Biden Should Be Clear: Corporations Are to Blame for High Prices / by Robert Reich

_{^{People wait in line to receive packages of food during an Alameda County Community Food Bank food giveaway at Acts Full Gospel Church on July 15, 2022 in Oakland, California amid record high inflation | Photo: Justin Sullivan/Getty Images}}

Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.

_{Reposted from Common Dreams}

I’ve analyzed every poll and survey over the last two months, and they all tell the same basic story:

Voters’ top issue is high prices and the cost of living—not jobs, not abortion, not immigration, not U.S. President Joe Biden’s or former President Donald Trump’s age, not even the survival of democracy.

Voters still don’t believe Biden will get prices down, but they believe Trump will. A significant number appear willing to vote for Trump and risk the future of democracy because they believe he will do better job lowering prices.

Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.

Which is why Biden’s approval rating on the economy is deeply underwater while perceptions of Trump’s handling of the economy when he was president (marked by low inflation but huge job losses from Covid-19) are positive.

What should Biden do?

Put blame for high prices squarely where it belongs: on big corporations with monopoly power to keep prices high.

And take those corporations on: Condemn them for price gouging. Threaten them with antitrust lawsuits, price-gouging lawsuits, even price controls. Criticize them for making huge profits and giving their top executives record pay while shafting consumers.

And name names: PepsiCo, Tyson’s, Kroger and Albertsons, Exxon-Mobil, and others.

To be sure, the Biden administration has brought down the prices of prescription drugs like insulin and inhalers, reduced bank overdraft and credit card fees, and cracked down on “junk fees” levied by airlines, concert promoters, and more.

Its Department of Justice has launched a lawsuit to combat price-fixing in the meat industry. And the FTC is suing to block the Kroger/Albertsons grocery mega-merger that would send grocery bills even higher.

“We’re taking on corporate greed to bring down the price of gas, food, and rent, eliminating junk fees,” Biden told a crowd of 1,000 supporters in Philadelphia recently.

But Biden has not berated hugely profitable corporations for keeping their prices and profit margins sky high—unlike Sens. Bob Casey (D-Penn.) and Sherrod Brown (D-Ohio), who have made corporate price hikes central to their campaigns and are outrunning Biden in polls. Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.

Brown, who represents a state that Trump won handily in 2020, has cut several web ads proclaiming he is “cracking down on the companies that rip off Ohio.”

Casey released a campaign ad showing corporate executives in suits sneaking into a grocery store under cover of night and switching out cereal boxes for smaller replacements. He has introduced a bill that would crack down on “shrinkflation”—a term for companies’ reducing the size of their goods but not cutting prices (Biden praised that legislation during his State of the Union address).

Senate Democrats in tight races, like Tammy Baldwin of Wisconsin and Jacky Rosen of Nevada, are making similar pitches.

Why isn’t Biden?

Partly, I think, because he’s uncomfortable attacking corporations directly.

It’s also because some economists close to his White House (such as Larry Summers) disagree that a major driver of inflation is corporations’ raising prices to juice profits. (Three years ago, Larry and I publicly debated a wealth tax on hugely profitable corporations. I was in favor; he against.)

But the fact is, corporate profits have surged to record levels. Shares are trading at record levels. Corporations are buying back their stock at record levels. CEO pay is at record levels. Corporate concentration—monopoly power—is higher than ever.

Concentration has increased in over 75% of U.S. industries since the late 1990s.

Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.

_{^{Is It Inflation? Or Is It Greedflation? | Robert Reich}}

Most voters agree that big corporations are largely responsible for inflation. Nearly 6 in 10 say corporations’ being “greedy” is a major cause of inflation, including a majority of independent voters, according to a poll by Navigator Research.

The Biden campaign’s internal polling has found similar results.

With less than five months to go—and the cost of living being the No. 1 issue on voters’ minds—Biden should let ‘er rip.

_{Robert Reich, is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include: “Aftershock” (2011), “The Work of Nations” (1992), “Beyond Outrage” (2012) and, “Saving Capitalism” (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, “Inequality For All.” Reich’s newest book is “The Common Good” (2019). He’s co-creator of the Netflix original documentary “Saving Capitalism,” which is streaming now.}

China makes efforts to bring prosperity to the world alongside domestic growth / by Anthony Moretti

_{^{A view of Shanghai Photo: VCG}}

_{Reposted from Global Times}

On October 1 this year, the People’s Republic of China (PRC) will celebrate the 75th anniversary of its founding. At the risk of engaging in hyperbole, it is doubtful the global community in 1949 would have foreseen what the nation would become over time.

I begin with the obvious: The PRC, when it was officially recognized by the United Nations (UN) in 1971, was a long way from asserting itself on the global stage. But with reform and opening-up beginning seven years later, that’s where the country has steadily earned its place. Through its growing diplomatic presence across the globe and its ever-expanding economy, China provides nations big and small with assurances that it is, and will remain, a proactive actor.

In 2018, the Brookings Institution reviewed the first four decades of reform and opening-up. It noted that China had been “profoundly transformed” with the Chinese people understanding the clear benefits of an improved standard of living. It added the following: “A clear majority of China’s people (often an overwhelming majority) express satisfaction with the regime’s policies, are optimistic about the direction of the country and indicate that they expect their children to have a better life than they do.” The country eradicated extreme poverty almost four years ago, and the World Bank estimates that China’s per capita GDP is now above $12,000. Keep in mind that it was less than $1,000 at the beginning of this century.

Chinese leader has affirmed China is now a moderately prosperous society. What’s the next goal? “We are now marching in confident strides toward the second centenary goal of building China into a great modern socialist country in all respects,” the Chinese president said.

Alongside domestic growth, efforts have been made to bring prosperity to other nations. Perhaps the most talked about program is the China-initiated Belt and Road Initiative (BRI), which started over 10 years ago. Roughly 150 nations are involved. Major infrastructure projects were one defining example of the BRI’s initial decade. According to one estimate, China invested more than $1 trillion in the projects. Meanwhile, because the geographical scope of the BRI is constantly expanding, Latin America might become a central player in subsequent years.

Whether it will rival the success of the China-Pakistan Economic Corridor, which since its creation according to another estimate has created “236,000 jobs and helped Pakistan add 510 kilometers of expressways and 8,000 megawatts of power supply,” will become clearer over time.

It is disappointing to note that as the PRC soon celebrates its 75th anniversary, its relations with the US are nowhere near where they were 50 years ago. In what seemed like the blink of an eye, following president Richard Nixon’s historic visit to Beijing in 1972, the two countries established diplomatic relations, commenced high-level exchanges, signed several cooperation agreements and worked together to ensure China’s accession into the World Trade Organization. Those accomplishments are just a few examples of how positive bilateral relations between the world’s two most powerful nations can foster goodwill.

Of course, the idea of a multipolar world, where nations need not see only one locus of international power, does not sit well in the West. That reality provides a significant cause of the fracture in the relationship. Yes, there are plenty of reasons for the US most especially to tout the world order created after World War II. However, the pressure applied to many countries during that time to adopt Western values was not positively received in many foreign capitals.

China’s approach is different, and should the US and its closest allies continue to view the Global South with apprehension, if not disdain, then that part of the world will continue to be amenable to Beijing’s message: The Five Principles of Peaceful Coexistence, unveiled by late Chinese premier Zhou Enlai in 1953, form the core of China’s philosophy.

The global picture in 2024 remains unstable. Military conflicts in the Middle East and Eastern Europe, climate change and chronic economic inequality challenge world leaders to find the right solutions. As those efforts continue, China will be at the center of all the conversations. Its commitment to working with the UN to make the world a better place will continue. So, too, will the development of the Chinese nation.

Anthony Moretti is an associate professor at the Department of Communication and Organizational Leadership at Robert Morris University.

Opinion: The growth of Europe’s extreme right means trade unions need to mobilise / by Morning Star Editorial Staff

_{^{Italy’s Prime Minister Giorgia Meloni, right, speaks with European Commission President Ursula von der Leyen during a round table meeting at an EU summit in Brussels, on April 17, 2024}}

_{Reposted from the Morning Star (UK}₎

THE EU election poses challenges to the working-class movement everywhere. The advance of the far right has changed the political balance in the world’s third-biggest economic bloc.

