 2010 elections. In the 2010 midterm elections, The New York Times identified 138 candidates for Congress with significant Tea Party support, and reported that all of them were running as Republicans. Of these, 129 were for the House of Representatives and 9 for the Senate. Some question the effectiveness of the Tea Party to endorse candidates as only 32% of the candidates that were backed by the Tea Party won the election. However, the support was enough for the Republicans to take control of the House of Representatives and paralyze the functioning of the Obama administration.

Conclusion

The popularity of the Tea Party seems to have fallen after the debt-ceiling crisis of 2011 during which Tea Party Republicans refused any compromise on tax increases and spending cuts. It is evident that it has ceased to be a grass root movement of the people. Money and the Republican Party have hijacked it to have it operate as the far rightwing elements of the Republican Party. In 2009, President cut taxes for ninety five percent of the American people. That has dented support for the Tea Party as reduction of taxes is one of their main requirements. However, Obama has not reduced the taxes of the top 5 percent. So the Republicans and other Tea Party supporters like "Americans for Prosperity" which are created and funded by the rich and the big business will continue to support the Tea Party Movement in a bid to neutralize the "Occupy Wall Street Movement". Unless, the Occupiers of Wall Street can successfully counter the Tea Party, their movement is doomed to fail.

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CHAPTER 4: THE POLITICIANS CORPORATION NEXUS

The United States is a democracy. A democracy is supposed to be a government of the people, by the people and for the people. That definition of democracy is unfortunately only for the books. The real truth, in all these so called great democracies of the world, is that the government is of the rich, by the rich and for the rich. Idealism, patriotism and compassion for the economically disadvantaged are rare among politicians. For most politicians of today, the honor and welfare of the politician come first, always and every time. The honor and welfare of the party and the fund providers come next. The honor and welfare of the ordinary citizen come last, always and every time. 99 percent of the people are a necessary inconvenience. They have to be approached with all kinds of promises before the elections. Once the election is over, the people and promises are forgotten. Governing the country becomes acting towards benefiting themselves, their kith and kin, and those who provide them and their charities and non profit organizations with money or other favors.

The politician corporate nexus is based on election funding and lobbying. Politicians need huge amounts of money to contest elections. The financing of elections, at federal, state and local level, has always been controversial, because private sources of finance make up substantial amounts of campaign contributions, especially in federal elections in the United States. In India there is no election funding by the government. So the first agenda of politicians who are elected is to see how they can recover the money spent in getting elected and enrich themselves and their kin.

Money Power in Elections

Federal election campaigns in the United States have been relatively unregulated. The first federal legislation dealing with campaign finance was in 1867. The Hatch Act of 1939 prohibited federal employees and contractors from making election contributions to candidates. Individual contributions are limited to $5,000 per year. The Tillman Act of 1907 and Federal Corrupt Practices Act 1910 sought to limit more broadly the influence of money on the campaigns. However, the acts lacked penal provisions and were largely ignored. In 1971, Congress consolidated its earlier reform efforts in the Federal Election Campaign Act 1971 by instituting more stringent disclosure requirements for candidates for federal elections, political parties, and Political Action Committees (PACs). Federal candidates include those running for the House of Representatives, the Senate, the President and the Vice President. The Federal Elections Commission was created in 1975 by an amendment to the Federal Election Campaign Act (FECA) 1971. It has the responsibility to disclose campaign finance information, to enforce the provisions of the law such as the limits and prohibitions on contributions, and to oversee the public funding of U.S. presidential elections.

The sources of campaign funds are individuals, PACs, corporations, unions, political parties and the government. PACs are private groups which are organized to support election of their chosen political candidates or to advance the outcome of a political issue or legislation. An organization becomes a "Political Action Committee" by receiving contributions or making expenditures in excess of $2,500 for the purpose of influencing a federal election. Direct contributions to a candidate from corporations and labor unions are prohibited. Candidates can obtain government funding to stand in elections if they fulfill the eligibility requirements. The government funding is subject to spending limits. Contributions from all categories are restricted by law. It is a federal crime to evade the donation limits. On January 21, 2010, the U.S. Supreme Court overturned a 20 year old ruling that had previously permitted state laws that prohibited corporations and unions from using money from their general treasuries to produce and run their own advertisements campaign. So now corporations and unions can use their funds for running advertisement campaigns to support their chosen campaigns. Spending limits are no longer applicable to money spent on advertisement campaigns run by unions or corporations. Funding for non-federal offices are governed by state and local law. Over half the states allow some level of corporate and union contributions. Some states have limits on contributions from individuals that are lower than the national limits, while six states (Illinois, Missouri, New Mexico, Oregon, Utah and Virginia) have no limits at all.

Government funding is limited to presidential candidates. In return, the candidate agrees to limit his or her spending according to a statutory formula. From the inception of this program in 1976 up to 1992, almost all candidates who could qualify accepted matching funds in the primary. Since then there have been exceptions like Republicans George W Bush, John McCain, Rudy Giuliani, Mitt Romney, Ron Paul and Democrats John Kerry, Hillary Clinton, Barack Obama, who opted out of the program. By refusing matching funds, candidates are free to spend as much money as they can raise privately.

During the mid term elections held in 2010, American corporations were worried that if the Democrats gained adequate majority in the Senate and the House, President Obama would be able to rollback Bush Tax Cuts and further his pro-poor agenda. So they pulled off all stops to raise money. The American Chamber of Commerce planned to spend $75 million on 10 senate and 40 house seats. This represented an increase of $40 million over the money spent on 2008 elections. 15 other pro Republican conservative organizations such as American Crossroads affiliated with Republican strategist Karl Rove planned to spend $300 million in the mid-term elections. The Centre for Public Integrity maintains that five insurance giants, Aetna Inc., Cigna Corp., Humana Inc., United HealthCare Inc. and WellPoint Inc., planned to spend $20 million on close House races. The coal industry also planned to spend millions to defeat environmentalist senators in Kentucky and Tennessee. In contrast, the Democrats had spent only $177 million in the entire of 2008 for congressional races. Money power of the "1 Percent" won in 2010. Republicans were able to wrest control of the House of Representatives from the Democrats and narrowed the majority of the Democrats in the Senate.

Clean Election Movements

Campaign finance is a controversial issue. Those who support free speech are against limits being set on election expenditure. Those who are concerned about political corruption and use of money power to influence election results favor existing and new restrictions. There are many election watchdog groups like "Protect Our Elections" who have been trying to reduce the influence of money in the American elections. But they face two fundamental problems. Most bills raised in the Congress to limit spending are blocked by the Republicans. Those that manage to get through are struck down by the Supreme Court as being against the First Amendment to the Constitution.

In 1979, the FECA allowed corporations to give donations to political parties rather than candidates. Bills setting spending limits and authorizing partial public financing of congressional elections and limiting advertising expenditure have been repeatedly blocked by the Republicans. In 2002, the Congress passed the Bipartisan Campaign Reform Act. This law was also challenged in the Supreme Court, but its core provisions, including restrictions on "soft money" donations to political parties and restrictions on "electioneering communications" (broadcast advertisements mentioning a candidate within 30 days of a primary or 60 days of a general election) were upheld by the Supreme Court.

The Disclose Act was proposed in July of 2010. The bill would have amended the Federal Election Campaign Act of 1971 to prohibit foreign influence in Federal elections, prohibit government contractors from making expenditures with respect to such elections, and establish additional disclosure requirements with respect to spending in such elections. The bill would also have imposed new donor and contribution disclosure requirements on nearly all organizations that air political ads independently of candidates or the political parties. The legislation would have required the sponsor of the advertisement to appear in it and take responsibility for it. Obama argued that the bill would also reduce foreign influence over American elections. Democrats needed at least one Republican to support the measure in order to get the 60 votes to overcome GOP procedural delays, but were unsuccessful.

A study reportedly established that US business spends $4.2bn (£2.6bn) over the four year election cycle on getting their favored politicians elected. Large corporations like to play both sides of the political divide. The biggest beneficiaries could be large pressure groups who are incorporated, such as the pro-gun rights National Rifle Association which has long complained of being muzzled.

Lobbying

Lobbying is the act of attempting to influence decisions made by officials in the government through legislators or members of regulatory agencies. Lobbying involves spending money on researching, writing and convincing lawmakers to vote in the interest of Big Business. Lobbyists run magazines like Fortune and Forbes Asia and commission authors to write books and articles in favor of neo liberal economic policies. Lobbying is also done by various individuals or groups like unions or corporations, fellow legislators or government officials, or interest groups environmentalists or human rights activists. Professional lobbyists are people whose business is trying to influence legislation on behalf of a party who hires them. Individuals and nonprofit organizations like gay rights groups also lobby.

The right of individuals, groups, and corporations to lobby the government is protected by the "Right to Petition" in the First Amendment to the U.S. Constitution. Politicians get indirect financial benefit from corporate lobbyists who contribute to charities or non profit organizations run by them. The corporations also gain as they get a tax deduction on their contribution. Some examples are given below:

Boeing lobbied against a rival aerospace company to win a $35 billion government contract to build a new military refueling tanker, allegedly through a donation of $10,000 to Symphony Orchestra of the Johnstown, Pennsylvania. The orchestra was patronized by John Murtha, the late Pennsylvania Democrat who, as a member of the Defense Department's budget committee, held a lot of influence over Pentagon contracting. Boeing also donated to groups that honored, among others, Senate Armed Services Committee Chairman Carl Levin, Democrat from Michigan; Representative. Norm Dicks, Democrat from Washington, then chairman of the Defense Appropriations subcommittee; Marine Gen. James Mattis, currently head of the U.S. Central Command; and Gen. David Petraeus, the incoming CIA director.

_Pharmaceutical company Eli Lilly contributed $25,000 to the "Alliance for Aging Research" in 2010 for congressional awards dinner organized by them. Among the awardees was Senator Richard Burr, Republican from North Carolina who is a member of the Senate committee that handles health issues. The same dinner honored the head of the Food and Drug Administration, Dr. Margaret Hamburg, and Senator Bob Casey, a Pennsylvania Democrat on the Senate's health committee_.

Toyota contributed $775,000 to the charity arms of the Congressional Black Caucus and Congressional Hispanic Caucus. The company claims that it did not benefit them.

Corporations including Dell Inc., AT&T, Comcast and Fluor Corp contributed more than $808,600 over the two years, towards a golf tournament organized by South Carolina Representative James Clyburn, a member of the Democratic Party's leadership, to fund a scholarship program for high school graduates and college students who live in his district. The congressman allegedly worked to ensure that a Fluor Corporation led partnership received $1.6 billion in federal stimulus funds to decommission two obsolete nuclear weapons reactors and perform other cleanup tasks at the government's Savannah River nuclear weapons facility. More than $271,700 was donated in 2009 and 2010 for annual charity dinners hosted by Speaker John Boehner, along with Senator Joe Lieberman, and former Washington, D.C. Mayor Anthony Williams. Boehner and Lieberman supported voucher programs that allowed low income students to attend private schools.

The biotechnology giant Monsanto spends millions of dollars every year lobbying the U.S. government to further its own agenda. At least three former Monsanto executives hold high positions of power in the Obama administration. Michael Taylor, senior adviser to the U.S. Food and Drug Administration (FDA), used to be a vice president of Monsanto. Islam Siddiqui, former vice president of the Monsanto funded lobbying group CropLife, is now a negotiator for the U.S. Trade Representative on agriculture. And Roger Beachy, the director of the National Institute of Food and Agriculture, is former director of a plant science center funded by Monsanto.

Jill Richardson in her article "A List of Corporate lobbying", June 19, 2009 in organiconsumers.org provided a list of 99 top spenders on lobbying in the first quarter of 2009.

Seventeen top health care, health insurance, and drug companies such as Pharmaceutical Research and Manufacturers of America, American Medical Association, American Hospital Association, Pfizer, Inc, Eli Lilly and Company, America's Health Insurance Plans, Inc, CVS Caremark Inc, Blue Cross and Blue Shield Association, Glaxo Smith & Kline, Merck & Co, United Health Group, Inc, Sanofi-Aventis U.S. Inc, Novartis, Abbott Laboratories, Astrazeneca Pharmaceuticals, LP, and Medtronic, Inc spent a little over $41 million on lobbying in the first quarter of 2009. No wonder it was nearly impossible to pass health care reform that provides affordable care to all Americans. Drug prices remain at one of the highest in the world and doctors keep recommending costly drugs when cheaper generic drugs could adequately treat the problem.

The oil companies spent about 55 million dollars lobbying against legislations favoring fuel efficient cars and subsidies for development of alternate energies with members of the Senate and House of Representatives during the first six months of 2008. The major contributors were Exxon Mobil $8.1 m, Chevron $6.1 m, BP $5.2 m, and Conoco Phillips $4.4. Six top oil companies namely Exxon Mobil, Chevron U.S.A. Inc, Conoco Phillips, BP America, Inc, Marathon Oil Corporation, American Petroleum Institute spent almost $30 million on lobbying in the first quarter of 2009 to prevent incentives for small and fuel efficient cars, reduce safety and environmental standards at drilling sites, and ensure perpetuity of tax breaks. Hence the placard at a protest: "I pay tax, does Exxon?"

Six top defense companies namely Lockheed Martin Corporation, General Electric Company, Northrop Grumman Corporation, Boeing Company, Honeywell International, and Raytheon Company spent about $19 million in the first quarter of 2009 to ensure that America keeps fighting wars. America may not have enough money to spend money on education in public schools to save the jobs of teachers and nurses. It always finds money to fund research in defense projects like the Star Wars program.

Five top telecom companies namely AT&T Services, Inc, Verizon (excluding Verizon Wireless), National Cable and Telecommunications Association, Comcast Corporation, and Motorola, Inc spent a little over $16 million and five top automotive companies namely General Motors, United Services Automobile Association, Ford Motor Company, Toyota Motor North America, and Alliance of Automobile Manufacturers spent a little over $9 million in lobbying in the first quarter of 2009.

Nine top financial services companies namely Financial Services Roundtable, 33. Prudential Financial, American Bankers Association, Visa, Inc, Investment Company Institute, Securities Industry and Financial Markets Association, J.P. Morgan Chase Bank, N.A., Citigroup Management Corp, and Credit Union National Association spent a little over $14 million in lobbying to ensure that the financial sector remains deregulated and continues to receive bailouts.

Three top biotech companies namely Monsanto, Biotechnology Industry Organization (BIO), and Bayer Corporation spent almost $6 million, three top railroads companies namely Association of American Railroads, Union Pacific Corporation, and BNSF Railway spent almost $6 million on lobbying in the first quarter of 2009. Top four life insurance companies namely American Council of Life Insurers, New York Life Insurance Company, State Farm Insurance and The Northwestern Mutual Life Insurance Company spent over $ 6 million during the same period.

Another about 33 corporations and organizations like Chamber of Commerce of the U.S.A, National Association of Realtors, U.S. Chamber Institute for Legal Reform, Fedex Corporation, International Business Machines (IBM), Time Warner Inc., The Dow Chemical Company, Microsoft Corporation, Wal-Mart Stores, Inc, Johnson & Johnson Services, Inc Norfolk Southern Corporation, American Airlines, Oracle Corporation, Air Transport Association of America, Inc., Disney Worldwide Services, Inc., National Association of Home Builders, UPS, Siemens Corporation, Distilled Spirits Council of the U.S., Inc, American Wind Energy Association, F. Hoffmann-La Roche Ltd, National Rural Electric Cooperative Association, and CBS Corporation spent a little over $ 91 million on lobbying in the first quarter of 2009.

The total sum spent by the top 99 companies on lobbying in the first quarter of 2009 was a little over 240 million. The expenditures listed above do not include money paid to private lobbying firms. For example, Monsanto spent $2,094,000 for its in house lobbying. It paid another $437,000 to private lobbying firms in first quarter 2009.

Conclusion

American investors, multinationals and their global counterparts are not concerned about the American Economy or the economy of any other countries. They have only one goal, get richer. They are financially powerful and spend billions of dollars lobbying in support of globalization and decontrol of the economy. Lobbying poses many problems to effective governance in the United States and other countries in the world. Many will be outraged by the sheer magnitude of the money spent to influence legislators and bureaucrats to act in a manner that is beneficial to the corporations. Will the "Occupiers of Wall Street" be able to defeat the money power of the corporations?

How Politicians Pay Back Their Mentors

Social Security for the Rich

The News Week Magazine published a startling new report titled "Welfare for Millionaires" assembled by Sen. Tom Coburn, a Republican from Oklahoma. According to the report, billions in government dollars are given as benefits America's wealthiest citizens. These included unemployment payments, subsidies and tax breaks on luxury items like vacation homes and yachts. Americans earning more than $1 million a year collect more than $30 billion in government largesse each year. The $30 billion in handout, is a lot of money when you consider that the budget deficit of the State of California is for 2011 is only $15.4 billion and just $ 1.4 billion could restore cuts in public school funding in California and save thousands of jobs.