The social democrats have been squeezed. The more genuine left has not advanced. The centre-right is now scrambling to do deals with sections of the far right to shore up its grip on EU’s policy levers — but the centre right is also itself seriously divided.

The first question is how to understand the rise of populist, largely anti-immigrant parties. Is this a repeat of the 1930s? The second question follows. Should this prompt us to popular-front policies: much broader alliances encompassing all defenders of democracy — or not? And what lessons are there for the left in Britain where similar forces are at work?

On the first question the answer would, in general, seem to be No. The fascist seizures of power in Italy and Germany were in face of a mobilised and dominant socialist working class. The far right used extra-legal force and was backed and financed by big business. This is not the case now. Economic and political turmoil could lead in that direction. But this is not where we are.

But if this is so, we need to understand what the current rise of the far right represents. It is indeed dangerous. But it is so in the context of a failed political project that has progressively disinherited working people across Europe of what was achieved in a century of struggle.

Its labour share of income in 1975 was 70 per cent of EU GDP, in 2003 58 per cent and last year 47 per cent — and over the past decade EU GDP has been virtually stagnant. The US’s has grown by 8.7 per cent over the past three years. China’s has doubled that. But the EU’s was just 3.4 per cent.

Worse, US growth has in part been directly at the expense of the EU, particularly Germany: by cutting Russian energy supplies and forcing the purchase of America’s more expensive oil, by introducing massive subsidies to attract new investment from Europe and blocking the 2022 peace moves in Ukraine. And it has done so through levels of federal borrowing double those of the EU and made possible by the world sovereignty of the dollar. Such is imperialism.

But the EU itself has also been crippled by its own neoliberal regulations — effectively helping the richest in the richest economies: a standard straightjacket for state spending across all states and prohibiting comprehensive state ownership. In 1992 the EU produced 27 per cent of world output. Today it is 17 per cent. Support for right-wing parties critical of the EU has a material base.

But it is also very dangerous. It is so immediately. The centre-right — effectively led by EU president Ursula von der Leyen — is seeking alliance with Giorgia Meloni in Italy, greased by an €18 billion contingent loan, around policies of EU rearmament, integration with Nato and continued war. Nothing immediately could be more dangerous.

But there is also a long-term danger, one that also faces us in Britain. It is the provision of a mass base for extreme right-wing politics, one to be manoeuvred against the organised working class.

What is needed? Not false talk about a false democracy. It must be political mobilisation spanning the trade union movement and rather than just opposing cuts individually identifying the common causes, a system now so geared to the super-rich that it can no longer generate growth.

Our trade unions have done so previously and can do so again: working as political educators across working-class communities in a way that rebuilds strength and solidarity.

_{Morning Star Online: People’s Daily}

Mongolia’s Neoliberal Turn Has Been an Ecological Disaster / by Manlai Chonos

_{^{With a traditional herding style in Mongolia that relies on mobility rather than forage, it is even more difficult for herders to prepare adequately for an upcoming disaster. (Anand Tumurtogoo)}}

Mongolia is experiencing a disastrous winter with alarming consequences for its agricultural output. Reports have highlighted the negative impact of climate change, but the country’s neoliberal transformation since the 1990s is the biggest factor

_{Reposted from Jacobin}

Mongolia just had another disastrous winter. By the end of April, the animal death toll had reached 7.1 million — more than 10 percent of the entire herd. It could increase further as during the “dzud” year of extreme cold and heavy snow, the most damage is done in the springtime when a combination of exhaustion and malnourishment reaches a critical point.

Yet dzud is not a new development. The ecological equilibrium has been playing out for centuries, and it has only become a recurring problem over the past two decades, due to climate change and other factors. In many ways, dzud is a continuous ecological problem rather than just a cold winter and excessive snowfall.

Often summer with little rainfall leads to winter with excessive snow, which is the case with this year’s dzud. Animals unable to store fat reserves during the summertime had to endure the winter, when heavy snow makes it impossible for grazing. Moreover, with a traditional herding style in Mongolia that relies on mobility rather than forage, it is even more difficult for herders to prepare adequately for an upcoming disaster.

This year, the problem was anticipated, as scholars, NGOs, and government officials have been communicating to the herders as early as last summer. The ongoing dzud has been the deadliest since 2009–10, when around ten million animals (23 percent of the herd) perished.

Many reports have picked up on this year’s dzud and rightfully addressed the issue as one of climate cataclysm. While the impact of climate change on Mongolia is very real, there is another side of the story that is more important — namely, the introduction of market forces when Mongolia transitioned from state socialism to free-market capitalism in the 1990s.

Mongolia’s Neoliberal Transformation

When one takes a long-term view, pastureland management in Mongolian steppes maintained a particular form of collective organization from feudal times to the socialist period. This model included factors of high mobility, collective organization, and the incorporation of new technologies to support the traditional herding economy, especially during socialist times, when the bulk of the activity was highly mechanized. This all contributed to the continuity of traditional forms of animal husbandry.

The 1991–93 privatization of livestock and dissolution of state farms was (and still is) characterized by its supporters as the return to a normal state of being after the state-socialist interregnum. It was in fact a radical break from traditional forms of animal tending, a critical juncture that led to the present problems.

The surge in the absolute numbers of livestock from twenty-five million before privatization to seventy million by 2023 is often hailed as one of the achievements of the 1990s transition. In fact, this increase was not the result of greater efficiency and productivity under the new market regime, but rather stemmed from the accumulation and overpopulation of animal head counts due to the loss of Mongolia’s processing industries. At its peak during the 1980s, close to 45 percent of Mongolia’s animal herd was processed in a single year to produce various agricultural products, with a significant portion exported.

In cultural terms, during the immediate postsocialist years, there was a romantic notion of the nomad as a figure curiously akin to the “noble savage,” with various forms of cultural revivalism happening in the background. In reality, many of those future roaming nomads were former employees of collectives and state farms who had to go out to the countryside for survival when the livestock and other state resources were privatized.

The number of herders peaked in 1998 at 414,000, three times greater than the 1989 figure of 135,000. Erik Reinert describes this process as ““primitivization of the economy,” with the whole agricultural economy atomized on a household basis and many such atomized households turning into primary production units. This meant abandoning what had previously been achieved during the socialist period, when there was high mobility through a combination of mechanized transportation and infrastructure as well as cooperative and managerial know-how.

Rural Society in Crisis

Many other demographic and social problems ensued, including challenges for education and health care. For the first time in many years, the problem of children dropping out from schools became rampant, in effect creating a generation of true nomads.

This massive yet curiously overlooked transformation shaped the lives of Mongolians today in multiple ways, both in the city and the countryside. In the capital Ulaanbaatar, every dzud has produced an influx of refugees into Mongolian-style “ger” districts, outnumbering those in apartments with heating and sewage systems by a ratio of three to one.

In the countryside, the degradation of pastureland and unsustainable economics for the herders has become the norm. Although the livestock population grew, the same patterns of inequality and precarity that were quickly established after the privatization in 1992 remain unchanged today. In 1998, by one estimate, two-thirds of all households had less than 150 animals, a bare minimum required to sustain a livelihood. By 2023, 86 percent of the herding households had less than two hundred animals.

These households are most prone to shocks like dzud and liable to become economic refugees in Ulaanbaatar. In addition, there has been further penetration of the market into the lifeworld of the herders, as they become accustomed to dependency on various consumer products, which might explain the massive debt generated over the years.

It is reported that around three-quarters of the herders have bank loans. With the chances of a dzud increasing every year, Mongolian herders are the most precarious and insecure group of all. This reality stands in curious contradiction with their symbolic prestige and representation in the “land of the nomads.”

A Tragic Myth

In 1968, the US ecologist Garrett Hardin wrote an influential essay titled “The Tragedy of the Commons.” Hardin presented a caricatural view of self-interested, irrational stakeholders in the form of herders exploiting the commons, rooted in the parables of game theory. The moral of the story was that the commons would prove to be unsustainable, leading to a Malthusian doom cycle as overpopulation and overgrazing end in tragedy.