As per the report, Jon Bon Jovi, the millionaire rock star, took federal dollars to raise honeybees on his property. Billionaire moguls David Rockefeller and Ted Turner have also accepted more than half a million dollars in farm payments. Basketball legend Scottie Pippen took $210,520 in agriculture subsidies while making his fortune playing for the Chicago Bulls. Tax records show that more than three fourths of high earners collecting farming money list their primary residence in a city, land unsuitable for farming.

Top earners, surprisingly, also get significant amounts of unemployment insurance and disaster payments. Since 2004, people with seven-figure salaries have accepted more than $9 billion in Social Security.

Overseas Private Investment Corporation

The US Government set up the Overseas Private Investment Corporation (OPIC) in 1971. It is a government corporation designed to extend political risk insurance, loan guarantees and direct loans at subsidized rates to U.S. companies that invest abroad. It is worth noting that the US Government does not extend the same benefits to US companies investing in the US. Naturally, US companies prefer to invest abroad instead of investing in the US. According to Nobel laureate Milton Friedman, OPIC fails to justify its own existence. He says "I cannot see any redeeming aspect in the existence of OPIC. It is a special interest legislation of the worst kind, legislation that makes the problem it is intended to deal with worse rather than better.... OPIC has no business existing. Congress should close down this government corporation to prevent it from continuing to hurt the US economy. OPIC activity does not lead to any net increase in U.S. employment. OPIC subsidies merely shift employment from certain sectors of the economy to subsidized businesses in foreign countries. In fact, subsidies to businesses provided by OPIC distort the market-driven distribution of capital and labor resources. Therefore, OPIC subsidies are most likely to have a detrimental effect on overall national income of the US."

Due to increased profitability of companies shifted to developing countries and incentives like OPIC for investments abroad, domestic investment in the United States, particularly in manufacturing and small business has been dwindling. Dwindling investment means dwindling jobs, dwindling jobs means less personal consumption, less consumption means economic down turn and the cycle continues. Not a single nuclear plant for producing electricity has been set up in the US since 1971. Many of US highways and bridges are crumbling due to lack of investment. The US government has to step in with investments and revive the American public sector. OPIC should be immediately disbanded and all subsidies to U.S. corporations investing abroad must be immediately stopped. Loan guarantees and direct loans at subsidized rates should be given to U.S. and foreign companies that invest in the United States.

Tax Breaks

The biggest give away are unpaid taxes. According to federal records more than 1,500 millionaires paid no income tax in 2010. This was mainly due to tax loopholes and savvy accountants. Tax breaks were taken by millionaires on things like mortgage interest ($27.7 billion), rental expenses ($64.2 billion) and electric vehicles ($12.5 million). These tax breaks add to the Federal Deficit. Washington, D.C.-based Citizens for Tax Justice released its first in-depth report on how much America's top profitable corporations were actually paying in taxes in 1984. This study found that America's top companies were paying only about 14 percent of their profits in taxes, less than a third of the corporate tax rate then in effect. Corporate tax loopholes figured prominently in the 1986 tax reform debate. The tax legislation eventually enacted plugged most of them. **But the 1986 tax reform legislation** also slashed tax rates on high personal incomes. The businesses that could easily change their tax status reorganized into "sole proprietorships" and took advantage of the new lower personal tax rates. Income that had been taxed at corporate rates now began showing up on individual tax returns.

America's biggest corporate powerhouses like General Electric could not become a "sole proprietorship." So these corporate giants did the next best thing. They invested heavily in politics and had their lobbyist legions carve out huge new loopholes in the tax code. **As per the latest report of the Citizens for Tax Justice** America's top corporations are now getting what essentially amounts to a 50 percent discount off their tax bills. By current statute, corporations are supposed to face a basic 35 percent income tax on their corporate profits. Over the last three years, the new Citizens for Tax Justice report that top U.S. corporations have actually been paying only 18.5 percent of their profits to Uncle Sam. Corporations, in effect, have achieved total tax loophole parity with America's individual super rich. The latest IRS statistics show that the nation's top 400 income earners, billionaires and mega millionaires, who are supposed to be paying taxes on their top tax bracket income at a rate of 35 percent are actually paying taxes at an effective rate of only about 18 percent. No politician seems even remotely interested to plug the major loopholes. 185 of the 280 corporations in Citizens for Tax Justice's new corporate tax report claimed tax exemption of about $ 12 billion on stock option deductions over the 2008-2010 period.

**The 280 profitable companies** made a combined profit of $1.4 trillion over 2008-2010. Under the tax code, they should have paid over $473 billion in federal corporate incomes taxes. They actually paid only $250.8 billion. The tax subsidy "discount" for 2010 alone was $85.1 billion. Full tax collection could substantially reduce the deficit in the federal budget and "avoid" massive cuts in public services and job losses.

**Shutting off** corporate tax loopholes, concludes Citizens for Tax Justice, would bring "real benefits" for Americans, everything from "reduced federal budget deficits" to "more resources to improve our roads, bridges, and schools — things that are really important for economic development here in the United States."

Farm Subsidies

Farm subsidies in the United States are intended to alleviate farmer poverty, but the majority of subsidies go to commercial farms with average incomes of $200,000 and net worth of nearly $2 million. The average farm household earns $81,420 annually (29 per cent above the national average); has a net worth of $838,875 (more than eight times the national average); and is located in a rural area with a low cost of living. Furthermore, farm subsidy formulas are designed to benefit large agribusinesses rather than family farmers. Giving farmers $25 billion in annual subsidies regardless of whether or not their crops have been damaged is not logical. Crop insurance markets, as well as futures and options markets, can balance good and bad years in a way that is cost-neutral over the long run.

The United States also subsidizes crop insurance and gives disaster aid. In 2000, Washington tripled crop insurance subsidies in an effort to eliminate the need for farm disaster payments. The budget-busting 2002 farm bill was also promoted as being large enough to reduce the need for disaster payments. Yet even with generous farm programs and subsidized crop insurance, Congress has passed a disaster aid bill every year since 2000 at a total cost of $40 billion. Congress has even drafted legislation offering disaster aid to farmers who refuse to purchase crop insurance at taxpayer-financed discounts. With Congress continuing to pass large disaster aid packages, what crop insurance subsidies are really funding is unclear.

The federal crop insurance program currently subsidizes 60 per cent of all premiums for the 242 million acres that farmers have enrolled in the program. It is run by 16 private firms that accept federal subsidies but must charge the prices set by Washington. The program seems to have been designed to aid insurance companies and harm taxpayers. Insurers are allowed to pass high-risk policies on to the government while keeping for themselves the low-risk policies that are likely to be profitable. Consequently, since 1998, the participating companies have earned $3.1 billion in profits, while the tax payers have lost $1.5 billion. Additionally, since 1998, Washington has paid nearly $20 billion in premium subsidies and more than $6 billion to cover the insurance companies' administrative costs. When sweet potatoes became eligible for crop insurance, planting quadrupled, but crop failures surged. Farmers were purposely growing sweet potato crops on unsuited land and skimping on all production costs simply to collect generous crop insurance and disaster aid-a practice known as "farming your insurance." Accordingly, the sweet potato insurance program was paying out $16 in insurance claims for every $1 paid in premiums before Congress fixed it in 2005. It is reasonable to assume that this practice continues to some degree in other crops. All in all, the crop insurance program spends $3.34 for every $1 premium in paid claims. It still has not prevented $40 billion being spent in disaster aid.

Washington could guarantee every full-time farmer an income of nearly $40,000 for just $4 billion annually. Instead, farm policy is designed to aid corporate agribusinesses. Among farmers eligible for subsidies, just 10 per cent of recipients collect 73 per cent of the subsidies, an average of $91,000 per farm. By contrast, the average subsidy granted to the bottom 80 percent of recipients is less than $3,000 annually.

Farm subsidies are actually one of America's largest corporate welfare programs. Fortune 500 companies, such as John Hancock Life Insurance received $2.8 m in farm subsidies; International Paper received $1.28m; Westvaco received $500,000; and ChevronTexaco $447,000. Celebrity "hobby farmers" such as David Rockefeller, Ted Turner and Scottie Pippen received $553,782, $206,948, and $210,520 respectively. Riceland Foods Inc. $ 541 million, Producers Rice Mills Inc $ 308 million, Farmers Rice Co-op $ 145m, CHS Inc. 49m, Tyler Farms 37 m, Montana Department of Natural Resources and Conservation 35m, First National Bank, Sioux Falls 28 m. Ducks Unlimited Inc 28 m, Pilgrim's Pride Corporation 26 m, Missouri Delta Farms received more than $25 million in farm subsidy between 1995 and 2005. Members of Congress, who vote on farm subsidies, such as Republican Senators Charles Grassley and Senator Gordon Smith received $225,041 and $45,400, plus a 25 percent ownership in three firms that received $2,114,622 and Democratic Representative John Salazar received $161,084.

Payment limits do exist on paper. Subsidies are restricted to farmers with incomes below $2.5 million, and an individual's subsidy may not exceed $180,000 per farm or $360,000 for up to three farms. However, an entire industry of lawyers exploits loopholes, rendering these limits meaningless. Farmers can simply divide their farms into numerous separate entities and then collect subsidies for each farm. For example, Tyler Farms in Arkansas has collected $37 million in farm subsidies since 1996 by dividing itself into 66 legally separate corporations to maximize its farm subsidies. Other farmers evade payment limits by signing up family members, such as the Georgia farmer who reportedly collected thousands in additional subsidies by signing up his two-year-old daughter as an additional farmer, making her eligible for up to $180,000. In reality there are no limits today.

Farm subsidies are paid to ex farmers for not cultivating their lands. In fact, some homeowners are now collecting subsidies for the grass in their backyards. A recent Washington Post investigation discovered 75 acres of Texas farmland that had been converted into a housing development. Today, the homeowners on these properties (which are worth well over $300,000 each) are eligible for fixed payments for the lawn in their backyards because of its "historical rice production." Over the past 25 years, rice plantings in Texas have plummeted from 600,000 acres to 200,000, in part because people can now collect generous rice subsidies without planting rice.

Calculating the net effect of these contradictory programs, the Organisation for Economic Co-operation and Development estimates that U.S. farm policy raises food prices enough to cost consumers an extra $12 billion annually. That amounts to an average annual food tax of $104 per household. All federal spending must eventually be funded by taxes. Thus, these subsidies cost the average household $216 in annual taxes in addition to $104 in higher food prices.

Conclusion

Politicians are only concerned about getting elected and enjoying the perks of office. They require money to get elected and to get rich. Only the rich and the corporations can give them money. So it is very difficult to break the politician-corporation nexus. Only movements like "Occupy Wall Street" or Anna Hazare's "India Against Corruption" can draw the attention of the media and the people to political corruption. Will the movement against political corruption and politician-corporate nexus succeed? It will if even half the "99 Percent" ordinary citizens of the world can come out on the streets together and stay there till they are heard. It will happen if the "99 Percent" can get together to elect honest politicians who are sympathetic to their cause. With contesting and winning elections becoming as expensive as they are, all over the world, it is becoming increasingly difficult for honest, compassionate and people oriented politicians to win election. Membership of elected bodies all over the world is becoming exclusive privilege of the rich.

With politicians and senior policy makers in the administration getting so much money from corporate America as election contributions and perks, it is unlikely that they will act to stop globalization, outsourcing and cheap imports from countries like China where US Corporations have invested heavily to increase profits unless they are forced to do so through pressure put on them by the American people. Thus only the American people can save the American economy. Jeffery D Sachs, noted American economist and author of "End of Poverty" says in an article published in "Time" Magazine March 24, 2008,

" _Great social transformations – the end of slavery, women and civil rights movements, the end of colonial (British) rule (over America), birth of environmentalism – all began with public awareness and engagement. Our political leaders followed rather than led. It was scientists, engineers, church goers and young people who truly led the way. If as citizens we vote for war, war it will be. If instead we support a global commitment to sustainable development, then .... our leaders will follow."_

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### CHAPTER 5: CORPORATE EXCESSES

" _I hope we shall... crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of their country._ " – Thomas Jefferson, in a letter to George Logan. November 12, 1816.

Much of the anger of the "Occupiers of Wall Street" is directed at the American Corporations and their politician backers. The posters and placards at the different protest venues say it all. "Wall Street is where Crime Really Pays"; "War Feeds the 1%", "We are the 99%, Our voices will be heard", "I pay taxes, What about Exxon?" "They Got the Bailouts: We got sold out", "Stop Corporate Greed". Conservatives call the movement an assault on capitalism. That is not true. Occupy Wall Street movement is not trying to destroy capitalism. It is about trying to bring some decency and honesty back to the tycoons and their corporations that used to have some. Henry Ford paid the workers of his automobile plant $5 per day in 1920, a handsome wage at that time, simply because he felt that the workers need to have money to spend so that the economy could prosper. What we have today are financial pirates trying to maximize their profits at the cost of the worker, the customer and the environment. They don't care about the long term health of their country. All that concerns them is the next quarterly earnings reports and their massive yearend bonuses.

History of Economic Meltdowns

Corporate Excesses are nothing new in the United States. Most of the economic meltdowns in the United States were the result of corporate greed or attempts by the Federal Administration to curb speculation by banks, and corporations.

Panic of 1837

The first financial collapse in the U.S. is known as the "Panic of 1837". To stop the speculation, President Jackson opposed the renewal of the charter of the Second Bank of the United States, which he believed favored the entrenched interests of rich speculators. Jackson also opposed payment for land with paper money and demanded the government be paid in gold and silver coins. His actions led to a liquidity crunch and the "Panic of 1837", the first major financial crisis of the American Economy and stopped business growth for three years. There were demonstrations against inflation and "Flour Riots" in 1837 when some warehouses storing flour were burnt. Price of cotton fell to 5 cents per pound in1980. Out of 850 banks in the United States at the time, 343 failed. Another 52 failed partially. There was a brief recovery in 1838-39 but the economy did not recover fully till 1842.

Panic of 1873

The next landmark economic meltdown was the "Panic of 1873". An economic depression called "The Panic of 1873" hit the Southern economy hard and disillusioned many Republicans who had gambled that railroads would pull the South out of its poverty. The price of cotton fell by half; many small landowners, local merchants and cotton wholesalers went bankrupt. Sharecropping for black and white farmers became more common as a way to spread the risk of owning land. New York Stock Exchange closed for ten days in 1873. 89 of the country's 364 railroad companies went bankrupt. A total of 18,000 businesses failed between 1873 and 1875, unemployment reached 14 percent by 1876.

Panic of 1907

The "Panic of 1873" was followed by the "Panic of 1907". "The Panic of 1907", also known as the 1907 Bankers' Panic, was a financial crisis that occurred when the New York Stock Exchange fell close to 50 percent from its peak of the previous year. The crisis was triggered by the failed attempt by some investors to corner the shares of United Copper Company on the stock market in October 1907. When this bid failed, banks that had lent money to the share cornering scheme suffered runs. The runs later spread to affiliated banks and trusts. This in turn led to the downfall of the Knickerbroker Trust Company a week later. The Knickerbroker Trust Company was New York City's third largest trust company. The collapse of the Knickerbrocker spread fear throughout the city's trust companies as regional banks withdrew their reserves from New York City banks. Panic extended across the nation as vast numbers of people withdrew deposits from their regional banks. This in turn led to a liquidity crisis. The crisis could have been more severe if financier J. P. Morgan had not pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system. At the time, the United States did not have a central bank to inject liquidity back into the market. By November 1907 the crisis had largely ended.

Age of Conflict between the Progressives and the Tycoons (1890-1913)

The period from 1890 to 1907 was a period of great economic growth led by big business houses. The volume of stocks traded on the New York Stock Exchange increased six times between 1896 and 1901. A new building for the stock exchange costing $4 million was opened in 1903. By the turn of the century, a middle class had developed that was critical of both the business elite and the somewhat radical political movements of farmers and laborers in the Midwest and West. Known as "Progressives", these people favored government regulation of business practices to ensure competition and free enterprise. But most political leaders were reluctant to involve the federal government too heavily in the private sector, except in the area of transportation. In general, they accepted the concept of liaises-faire, a doctrine of the tycoons opposing government interference in the economy except to maintain law and order.

Progressives have their Way

When Democrat Woodrow Wilson (1913-1921) was elected President with a Democratic Congress in 1912, he implemented a series of progressive policies. In 1913, the Sixteenth Amendment which allowed the Congress to collect income tax without distributing it among states as per their population was ratified. Thus income tax was instituted in the United States. Wilson also created the Federal Reserve, the central banking system of the United States in 1913 with the enactment of the Federal Reserve Act. Current functions of the Federal Reserve System include:

To serve as the central for the United States. It would also supervise and regulate banking institutions and protest the credit rights of the consumers

To strike a balance between private interests of banks and the centralized responsibility of government.

To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of maintaining the stability of the financial system and contain systematic in financial markets and to provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

Many of today's U.S. regulatory agencies like the Interstate Commerce Commission, the Food and Drugs Administration and the Federal Trade Commission, to break up trade monopolies were created under Wilson Administration. The break up of the monopoly of Standard Oil was a major success in this regard. Taking his cue from developments during the "Progressive Era", Henry Ford, in 1913, offered a very generous wage of $5 a day, to his workers. He argued that a mass production economy could not survive if average workers could not buy the goods produced. However, the wage increase did not extend to women. Ford expanded the company's Sociological Department to monitor his workers and ensure that they did not spend their new found bounty on "vice and cheap thrills."

Wall Street Crash of 1929

It was nearing the end of the "Roaring Twenties" and the economy was booming. Then suddenly economic disaster struck in October 1929. The stock markets crashed. The market had been on a six year Bull-run that saw the Dow Jones Industrial Average increase fivefold in value. The Dow peaked at 381.17 on September 3, 1929. On October 24 ("Black Thursday"), the market lost 11 percent of its value at the opening bell on very heavy trading. Some big financers tried to halt the slide by aggressive buying in an effort to repeat the strategy that ended the "Panic of 1907". But it did not work. On Monday, October 28, more investors decided to get out of the market, and the slide continued with a record 13 percent loss in the Dow. The next day, October 29, 1929, about 16 million shares were traded, and the Dow lost an additional 12 percent. The market continued to fall arriving at an interim bottom on November 13, 1929 with the Dow closing at 198.60. The market recovered for several months reaching a secondary closing peak of 294.07 on April 17, 1930 before embarking on another, much longer, slide from April 1931 to July 1932 when the Dow closed at 41.22, its lowest level of the 20th century. It would not return to the peak of September 1929 until November 1954.

Recession of 1937-1938

In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. Then, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget and reduce deficit. The American economy then took a sharp downturn that lasted for 13 months through most of 1938. Industrial production fell almost 30 per cent within a few months and production of durable goods fell even faster. Unemployment jumped from 14.3 percent in 1937 to 19.0 percent in 1938. Manufacturing output fell by 37 percent from the 1937 peak and was back to 1934 levels. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production went up after June 1938.

The Bursting of the Dotcom Bubble 2002-2004

The dot-com bubble (also referred to as the Information Technology Bubble) was a speculative bubble that formed during the period 1995–2000. On March 10, 2000, the NASDAQ peaked at 5132 in intraday trading before closing at 5048 more than double its value a year earlier. On March 20, 2000, the NASDAQ lost more than 10 percent from its peak. Financial magazine Barron's shocked the market with its cover story "Burning Up". The article pointed out: "America's 371 publicly traded Internet companies have grown to the point that they are collectively valued at $1.3 trillion, which amounts to about 8% of the entire U.S. stock market." By 2001 the bubble was deflating at full speed. A majority of the dot-com companies ceased trading after exhausting their venture capital. Many of the companies having high share value had never made a net profit. The 9/11 terrorist destruction of the World Trade Center's Twin Towers accelerated the stock market drop. The NYSE suspended trading for four sessions.

Several communication companies could not weather the financial burden and were forced to file for bankruptcy. One of the biggest players, World Com was found practicing illegal accounting practices to exaggerate its profits on a yearly basis. WorldCom's stock price fell drastically when this information went public, and it eventually filed the third-largest corporate bankruptcy in U.S. history. Many dot-com companies ran out of capital and were acquired or liquidated. Several companies and their executives were accused or convicted of fraud for misusing shareholders' money, and the Securities and Exchange Commission fined top investment firms like Citigroup and Merrill Lynch millions of dollars for misleading investors. Various supporting industries, such as advertising and shipping, scaled back their operations as demand for their services fell. A few large dot-com companies, such as Amazon.com and eBay survived the turmoil. Others such as Google have become industry-dominating mega-firms. The stock market crash of 2000–2002 caused the loss of $5 trillion in the market capitalization of companies from March 2000 to October 2002.

The Sub-prime Crisis 2007- 2011

The United States, the world's largest economy, entered 2008 with a housing market correction, a Sub Prime Mortgage crisis and a declining dollar. By January 2008, the world's largest banks had already admitted losing more than $100bn from mortgage related bonds and derivatives gone bad. The main sub prime losses reported in the third quarter of 2007 were by Citigroup: $18bn, UBS: $13.5bn, Morgan Stanley $9.4bn, Merrill Lynch: $8bn, HSBC: $3.4bn, Bear Stearns: $3.2bn, Deutsche Bank: $3.2bn, Bank of America: $3bn, Barclays: $2.6bn, Royal Bank of Scotland: $2.6bn, Freddie Mac: $2bn, Credit Suisse: $1bn, Wachovia: $1.1bn, IKB: $2.6bn, BNP Paribas: $197m.The chief executive of Citigroup, resigned in November after the full extent of Citigroup's Sub Prime Mortgage losses began to emerge. US bank JP Morgan Chase said its earnings for the last three months of 2007 fell 34 percent as a result of its exposure to soured US mortgage loans. The bank said it had to cut the value of investments linked to the US mortgage market by $1.3bn. Wells Fargo, the biggest bank on North America's West Coast, said the home loans crisis had led to its first drop in quarterly profits since 2001and reported a 38 percent decline in net income to $1.36bn for the last three months of 2007. Wall Street banking giant Merrill Lynch unveiled a huge loss for 2007 and was crippled by exposure to risky investments in the US housing market. The losses included a massive $14.1bn write down on failed investments related to Sub Prime Mortgages. Merrill Lynch was the last big bank to reveal losses related to the crisis in the US mortgage market. In the last three months of 2007 alone, Merrill Lynch chalked up losses of $9.83bn, the biggest quarterly loss in its history. Its chief executive stepped down in October because of the bank's poor performance. BBC Business Editor Robert Peston said that Merrill Lynch had avoided bankruptcy because of lifesaving capital injection from the cash rich economies of Asia and the Middle East.

Other Financial Services like mortgage companies and bond insurers were also in trouble. The sub-prime (mortgage) market of the US was focused on providing home loans to those with limited or poor credit histories. Many of these mortgages were converted into financial instruments and sold to investors including banks and investment banks in the US and all around the world. But after 2005, rising unemployment and under employment meant that many sub-prime borrowers could no longer make their monthly payments. This led to defaults and a steep fall in the value of investments linked to sub-prime loans. Many banks had to report massive losses. As a result many mortgage companies in the US, Europe and UK came close to bankruptcy. The largest mortgage company in the US, Countrywide was taken over by Bank of America while the British Government poured billions of pounds of taxpayer's money into the British Bank, Northern Rocks, to save it from going bankrupt. Bond insurers were also in trouble. Analysts at Barclay's Capital said banks own $820bn of securities guaranteed by bond insurers. After insuring debt hit by the Sub Prime Mortgage crisis, bond insurers, such as Ambac Financial Group and MBIA, have suffered billions of dollars of write-downs.

**"The US banking system is sound...",** President Herbert Hoover had said in 1930, during a Presidential campaign against Roosevelt after the stock market crash of 1929 and collapse of a large number of smaller banks. Henry Paulson, the treasury secretary in the Bush Administration, appeared on national TV in July 2008 to declare that the US banking system is safe and sound. He added that the list of "troubled" banks" is small and the situation is very manageable. What he failed to mention was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) had a list of 117 problem banks. The list did not include banks such as Citigroup which made billions of dollars of losses and whose share has fallen from about $ 48 to less than $ 4 within one year. The California based savings bank, the IndyMac Bank, which was declared insolvent in July 2008, was not on the FDIC list a week before it collapsed. Mr. Paulson's statement has proved to be false.

Twenty three FDIC insured banks had failed till October 2008 as against three failures in all of 2007. The pressures of tighter credit, high inter bank call money rates, unwillingness of banks to lend to each other, tumbling home prices and rising foreclosures have been battering many banks, large and small. FDIC officials have said that the agency expects to raise insurance premiums paid by banks and thrifts to replenish its reserve fund after paying out billions of dollars to depositors at IndyMac. FDIC Chairman Sheila Bair said that she expects turbulence in the banking industry to continue for some more years and more banks are likely to appear on the agency's internal list of troubled institutions. Of the 8,500 or so banks in the US, 90 were considered to be in trouble in the first quarter of 2008. The FDIC doesn't disclose the banks' names. The most bank failures in the US during the period 2001-2008 were 12 in 2002 when the "Dotcom Bubble" burst and 23 in 2008 after the Sub-prime Crisis. It is of course better the situation in 1982 and 1983 during the Regan Presidency when 42 and 49 banks had failed. (Source: FDIC website, updated up to October 10, 2008).

Bankers are supposed to be conservative and risk averse. But most modern bankers are just the opposite. They tend to lend without assessing the repaying abilities of the borrower and the quality of the collateral securities if any. To make matters worse, their cash to deposit and reserve ratios are very low and they borrow from wholesale lenders and lend to retail lenders at higher interests. So when there is an economic slow down and borrowers begin to default on a large scale, banks get into trouble. When the banks default on payments to the wholesale lenders, there is further melt down of the kind we saw during the "Great Depression" of 1929 to 37, depression of 1982-83 or during 2008.

Most obvious and accepted reason for the collapse of the US banks and investment banks has been the lack of control and monitoring by the Fed. Under the neo liberal capitalist policies introduced by President Regan and followed by the subsequent US Administrations, the US economy had been almost completely deregulated. Federal authorities responsible for monitoring the policies and practices of banks and their financial health looked the other way while banks threw prudence and safe banking practices to the wind and found devious but risky methods to increase profits. Every thing seemed fine when the banks made profits. When the housing bubble burst and the sub prime crisis started, the house of cards just collapsed. Millions of investors lost their future and the poor tax payers in Europe and America have to bail out the banking system to the tune of over a trillion dollars.

Rating agencies are supposed to provide risk warnings to the investing public with their star ratings. These agencies like Fich, Moody's and Standard and Poor, deliberately or negligently kept grading sub prime mortgage related securities as very safe till they started to sour. Then, all of a sudden, they downgraded banks and financial institutions creating panic in the investing public who rushed to withdraw their saving and redeem their investments. Withdrawals and redemptions left some of the banks cashless causing them to collapse.

Excess Liquidity was another factor that contributed to the Sub-Prime Crisis. After the terrorist attacks on Sept. 11, 2001, the Fed lowered its benchmark rate to 1 percent and promised in advance to keep it there indefinitely to create a security blanket of continuous cheap credit. The strategist behind that step, Alan Greenspan, then the Fed chairman, is now widely blamed for keeping money too cheap for too long, inflating the real estate bubble whose bursting is now wreaking so much havoc in the United States and elsewhere. Excessive liquidity and cheap credit led to a bull runs on the stock market and a boom in the property market. Investors tried to replicate success stories. Share prices hit all time highs which could not be sustained. More houses and commercial spaces were constructed than what can be sold. Services like restaurants, air lines have excessive capacity. Suddenly the house of cards collapsed. The economy went from boom to burst. We had the Asian crisis in 1998, the bursting of the Dot.com bubble in 2002 and the bursting of the housing bubble in 2007. And when the bubbles burst, the ordinary Americans suffer the most pain.

Corporate Greed

Gordon Gekko, the ruthless takeover artist in the 1987 movie "Wall Street," went on to deliver a memorable soliloquy: "The point is, ladies and gentlemen, that greed – for lack of a better word – is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. ... And greed, you mark my words, will not only save..... that other malfunctioning corporation called the USA." That malfunctioning corporation called the USA is still malfunctioning. At the moment, the cause is a surfeit of greed not seen since the 1980s. The US corporate culture has been transformed from one based on legitimate profit motive to one that is based illegitimately, on risking all to maximize profit and earn huge bonuses. At its essence, this is a practice of making money from _transacting_ or speculating (gambling) and not from transforming a commodity into a product or a brilliant idea into something so useful that millions rush to buy it.

And when these greedy transactions go bad, as they have in the Sub Prime mortgage mess, everyone gets hurt. If the Bear Stearns catastrophe is not understood by most Americans, it is because the business the giant investment bank was conducting was not transparent. Bear Stearns was neck-high in dubious assets and unable to meet its own creditors' demands. So the Federal Reserve engineered what amounts to a public bailout, a transaction smoothed by J.P. Morgan Chase, originally with an offer of about $2 per share to take over Bear Stearns and save it from bankruptcy. Bear Stern's chief executive walked away with millions of dollars as bonus, the so called "Golden Parachute". Bear Sterns was not the only or last American Investment Bank to collapse. FBI is supposed to be investigating the failed banks and financial institutions and I hope they can nail the greedy culprits. In the mean time, the frustrated American public has to be satisfied with calling the CEOs "Chief Embezzlement Officers" and the "Chief Financial Officers" the "Chief Fraud Officers"

Wall Street and their protectors in Washington, Democrat and Republican say that there is nothing wrong with making a profit. That is absolutely true. But it is demoralizing for the 99 Percent to watch the Federal Administration using American taxpayer money to bail out banks and financial institutions that wrecked the nation's financial infrastructure because of their greed and save the jobs and big bonuses of the CEOs and executives of the errant corporations.

Bank Bailouts

The ordinary Americans were against the bailing out of the banks and financial institutions with the tax payer's money. 68 percent Americans have opposed the proposals. The "Bailout Package" had been rejected once by the House of Representatives. But the influence of big money and lobbying prevailed. President Bush, the proclaimer of "the American economy is fine" has spent billions of dollars of tax payers money to bailout banks before coming out with a $ 700 billion plan to bail out failing banks. The Senate and the House of representatives have passed it. Central banks and other officials around the world have agreed to keep credit flowing to the banks to avoid recession. They are also keen to avoid a breakdown of investor's confidence which could induce ordinary Americans to withdraw their money and keep it at home. The breakdown of investor confidence in banks leads to run on banks. It led to the collapse of hundreds of banks during the Great Depression of 1929 and at least 23 banks including the Washington Mutual during the current crisis.

Governments across the world agreed on Monday 13 September 2008 to shore up confidence in tottering global banks and stave off the world's worst financial crisis in 80 years. Bank of England, European Central Bank and Swiss National Bank decided to work together to protect the European banks. The UK government decided to invest $ 64 billion US in ailing British banks Royal Bank of Scotland and Lloyds TSB. The UK Government has become the largest share holder in Royal Bank of Scotland and mortgage lender HBOS. The French, German and Spanish governments committed $ 1.3 trillion US to guarantee inter bank loans and take equity stakes in banks up to 3 percent of their GDP. German government decided to earmark about $ 700 billion US in guarantees for troubled banks till December 2009. Qatar launched a plan to purchase shares in listed banks to the extent of about $ 5 billion US. Mitsubishi UFJ Capital has agreed to provide $ 9 billion US to Morgan Stanley against a Federal guarantee. The Fed has also bailed out Citibank with a multibillion dollar bailout and a $306 billion guarantee of its assets.

But the success of the above measures rests with the banks themselves. Raising money to rebuild a capital cushion requires issuing new stock, merging or selling big stakes. Such moves are rarely popular with existing shareholders even in the best of times. But such measures are necessary before financiers can return to their normal job of lending money to grease the wheels of commerce. The current corps of central bankers around the world would also want to avoid a permanent expansion of the money supply which fuels inflation, while keeping cash flowing through banks and into the rest of the economy. The world's financial system is in such turmoil that Britain and most of European governments have called for a new Breton Woods conference to reshape the worlds financial system.

The banks of the developed world have been saved for the time being as have the billions of ordinary people who have deposited their savings in the troubled banks. But unless the neo liberal economic policies which led to the crisis are permanently discarded, speculative activity is controlled with an iron hand and cheap credit for speculation and consumption is denied, the boom – crash – doom cycle will continue.

The Corporate Monsters

Wal-Mart is supposed to have caused a 13 percent drop in consumer prices and saved the American consumers $ 200 billion a year. The claim is possibly true. But let us try to understand how Wal-Mart does it? It does so by procuring or manufacturing the products in developing countries where labor is cheap, importing them into America, selling them in their stores and making billions of dollars in profit. As a result, American manufacturing (the key to American prosperity and high paying jobs) is dying, Americans are losing their jobs and the United States trade deficit and debt is going up by $ 200 billion and more every year. The readers may like to decide what is more important, benefiting American consumers with cheap imported products or increasing American employment and decreasing American debt by producing and consuming costlier but indigenously developed products?