There have been many rebuttals of the picture that Hardin painted, most notably by Elinor Ostrom, reminding us of various types of “community management” schemes that Hardin conveniently overlooked. Yet the idea of the “tragedy of the commons” still remains a potent one, serving as a justification for neoliberal policies of austerity and privatization.

Discussions about pasture degradation in Mongolia often invoke the local version of this parable: “niitiin umchiin emgenel,” which is sometimes translated as “tragedy of public property.” As far as Mongolia is concerned, the notion of the “tragedy of the commons” is alive and well. It has been ever present as a form of neoliberal apologetics since Mongolia took up a textbook form of shock therapy in the 1990s to transition to a market economy.

This process created the present-day oligarchy and its kleptocratic regime, often sanitized in the international media as an “oasis of democracy.” The dominant ideology condemns all forms of state and public ownership, often with reference to real cases of corruption and embezzlement, and presents market rationalization as an essential tool to deliver the best outcomes.

The reality that Mongolian herders currently face somehow resembles the pattern of enclosure in England during the eighteenth and nineteenth centuries, which is where Hardin originally drew inspiration for his parable. Ever since the privatization of livestock, market fundamentalists have argued that the process was incomplete since land should also be privatized. Land reform has been one of the most controversial issues in Mongolia, with pastureland remaining nominally public to this day.

In this context, we see the “tragedy of the commons” being invoked to condemn the supposedly unproductive and irrational herders. They are accused of striving for personal maximization by exploiting finite resources, resulting in the degradation of pastureland and the “tragedy” of the dzud crisis.

Yet as Mongolia has become more integrated into global capitalism, with greater exploitation of its mineral resources resulting in the label “Minegolia,” many former pasturelands have already been “enclosed” or are on the way toward it. As market forces encroach, what David Sneath calls a “proprietary regime” is being created.

While pastureland has not yet been formally privatized, it nevertheless functions as such in practice, with official certificates of ownership granted as herders slowly realize that they should claim the land as theirs before new encroachments and enclosures threaten their livelihood.

The End of Nomadism?

In 1999, Sneath and Caroline Humphrey asked if we were seeing “the end of nomadism,” looking at three different experiences of rural economy in Buryatia (Russia), Inner Mongolia (China), and Mongolia. At the time, it was evident that Mongolia’s pastureland ecology put it in a better position than the other two regions, in view of its distinctive organizational features and institutional history.

A quarter of a century later, this might no longer be the case. Since privatization, the composition and quantity of Mongolia’s livestock has changed, with many more goats being raised for cashmere while pastureland is left nominally public. As the current situation exposes the unsustainable nature of Mongolia’s reorganized pastoral economy, the country finds itself facing another critical juncture.

Cooperative and collective solutions persist to this day among conservative traditionalists, who at best propose to continue the current pastoral allocation by assigning an extra burden to the herders in order to preserve the “nomadic civilization.” However, it would be difficult if not impossible to reverse the encroachment of market forces.

The process of enclosures is continuing today in various forms endorsed by the current government, with the prioritization of mining and (most recently) tourism when it comes to land resources. With a shrinking habitat, the herders are under pressure to act as rationalized actors if they are going to survive under market conditions. Is the end of nomadism finally arriving in Mongolia?

_{Manlai Chonos is a social scientist based in Germany.}

Inequality Is the Price of Corporate Greed / by Max Lawson

_{^{Dividends to rich shareholders have risen 14 times faster than wages, causing inequality to spiral. (Credit: Getty Images)}}

_{Reposted from the Tribune}

The billionaire Warren Buffet famously said once, ‘There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.’ New analysis released by Oxfam this week for International Workers’ Day shows concretely that since 2020, the rich class, as Buffet calls them, are winning big.

Global dividend payments to rich shareholders grew on average fourteen times faster than worker pay in thirty-one countries, which together account for 81 percent of global GDP, between 2020 and 2023. Global corporate dividends are on course to beat an all-time high of $1.66 trillion reached last year. Payouts to rich shareholders jumped by 45 percent in real terms between 2020 and 2023, while workers’ wages rose by just three percent. The richest one percent, simply by owning stock, pocketed on average $9,000 in dividends in 2023 — it would take the average worker eight months to earn this much in wages.

This matters because as long as returns to capital increase faster than returns to work, the inequality crisis will grow. At the heart of our economy is a constant struggle between the owners — or capital, as it is known in economics — and the workers, or labour. The measure of progress, or the lack of it, is the extent to which the benefits of all those billions of hours of labour worked each day are accruing to workers and their families, driving greater equality, or the extent to which benefits are accruing to the owners of capital, driving greater inequality.

For the majority of people on our planet, the years since 2020 have been incredibly hard. The pandemic was a huge blow; the millions lost to the disease, and the millions more thrown into destitution as the world ground to a halt. The sharp increase in the cost of food and other essentials that followed in 2021 has become a grinding new reality for many families across the world as they try to buy oil, bread, or flour without knowing how many meals they will have to skip that day. I think of friends in Malawi, for example, where I used to live, who are struggling each day to stay afloat; or the millions here in the UK who rely on food banks just to stave off hunger. Globally, poverty is still higher than it was in 2019. Inequality between the rich world and the Global South is growing for the first time in three decades.

But for the richest in our society, the owners of capital, the years since 2020 have really been good. Billionaires, of whom there are about 3000 worldwide, are some of the biggest shareholders. Seven out of ten of the world’s largest corporations have a billionaire CEO or a billionaire as their principal shareholder. Over the last decade, billionaire wealth increased by around seven percent annually. Since 2020, it has accelerated to 11.5 percent a year.

The term ‘shareholders’ has a democratic ring to it, but this is patently false. In fact, it is the richest people in the world who own the largest proportion of shares, and indeed all financial assets. Research on twenty-four OECD countries found that the richest 10 percent of households own 85 percent of total capital-ownership assets — including shares in companies, mutual funds and other businesses — while the bottom 40 percent own just four percent. In the USA, the richest one percent own 44.6 percent, while the poorest 50 percent own just one percent.

The rich are not only rich, they are predominantly men, and they are predominantly white. In the USA, 89 percent of shares are owned by white people, 1.1 percent by Black people and 0.5 percent by Hispanic people. Similarly, globally, only one in three businesses are owned by women. So those bumper returns to shareholders are basically boosting incomes and wealth at the top.

How can we fix this? Taxing the super-rich much more would be a great start; the news here is good, because Brazil, which is chairing the G20 group of the world’s most powerful economies this year, has put the need to increase taxes on the formal agenda for the first time. At the same time, President Biden has once again said he supports a new billionaire tax.

But ultimately, tax is about fixing a problem after it becomes one. The key thing is ensuring the economy does not create such huge inequality in the first place. One critically important way to do this is to tip the scales back in favour of workers. The fruits of labour should be enjoyed by workers, not by those who, as John Stuart Mill said, ‘grow rich in their sleep without working, risking or economising’. This will only happen with an increase in worker organisation and workers’ power. When workers’ power has been high, inequality has been low, and as the International Monetary Fund has pointed out, declining membership of unions has directly contributed to increases in incomes at the top.

Given this, the resurgence in strikes and increase in the power and voice of workers we have seen in recent years is amazing. It is still a fraction of what is needed to tip those scales, but a whole new generation of workers are seeing the power of organising. Gen Z’s support for unions is the highest of any living generation. From the autoworkers in the USA to the garment workers in Bangladesh, we see workers fighting back against owners, and fighting for a fairer, more equal world.

Workers worldwide need to grab the scales and pull them back towards them; this will in turn create the politics and the economics of a new age of equality.