The "Stars of Modern Market Economy" are multinational corporations like Nike, E Bay or Google who do billions of dollars worth of business, make billions of dollars in profit but have a small employee base in the U.S. Nike grew into a huge company by simply producing their products in factories in Asia and selling them in their shops in America and Europe. The whole operation is controlled by a relatively small head office in the United States. This head office may one day be shifted out of United States to a tax haven in the Caribbean islands to escape corporate taxes. Neo-liberals are unhappy that AIG and General Motors were bailed out by the U.S. government, a move which saved thousands of jobs. Do the "Stars of Modern Market Economy" like Nike create jobs and save economies of the developed countries or simply generate wealth for a few?

Lack of controls on imports destroyed the domestic manufacturing in the United States and left millions without employment and in poverty. The middle class in the developed world is shrinking every day and the middle class is growing rapidly in the developing countries. How can anyone claim that lack of regulation is beneficial for economies and good for humanity?

Personal Compensation and Bonuses

Personal Compensation and bonuses of CEOs and top executives are sky rocketing while the ordinary American is being reduced to economic slavery. In 2010, researchers at the Institute for Policy Studies (IPS) revealed that CEOs at twenty five of America's largest corporations ranging from Boeing to Verizon took home more in personal compensation than the companies they run paid in federal income tax. These top execs averaged over $16 million each. These bonuses are a powerful incentive for the CEOs to continue to find ways to avoid corporate taxes and exploit the workers. In the 1950s, tax rates as high as 91 percent on personal income over $400,000 discouraged payment of huge bonuses to corporate executives.

Demand for Tax Breaks

A powerful coalition of U.S. based global companies is lobbying hard for a "tax holiday" on offshore profits. Eighteen major corporations and twenty four trade associations that make up the group and include companies like Google, Apple, Pfizer, and General Electric have parked huge amounts of profits totaling more than $1.4 trillion in offshore tax havens. They've stowed those profits abroad primarily to avoid having to pay federal taxes on that income.

Now they want to bring their treasure to the United States. Instead of paying the statutory corporate income tax rate of 35 percent or even the "effective rate," which for most global companies, is closer to 11 percent they're urging Congress to let them do this at a tax rate that is a little over 5 percent. They tell Congress they need a "tax holiday" to free up badly needed capital to invest in the U.S. and create jobs. They've formed a lobby front called the WIN (short for "Working to Invest Now in America") America coalition to make their case, spending over $50 million and hiring over 160 lobbyists, including 42 lobbyists that previously worked as staffers on select Congressional tax writing committees. Most GOP members would support any tax cut without a moment's hesitation. So WIN America has focused its lobbying firepower on Democratic members. The coalition's corporate lobbyists argue this would be a win-win stimulus for the economy and a low cost way to growth and jobs that both Republicans and Democrats could support.

The problem with these WIN America promises is this that they are never kept. They waged the same campaign in 2004 with the same promises that they would create jobs and got their tax breaks. **That Bush Tax Holiday handed 843** U.S. companies a tax break that cost the U.S. Treasury $92 billion. But they created few jobs. In fact, 58 of the large corporations that took the 2004 tax holidays shed almost 600,000 workers in subsequent years. This downsizing was not a result of the economic meltdown as many of these companies made record profits. Of the 58 corporations only eight reported losses between 2008 and 2010 and 43 have registered profits every single year through the economic downturn following the Sub Prime crisis. If companies were struggling, and unprofitable, then dramatic downsizing makes sense. But when companies are prospering, sitting on record levels of cash and saying they need tax cuts to hire workers, their argument makes no sense. Lawmakers must block this fiscally irresponsible and entirely undeserved tax break.

Today, these 58 companies maintain combined cash reserves of more than $450 billion. There's nothing holding them back from investing in America except their belief that they can make more money abroad. These 58 giant corporations accounted for nearly 70 percent of the total repatriated funds and collectively saved an estimated $64 billion from what they otherwise would have had to pay in taxes. The 10 biggest "layoff leaders" were Citigroup, Hewlett-Packard, Bank of America, Pfizer, Merck, Verizon, Ford, Caterpillar, Dow Chemical, and DuPont. Citigroup have announced in December 2011 that they are going to shed another 4,500 jobs. Congress shouldn't be fooled again. But what can the people do when their elected representatives have corporate interest instead of national interest in their hearts. Unfortunately, a segment of corporate America embraces a "built to loot" business model. They squeeze their employees with the exception of top management and their shareholders. They outsource and offshore jobs and engage in "creative" accounting to reduce their tax liabilities to nothing. They take benefits from the treasury, but don't contribute.

Corporate Fraud

Corporate fraud has plagued the US for some years but reached gigantic proportions during the Bush presidency and thereafter. During the Bush Presidency from 2000 to 2008, there were 26 major accounting scandals. The more prominent ones are Micro Strategy in 2000, Enron, Adelphia, AOL, Bristol-Mayers-Quibbs, CMS Energy, Duke Energy, Dynergy, El Paso Corporation, Fredie Mac, Halliburton, Homestore.com ImClone Systems, Merck &Co, Merril Lynch, Peregrine Systems, Reliant Energy and WorldCom in 2002, AIG in 2004 and Bernard L Madoff Investment in 2008. Top auditing firm Price Waterhouse Cooper was auditing four of them; Arthur Anderson five of them; Deloitte & Touche four of them; KPMG two of them and Earnest & Young one. The common causes were inaccurate reporting of results, falsification of accounts, internal corruption, inflated sales and revenues and round trip trades. Fredie Mac understated income by about $ 5 billion to save tax.

Enron

Enron was formed in 1985 after merging natural gas pipeline companies, Houston Natural Gas and InterNorth. Enron rose to become the largest seller of natural gas in North America by 1992. Enron's stock rose from the start of the 1990s until year-end 1998 by 311% percent, a significant increase over the rate of growth in the S&P 500 index. The stock increased by 56% in 1999 and a further 87% in 2000, compared to a 20% increase and a 10% decline for the index during the same years. By December 31, 2000, Enron's stock was priced at about $83 and its market capitalization exceeded $60 billion. In addition, Enron was rated the most innovative large company in America in "Fortune" magazine's Most Admired Companies Survey.

Actually things at Enron were far from satisfactory. Its CEO, Jeffery Skilling and his staff were able to hide billions of dollars in debt from failed deals and projects through the use of accounting loopholes and incorrect financial reporting. Chief Financial Officer Andrew Fastow and other executives not only misled Enron's board of directors and audit committee on high-risk accounting practices, but also pressured Enron's auditors Arthur Andersen to ignore the issues. On December 2, 2001, Enron filed for Chapter 11 bankruptcy. The Enron scandal was the largest bankruptcy reorganization in American history at that time. The Enron case was judged to be the biggest audit failure in the U.S. Shareholders lost nearly $11 billion when Enron's stock price, which hit a high of $ 90 per share in mid-2000, plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) carried out an investigation. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history until WorldCom's bankruptcy in 2002. The collapse led to a little less than 100,000 job losses worldwide.

Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor firm, Arthur Anderson, was accused of applying reckless standards in its audits because of a conflict of interest over the significant consulting fees generated by Enron. In 2000, Arthur Andersen earned $25 million in audit fees and $27 million in consulting fees. The firms' methods were questioned as either being completed solely to receive its annual fees or for its lack of expertise in properly reviewing Enron's revenue recognition, special entities, derivatives, and other accounting practices. In addition, after news of SEC investigations of Enron were made public, Andersen shred several tons of supporting documents and deleted nearly 30,000 e-mails and computer files, raising accusations of a cover-up.

MicroStrategy

Michael Saylor co-founded MicroStrategy in 1989 with the consulting contract from Du Pont, and McDonald. It expanded into that market with a business intelligence software platform, services, and support. Saylor accumulated wealth as the majority owner of MicroStrategy and received much media attention as a popular young billionaire. Then in June 1998, he took the company public with an initial stock offering of 4 million shares priced at $12 each. In March 2000, the U.S. Securities and Exchange Commission brought charges against Saylor and two other top MicroStrategy executives for the company's inaccurate reporting of results. The stock lost 90% of its value in a few weeks and Saylor's personal net worth plummeted by $6 billion on March 20, 2000.

Freddie Mac and Fannie Mae

Freddie Mac and Fannie Mae were Fortune 500 corporations but with a dubious record of financial propriety. As of 2008, Fannie Mae and Freddie Mac owned or guaranteed about half of the U.S.'s $12 trillion mortgage market. In 2003, Freddie Mac revealed that it had understated earnings by almost $5 billion, one of the largest corporate restatements in U.S. history. As a result, in November, it was fined $125 million, an amount called "peanuts" by Forbes Magazine. On April 18, 2006, Freddie Mac was fined $3.8 million, by the Federal Election Commission, for making illegal campaign contributions. It was by far the largest amount ever fined by the Federal Election Commission. Freddie Mac was accused of illegally using corporate resources between 2000 and 2003 for 85 fundraisers that collected about $1.7 million for federal candidates. Much of the illegal fundraising had benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac. Notably, Freddie Mac held more than 40 fundraisers for House Financial Services Chairman Michael Oxley, the Republican Member from Ohio.

The exposure of Freddie Mac and Fannie Mae to the U.S. mortgage market made both corporations highly susceptible to the "Subprime Mortgage Crisis". In July 2008, the U.S. government took action to prevent the collapse of both corporations. The rating agency Moody's changed the investment grade of Freddie Mac's preferred stock from A1 to Baa3 one August 22, 2008, the lowest investment grade credit rating. On September 7, 2008, Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA. The action has been described as "one of the most sweeping government interventions in private financial markets in decades". Shares of Freddie Mac stock, however, plummeted to about one U.S. dollar on September 8, 2008, and dropped a further 50% on June 16, 2010, when the Federal Housing Finance Agency ordered the stocks delisted.

Several executives of Fannie Mae or Freddie Mac were politically connected. Kenneth Duberstein (Fannie Mae board member from 1998 to 2007) was a former Chief of Staff to President Reagan, advisor to John McCain's Presidential Campaign in 2000, and President George W. Bush's transition team leader. James Johnson (CEO from 1991-1998) was a former aide to Democratic Vice-President Walter Mondale and ex-head of Obama's Vice-Presidential Selection Committee. Franklin Raines (CEO from 1999 to 2004) was former Budget Director for President Clinton. Jamie Gorelick (Vice Chairman from 1998 to 2003) was former Deputy Attorney General to President Clinton. In his position, Johnson earned an estimated $21 million; Raines earned an estimated $90 million and Gorelick earned an estimated $26 million during their tenures with the corporation. Three of these four top executives were also involved in mortgage-related financial scandals. The top 10 recipients of campaign contributions from Freddie Mac and Fannie Mae during the 1989 to 2008 time period include 5 Republicans and 5 Democrats. On Oct 21, 2010 government estimates revealed that the bailout of Fredie Mac and Fannie Mae will likely cost taxpayers $154 billion.

AIG

In 2005, AIG, the insurance giant was investigated for accounting fraud. The company had lost over 45 billion US dollars worth of market capitalization because of the scandal. Investigations discovered over a billion US dollars worth of errors in accounting transactions. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. Its CEO was forced to step down and is still fighting civil charges being pursued by New York State.

Lehman Brothers

One of the biggest collapses of 2008 was the fall of Lehman Brothers, (assets $691 billion) the once highly regarded and onetime fourth-largest Wall Street investment firm. It was the largest corporate bankruptcy filing in the history of U.S. bankruptcy courts. The company's North American investment banking and trading businesses and New York City headquarters were sold to British bank Barclays. Some of Lehman's U.S. businesses, including wealth management firm Neuberger-Berman, continue to operate as stand-alone entities under new ownership. It also resulted in the closing of 80 of the bank's smaller subsidiaries and tens of thousands of job losses.

Washington Mutual

Another major investment bank to collapse in 2008 was Washington Mutual. Its customers withdrew more than $16 billion of deposits over a 10 day period amid fears of insolvency. This caused government regulators to seize the holding company's banking assets and sell them to JPMorgan Chase for $1.9 billion. What was once the nation's largest savings and loan and sixth-largest bank is now a shadow of its former self.

World Com

World Com filed for bankruptcy protection in July, 2002, in what was considered the largest corporate insolvency ever at the time. WorldCom filed for bankruptcy protection following the discovery of an $11 billion accounting scandal. Former CEO Bernie Ebbers was sentenced to 25 years in prison after being convicted of securities fraud, conspiracy, and filing false documents. The company renamed itself MCI, and then emerged from bankruptcy a year later. In 2005 MCI was acquired by Verizon Communications for $7.6 billion.

MF Global

The collapse of MF Global is one of the latest instances of corporate fraud. MF Global was one of the biggest players in the derivatives market in the US. Former New Jersey Gov. Jon Corzine led MF Global for about 20 months before it collapsed into the eighth-largest bankruptcy in U.S. history on October 31, 2011. The court-appointed trustee overseeing MF Global's bankruptcy says up to $1.2 billion is missing from customer accounts. The firm collapsed after making a disastrous bet on European debt. Legal experts say Corzine and other top MF Global executives also could face legal action. It's the first time in more than 100 years that Congress has subpoenaed a former senator to testify. A Democrat, Corzine represented New Jersey in the Senate from 2001 through 2005. He later served as the state's governor. Before entering politics, he was CEO of Goldman Sachs from 1994 to 1999. Several class-action lawsuits on behalf of shareholders have been filed against Corzine and three other top executives. A bankruptcy court is consolidating the suits. They accuse the firm and its leaders of making false statements about MF Global's strength and cash balances.

Conclusion

The huge corporate accounting scandals of the period 2000-2002, exemplified by the collapse of firms like Enron, WorldCom, Peregrine Systems and others made the US government enact a legislation that would regulate corporate markets specifically to prevent such frauds. The Sarbanes-Oxley Act (also known as the Public Company Accounting Reform and Investor Protection Act of 2002) that was passed by the US Congress in 2002. It was meant to strengthen and tighten corporate accounting procedures. It established a new quasi-public agency to oversee, regulate, inspect and discipline accounting firms in their roles as auditors of public companies. It also specified tighter rules for corporate governance, including internal control assessments and enhanced financial disclosure. However, many of the harsher provisions were diluted. Corporate fraud continues to be common. In 2003, 1215 cases were registered by FBI. 463 were convicted. In 2004, 1319cases were registered and 431 were convicted. In 2005, 1562 cases were registered and 513 were convicted. In 2006, 1655 cases were registered and 413 were convicted.

Conclusion

Corporate excesses are well documented. However, the corporations have used their money power intelligently and used the media by commissioning articles and opinions which favor small government and removal of government regulations which enable them to exploit people and make huge profits. In the process they have been able to brainwash sizable sections of the American 99 Percent like the supporters of "The Tea Party" and get pro-corporation politicians elected to the Senate and the House of Representatives. They thus try their best to perpetuate their hold on the American Government, perpetuate Bush tax cuts, deregulate the economy and enable them to enslave the American people and increase their profits. Have the Occupiers of Wall Street the ability to combat the misinformation campaign and brainwashing by the corporations and defeat their chosen politicians in the forthcoming elections?

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CHAPTER 6: BUDGET DEFICIT AND AUSTERITY

Budget Deficit

There is a lot of brouhaha these days about public debt and budget deficit. Most governments around the world spend more than what they earn through various taxes and duties. The shortfall is usually made up by government borrowing or simply printing more money. When government borrowings reach close to the GDP alarm bells begin to ring. In some cases, a government can be faced with default or be unable to pay back their debt. This damages their credit rating and makes it difficult and more costly for governments to borrow more money to keep the governments running.

Budget Deficit, Public Debt and National Debt of United States

The annual "Budget deficit" is the difference between income and budgeted spending of the Federal Government during a given fiscal year. Since 1970, the U.S. Federal Government has spent more than its income for all but four years, 1998 to 2001under President Clinton. The deficit for 2010 was an unprecedented 1.294 trillion dollars. The Public Debt is the cumulative accumulation of budget deficits. It stood at about $14.0 trillion as of December 2010.

"Inter-governmental Debt" is the money borrowed by the United States government from "Off Budget Funds" such as Social Security Trust Fund and other Federal trust funds for additional appropriations by the government for the Iraq and Afghanistan wars, and allocations for other non budgeted expenditure. These additional appropriations are not given publicity. Thus the cost of the Iraq and Afghan Wars remain a matter of conjecture. The only way of knowing the inter-governmental debt is to monitor the difference between cumulative budget deficit (public debt) and increase in national debt. For example, FY 2008, the U.S. Federal Government collected $2.52 trillion, while budgeted spending was $2.98 trillion. Thus it generated a budget deficit of $455 billion. However, during FY2008 the national debt increased by $1,017 billion, $ 562 billion more than the $455 billion deficit figure. This $ 562 was the Inter-governmental debt for FY2008.

The "National Debt" is the sum of public debt and intra-governmental debt. The increase in the national debt during a given year is a useful tool to determine the actual amount the government has spent over and above its income. From FY 2003 to 2007, the national debt increased approximately $550 billion per year on average. For the first time in FY 2008, the U.S. added $1 trillion to the national debt. It means that from 2003 to 2007, the government spent roughly $1.20 for each $1.00 it collected in taxes. This increased to $1.40 in FY2008 and $1.90 in FY2009. Do you believe that such profligacy can go on for ever?

Future Projection

The Congressional Budget Office (CBO) in a report of June 2011 visualized two scenarios to predict how the public debt will change during the 2010-2035 time period. The "Extended Baseline Scenario" assumes that the Bush tax cuts (extended by Obama) will expire as per current law in 2012. It also assumes the alternative minimum tax (AMT) will be allowed to affect more middle-class families, reductions in Medicare reimbursement rates to doctors will occur. Thus the tax revenues will reach 23% GDP by 2035, much higher than the historical average 18%. Under this scenario, activities such as national defense and a wide variety of domestic programs (excluding Social Security, Medicare, and interest) would decline to the lowest percentage of GDP since before World War II. Under this scenario, public debt will rise from 69% of GDP in 2011 to 84% of GDP by 2035.

The "Alternative Fiscal Scenario" assumes the continuation of present trends, such as permanently extending the Bush tax cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at the current level. Revenues are assumed to remain around the historical average 18% GDP. Under this scenario, public debt will rise from 69% of GDP in 2011 to 100% of GDP by 2021 and approach 190% of GDP by 2035. That could be disastrous for the United States.

Causes of decline in U.S. financial position

When President Clinton took office in 1992, the economic growth was low, unemployment was high, interest rates were high, and the Federal debt had quadrupled in the previous 12 years. The aim of Clinton Administration was to reduce the national debt by managing a Federal budget surplus. Reducing the debt is beneficial for all Americans. It means lower interest rates for mortgages, car loans and college loans, and leads to an increase in investment and more jobs. It required fiscal discipline. The Clinton administration achieved budget surplus for four years in a row; $ 68 billion in 1998, $ 122 billion in 1999, $ 237 billion in 2000, and $ 127 billion in 2001. The last time the U.S. government had three consecutive year of budget surplus was 1949.This was achieved by increasing taxes on the rich and controlling expenditure. The $5.7 trillion National Debt was reduced by $360 billion between 1998 and 2000.

Both economic conditions and Bush government's policy decisions significantly worsened the debt outlook since 2001. The National Debt increased from about $ 4 trillion in 2001 to about $14.6 trillion national debt in 2011. The major reasons for the increase were:

Revenue declines due to lower tax collections because of recession. It was estimated to be between $4 to 5 trillion over the last decade.

Defense spending increases: The wars in Iraq and Afghanistan added an additional $1.5 trillion to the national debt. Some estimates which include indirect costs like rehabilitation of the war wounded, defense and development contracts, aid etc put the cost at $3.7 trillion. Bloomberg estimates it to be about $ 2 trillion.

Bush tax cuts of 2001 and 2003: Experts estimate that the Bush tax cuts added roughly $2 trillion to the national debt over the last decade (2001-2010).

Increases in net interest: Bloomberg estimates it to be about $ 45 billion per year or about $ 0.5 trillion in the last decade.

Other non-defense spending: About 1.5 trillion

Other tax cuts: About $ 1 trillion

Obama Stimulus: About $ 600 billion

Medicare Part D: About $ 200 billion

Other reasons: About $ 700 billion

A sharp rise in spending on unemployment insurance and other safety-net programs since 2009.

Total about $ 10 trillion

To Extend Bush Tax Cuts or Not

Various authorities have given their assessment of the effect of national debt if Bush Tax cuts are extended to from 2011 to 2020. The Congressional Budget Office estimates that the Bush Tax cuts led to a loss of tax revenue to the tune of $ 2.65 trillion, increased interest and debt servicing costs by about $ 0.68 trillion and caused the National Debt to rise by about $ 3.3 trillion. The Congressional Budget Office is a nonpartisan organization. The non-partisan Pew Charitable Trust further estimated in May 2010 that limiting the extension of ATM to individuals making less than $200,000 and married couples earning less than $250,000 would increase the debt about $2.2 trillion in the next decade.

In December 2010, President Obama was forced to extend the Bush Tax Cuts for two years till 2012 because all 42 Republican Senators pledged to block all legislation in the lame-duck session until the tax matter was settled. The Republicans claim that extension of the Bush tax cuts is essential for creating jobs. But results show otherwise. Bush Tax Cuts have been in force for 10 years from 2001. The unemployment rate has risen from about 6 percent in 2001 to over 9 percent in 2010.

Political warfare over perpetuation of Bush tax cuts and balancing the budget is on. With presidential elections due in 2012, Republican candidates generally want the Bush Tax Cuts made permanent and the budget to be balanced by cuts in social security and Medicare spending. The Democratic candidates are generally advocating for retention of the lower rates for middle class incomes but a return to Clinton era tax rates for high incomes. The American people will decide who wins in 2012.

Other Options

There are other options to reducing the deficit. The government's income can be increased. One way to do that is to increase import duty by 10 percent. The United States imports about $ 2 trillion dollars worth of goods per year. The measure can thus generate an additional income of $ 200 billion per year. It will also increase the cost of imported goods and encourage domestic production. The second way is to stop paying American farmers for not cultivating their land and direct them to produce crops which can be used to produce bio-fuels. It will save about $ 50 billion per year, reduce imports, and create jobs and economic activity. The third method is to slap a turnover tax of 0.1 percent on stock and commodity markets. Since the daily turnover is over one trillion dollars, this measure will increase government's income by $ 300 billion per year. There can be many other innovative ways of increasing government's income and reducing expenditure without hurting the poor.

Conclusion

The debate over perpetuating tax cuts and the ways of balancing the budget will continue. But governments are of the rich, run by the rich and for the rich. Hence the tax cuts which benefit about 5 percent of the richest Americans will be made permanent. Pension benefits, social security and the right to collective bargaining will be slowly be abolished. Ex GAO Director, David Walker pointed out four types of "deficits" that caused the overall fiscal problem; budget, trade, savings and leadership deficits. Unless the Americans learn to save and to elect good leaders with compassion for the poor, the future is bleak indeed. The Federal Government may continue to print money but what about the states? One by one the states and towns are going broke. Soon, schools will close down because there is no money to pay teachers, garbage will not be collected because there is no money to pay contractors, criminals will take over the streets as there will be no money for law enforcement, and pensioners will be frequenting community kitchens and garbage dumps in search of food.

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CHAPTER 7: WHERE HAVE THE JOBS GONE

" _I would like to read what John McCain has to say about honor. Both my husband and I have been laid off and we cannot afford to buy his book to find out_ " – Zulia Zulich, Rancho Cucamonga, California, US, In Box, Time Magazine, September 29, 2008

A major effect of "globalization" on the American Economy is increasing unemployment, particularly in manufacturing industry, IT and banking. The highest unemployment rate after the "Great Depression" was 9.71 in 1982, the second year of the Regan Presidency. It rose to above 10 percent in 2009 before dropping to about 8.3 percent in January 2012. The US economy must generate 150,000 new jobs each month just to keep pace with population growth. The US economy is more than 8 million jobs short of keeping up with population growth.

In the five years from 2002 to 2007, U.S. manufacturing lost 2.9 million jobs, almost 17 percent of the manufacturing work force. The losses were across the board. Not a single manufacturing payroll classification created a single new job. Communications equipment lost 43 percent of its workforce. Semiconductors and electronic components lost 37 percent of its workforce. The workforce in computers and electronic products declined 30 percent. Electrical equipment and appliances lost 25 percent of its employees. The workforce in motor vehicles and parts declined 12 percent. Furniture and related products lost 17 percent of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43 percent. Paper and paper products lost one-fifth of its jobs. The work force in plastics and rubber products industries has declined by 15 percent. Even manufacturers of beverages and tobacco products have experienced seven percent shrinkage in jobs. The information technology sector lost 17 percent of its jobs, with the telecommunications work force declining by 25 percent. Even wholesale and retail trade lost jobs. Accounting and book keeping employment shrank by 4 percent Computer systems design and related lost 9 percent of its jobs.

The banking and financial jobs are the latest on the firing line. Even the services sectors like aviation and hospitality sectors are loosing jobs. In five years the US economy created only 70,000 jobs in architecture and engineering, many of which are clerical. Engineering enrollments in US universities are shrinking. There are no jobs for graduates. There are several hundred thousand American engineers who are unemployed and have been for years. Engineering graduates cannot get even a Wal-Mart jobs because their education makes them over-qualified. In 2007 there were over 200,000 fewer managerial and supervisory jobs than 5 years ago. The total number of private sector jobs created over the five year period is 500,000 jobs less than one year's legal and illegal immigration. (In a December 2005 Center for Immigration Studies report based on the Census Bureau's March 2005 Current Population Survey, Steven Camarota writes that 7.9 million new immigrants entered America between January 2000 and March 2005.) The percentages or numbers can be disputed but the trend cannot be disputed.

Reasons for Job Losses

Competition from the Developing Nations

The most widespread reason for unemployment in the US is cheap imports from developing nations. A study report by the Economic Policy Institute says that the US trade deficit with China was responsible for 2.3 million Americans losing their jobs between 2001 and 2007. The Alliance for American Manufacturing helped fund the report's research. The alliance's executive director, Scott Paul, said, "This report is groundbreaking because it shows the extent of damage caused by Chinese cheating." Some US manufacturers, labor unions and politicians accuse China of manipulating its currency to give Chinese companies an unfair advantage in international trade. More than two-thirds of the jobs displaced by Chinese imports were in manufacturing and more than half of the workers were in the top half of the US wage earners. The jobs include well-paying factory jobs with health insurance coverage and retirement benefits. The deficit with China is running at an annual rate of over 200 billion. The trade balance with China in 1985 about $ 60 million in favor of the US. It has been in favor of China ever since, increasing from $ 1.6 billion in 1986 to $ 256 billion in 2007.

Outsourcing

The term out sourcing is used to describe shifting of business operations and jobs overseas by American companies to save cost and increase profit. Before outsourcing became an accepted practice, unemployment resulted mainly from turnover in the labor force and recession. Recoveries pulled people back into jobs. But things have changed. Since early eighties, offshore outsourcing and offshore production have increased the unemployment among the highly educated segment of the workforce in the US. A Gallup Poll shows that sixty-one per cent Americans say they are concerned that they or a friend or a relative of theirs might lose a job because their employer is moving that job to a foreign country. Another forty-one per cent say they are 'very concerned' about this happening.

Supporters of outsourcing try to justify outsourcing by pointing out that the total jobs outsourced are only a small fraction (about 6 %) of the American workforce. For them, employing 1.3 million Asians instead of Americans is justified because that would produce a few billions of additional profit for the companies. A 2007 report from McKinsey Global Institute estimated that every dollar of costs that the U.S. companies move offshore brings American Companies a net benefit of $1.12 to $1.14 and projects a net profit of $390 billion by 2010 to the American companies. It does not matter to the corporations that in the process the Americans, who lose their jobs in the process, will loose at least $390 billion in earnings. And the American economy will loose at least an equivalent amount of personal expenditure.

A report prepared by the Chartered Institute of Personnel and Development indicates that 30,000 jobs have been sent to developing countries annually ever since the start of the outsourcing in the year 2000. There were 600 firms who participated in the survey and nearly a third of these firms revealed that they feel the pressure to outsource some of their functions due to competition from imports from China and the developing world. Another set of statistics indicates that 15 million high-paying manufacturing jobs have left the U.S. since 1986. The horrifying truth is that in a few years not a single automobile, airplane or ship will be assembled or manufactured in the U.S. A day may not be far when the American unemployed will start migrating to the developing countries like India in search of work or to survive on their meager pensions. American lifestyle and American wealth will cease to exist. The wealthy few will be the corporate entities and investors that outsourced their workforce.

Legal Immigration

American scientists and engineers are denied employment opportunities in their own country by their own Government who, under lobbying pressure from the corporate lobby, allow American companies, Universities and Government Research organizations to import hundreds of thousand of less paid foreign workers by issuing H-1B and L1 visas. There are about one million foreign workers in the US on H-1B and L1 visa. That means over one million American engineers, software professionals, scientists, research workers, professors and even models have lost their jobs to cheaper legal immigrants.

The H-1B visa allows US employers to employ foreign workers having specialized knowledge in the fields of architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, law, accounting, business management, theology, and the arts etc. However, as a bachelor's degree or its equivalent is the minimum requirement, it can hardly be called very specialized. Even models and chefs qualify for H1B visas. In theory, the maximum duration of the H-1B visa is six years (ten years for Defense project-related work) though the period can be extended under certain conditions. H-1B visa holders can apply for and obtain the green card while working in the US and become a permanent replacement for American scientists and engineers.

The number of new H-1B visas issued each year is subject to an annual Congressionally-mandated quota. In 2000, the US Congress permanently exempted H-1B visas holders working in Universities and Government Research Laboratories from the quota. Thus unlimited foreigners can be granted H1B visa if they can get an appointment in these organizations. In 1990s, the quota was 90,000. In 1998 the quota was increased first to 115,000 and then, in 2000, to 195,000 visas per year. In 2004, the quota reverted to 90,000 when the temporary increase passed by Congress in 1999 expired. Since then, the basic quota is fixed at 65,000. An additional 20,000 visas were given to foreign students passing out with US University degrees and wanting to work in the US. Another 10,500 visas annually are available to Australian citizens under a similar but more flexible program, the E-3 visa program.

In its annual report on H-1B visas released in November 2006, USCIS stated that it approved 131,000 H-1B visas in FY 2004 and 117,000 in FY 2005. The numbers are in excess of quota because H-1B visas are exempt from the quota if the employer is a University or Government Research Laboratory. The actual total could be one million as those employed in American Universities and research organizations are not included in the quota and many visas must have been extended. And this when over 8,657,000 American scientists and engineers are employed in non E&S field and another 457,000 are unemployed. In spite of the dismal state of employment of US scientists and engineers, the House Republican Study Committee have approached Nancy Pelosi and Steny Hoyer, the Speaker of the House and Majority Leader, respectively, in 2007 requesting for an increase in the current H1B visa quota of 65,000 per year to 115,000. They also request a 20% automatic yearly increase in the quota every year, if the previous year's quota was met. In other words the Republicans want to ensure that all American engineers, scientists and IT professionals are replaced by cheaper H1B visa holders so that their supporters, Corporate America, can make more profits.

The H-1B program has been criticized by many. The H-1B program has resulted in replacing U.S. engineers and scientists by lower paid foreign workers. The first documented cases occurred in 1994 when US companies AIG (Livington NJ) and Sea Land (Elizabeth NJ), took advantage of a loophole in the law to replace their U.S. programming staffs with H-1B workers. These companies used companies which supply manpower on contract to supply the H-1B replacements. The companies could claim they did not apply for H-1B visas and the manpower suppliers could claim they had not fired any U.S. workers. Thus, US employers can and do openly and legally replace their U.S. workforce with H-1B workers. The American Competitiveness Act of 1998 that temporarily expanded the H-1B program contained a provision that was designed to close this loophole in the version that passed the House Judiciary Committee. The House leadership had the provision removed before the bill came to a vote.

The H-1B program is primarily used by companies as a source of cheap labor to increase profitability. According to Ron Hira, assistant professor of public policy at the Rochester Institute of Technology, the median wage in 2005 for new H-1B visa holders working in information technology (IT) was just $50,000 per year, which is even lower than starting wages for IT graduates with a Bachelor of Science degree. The US governments OES (Occupational Employment Statistics) office's data indicates that 90% of H-1B workers in IT industry were paid below the median US wage for the same occupation. According to a report by Programmers Guild board member John Miano titled "The Bottom of the Pay Scale: Wages for H-1B Computer Programmers F.Y. 2004," non-U.S. citizens working in the United States on an H-1B visa are paid "significantly less than their American counterparts. The report's H-1B wage data came from the U.S. Department of Labor's H-1B disclosure Web site. The salient findings of Miano's report are :

Mean salary of an American computer programmer is $ 67,700 per year while that of a H1B holder computer programmer is $ 52,312. The American employer thus saves $ 15, 388 per year by employing a foreign H1B visa holder.