_{Max Lawson is head of inequality policy at Oxfam International.}

China urges developed countries to fulfill climate finance commitments at G20 meetings / by Feng Fan

_{^{A wind power project is seen along the mountains in Ji’an, East China’s Jiangxi Province, on July 6, 2023. By the end of May, the installed capacity of wind power in China had risen 12.7 percent year-on-year to approximately 380 million kilowatts, official data showed. Photo: cnsphoto}}

_{Reposted from Global Times}

China has urged developed countries to expedite the implementation of their climate finance commitments, helping developing countries in climate actions with financial and technological assistance. The stance was made during G20 meetings, held on Wednesday and Thursday, aimed at enhancing technical and capacity-building support for developing countries.

During the G20 Finance Ministers and Central Bank Governors Meeting under the 2024 G20 Brazilian presidency in Washington DC, China’s Finance Minister Lan Fo’an called for all parties to adhere to the principle of common but differentiated responsibilities in climate actions, asking developed countries to implement their climate finance commitments, according to the website of China’s Ministry of Finance.

Lan emphasized China’s commitment to refining policies and standards that support green development, including fiscal, financial, investment and pricing systems.

“These initiatives are designed to accelerate the transition toward a low-carbon economy by fostering investment in green technologies and have achieved significant progress,” said Lan.

Although developed countries have made commitments regarding green transformation and climate finance, the actual funds mobilized fall short of the needs of developing countries, slowing down global green transition efforts, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Sunday.

The UN Environment Programme’s 2023 Adaptation Gap Report, released in November 2023, revealed a significant shortfall in adaptation finance needs of developing countries, estimated at between $215 billion to $387 billion annually. In contrast, only $21 billion in public multilateral and bilateral adaptation finance flowed to developing countries in 2021, a 15 percent decrease from the previous year, resulting in a funding gap ranging from $194 billion to $366 billion.

“Developed countries often cite intellectual property protection as a reason to restrict the transfer of green technologies to developing nations. This practice not only hampers the development and application of global green technologies but also affects cooperative efforts to tackle climate change,” Wang noted.

In contrast, China actively participates in international exchanges and cooperation on green technologies, promoting the international exchanges and transfer of these technologies through initiatives, such as the China-proposed Belt and Road Initiative.

China encourages innovation and the protection of intellectual property rights while also promoting the dissemination of technology to achieve common global green development goals, Wang stressed.

On Friday, at the 109th meeting of the World Bank’s Development Committee, Lan highlighted the need for the World Bank to implement counter-cyclical adjustment measures in expanding project investments to stimulate effective demand. He called for the promotion of trade and investment liberalization and the maintenance of open and stable global supply chains to aid the global economic recovery.

Lan noted that China is driving high-quality development, advancing the green transformation and new productive forces. The country is confident in its capability to achieve the projected GDP growth rate of 5 percent for 2024, underpinned by strong economic resilience, potential and vitality.

Furthermore, Pan Gongsheng, governor of the People’s Bank of China (PBC), the country’s central bank, stressed the benefits of a more open and inclusive multilateral trade system for stabilizing global cross-border capital flows during his address at the G20 meeting, according to the PBC’s official website.

Pan also noted significant progress in advancing green finance, pledging continued collaboration on key initiatives.

China’s Ministry of Industry and Information Technology reported a robust increase in the country’s green supply capacity, with significant improvements in the provision of green equipment and products. In the first quarter of 2024, the production of new-energy vehicles (NEVs) in China reached 2.115 million units, up 28.2 percent year-on-year, with sales reaching 2.09 million units, up 31.8 percent. Sales of NEVs accounted for 31.1 percent of China’s car market.

_{Global Times was established in 1993, its English version was launched in 2009.}

China’s economy is still far out growing the U.S. – contrary to Western media “fake news” / by John Ross

_{^{Xi Jinping speaks at a news conference after the G-20 Summit in Hangzhou in 2016. He formed his faction in the city years earlier. (Photo: Reuters)}}

_{Reposted from MR Online}

GDP data for China, the U.S., and the other G7 countries for the year 2023 has now been published. This makes possible an accurate assessment of China’s, the U.S., and major economies performance—both in terms of China’s domestic goals and international comparisons. There are two key reasons this is important.

First for China’s domestic reasons: to achieve a balanced estimate of China’s socialist economic situation and therefore the tasks it faces.
Second, because the U.S. has launched a quite extraordinary propaganda campaign, including numerous straightforward factual falsifications, to attempt to conceal the real international economic facts.

The factual situation is that China’s economy, as it heads into 2024, has far outgrown all other major comparable economies. This reality is in total contradiction to claims in the U.S. media. This in turn, therefore, demonstrates the extraordinary distortions and falsifications in the U.S. media about this situation. It confirms that, with a few honourable exceptions, Western economic journalism is primarily dominated by, in some cases quite extraordinary, “fake news” rather than any objective analysis. Both for understanding the economic situation, and the degree of distortion in the U.S. media, it is therefore necessary to establish the facts of current international developments.

China’s growth targets

Starting with China’s strategic domestic criteria, it has set clear goals for its economic development over the next period which will complete its transition from a “developing” to a “high-income” economy by World Bank international standards. In precise numbers, in 2020’s discussion around the 14^th Five Year plan, it was concluded that for China by 2035: “It is entirely possible to double the total or per capita income”. Such a result would mean China decisively overcoming the alleged “middle income trap” and, as the 20^th Party Congress stated, China reaching the level of a “medium-developed country by 2035”.

In contrast, a recent series of Western reports, widely used in anti-China propaganda, claim that China’s economy will experience sharp slowdown and will fail to reach its targets.

Self-evidently which of these outcomes is achieved is of fundamental importance for China’s entire national rejuvenation and construction of socialism—as Xi Jinping stated, China’s: “path takes economic development as the central task, and brings along economic, political, cultural, social, ecological and other forms of progress.” But the outcome also affects the entire global economy—for example, a recent article by the chair of Rockefeller International, published in the Financial Times, made the claim that what was occurring was China’s “economy… losing share to its peers”. The Wall Street journal asserted: “China’s economy limps into 2024” whereas in contrast the U.S. was marked by a “resilient domestic economy.” The British Daily Telegraph proclaimed China has a “stagnant economy”. The Washington Post headlined that: “Falling inflation, rising growth give U.S. the world’s best recovery” with the article claiming: “in the United States… the surprisingly strong economy is outperforming all of its major trading partners.” This is allegedly because: “Through the end of September, it was more than 7 percent larger than before the pandemic. That was more than twice Japan’s gain and far better than Germany’s anaemic 0.3 percent increase.” Numerous similar claims could be quoted from the U.S. media.

U.S. use of “fake news”

Reading U.S. media claims on these issues, and comparing them to the facts. it is impossible to avoid the conclusion that what is involved is deliberate “fake news” for propaganda purposes—as will be seen, the only alternative explanation is that it is disgracefully sloppy journalism that should not appear in supposedly “quality” media. For example, it is simply absurdly untrue, genuinely “fake news”, that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy”. Anyone who bothers to consult the facts, an elementary requirement for a journalist, can easily find out that such claims are entirely false—as will be shown in detail below.

To first give an example regarding U.S. domestic reports, before dealing with international aspects, a distortion of U.S. economic growth in 2023 was so widely reported in the U.S. media that it is again hard to avoid the conclusion that this was a deliberate misrepresentation to present an exaggerated view of U.S. economic performance. Factually, the U.S. Bureau of Economic Analysis, the U.S. official statistics agency for economic growth, reported that U.S. GDP in 2023 rose by 2.5%—for comparison China’s GDP increased by 5.2%. But a series of U.S. media outlets, starting with the Wall Street Journal, instead proclaimed that the “U.S. economy grew 3.1% over the last year”.

This “fake news” on U.S. growth was created by statistical “cherry picking”. In this case comparing only the last quarter of 2023 with the last quarter of 2022, which was an increase of 3.1%, but not by taking GDP growth in the year as a whole “last year”. But U.S. growth in the earlier part of 2023 was far weaker than in the 4^th quarter—year on year growth in the 1^st quarter was only 1.7% and in the 2^nd quarter only 2.4%. Taking into account this weak growth in the first part of the year, and stronger growth in the second, U.S. growth for the year as a whole was only 2.5%—not 3.1%. As it is perfectly easy to look up the actual annual figure, which was precisely published by the U.S. statistical authorities, it is hard to avoid the conclusion that this was a deliberate distortion in the U.S. media to falsely present a higher U.S. growth rate in 2023 than the reality.