The difference in case of a computer scientist is $ 12,077 per year and in case of a network analyst is about $ 9,421

An L-1 visa is another visa used by foreign workers to work in the United States. It is generally valid for three years. The visas are available to employees of an international company with offices in both a home country and the United States. The visa allows such foreign workers to relocate to the corporation's US office after having worked abroad for the company for at least one year prior to being granted L-1 status. Spouses of L-1 visa holders are allowed to work, without restriction, in the US and the L-1 visa may legally be used as a steppingstone to the Green Card. The L-1 visa has two subcategories, one for executives and managers and the other for workers with specialized knowledge which are valid for up to 7 years and 5 years respectively. There is no quota. US companies which have large number of workers on L-1 visa in the US are Cognizant Technological Solutions, New Jersey; IBM, New York; Deloitte & Touche LLP, New York; Intel Corporation, Santa Clara, California; Honeywell International, New Jersey; Hewlett Packard, California; Caritor, California; Schlumberger Technology, Houston, Texas; Oracle Corporation, California; Syntel, Michigan; Price Waterhouse Cooper, New York and Microsoft, Washington. (source: list published by the US Senate, 2007)

Up to 20,000 foreign students automatically get H1B visa when they pass out of US universities. They provide a cheap source of employees to the American employers. If the requirement is for giving them some practical training, the duration of the visa should be one to two years and they must get the same median salary as American passing out of American universities are supposed to get.

Illegal Immigration

The US has between ten to fourteen million illegal immigrants from Mexico and other countries. A lot of the jobs that illegal immigrants take are unskilled jobs like maids in hotels and residences, farm workers, which Americans are not interested in. The problem is the same in India where illegal immigrants from Bangladesh and Nepal take up similar jobs where Indians are reluctant to work. But the children of illegal immigrants will compete for skilled jobs. Jobs related to building trades require skill and pay well and contractors are obligated to pay prevailing wages for major contracts. Illegal immigrants work for less. Immigrant workers have a major presence in the service sector of the economy. Recently, McDonald was fined a million dollars by an US court for employing illegal immigrants at their outlets in the US. An economy that cannot create jobs to keep up with population growth should not be boosting population with heavy rates of legal and illegal immigration.

Globalization

The concept of Globalization of the world economy was thought out by the Washington Consensus to perpetuate US domination of the world economy. WTO was established to replace GATT as the international organization which is to govern world trade. The basic aim of economic globalization is to open up the entire world economy by removing trade barriers imposed by Developing Countries through import restrictions, duties and restrictions on inflows of foreign capital. The US is by far the richest country and controls the world economy with the support of its allies and bodies like the International Monetary Fund (IMF), World Bank and World Trade Organization (WTO). So the US wanted to manipulate the world economy so that it is adapted inextricably to suit the US and European investors and their transnational corporations. Free trade has been imposed on the poor countries by the leaders of the US and the developed world whose industries and commerce has been amply protected to ensure that the growth of US economy is assured. Under globalization most profits go to groups of American investors and American transnational corporations. Unfortunately globalization does not benefit the American people. Globalization may make available cheap imports for consumption but it creates widespread unemployment in the US. When you don't have an income you cannot consume.

Globalization is the foremost reason for unemployment in the US. The minimum wage for an unskilled person in the US is $ 7.2 per hr or about $ 57 per day. This would translate to about Rupees 3000 per day in India. For that kind of sum one can hire a post graduate engineer with 10 years experience. The minimum wage in India is around Rupees 200 per day or less than four dollars per day. The labor rates in China, Vietnam, Bangladesh and many other developing countries could be even lesser. How can American manufacturers compete with manufacturing in the developing world? In search of profits, corporate America has outsourced much op their operations to the developing countries resulting in job cuts in the US and job gains in the developing world. If this is allowed to continue, all well paid jobs which can be shipped abroad will be shipped abroad. America will become a nation of the unemployed and the under employed.

In his article "The Decline of Detroit", Steve Schifferes, Globalization reporter, BBC News, says that Globalization has affected the US automobile industry over the past thirty years. 28,000 workers lost their jobs when General Mortors closed the Buick City plant in Flint. The mighty General Motors was the world's biggest industrial company. In the 1950s the Detroit area had the highest median income and highest rate of home ownership in any major US city. The Company has been closing its plants all across Flint. Now there are only 6,000 GM workers in Flint, compared to 100,000 at the peak. Now Flint has the highest rate of unemployment, poverty and homelessness in Michigan. The company does plan to build more car plants in the future but they will be in emerging markets like China and India, not in the United States.

The concept of unrestricted trade and low tariffs has exposed US manufacturing companies to unfair competition from manufacturers in the developing world. The cost of doing business in the developing countries in dollar terms is far less than in America. Labor is cheap in the developing countries. Other inputs like rentals of commercial and residential premises are one tenth of what it is in the US except in some of the mega cities of the developing world. Workers amenities and safety standard are appalling in most developing countries. How can American manufacturing compete in such an environment? Unable to compete with cheap products from the developing world and without any trade barriers to protect them, most American companies opted to set up manufacturing in the developing world. The result is decline of American manufacturing and small businesses, increasing unemployment and poverty and an ever increasing trade deficit. It is interesting to note that the last time the US had a trade surplus was in 1975. By 1987, the US trade deficit had reached $ 153 billion.

Deteriorating Quality of Employment

The issue of job quality in the American economy has been a matter debate among policymakers and academics over the last decade. A situation that has become common in the American economy today is where scientists and engineers or persons who have received a bachelors degree or higher education in science or engineering or other fields are forced, by lack of suitable assignments with in the American economy, to work on less paid jobs which do not require their education, qualification and experience.

Paul Craig Roberts in his article "Watching the Economy Crumble" claims that the US is sliding towards becoming a Third World country and that the media gives employment and unemployment figures which are misleading. He says that the media claimed that 207,000 jobs were created in July 2007. Of the new jobs, 26,000 were government jobs and 181,000 private sector jobs. Of these private sector jobs, 177,000, or 98 percent, were in the domestic service sector. He gave the breakdown of the jobs created: 30,000 food servers and bar tenders; 28,000 in health care and social assistance; 12,000 in real estate; 6,000 in credit intermediation; 8,000 in transit and ground passenger transportation; 50,000 in retail trade and 8,000 wholesale trade. There were 7,000 construction jobs, most of which were filled by Mexicans immigrants. The above contention is supported by Forbes Asia issue of April 21, 2008, in the Article Global 2000 which gives the main job creator US companies during 2007 as Wall-Mart Stores 100,000; IBM 31,100; Starbucks 26,000; Kroger 20,000; Coca Cola 20,000; Oracle 19,000; Dell 17,000 and Pepsi Co 17000.Thus 67,000 jobs were created in technology vis a vis 157,000 in retailing. The Administration however wants the American people to believe that more engineers and scientists were employed in 2006 than ever before.

According to data from the National Science Foundation (NSF) Scientists and Engineers Statistical Data System (SESTAT), www.nsf.gov/statistics/in article titled "Unemployment Rate of US Scientists and Engineers Drops to Record Low 2.1 % in 2006" by Nirmala Kannankutty, the overall unemployment rate of scientists and engineers in the United States dropped from 3.2% in 2003 to 2.5% in 2006. They claim that this is the lowest unemployment rate measured by SESTAT since the early 1990s and that the comparable unemployment rates for the entire U.S. labor force in 2003 and 2006 were 6.0% and 4.7%, respectively. What is not highlighted in the report is that only 23 percent of all scientists and engineers are employed in their field. National Science Foundation Website is a clear example of how the Administration is constantly misleading the American public about the state of economy and under employment. The table clearly shows that only about 22% scientists and engineers are employed in their respective fields. The term "Related Field" has not been defined. It could include an engineer working as a driver or computer operator in a construction company. They should be included in the Non S & E Occupation. If that is done, it will be seen that 60% scientists and engineers are unable to find employment in their field. So, Paul Craig Roberts is quite right in asking "Where are the jobs for the 65,000 engineers the US graduates each year? Where are the jobs for the physics, chemistry, and math majors? Who needs a university degree to wait tables and serve drinks, to build houses, to work as hospital orderlies, bus drivers and sales clerks?

Conclusion

Unemployment and the quality of employment for American graduates, engineers, scientists and technicians are fundamental problems of the U.S. economy. Obama Administration may have been able to bring unemployment down from about 10.1 percent to 8.6 percent. These statistics are silent about the quality of jobs that are being generated and the level of unemployment among the American graduates. It is not clear whether the jobs being created are low paid jobs in the service industries or high paid jobs for those who have college degrees, technical skills and experience. Reducing unemployment by a few percentage points may not be enough to get the "Occupiers of Wall Street" off the streets.

70 percent of U.S. GDP is consumption. Can consumption increase when more and more people are unemployed? Unemployment benefits were intended to help people over the down time in the cycle when workers were laid off. Today the unemployment is becoming permanent as entire occupations, small businesses and industries are wiped out by outsourcing and as corporations replace their American employees with foreign ones.

American companies may choose to ignore the human tragedy they orchestrate whenever they cut jobs or ship them off shore or employ non American immigrants to increase profits. But can the political leaders and the US administration be allowed to remain insensitive to the issue. "The Occupiers of Wall Street" have to grow in numbers and acquire political power to check corporate America. Only then can they become game changers and not losers.

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CHAPTER 8: NEED FOR A THRIVING PUBLIC SECTOR

Public Sector in the developed world is generally restricted to government departments, education and healthcare. Public sector in the United States is restricted to Federal and State departments like the Chicago Transit Authority that runs municipal buses. As government deficit mounts and austerity measures are put into effect, tens of thousands of the once middle class American government workers, bus drivers, police officers, fire fighters, nurses, teachers etc. have been losing jobs since 2009. About one in five black workers work in the public sector and black community is being hit hard by the job losses.

But there are many public sector companies in the developing world which are engaged in a variety of commercial activities like operating banks, public transport systems, oil exploration and refining, mining, producing metals like steel, aluminum and producing medicines, vaccines etc. These companies are not government departments but limited companies run by professionals in which the government is the majority share holder. Public sector companies can be engaged in healthcare, insurance, infrastructure development, operating harbors etc. Public sector companies are anathema to neo-liberal economists and multinational corporations of the developed world. Such companies of the developed world like the railways, ports, industries and airlines run by the public sector to be sold off to the private sector. But public sector companies engaged in commercial activities have played a very important role in the growth of developing countries like China and India which enjoy the highest growth rates in the world today.

Public Sector companies have proved to be highly successful in combating high rate of unemployment, low levels of savings and lack of investment and weaknesses in infrastructural facilities in the developing world. American economy needs a big push. This push is not coming from the private sector because of their unwillingness to invest funds in America and their unwillingness to take risk with large long-gestation investments. Hence, government intervention through public sector is necessary for economic growth in the United States, to diversify the U.S. economy, to create jobs and to overcome economic stagnation and private sector excesses.

Public Sector companies have contributed significantly to India's rise to be the fourth largest economy in the world. As on Apr 30, 2011, there were a total of about 250 major Public Sector companies in India. About 50 of these were listed were listed at the Bombay Stock Exchange (BSE) and constituted about 20 percent of the total market capitalization of 4,946 companies listed on the BSE. Additionally, 28 Public Sector Banks (PSBs) including their subsidiaries and six State Level Public Enterprises (SLPEs), accounted for 6 percent of the total market capitalization at BSE. The market capitalization of all Public Sector companies taken together was about $1 trillion. The largest Public Sector company of India, the Oil and Natural Gas Corporation Ltd (ONGC), has a market capitalization of about $500 billion as on Apr 30, 2011. The total number of employees in major Public Sector companies was about 1.5 million in FY 2009. The public sector has been the backbone of the Indian economy. It has acted as a strategic partner in the nation's economic growth and in our development process. They have contributed about $260 billion to the Central Exchequer of the government of India during FY 2010. The Public Sector companies have contributed about 6.3 percent of the Indian GDP in FY 2010. They are expected to invest about $ 20 billion in India in FY 2012.

The public sector companies aim at achieving the following objectives:

To promote rapid economic activity through creation and expansion of infrastructure

To promote redistribution of income and wealth

To create employment opportunities

To promote balanced regional growth

To encourage the development of small-scale and ancillary industries

To act as an important instrument of self-reliance and economic sovereignty.

Necessity of Public Sector Companies

The main usefulness of public sector companies to a country's economy lies in investing in areas of the economy which do not interest the private sector. Some examples are given in the succeeding paragraphs.

Filling the Gaps in Availability of Capital Goods

There are serious gaps in the industrial structure of many developing countries, particularly in the fields of heavy industries such as steel, heavy machine tools, exploration and refining of oil, heavy Electrical and equipment, chemicals and fertilizers, defense equipment, etc. For example, Iran and Nigeria, which produce millions of barrels of crude oil per day, have little or no refining capacity and depend on foreign companies for refining. They have to import petroleum products. Public sector companies in India have helped to fill up such gaps. Steel, aluminum, heavy earthmoving machinery, railway engines and coaches, to name a few products, are produced or manufactured in both the private sector and the public sector. In America, steel, automobile and many other industries are going sick because of cheaper imports from China and other developing countries. Nationalization of such companies would ensure that jobs are protected and there is no disruption in availability of essential capital goods in time of war.

Generate Employment

Public sector companies have created millions of jobs in developing economies to tackle the unemployment problem in the country. The public sector accounts for about two-thirds of the total employment in the organized industrial sector in India. By taking over many sick units, the public sector has protected the employment of millions. Public sector has also contributed a lot towards the improvement of working and living conditions of workers by serving as a model employer and preventing exploitation of labor by private corporations. In the United States, the bailing out of General Motors, Chrysler and AGI saved hundreds of thousands of jobs. Nationalization of the Royal Bank of Scotland in UK also saved thousands of jobs which would have been lost if the bank had been allowed to fail. Nationalization of banks which fail in the United States could save jobs and payments by FIDIC. Such nationalized banks can turn profitable as we have seen in the case of General Motors and the Royal Bank of Scotland. They can be subsequently privatized by sale of shares and the taxpayer's money recovered.

Balanced Regional Development

Public sector companies can locate their plants in backward and less developed parts of the county. These areas lacked basic industrial and civic facilities like electricity, water supply, townships and skilled manpower. Public enterprises in India have developed these facilities thereby bringing about complete transformation in the socio-economic life of the people in these remote regions. Steel plants of Bhilai, Rourkela and Durgapur; fertilizer factory at Sindri, are few examples of the development of backward regions by the public sector. There is considerable difference in the state of economic development and prosperity among the different states in the U.S. This problem can be addressed if public sector companies could be created in the U.S. and located in the less developed areas.

Generate Income for Public Exchequer

Public sector companies which are well run generate cash reserves and pay dividends. Public sector enterprises in India have been making billions of dollars of contribution to the Government exchequer through payment of corporate taxes, excise duty, custom duty, dividends etc. The overall profits of all major Public Sector companies of India stood at about $20 billion during FY 2010 and the dividend declared by them stood at about $6 billion. These Public Sector companies earned foreign exchange equal to about $15 billion in FY 2010. In this way they help in mobilizing funds for financing the needs for the planned development of the country.

Import Substitution

Some public sector companies in India were started specifically to produce goods which were formerly imported and thus to save foreign exchange and reduce trade and current account deficits. Public Sector company, Bharat Heavy Electricals is a major manufacturer of turbines and has successfully competed with General Electric and Siemens and saved millions of dollars of foreign exchange. The United States which has huge trade and current account deficits. It could create some public sector companies to compete with imports from developing countries and create jobs.

Reduce Concentration of Economic Power

We have seen that from the time of President Andrew Jackson, American corporations have been challenging the authority of the U.S. Administration. A vibrant public sector in the United States would reduce concentration of economic power in private hands and increase government control over the U.S. economy. This could help make the economy more people oriented than profit oriented. For example, India, with its nationalized banks can ensure that these banks lend at low interest rates to poor farmers and small scale industries and small businesses which private banks with their profit orientation and risk aversion may not be willing to do.

Limitations and Abuses of the Private Sector

The behavior and attitude of the private sector itself is an important reason for the expansion of the public sector in the United States. In many cases the private sector could not take the initiative to take up infrastructure or manufacturing projects because of the lack of funds, doubtful profitability or their inability to take risk with large long-gestation investments. In a number of cases, the government should take over a private sector industry or industrial units either in the interest of workers or to prevent excessive exploitation of consumers. Very often the private sector does not function as it should and does not carry out its social responsibilities.

Enable Governments to Intervene in Economy and Boost Growth

During the recent global economic downturn, the Government of India was able through public sector banks to infuse capital into the economy in order to boost economic activity into sectors such as real estate, agriculture and small enterprises by providing capital at lower interest rates. These initiatives of the Government helped contain serious after effects of the global economic meltdown of 2008 while keeping a tab on inflation. In the absence of Public Sector banks, the American government was not in a position to directly assist the economically weaker sections of the society. The governments and central banks of the developed world could only bailout private banks and financial institutions whose greed and unethical or fraudulent actions created the financial meltdown in the first place. The bailout funds did not produce any economic activity or generate employment. They were invested in speculative activities in search of profits.

Limitations of Public Sector Companies

Despite their impressive role, Public sector companies, the world over, suffer from several problems and shortcomings. Investment decisions in many public enterprises are not based upon proper evaluation of demand and supply, cost benefit analysis and technical feasibility. Many projects in the public sector have time and cost over runs. Several public enterprises suffer from over-capitalization resulting in high capital-output ratio and wastage of scare capital resources. Public sector enterprises incur heavy expenditure on social overheads like townships, schools, hospitals, etc. Such amenities may be desirable but the expenditure on them should not be so high as to make the organization economically unviable. Manpower planning is not always effective and many public sector companies have excess manpower. Another serious problem of the public sector companies has been low utilization of installed capacity. In some cases productivity is low on account of poor materials management or ineffective inventory control. Sometimes there is lack of cost-consciousness, quality consciousness, and effective control on waste and efficiency. The management of public enterprises in many developing countries leaves much to be desired. Managerial efficiency and effectiveness have been low due to inept management, uninspiring leadership, too much centralization, frequent transfers and lack of personal stake. Civil servants who are deputed to manage the enterprises often lack proper training and use bureaucratic practices. Political interference in day-to-day affairs, rigid bureaucratic control and ineffective delegation of authority hamper initiative, flexibility and quick decisions. Motivations and morale of both executives and workers are low due to the lack of appropriate incentives. But as we have seen in the Chapter "Corporate Excesses", the private sector is not perfect. Corporate greed and fraud also causes considerable turmoil in the economy of a country. The answer is to improve the management of private sector companies and not to privatize them.

Need for Developing Public Sector Companies in the United States

The American economy needs a big push. This push will not come from the private sector because of their unwillingness to invest in low profit ventures and their inability to take risk with large long-gestation projects. Hence government intervention through public sector is necessary to revive economic growth, to diversify the economy and to provide employment to the millions of unemployed. Some sectors where public sector companies could be useful are discussed in the succeeding paragraphs.

Public Transport

A well developed public transport system reduces consumption of petroleum products, reduces traffic congestion in urban areas and reduces the expenses of commuting to work, shopping complexes or to college. It is a very important facility for the poorer sections of the society. Some forms of public transport which have been very successful are given below:

Integrated urban transport projects combining Metro Rail Projects, mono rail and busses. The best example of this combination can be seen in Singapore where possession of a car is not a necessity but a luxury. These systems are in use or under construction in many of the major cities in India. They contribute substantially to increasing commuter comfort and reducing traffic congestion, pollution, commuting time. Most importantly, they generate hundreds of thousands of jobs.

Share taxis. Taxis are expensive and mostly unaffordable to the poorer sections of the society. Use of shared taxis is a very convenient mode of convenience and is becoming increasingly popular in many cities and much of rural India. They are mostly privately owned and provide self employment to hundreds and thousands of Indians. These taxis also run as a regular service between some cities like Mumbai and Pune.

Nationalization of Banks

The boom – bust cycle is well established in the United States. Every bust phase sees the collapse of large number of banks. FIDIC steps in to pay each depositor up to $200,000 and thus spends billions of tax payer's money. Why are these banks not nationalized? Jobs would be saved if they were nationalized and recapitalized with the same taxpayer's money. The deposits of these banks would be available to federal and state governments to finance infrastructure projects and investments in the priority sectors like education, and healthcare.

Nationalization of Bankrupt Companies

The best example of this strategy is General Motors. Within three years of being forced into bankruptcy by the Obama Administration, it has emerged as the world's largest automobile manufacturer and all taxpayer's money invested in it has been fully recovered. If the government had held shares in the company, it would be getting returns on its investment and reduced its deficit.

Nationalization of faltering Steel and Auto Ancillary Industries

Steel and Auto Ancillary industries of the United States are in trouble due to competition from the developing world. Their collapse would lead to huge job losses. These are strategic industries and vital to the United States in time of war. These should be nationalized on as required basis.

Infrastructure Development and Renewal

Much of the infrastructure in the form of roads and bridges were built in the 1930s during the period of the "New Deal" following the Great Depression. Most of these are now 80 years old and need renewal. This could be an area for deployment of Public Sector companies.

Development of Backward States

Public Sector companies can be located in the less developed states of the U.S. This will generate employment and revenues in these states and help them to catch up with the more prosperous ones.

Renewable Energy Sector

Development of renewable energy in the form of solar power and micro hydroelectric projects could be another area for deployment of Public Sector Companies. Micro hydroelectric projects have been very useful in the hilly states of India and could be useful for small townships in the Rocky mountains and Alaska.

Conclusion

The expansion of the public sector in developing countries was aimed at the fulfillment of their national goals of removal of poverty, the attainment of self-reliance, reduction in inequalities of income, and expansion of employment opportunities. They also helped in removal of regional imbalances, and acceleration of the pace of agricultural and industrial development. They helped to reduce the tyrannies of the private sector and prevent growth of monopolistic tendencies by acting as effective countervailing power to the private sector. In spite of their weaknesses, they have enabled many developing countries to achieve significant economic growth and rid them from dependence on foreign aid from the developed world. Even some small developed countries like Singapore have large public sector companies making substantial contribution to their economies.

America needs to develop thriving public sector companies in banking, manufacturing, pharmaceuticals and public transport to revive economic growth, reduce unemployment and check the tyranny of the private sector. Nobel prize winning economist Joseph E Stiglitz supports this view.

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CHAPTER 9: STRATEGY FOR BRINGING CHANGE

" _The Mirage of American Economic invulnerability has vanished, along with much of the savings of thrifty and prudent men and women.... We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer._ " – President Roosevelt, During a campaign speech during US presidential elections of 1932.

Every American knows that the American economy and particularly the prosperity of the majority of the American people is bad and getting worse by the day. Government finances are in a mess. Deficit and debt is mounting by the year. The financial condition of most States is in doldrums. Only the multinationals and the super rich are doing fine. What most people are unable to figure out is why they are becoming less and less prosperous. The media puts the blame on political ineptitude, corporate excesses, excessive liquidity, the high oil prices, the expenditure on homeland security and wars in Iraq and Afghanistan. But is it really so? Is the decline in the US economy due to the above reasons or the deeply flawed economic concept of "Neo-liberal Capitalism" which the U.S. and British Governments have been following since the reign of President Ronald Regan and Prime Minister Margaret Thatcher?

The "Occupiers of Wall Street" have launched their protests. But have they been able to make any impression on the political and economic environment in the United States? The reality is that apart from occasional mention in the media, they have achieved nothing. If they are to make a difference, they must have a strategy for bringing change.

Elect Honest Patriotic Politician

The actions of the President of the United States and functioning of the administration are based on the laws passed by the Senate and the House of Representatives. The pro-rich and pro-corporation legislations like tax breaks, subsidies, deregulation, bailouts etc are all approved by the majority of our lawmakers. The "Occupiers of Wall Street" will not be able to bring change to the political system and economy unless they can elect politicians who are true patriots and sympathetic to the needs of the American people. Decisive Federal elections are going to take place in 2012. If this opportunity is lost, the "Occupiers of Wall Street" will have to wait another two to four years before they can bring about significant change to the American economy is run. To do that we need to:

Identify pro-corporate neo-liberal politicians that need to be defeated and campaign on the social media (Facebook, Twitter etc.) via internet to defeat them in the elections. They could be in either party. But they are most likely to be Republicans who are supported by the Tea Party.

Identify patriotic and pro-people candidates and get them elected first in the primaries and then the federal elections to elect the president and the members of the Senate and the House by campaigning for the on the social media.

The rich and the corporation have the money and hence will control the print and the electronic media. The people, the "Occupiers of Wall Street" have the internet and the social media. So there is no need to think that the people cannot win. If the 99 Percent do not have the will to fight or have been brainwashed by the Republican slogan of the so called American values of minimum government and free enterprise (which really means rule by the big business and the wealthy and the right of the wealthy and corporations to exploit the people), nothing will change. In a true democracy, people's will must prevail.

Roll Back Tax Cuts

The Bush tax breaks have to be rolled back and the taxation must be as during the Clinton administration or as per the "Buffet Rule". For this to happen Obama must get a second term and the Democrats have to have control of both the House and the Senate. That should be the first target of the "Occupiers of Wall Street".

Improve Tax Compliance

As per an Institute of Public Studies' report titled "America Looses", a huge share of the overseas profits that Corporations claim to generate actually comes from "Creative" accounting that shift profits generated from sales in the United States to foreign tax havens where corporations face little or no income tax." The study suggests a variety of steps the U.S. Administration needs to take to end this preferential treatment. Passing one key reform bill now pending before Congress, the "Stop Tax Haven Abuse Act", would shut off most of the tax loopholes that encourage profit shifting overseas and raise an estimated $100 billion a year. Congress can do a great deal to strengthen the U.S. economy and create and protect jobs. Honest people need to be in the Congress.

Reform Social Security

There is a need to restrict social security benefits to the needy and not to retired millionaires who are sitting on piles of money.

Reform Agricultural Subsidy

The agricultural subsidy system needs to be reformed so that the wealthy land owners and corporations cannot manipulate the system to get richer without doing work, taking risks or generating employment. The payments to land owners for not cultivating must be stopped and they should be encouraged to cultivate crops which can be used to produce bio fuels. In case of over production of any crop, the government should buy the crop at a fair support price and give it away as food aid to Indian Reservations, community kitchens and as food aid to the poorest countries around the world.

Reduce Budget Deficit without Austerity Cuts

America must reduce its budget deficit but without austerity measures which affect the lives of the ordinary Americans. Austerity measures which weakens the education and healthcare system or increase unemployment must be resisted by the 99 Percent with mass and if necessary violent protests. Some simple measures to reduce the budget deficit are:

Increase revenues by eliminating the tax holidays for the rich; by improving the tax compliance by eliminating legal loopholes, and laying down stringent penalties for tax evasion and money laundering; taking effective steps to shutdown tax havens, and increasing import duties by at least 10 percent. A transaction tax should also be levied on all transactions at the stock and commodity exchanges. Corporations employing foreigners under H1B or L1 visas should be asked to pay 10 percent of the remunerations paid to the employees as foreigner employment tax.

Decrease government expenditure by reducing defense and homeland security budgets by 10 percent; stopping payment to land owners for not cultivating their land holdings; and stop paying social security benefits to individuals whose assets are worth more than $10 million. All financial incentives to American individuals and corporations for investing abroad should also be withdrawn.

Strengthen Regulation and Monitoring of Banks and Stock Markets

Deregulation of banks and "Savings and Loans Institutions" had been started by Jimmy Carter in 1980. The policy of deregulation of banks and financial institutions was continued vigorously by President Regan and his successors. Banks have been lending large amounts of money for speculative businesses and thus creating bubbles. Whenever the speculative businesses failed, banks and financial institutions collapsed. It happened in 1837, 1873, 1907, 1929, 1937, 1982, 1983, 2002 and in 2008.

Fraudulent accounting practices in corporate America are more common than most would care to admit. One classical example is that of Refco Bank which went burst in 2005. The US government investigation revealed that Refco and its customers had built up heavy losses in the mid 1990s when the company was privately owned with Phillip Bennett as CEO. The firm went public in 2005 but filed for bankruptcy weeks later after the $430m fraud was revealed in its books. The fraud was investigated and Phillip Bennett pleaded guilty to conspiracy and fraud charges. This is just one of many instance of collapse of an American bank due to fraud. Many of the banks which have collapsed recently are being probed by FBI and action may be taken against some CEOs. But prevention is better than cure.

Banks and stock markets must be properly regulated so that the bank collapses can be avoided and confidence in banking and financial corporations can be restored.

Recapitalize the Surviving Banks

The chairman of the Fed in the 1920s, Benjamin Strong, foresaw the potential for a banking crisis that would interrupt lending and he was one of the few Americans to understand the financial ties between the United States and Europe. The solution, in his words, was for central banks to "flood the streets with money." Strong died in 1928, too early to experience the monetary crisis that followed when the Fed reined in lending in response to the stock market crash of 1929. But Roosevelt created the FDIC and bailed out banks and restored the confidence of the public in banks. Regan and Bush Administrations also bailed out banks and "Savings and Loans Institutions" in the wake of the banking and "S&Ls" crisis of 1983 and 2008.

Banks of today have to shed losses linked to the U.S. housing market and recapitalize, either by attracting new investors or by selling themselves to stronger institutions. But the process is not easy. Lehman Brothers and Washington Mutual, the largest savings and loan bank in the United States and once among the most successful financial institutions in the country, tried to sell themselves to a stronger bank but failed. That is why even healthy banks hoard cash in a crisis. A bailout plan which visualizes purchase of bad loans from bank is sending good money to save bad money. The Fed must not buy bad loans but buy stakes in the banks which they can sell when things improve. Buying bad debts may not be such a good idea.

Control Speculation

Speculative activity has many harmful effects on the economy. The first ill effect is unwarranted rise in prices. How else can one explain the drop in crude oil prices from $ 140 per barrel to less than $ 50 per barrel in less than one month? The fall in prices of most commodities throughout the world clearly shows that price rises are mostly the effect manipulation of prices and speculative deals on the commodity exchanges of the world. Ideally commodity exchanges should be banned. But if that is not possible, transactions at the exchanges must be heavily taxed and effectively regulated. All transactions must be delivery based. Failure to take delivery must invoke punitive penalties.

Sale of share must also be delivery based with a minimum holding period of one month. Profits must be taxed at the highest rate. Short selling must be totally banned. The markets must be properly regulated. All defaults and irregularities like insider trading and not making public financial status must invoke punitive penalties. If flow of excess cheap money into speculative business can be stopped, it will automatically get channeled into productive investments and create jobs.

Increase Interest Rates to Discourage Speculation with Borrowed Money

Cheap money encourages consumption and speculation with borrowed money. Both are bad for the economy. The Fed can lay down low rates for lending to manufacturing and service industries which generate employment and lay down high rates above 20% for personal loans for consumption and speculation. But interest rates are set by people who run central banks and financial institutions. They may be influenced by "the market" or "lobbying" and the market is controlled by people with money who want to maximize their profits. So such measures may be difficult to implement.

Higher interest rates will also encourage savings. In India, most banks give an interest of 8 percent or more on fixed deposits. This encourages savings. The saving rate in India is over 30 percent. The aged can invest their retirement benefits in risk free fixed deposits and live off the interest. They do not have to invest in risky pension funds.

Discourage American Investors from Investing Abroad

This can be done by withdrawing insurance of investments abroad and taxing profits earned abroad. American banks must not lend money for investing abroad. If Americans cannot invest abroad, they will invest their surpluses in America and create jobs in America.

Give Incentives to Companies that Create Jobs in the U.S.

Incentives should go to corporations and activities that will create jobs. Tax holidays should not be granted for off shore tax dodgers. These companies are not in the business of creating jobs. They are in the business of shifting as much wealth to their top managers and shareholders as possible. There are other small businesses and domestic companies in the U.S. that are providing jobs to Americans. The Administration should encourage and support these companies and businesses with tax breaks and subsidies.

Americans will have to Save

The American Consumer has been a divine boon to the world. For more than four decades, the American consumer has shown an insatiable desire to spend. Only twice since 1965, despite half a dozen recessions, have Americans spent less in a year than the previous one. But the party is over. Many consumers don't have much choice but to scale back. Total credit card debt has increased by over 50 percent since 2000. The average American credit card debt is $16,635. The personal savings rate has hovered close to zero for the past several years.

Americans will be forced to spend less and save. Young people will have to live with their parents till they can afford independent establishments. Some will work on two or three part-time jobs if they can find them. In the longer term, an aging population will need to spend less and save more for retirement. As that process plays out, consumer spending may become less important in the big economic picture. Moody's Economy.com forecasts that the combination of demographic and financial factors will reverse a four decade increase in consumer spending. Consumption could actually start falling as a percentage of U.S. GDP. Some trends are already visible. Large vehicle sales declined 5.5 percent during the first six months of 2008, while small car sales rose 33 percent. According to J. D. Power & Associates, Piaggio, the company that makes Vespa scooters, the scooter sales in June 2008 were up 146 percent over a year earlier. Starbucks announced that it was closing 600 stores in response to reduced consumer spending. The NPD Group has found that the number of meals made at home has been steadily rising since 2001. Some have already started changing their life style. Cindee Mazzanti, a self employed 57 year-old living in upstate New York, started downsizing in 2001, when the end of the dot-com bubble made her realize the importance of living within one's means. She sold her home and used the money to pay off her debts and purchase a smaller home without a mortgage. She also traded in her Ford Freestyle SUV for an easier to maintain Ford Focus to lower her own fuel costs and help reduce America's demand for foreign oil. Her monthly living expenses shrank from $5,600 to $1,200. Without debt, she says, she feels free.