It may be noted that even if U.S. GDP growth had been 3.1% then China’s was much higher at 5.2%. But the real data makes it transparently clear that China’s economy grew more than twice as fast as the U.S. in 2023—showing at a glance that claims that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy” were entirely “fake news”.

Many more examples of U.S. media false claims could be given, but the best way to see the overall situation is to systematically present the overall facts of growth in the major economies.

What China has to do to achieve its 2035 goals

Turning first to assessing China’s economic performance, compared to its own strategic goals of doubling GDP and per capita GDP between 2020 and 2035, it should be noted that in 2022 China’s population declined by 0.1% and this fall is expected to continue—the UN projects China’s population will decline by an average 0.1% a year between 2020 and 2035. Therefore, in economic growth terms, the goal of doubling GDP growth to 2035 is slightly more challenging than the per capita target and will be concentrated on here—if China’stotal GDP goal is achieved then the per capita GDP one will necessarily be exceeded.

To make an international comparison of China’s growth projections compared with the U.S., the U.S. Congressional Budget Office (CBO), responsible for the official growth projections for the U.S. economy on which its government’s policies rely, estimates there will be 1.8% annual average U.S. GDP growth between 2023 and 2023—with this falling to 1.6% from 2034 onwards. This figure is slightly below the current U.S. 12-year long term annual average GDP growth of 2.3%—12 being the number of years from 2023 to 2035. To avoid any suggestion of bias against the U.S., and in favour of China, in international comparisons here the higher U.S. number of 2.3% will be used.

The results of such figures are that if China hits its growth target for 2035, and the U.S. continues to grow at 2.3%, then between 2020 and 2035 China’s economy will grow by 100% and the U.S. by 41%—see Figure 1. Therefore, from 2020 to 2035, China’s economy would grow slightly more than two and a half times as fast as the U.S.

_{^{FIgure 1}}

The strategic consequences of China’s economic growth rate

The international implications of any such growth outcomes were succinctly summarised by Martin Wolf, chief economics commentator of the Financial Times. If China’s economy continues to grow substantially faster than Western ones, and it achieves the status of a “medium-developed country by 2035”, then, in addition to achieving high domestic living standards, China’s will become by far the world’s largest economy. As Wolf put it: “The implications can be seen in quite a simple way. According to the IMF, China’s gross domestic product per head (measured at purchasing power) was 28 per cent of U.S. levels in 2022. This is almost exactly half of Poland’s relative GDP per head… Now, suppose its [China’s] relative GDP per head doubled, to match Poland’s. Then its GDP would be more than double that of the U.S. and bigger than that of the U.S. and EU together.” By 2035 such a process would not be completed on the growth rates already given, and measuring by Wolf’s chosen measure of purchasing power parities (PPPs) China’s economy by 2035 would be 60% bigger than that of the U.S. But even that would make China by far the world’s largest economy.

Wolf equally accurately notes that the only way that such an outcome would be prevented from occurring is if China’s economy slows down to the growth rate of a Western economy such as the U.S. Clearly, if China’s economic growth slows to that of a Western economy, then, naturally, China will never catch up with the West—it will necessarily simply stay the same distance behind. Therefore. as Wolf accurately puts it the outcomes are:

What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

The progress in achieving China’s strategic economic goals

Turning to the precise figure required to achieve China’s 2035 target, China’s goal of doubling GDP required average annual growth of at least 4.7% a year between 2020 and 2035. So far China, as Figure 1 shows, is ahead of this goal—annual average growth in 2020-2022 was 5.7%, meaning that from 2023-2035 annual average 4.6% growth is now required.

China’ 5.2% GDP increase in 2023 therefore once again exceeded the required 4.6% growth rate to achieve its 2035 goal—as shown in Figure 1. From 2020 to 2023 the required total increase in China’s GDP to hit its 2035 target was 14.9%, whereas in fact its growth was 17.5%. This is in line with the 45-year record since 1978’s Reform and Opening Up, during which entire period the medium/long term targets set by China have always been exceeded.

Therefore. to summarise, there is no sign whatever in 2023, or indeed in the period since 2020, that China will fail to meet its target of doubling GDP between 2020 and 2035—China is ahead of this target. Such a 4.6% growth rate would easily ensure China becomes a high-income economy by World Bank criteria well before 2035—the present criteria for this being per capita income of $13,846.

It should be noted, as discussed in in detail below, that a clear international conclusion flows from this necessary 4.6% annual average growth rate for China to achieve its strategic goals. It means that China must continue to grow much faster than the Western economies throughout this period to 2035—that is in line with China’s current trend. However, if China were to slow down to the growth rate of a Western economy, then it will fail to achieve its strategic goals to 2035, may not succeed in becoming a high income economy, and will necessarily remain the same distance behind the West as now. The implications of this will be considered below.

Systematic comparisons not “cherry picking”

Having considered China’s performance in 2023 terms of achieving its own domestic strategic goals we will now turn to actual results and a comparison of China with other international economies. This immediately shows the factual absurdity, the pure “fake news” of claims such as that the U.S. has “the world’s best recovery“ and “the United States… is outperforming all of its major trading partners.” On the contrary China has continued to far outgrow the U.S. economy not only in 2023 but in the entire last period. China’s outperformance of the other major Western economies, the G7, is even greater that of the U.S.

Entirely misleading claims regarding such international comparisons, used for propaganda as opposed to serious analysis, are sometimes made because data is taken from extremely short periods of time which are taken out of context—unrepresentative statistical “cherry picking” or, as Lenin put it, a statistical “dirty business”. Such a method is always erroneous, but it is particularly so during periods which were affected by the impact of the Covid pandemic as these caused extremely violent short-term economic fluctuations related to lock downs and similar measures. China’s assertion of superior growth is based on its overall performance, not an absurd claim that it outperforms every other economy, on every single measure, in every single period! Therefore, in making international comparisons, the most suitable period to take is that for since the beginning of the pandemic up to the latest available GDP data. As comparison of China with the U.S. is the most commonly made one, and particularly concentrated on by the U.S. media campaign, this will be considered first.

China’s and the U.S.’s growth in 2023

It was already noted that in 2023 China’s GDP grew by 5.2% and the U.S. by 2.5%—China’s economy growing more than twice as fast as the U.S. But it should also be observed that 2023 was an above trend growth year for the U.S.—U.S. annual average growth over a 12-year period is only 2.3% and over a 20-year period it is only 2.1%. Therefore, although in 2023 China’s economy grew more than twice as fast as the U.S., that figure is actually somewhat flattering for the U.S. Figure 2shows that in the overall period since the beginning of the pandemic China’s economy has grown by 20.1% and the U.S. by 8.1%—that is China’s total GDP growth since the beginning of the pandemic was two and half times greater than the U.S. China’s annual average growth rate was 4.7% compared to the US’s 2.0%.

_{^{Figure 2}}

Economic performance of China and the three major global economic centres

Turning to wider international comparisons than the U.S. such data immediately shows the extremely negative situation in most “Global North” economies and China’s great outperformance of them. To start by analysing this in the broadest terms, Figure 3 shows the developments in the world’s three largest economic centres—China, the U.S., and the Eurozone. These three together account for 57% of world GDP at current exchange rates and 46% in purchasing power parities (PPPs). No other economic centre comes close to matching their weight in the world economy.

Regarding the relative performance of these three major economic centres, at the time of writing data has not been published for the Euro Area for the whole year of 2023 —which would be the ideal comparison. However, it has been published for the the Euro area for the four quarters of 2023 individually and trends can be calculated on that basis. These show that In the four years to the 4^th quarter of 2023, covering the period since the beginning of the pandemic, China’s economy has grown by 20.1%, the U.S. by 8.2%, and the Eurozone by 3.0%. China’s economy therefore grew by two and a half times as fast as the U.S. while the situation of the Eurozone could accurately be described as extremely negative with annual average GDP growth in the last four years of only 0.7%.

Such data again makes it immediately obvious that claims in the Western media that China faces economic crisis, and the Western economies are doing well is entirely absurd—pure fantasy propaganda disconnected from reality.

_{^{Figure 3}}

Relative performance of China and the G7

Turning to analysing individual countries, then comparing China to all G7 states, i.e. the major advanced economies, shows the situation equally clearly—see Figure 4. Data for China and all G7 economies has now been published for the whole of 2023. The huge outperformance by China of all the major advanced economies is again evident.

Over the four years since the beginning of the pandemic China’s economy grew by 20.1%, the U.S. by 8.1%, Canada by 5.4%, Italy by 3.1%, the UK by 1.8%, France by 1.7%, Japan by 1.1% and Germany by 0.7%.

In the same period China’s economy therefore grew two and a half times as fast as the U.S., almost four times as fast as Canada, almost seven times as fast as Italy, 11 times as fast as the UK, 12 times as fast as France, 18 times as fast as Japan and almost 29 times as fast as Germany.

In terms of annual average GDP growth during this period China’s was 4.7%, the U.S. 2.0%, Canada 1.3%, Italy 0.8%, the UK 0.4%, France 0.4%, Japan 0.3% and Germany 0.2%.

It may therefore be seen that China’s economy far outperformed the U.S., while the performance of all other major G7 economies may be quite reasonably described as extremely negative—all having annual average economic growth rates of around or even under 1%.

_{^{Figure 4}}

Comparison of China to developing economies

A comparison using the IMF’s January 2024 projections can also be made to the major developing economies—the BRICS. Figure 5 shows this, using the factual result for China and the IMF projections for the other countries. Over the period since the start of the pandemic, from 2019-2023, China’s GDP grew by 20.1%, India by 17.5%, Brazil by 7.7%, Russia by 3.7% and South Africa by 0.9%.

This data confirms that the major Global South economies are growing faster than most of the major Global North economies, which is part of the rise of the Global South and draws attention to the good performance of India. But China grew more than two and half times more than all the BRICS economies except India—China’s growth was 15% greater than India’s. It should be noted that India is at a far lower stage of development than the other BRICS economies—all the others fall in the World Bank classification of upper middle-income economies whereas India falls into the lower middle income group.

_{^{Figure 5}}

Comparison of China’s growth to Western economies

Finally, this outperformance by China casts light on what is necessary to achieve its own 2035 strategic targets. China’s 4.6% growth rate necessary to meet these goals means that it must continue to maintain a growth rate far higher than Western economies—Figure 6 shows this in overall terms in addition to individual comparisons given to major economies above. Whereas China must achieve an annual average 4.6% growth rate the median growth rate of high income “Western” economies is only 1.9%, the U.S. is 2.3%, and the median for developing economies is 3.0%.That is, to achieve its 2035 goals China must grow twice as fast as the long term trend of the U.S., almost two and a half times as fast as the median for high income economies, and more than 50% faster than the median for developing economies. As already seen, China is more than achieving this.

But such facts immediately show why it is an extremely misleading when proposals are made that China should move towards the macro-economic structure of a Western economy. If China adopts the structure of a Western economy then, of course, China will slow down to the same growth rate as Western economies—and therefore fail to achieve its 2035 economic goals. China will be precisely stuck in the negative outcome of the situation accurately diagnosed by Martin Wolf.

What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

_{^{Figure 6}}

Conclusion

In conclusion, it addition to objectively analysing 2023’s economic results, it is also necessary in the light of this factual situation to make a remark regarding Western, in particular U.S. “journalism”.

None of the data given above is secret, all is available from public readily accessible sources. In many cases it does not even require any calculations and simply published data can be used. But the U.S. media and journalists report information that is systematically misleading and in many cases simply untrue. While it lagged China in creating economic growth the U.S. was certainly the world leader in creating “fake economic news”! What was the reason, what attitude should be taken to it?

First, to avoid accusations of distortion, it should be stated that there were a small handful of Western journalists who refused to go along with this type of distortion and fake news. For example Chris Giles, the Financial Times economics commentator, in December, sharply attacked “an absurd way to compare economies… among people who should know better.” Giles did not do this because of support for China but because, quite rightly, he warned that spreading false or distorted information led to serious errors by countries doing so: “Coming from the UK, which lost its top economic dog status in the late 19^th century but still has some delusions of grandeur, I can understand American denialism… But ultimately, bad comparisons foster bad decisions.” But the overwhelming majority of U.S. and Western journalists continued to spread fake news. Why?

First, the fact that identical distortions and false information appeared absolutely simultaneously across a very wide range of media makes it clear that undoubtedly U.S. intelligence services were involved in creating it—i.e. part of the misrepresentation and distortions were entirely deliberate and conscious, aimed at disguising the real situation.

Second, another part was merely sloppy journalism—that is journalists who could not be bothered to check facts.

Third, supporting both of these factors was “white Western arrogance”—an arrogant assumption, rooted in centuries of European and European descended countries dominating the world, that the West must be right. Therefore, such arrogance made it impossible to acknowledge or report the clear facts that China’s economy is far outperforming the West.

But whether it was conscious distortion, sloppy journalism, or conscious or unconscious arrogance, in all these cases no respect should be given to the Western “quality” media. It is not trying to find out the truth, which is the job of journalism, it is simply spreading false propaganda.

It remains a truth that if a theory and the real world don’t coincide there are only two courses that can be taken. The first, that of a sane person, is to abandon the theory. The second, that of a dangerous one, is to abandon the real world—precisely the danger that Chris Giles pointed to. What has been appearing in the Western media about international economic comparisons regarding China is precisely abandonment of the real world in favour of systematic fake news.

_{This is a shortened version of an article that originally appeared in Chinese at Guancha.cn.}

_{John Ross is a senior fellow at Chongyang Institute for Financial Studies, Renmin University of China. He was formerly director of economic policy for the mayor of London.}

Review: It’s Time to Dismantle the US Sanctions-Industrial Complex / by Ben Wray

_{^{A woman walks out of a currency exchange shop displaying a giant US dollar in Cairo on August 24, 2022. (Khaled Desouki / AFP via Getty Images)}}

The US has built up an elaborate machinery for waging economic warfare on its rivals with little or no public debate. This sanctions-industrial complex is a disguised form of imperialism and a dangerous source of global instability.

_{Reposted from Jacobin}

_{Review of Underground Empire: How America Weaponized the World Economy by Henry Farrell and Abraham Newman (Henry Holt & Co., 2023).}

The key to America’s global supremacy in the twenty-first century is not bombs or battalions. It is the things we can’t see: fiber-optic cables, semiconductor chips, and the dollar “clearing” system. Underground Empire by Henry Farrell and Abraham Newman is a study of how the United States turned seemingly unremarkable digital infrastructure into powerful weapons which it has wielded to discipline allies and punish enemies.

By targeting “choke points” in the global economy, the United States can prevent rivals — most importantly China — from accessing technologies and resources that they depend upon. While this weaponization of US economic power has largely been successful so far, it is creating strong incentives for other countries to establish ways of operating in the global economy that bypass the United States.

Washington’s economic warfare is intended to shield US hegemony from rising threats in an era of relative decline. In the long run, however, it may be setting changes in motion that fatally undermine American dominance.

Beginnings

The underground empire did not come about by design. It developed organically, above all in response to the need for the fastest possible internet, finance, and supply-chain connections between the United States and the rest of the world. The infrastructure of contemporary globalization was built in the neoliberal era, and as such it is privately owned. But it is overwhelmingly US companies that own it, and much of it sits on US soil.

The fiber-optic cables which run along seabeds and under the ground are essential for near-instantaneous telecommunications globally. By 2002, over 99 percent of cables which passed between any two continents ran via the United States.

The SWIFT international payment system allows banks across the world to trade in dollars, the global reserve currency. Although it is based in Belgium, its data center is located in Northern Virginia and its board is full of US banks.