Stop Globalization and Free Market Policies

Might is right and survival of the fittest are the laws of the wild. They are not the laws of a modern society where people, even the poor have rights and social justice has to prevail. Significantly, Capitalism was not always practiced as it is today. Social welfare and social justice was very much a part of the Capitalist system that existed till the sixties. It vanished with the introduction of Neo liberal Economic policies during the Presidency of Ronald Regan. Today's globalization is a set of rules laid down by the leaders of the World Bank, IMF and the United States Treasury and the multinational corporations they represent. The neo-liberals want the corporate world to be freed of government controls and regulations. They want taxes and tariffs to be abolished or reduced. They want free flow of capital and investments to be allowed across the globe. They want prices to be deregulated and left to be evolved at the market place based on demand and supply.

China appears to have gained remarkably through liberalization of its economy. In its first twenty years of economic reforms from 1978 to 1998, its per capita GDP grew from 379 Yuan to 6431 Yuan. Trade during the period increased from US$ 20.6 billion to US $ 319 billion. Foreign exchange reserves rose from US $ 167 million to more than two trillion US $ by the end of 2010 (almost entirely at the cost of the US). The figures are most impressive. What is often forgotten is that China never adopted neo-liberal Capitalism in its totality. It has strict capital controls and a controlled foreign exchange conversion regime. The free market access to foreign companies is restricted to a few coastal regions and towns and having Chinese companies as partners is often mandatory for investing multinational corporations. Exports are often subsidized. Thus the Chinese economic reforms are more nationalist than neo-liberal capitalist. But China, in spite of its remarkable success, is not free from internal problems. China has backed away from the toughest part of the reforms. Fearing that the resulting unemployment will fuel unrest and instability, its leadership have decided against closing down loss making state enterprises and decided to recapitalize and modernize them. Housing subsidies have been retained and privatization of housing development postponed.

The truth regarding the exploitive nature of globalization is that it is controlled by the corporations, particularly multinational corporations. Some of the readers will be surprised to know that out of world's 100 largest economies, 51 are global corporation. That means that the sales of 51 multinational corporations exceed the GDP of about 150 countries of the world. We are allowing multinational corporations to take control of our governments and our lives. The results of deregulation of the economy are before all of us. A large percentage of our leaders and government employees are on their covert pay rolls or accept funds for their election campaign or as bribes and do their biddings as corporate employees. Power and sophistication of the media controlled by the corporations produces evermore powerful ways of influencing how people think and what they believe. Big business distorts our perception of the truth. Corporate propaganda and some times even money power also tries to undermine democracy by supporting right wing politicians who favor tax cuts and decontrol of the economy. The impact of globalization so far has been to raise profits, strengthen the corporations and weaken the bargaining power of unions and regulating powers of governments.

The forces of neo-liberalism are trying to turn the clock back more than two hundred years, to the beginning of industrial revolution by abolishing worker rights and bring back the social conditions of Blake's "Dark Satanic Mills" or Charles Dickens' "David Copper Field". The neo- liberals aim to get rid of the welfare state for the workers and produce desperation, anxiety, hopelessness and fear in billions of unemployed and modern day economic slaves. Under the neo liberal dispensation, the accumulation of wealth has been extraordinary.

Globalization is not working for the US. Like many other strategies born out of capitalist greed and the desire to control the world, globalization is bound to fail. It will only work if it is restructured to benefit the people of the world rather than multinational corporations and investors of the developed world. It will work when it can reduce rather than increase inequalities. US economy can survive only if it can find a way to globalize trade without hurting its own citizen and the people of the countries of the world. It should consider scrapping WTO and going back to GATT. If it can't, the American people will have to step in and boycott imported goods and services. "Be American Buy American" should be the clarion call of the American people.

America will remain the most important country even in the Post-American World. It has released the twin genies of neo-liberalization and Globalization. Only it can put them back into the bottle and save itself and the world.

Restrict immigration and Issue of H1B Visa

The H-1B, E-3 and L-1 visa programs are a benefit to the American corporations that enables them to get workers at a lower wage. These programs amount to a subsidy to the corporations that skew the labor market against American middle class citizens. American workers don't support the H-1B, L-1 and other programs for induction of foreign workers. It runs against their interests. But when the Administration supports corporate America and neglects their own people, what can they do? Regan put an end to strikes by unions in early eighties by firing thousands. Can the "Occupiers of Wall Street" restart a movement to ensure that American scientists, engineers and workers have priority in getting employment over foreign workers? The problem of low wages paid to foreign workers could be addressed with a few relatively simple changes to the laws. The corporate America must be made to pay the median US salary for the job to the foreign workers they hire and issue of green cards to these categories must stop. Using the H-1B visa program to replace Americans in the workforce should be made a criminal offense. Employer monitoring must be improved and the quotas must be progressively reduced to meet only non availability of a category.

Legal and illegal immigration increases unemployment of American citizen and depresses the wage structure. H1B visa increases unemployment and under employment of American Engineers and Scientists. Both are detrimental to the American people and must be stopped or reduced to the minimum necessary for sustaining the economy and not for sustaining corporate profitability. Corporate profitability of American businesses and manufacturing in America must be ensured by adequately taxing imported goods and services to nullify the labor cost differential with developing countries.

The Administration Must Boost Economic Activity and Employment

President Roosevelt tried to balance the budget by reducing government expenditure. But he had to change tack and try to boost the economy through government spending. Something like that is necessary today. President Barak Obama has recognized the necessity. The American policy makers may like to study the public transport and government housing systems for the low income groups in Singapore and spend government money to develop them. It may also try to create some public sector companies to break the monopoly of the US private sector. America needs to study the success of the Public Sectors of France, Hong Kong, Singapore and India to see how they can coexist and participate in economic development of the country. Public sector is indispensable in high investment industries with long gestation and low profitability like nuclear power, hydroelectric power, infrastructure development, housing for the poorer sections of the society and public transport systems like what is available in Singapore.

Reviving Local Industries and Businesses

Full employment is never possible. It is therefore important for governments to encourage self employment. The U.S. Administration also needs to revive private industries and businesses which have been declared bankrupt. It should also study an Indian organization called "Bureau of Industrial Financial Rehabilitation" or BIFR, which tries to revive sick industries in India with the help of retrenched staff and financial investment. The India Government has taken a number of steps for revival of sick industrial units. The Reserve Bank of India (RBI) has laid down guidelines to banks for lending to sick units. Measures include amalgamation of sick units with healthy units, asking labor unions to take over management, etc. The U.S. Administration has rightly approved a multi billion bailout package for the American auto industry. Public sector is neither a Communist ideology nor a curse. Many top European, Indian, Singaporean and Chinese companies are in the public sector. Nationalization is better than bailing out private industry. Then, the tax payer, whose money is used in the bailout, has a better chance of getting benefits of the bail out.

Conclusion

America Administration may claim that US economy is the Worlds number one economy. That can be disputed. What cannot be disputed is that it has one of the highest percent of people living below the poverty line in the developed world. It also has one of the highest income disparities between the rich and the poor in the developed world. And the most amazing thing is that the American presidents and politicians don't seem to care, the U.S. administrations don't seem to care, the American corporations don't care, American millionaires don't care and even about half the American people, the supporters of the Republican Party don't seem to care. Great American intellectuals like Jeffery Sachs are more worried about solving poverty in the developing world rather than focus in stopping growth of poverty in his own country. American poverty and income disparity cannot be reduced by shipping jobs overseas, replacing American workers with low cost immigrants.

A large percentage of the American middle class was able to survive the ordeal of the Great Depression. They survived the slow down of the American economy, collapse of banks and the Savings and Loans crisis that lasted from 1974 to 1983. Those in professions where skills and jobs were considered "depression proof" (government positions, teachers in well funded districts, doctors, lawyers, etc.) continued to work. American middle class households managed to get through the economic depression by adapting to conditions, spending wisely and avoiding unnecessary purchases. But things are going to be more difficult this time. Unlike the situation during the depression and numerous earlier recessions, manufacturing has left America. Manufacturing and employment cannot be revived without stopping the imports from developing nations. The US government is not likely to do it. So, the ordinary Americans will have to boycott Chinese and other Asian products and try to live off American products.

Stopping neo-liberal policies and Globalization will not be easy. Corporate America will resist people oriented policies in every way they can. This is what Mr. Bush had to say at the Federal Hall on Wall Street just before the G 20 conference he had called on 15 November, 2008 to discuss the world economy:

" _While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people._ "

This means that in President Bush's perception, the surest path for growth of corporate America is free market or freedom to exploit the consumers and labor around the world, while Americans and the people of the world can enjoy the freedom of being poor and unemployed. The American people cannot afford unrestricted cheap imports from China while their domestic industries perish and jobs are out sourced to countries where labor is cheaper. Protectionism is not only desirable but essential for the survival of the United States, the developing and the developed economies. International trade should be need based and not greed based.

If the US Administration does not act to improve the lot of the American people, the American People must take to the streets with non violent or violent agitations and force the political leaders to act in their interest. Americans need to revolt. They need to boycott products that are outsourced or imported. They need to write letters to their political representatives and local newspapers to stop outsourcing and imports. They need to make their voices heard. They need to parade in front of government and corporate offices, hold banners and shout out loud "We are not going to take this anymore!" It is a question of surviving with dignity.

"The Occupiers of Wall Street" have launched their movement. But do they have the support of the 99 percent Americans they claim to represent? There is nothing to indicate that they have the support. They must also develop a winning strategy.

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### EPILOGUE

In his State of the Union address in January 2012, President Barak Obama declared that the lives of the American people, the 99 Percent, cannot improve by investing American money in shifting manufacturing to the developing world and shipping the products back to America to improve corporate profits. The rules of taxation have to change and the rich and the corporations have to contribute their fair share to nation building. Inequalities have to reduce. Millionaires and billionaires cannot be allowed to pay the same tax rate as their secretaries. American money needs to be invested in America to create jobs. American public sector needs to be revived. Jobs need to be created.

Some Americans have had enough of the stranglehold that American corporations and wealthy politicians have on their lives. They are fed up with being exploited by the corporations and politicians. A few of them, "The Occupiers of Wall Street", have mustered courage and come out in protest. But their numbers are too small to have any real effect. If they are going to change the way the American government treats the American people, their numbers have to grow a thousand fold or perhaps ten thousand fold. They must garner political power. For without political power, nothing will change. They must organize themselves and find a leadership that can lead them like George Washington, Abraham Lincoln or Reverend Martin Luther King Jr. Could Obama be that leader? Can the majority of American 99 Percent come together and elect Barak Obama and the Democrats to the Presidency, Senate and the House of Representatives so that the neo-liberal capitalism introduced during the Regan Presidency can be checked, the Bush Tax Cuts be rolled back and a New Deal be given to the American people.

The politicians may physically remove the "Occupy Wall Street" demonstrators from public spaces, but they can't erase the idea driving the protests, that the American political structures should serve the American people and not just those who have amassed great wealth and power. A class war may well be necessary.

Are the "Occupiers of Wall Street" going to be losers or game changers? Their actions and the future will tell.

Back to Contents

### BIBLIOGRAPHY

This book has primarily been researched from the web encyclopedia, wikepedia.org and other websites, books and magazines which are mentioned below.

Prologue

Chapter 1: Occupiers of Wall Street

occupywallst.com; inequality.org; Topics.nytimes.com; occupywallstreet.org

Chapter 2: Protest and Protesters

Chapter 3: The Tea Party

Chapter 4: The Politicians Corporate Nexus

"No Tax Holiday for Corporate Job Destroyers" by Chuck Collins, 2001; "Welfare for Millionaires" News Week Magazine, Nov 14, 2011; "Corporate Campaign Cash Floods US Elections" by Tom Hamburger; August 2, 2010 in the Chicago Tribune; opensecrets.org; "A List of Corporate Lobbying" by Jill Richardson, La Vida Locavore, June 18, 2009; Institute for Policy Studies report, _America Loses: Corporations that Take Tax Holidays Slash Jobs_. Ips-dc.org Heritage.org Brian Reidel, June 20, 2007; wg.org/farms

Chapter 5: Corporate Excesses

"More than 100 US Banks in Trouble" Reuters (Singapore Times August 28, 2008); Greed Ails U.S. Economy **By Marie Cocco;** corporateinformation.com; "Bankruptcy Filings Surge to 1 Million" By Ben Rooney, CNN Money, Aug 27,2008; Forbes Asia Mar 24, 2008 issue; "The Price of Greed" by Andy Serwer & Allaon Sloan; "Govt Bailout: A US Tradition dating to Hamilton" by Michael Phillips, Yohoo Finance; "Bail out Nation" by Justin Fox Time Magazine September 22, 2008; "Oil's Washington Juggernaut" By Steve Hargreaves, CNN Money August 19, 2008; Networkideas.org lessons from Global Corporate Frauds by Jayanti Gosh; BankruptcyData.com

Chapter 6: Budget Deficit and Austerity

infoplease.com; indexmundi.com /united_states/ gdp. Html; globalresearch. Ca; The Real State of the US Economy by Williaam F Engdahl, Global Research Aug 02.08, "It's Official: The Crash of the U.S. Economy has Begun" by Richard C. Cook"U.S. Economy: Stagflation is Here, and It is a Weapon of Mass Destruction", by Richard C. Cook, August 20th, 2008; "What Happened to the U.S. Economy?" by Harry Browne July 30, 2003; census.gov/foreigntrade/balance.htm; exportimportsuite101.com; US Global Trade Deficit by Countries By Daniel Workman 1 Feb 2008; History of Trade Deficit, US Department of State; USinfo .state.gov / infousa/economy

Chapter 7: Where Have the Jobs Gone

Bureau of Economic Analysis, US Department of Commerce, News Release August 2008; "Illegal Workers Weigh on Elections" By Caroline Hepker, BBC News 2 august 2008; Out Sourcing America: Job Loss and Unemployment By Norma Sherry; inhome.rediff.com; "House Republicans Move to Increase H1B visa Quota" By Michael Arington; techcrunch.com; "Research Finds US H!B visa holders paid less" 26. Oct 2005, workpermit.com; National Science Foundation website, nsf.gov/statistics/inbrief; "Unemployment Rate of US Scientists and Engineers Drops to a Record Low of 2.6% in 2006" by Nirmala Kannankutty, National Science Foundation News Release; "H1B Is Just Another Government Subsidy" By Paul Donnely, Computerworld.com; "H1B Computer Programmers" By John Miano, www.cis.org/article/2005

Chapter 8: Need for a Public Sector

Contact singapore.sg/industries/public_sector; publicsector.co.uk; publicservices.co.uk; nytimes.com/2011/11/29/us/as-public-sector-sheds-jobs

Chapter 9: Strategy for Bringing Change

bifr.nic.in; heritage.org; "We need to correct the faults in our economic system, Roosevelt had told the US", Associate Press; "A lesson Rooted in the Great Depression" by Carter Dougherty, Sep 18, International herald Tribune; "How the Next President Should Fix the US Economy" by Justin Fox, Time Magazine June 2, 2008

### ABOUT THE AUTHOR

Bhaskar Sarkar was born at Calcutta, India in 1940. He graduated in civil engineering in 1963 and joined the Corps of Engineers of the Indian Army and hung his boots after 28 years of distinguished service in the rank of Colonel. A keen student of military history, economics and international affairs, he has eleven published and a few unpublished books to his credit. This is his first E book. Other Books by the Author are:

Pakistan Seeks Revenge and God Saves. India ISBN 81-85462-11-9. Fiction.

Tackling Insurgency and Terrorism. ISBN 81-7094-291-8. Non fiction.

Kargil War, Past Present and Future. ISBN, 1-897829-61-2. Non Fiction.

Outstanding Victories of the Indian Army. ISBN 1-897829-73-6 . Non Fiction.

Thirty Nine Steps to Happiness. Non Fiction. 81-248-0142-8

President Takes Over. Fiction. (Unpublished)

Practical Approach to Vaastu Shastra. (A Peacock Book)

Earthquakes, All we need to know about them. ISBN 978-81-248-0188-8. Non Fiction.

**Decline and Fall of the American Empire. Non Fiction. (Unpublished)**

**Nationalism: Economic Strategy for Survival of Developing Countries. ISBN 978-81-269-1093-9.**

**An Introduction to Religions of the World. ISBN 978-81-269-1339-8. Non Fiction.**

**Can the American Economy be Saved? Non Fiction. (Unpublished)**

**Who is Afraid of the Chinese Dragon? I am. Non Fiction. (A Peacock Book)**

**Tackling the Maoist Menace. ISBN 978-81-269-1636-8. Non Fiction.**

**Prevention, First Aid and Treatment of Diseases with Homeopathy. (On offer)**

**The Laments of a Rational Pessimist. (On offer)**