While the semiconductor supply chain was offshored decades ago, key links in the chain are still American-owned and much of the rest is in the hands of US allies. Even though China has become the heart of global capitalist production, the arteries of neoliberal globalization still bleed red, white, and blue.

Until 2001, the United States had no reason to weaponize this underground empire. America was the chief beneficiary of the new world order as it sat at its center, with those on the periphery paying tribute every time they traded in US dollars or bought American technology. It suited Washington not to politicize its economic hegemony, as if it was a natural state of being that worked as well for Uganda and Uruguay as it did for the United States. If there were no problems, there would be nothing to contest.

That changed when two planes hit the Twin Towers. 9/11 was the shock to the system which made everyone in Washington sit up and think about the “pipes and plumbing,” as Farrell and Newman put it, of US power.

Al Qaeda had been able to use American telecoms and American dollars to fund and organize their attacks. Now the US government wanted access to this infrastructure so that the National Security Agency (NSA) could listen in to phone calls and the Treasury could cut anyone off from international finance, anywhere in the world. The US state quickly realized that all this was not only possible — it was not even that difficult.

As Farrell and Newman write:

The global economy relied on a reconstructed system of tunnels and conduits that the United States could move into and adapt, nearly as easily as if they had been custom-designed by a military engineer for that purpose.

What began as ad hoc measures justified on the basis that they were dealing with emergency security threats quickly became “commonplace tools of policy.” The NSA “maintained and expanded” its global spying network despite the Edward Snowden revelations in 2013, while “intelligence gathering and economic coercion are now part of the Treasury’s core mission.”

At first, the targets were the outliers, Al Qaeda and North Korea. But as America’s hegemonic position came under ever greater challenge and American politics became ever more volatile, Washington turned these powerful weapons of economic war towards the heartlands of the global economy.

Dollar Unilateralism

The real test case for whether the United States had the power to carve countries out of the global economy was Iran. The United States had been sanctioning Iran for years, but the West Asian country continued to trade various commodities — most importantly its oil — in dollars using European banks.

This changed in 2006 when the United States cut off an Iranian bank from the dollar clearing system, which can only be accessed via US banks. Until then, the United States had thought it was too risky to politicize dollar clearing in case foreign banks responded by trying to find alternatives to the dollar.

Washington was pleased when it realized that the response of European banks to the new Iran sanctions was complete compliance. These companies feared that the Treasury would cut them out of the dollar clearing system if they rebelled: access to the dollar was indispensable for them, whereas facilitating Iranian trade was nice but optional. By 2015, Iran had been completely cut off from trading in dollars.

This was a game changer not only in terms of how the international financial system worked, but also in terms of how the United States did diplomacy. On their travels abroad, Treasury officials became less interested in meeting ministers than going directly to their banks, since they didn’t need other countries’ permission to cut off — or threaten to cut off — their companies from the dollar. The era of “dollar unilateralism” had begun.

There was resistance to dollar unilateralism. The European Union (EU) and the five permanent members of the UN Security Council had negotiated the Iran nuclear deal in 2013 and were legally obligated to stick by it. When Donald Trump pulled the United States out of the deal in 2018 and restarted the full array of sanctions against Iran, including “secondary sanctions,” the EU and the other states that had signed up to the deal said they were still committed to it.

Germany, France, and the UK — hardly enemies of Washington — even built a work-around to SWIFT called INSTEX to facilitate trade with Iran. However, it proved to be a massive flop.

The signatories to the Iran deal could not enforce it because European companies were terrified of the existential threat posed by American secondary sanctions. The collapse of the Iran deal proved how limited European sovereignty was in a dollar-dominated global economy.

The reality of European subordination became further evident when the EU decided to impose major unilateral sanctions of its own in wake of Russia’s invasion of Ukraine in February 2022. The EU quickly realized that it didn’t have the weapons to “take charge of its own story.” As Farrell and Newman observe:

The more that the EU sought to build its own sources of power and authority, the more it realized that it needed what the United States had: information, institutions, technical expertise, and power over global markets.

The same realization about the power of the US state had dawned on Microsoft. The company had been a fully signed up ideologue of “the free market,” promoting itself globally as a “digital Switzerland” free from geopolitical interference by Washington or any other state.

By the time of the Ukraine war, the company had done a volte-face. It was now boasting about its influence in fending off Russian cyberattacks and facilitating Ukrainian ones, a role which has been compared to that of Ford Motors building US tanks in World War II. Whether it is the European Commission or Microsoft, pieties about the free market have made way for the brutal realpolitik of the underground empire.

Blocking Huawei

The sanctions on Russia went beyond anything that had ever been comprehended previously. Most dramatic of all was the seizing of $260 billion of Russia’s own foreign currency reserves, an unprecedented move which set off alarm bells in foreign capitals all over the world about their vulnerability to the dollar — most of all in Beijing. As a former advisor to China’s Central Bank put it: “If the US stops playing by the rules, what can China do to guarantee the safety of its foreign assets? We do not have an answer yet.”

China’s search for answers went beyond foreign currency reserves. The US war on one of its most important companies, the telecoms giant Huawei, had by and large worked. Washington had decided to put a stop to Huawei’s realistic aim of dominating global 5G infrastructure, an ambition that directly threatened US control of global telecoms and thus endangered the underground empire.

Sanctions cut Huawei off from many of its key suppliers, most importantly the Taiwanese semiconductor fabricator TSMC. By 2021, Huawei’s global market share of the smartphone market had fallen from a high of 20 percent to just 4 percent. Key American allies such as the UK and Australia had abandoned plans to have it build their 5G networks. The United States had shown China that it had the power to prevent it becoming a technological superpower.

The United States wasn’t satisfied with just blocking the dragon’s path. Joe Biden’s national security advisor, Jake Sullivan, made a speech in September 2022 stating that the goal of maintaining a “relative advantage” over China technologically was no longer enough. The United States now wanted “as large of a lead as possible.”

Shortly afterwards, Biden announced the largest set of semiconductor sanctions yet, prohibiting any US company from providing supplies to any Chinese chip manufacturer and pressuring allies to do the same. Since chips are now needed for producing just about anything, these sanctions pose a major threat to China’s economic development.

The United States appears to be convinced that these sanctions are working. CNBC reported on January 17 that Chinese imports of chips fell 15.4 percent in 2023, with the United States lining up further measures to close “loopholes” in the sanctions regime.

However, Huawei announced in September that its new smartphone contained a two-nanometer chip, which lies just behind the most advanced semiconductors in the world. This was not supposed to be possible, and the news shocked Washington.

It remains unclear exactly how Huawei managed to get the two-nanometer chip and whether China is capable of producing them at scale. But the crack in the underground empire opens up wider questions about the constraints and potential pitfalls of weaponizing American economic power.

The Sanctions-Industrial Complex

As Nicholas Mulder’s recent history of sanctions, The Economic Weapon, found, sanctions tend to fail more than they succeed, and they almost always have unintended consequences. The most obvious risk is that by placing so much of the world economy under sanction — about one-third of it at this point — the United States may be providing the motivation these countries need to build alternative financial and technological infrastructure. This may be difficult, costly, and inefficient compared to relying on the US-dominated system, but at least it holds out the promise of independence.

Iran responded to US sanctions by using black market “proxies, cut outs and cash payments,” according to Farrell and Newman — a move which generated $80 billion in annual trade. China is taking a more sophisticated approach, developing a Central Bank Digital Currency (CBDC) which has the potential power to facilitate instant bilateral trade, cutting out the dollar entirely.

Other risks include a “hard decoupling” between the economies of the United States and China if tit-for-tat sanctions “spiral.” Such a breakdown could trigger a global recession that would dwarf that of the 2020 pandemic crisis.

As Farrell and Newman argue:

The US understands the world economy far better, and can manipulate it more easily, than its allies and adversaries. Yet as the contradictions mount, the risk of catastrophic failure grows.

A major problem is that once you go down the road of sanctions, where do you stop? Matt Duss, foreign policy advisor to Bernie Sanders, told the authors that there is now a “sanctions-industrial complex” in the United States, with agencies invested in finding new reasons to impose more sanctions, especially when previous ones have not been as effective as hoped.

When a sanction is imposed, it becomes politically difficult to then take it away again without facing the accusation of being “soft” on America’s adversaries. Once the global economy has become weaponized, it is very difficult to disarm, even if the long-term consequences of continuing down this road may be grave for American power.

A Benevolent Empire?

The risks associated with America’s underground empire raise the question of what is to be done about it. For Farrell and Newman, the answer is “a different kind of imperium, one that would demonstrably serve the global as well as national interest.”

For a book that is immersed in realpolitik, this is a disappointingly fanciful conclusion. The idea that the United States, or indeed any capitalist state, can be trusted to serve humanity as a whole is naive in the extreme. America is weaponizing its hegemonic position exactly because it is under threat, especially from a rising China.

This mistake is compounded when the authors advocate a new US agency with oversight for “economic security” matters. While Farrell and Newman intend such an agency to think about the long term and consider the risks of sanctions and other hostile measures, the reality of the US state means it would inevitably help entrench the sanctions-industrial complex, institutionalizing the problem even more.

Indeed, the authors, who coined the now widely used term “weaponized interdependence” to describe the US-China relationship, admit in the book that US officials have instrumentalized their ideas to inspire new choke points that Washington can find and weaponize, thus intensifying the very dangers that they are trying to warn about.

The reality is that there will be no benevolent underground empire, and trying to wish one into existence is a dead end. The fact that Biden has deepened the sanctions developed under the Trump administration should be evidence enough that it is a waste of energy at best and actively counterproductive at worst to place hopes in establishment politics to tame the underground empire.

We should instead look to anti-imperialist politics, both within the United States and beyond, as the alternative to America’s weaponization of the global economy. By building national economic sovereignty, strengthening trade relationships outside of the dollar zone, refusing to comply with America’s unilaterally imposed diktats, and breaking from US-dominated international institutions like the North Atlantic Treaty Organization and the International Monetary Fund, we can hasten US imperial decline and move towards a world of genuine multipolarity, where no one country can dictate the rules of the game.

_{Ben Wray is the author, with Neil Davidson and James Foley, of Scotland After Britain: The Two Souls of Scottish Independence (Verso Books, 2022).}

When will housing affordability improve? Spoiler alert: It will take some time / by Casey Quinlan

_{^{Construction workers build a residential high rise on Oct. 2, 2023, in Miami. Inflation is slowing and job growth has surged, but housing costs are still high, partly because of high demand, low inventory and mortgage rates. (Joe Raedle/Getty Images)}}

_{Reposted from Maine Morning Star}

Inflation is slowing and job growth has surged, but many Americans still feel the burden of expensive housing – fueled in part by high demand, low inventory and mortgage rates.

Home prices across the U.S. rose 5.5% over the past year in December 2023 and they are projected to increase 2.8% year over year by December 2024, according toCoreLogic, a consumer and business information company. None of the states in CoreLogic’s data showed home price declines.

Rents shot up 23.9% between the beginning of 2020 and the start of of 2023 and home prices rose 37.5% according to Harvard University’s Joint Center for Housing Studies’ 2023 state of the nation’s housing report. The median sales price of a home sold in the U.S. is $417,700, according to the St. Louis Fed.

Given the state of housing affordability in the U.S., here’s what to know about ongoing construction shortages, high interest rates, where housing prices are climbing, and what policymakers could do about it.

How did the housing market get this way?

Much of the current predicament renters and homebuyers face is linked to high housing demand, low housing inventory and the Fed’s cycle of hiking interest rates.

Very low mortgage rates – January 2021 saw the lowest recorded mortgage rate at 2.65% – fueled demand but drove up prices, exacerbated by low housing inventory, Matthew Walsh, economist at Moody’s Analytics explained. The Federal Reserve then raised interest rates in 2022 to combat inflation, which in turn influenced mortgage rates.

Those rates reached near 8% in October, and higher rates put constraints on housing supply, with more homeowners staying put. It’s now 6.77% for a 30-year fixed rate mortgage.

A lack of housing stock, both in for sale and overall inventory, is a key long-run problem for housing affordability, said Robert Dietz, chief economist for the National Association of Home Builders. A lack of accessible rental inventory that provides both single family and multi-family rental housing is a problem, he said.

“We simply don’t have enough developed land to build on, particularly in the places where it’s needed the most, which tends to be highly dense, more regulated markets in the largest metros where there’s a lot of population growth,” he said.

He added that a lack of construction labor as well as expensive building materials – partly affected by supply chain problems – have exacerbated the problem.

A 2023 Home Builders Institute report found that construction would need to add hundreds of thousands of workers to meet residential construction demand. An HBI survey done in 2021 found that around 90% of home builders for single family homes said there was a shortage of carpenters and that more than 80% of remodelers said there was a shortage in most of the construction trades they needed subcontractors for.

What is the Federal Reserve doing with interest rates?

The Fed is expected to cut rates this year, which should have some impact on housing prices. The Fed may not cut rates until May or later, but economists have forecast multiple rate cuts this year.

Many homebuyers and renters are hoping that a cut in interest rates could provide lower home and rental prices, since a lack of homebuying can drive up rental costs.

But economists say there won’t be meaningful relief anytime soon.

“It should push mortgage rates down into the low 6% range and perhaps in 2025 moving into the high 5s,” Dietz said. “That’s not the 2 to 3% rate that we saw earlier, but it will help price in some demand by lowering the monthly payment on a hypothetical mortgage. It is going to have a disproportionate impact on first-time buyers who tend to be particularly sensitive to changes in rates because they don’t have any home equity as first-time buyers.”

Selma Hepp, chief economist at CoreLogic, said home prices will remain pricy for quite some time, even when mortgage rates come down.

“Because home prices have gone up 40%, no matter how much you adjust mortgage rates — and we’re not expecting them to come down to 2% any time soon if ever again — you’d really have to get them to 2% to get that affordability back,” she said.

What are home price trends in different parts of the U.S.?

New Jersey, Connecticut and Rhode Island saw the highest home price increases in December, according to CoreLogic’s data, but no states saw home prices go down.

Hepp said that is significant because until this report, a couple states continued to show year-over-year declines: Utah and Idaho as well as the District of Columbia. She said that change may have been fueled by people moving from parts of California and from Seattle who drove up home prices in their new states.

A Moody’s Investor Service report released in October showed Florida, Montana, Nevada, and Idaho had the largest decline in affordability, due in part to growth in new residents.

But no part of the country is being spared by the effects of rising housing prices. Walsh said some of the fastest price appreciation he’s seen is in parts of the northeast and midwest because some of those markets are more affordable compared to parts of the country that saw an influx of residents earlier in the pandemic, such as metro areas in Mountain states including Colorado and Arizona

“The places where we’ve seen the most moderation in home prices have been in the places that lost that affordability edge…,” he said. “… Some of the fastest growing places in the northeast, like upstate New York, a place that really hasn’t seen quick increases in home prices in a long time, have been showing signs of life over the past year.”

How are policymakers helping?

Some states and cities are stepping up to the challenge of improving its affordable housing stock.

A program in Maine is funding more affordable rental housing, which includes the improvement of existing housing. Minnesota’s Family Homeless Prevention and Assistance Program is expanding rental assistance.

Voters in Phoenix and Albuquerque, New Mexico, last year supported bond measures that will spend millions on affordable housing. In 2022, voters approved housing bonds to fund more affordable housing for Buncombe County, North Carolina; Columbus, Ohio, and Kansas City, Missouri. Localities in Colorado and Montana voted to use tax revenues on affordable housing development and projects in 2023 as well.

On the federal level, the Biden administration announced in July it would address low housing supply by incentivizing projects with greater density and creating a program to fund projects that focus on zoning reforms. In October, the administration also introduced new housing initiatives to increase homeownership, such as loans to boost affordable housing on tribal lands and letting homeowners use prospective rental income from “dwelling units” at their home as part of their income when they want to qualify for FHA-insured mortgages. Some economists say that zoning is far too restrictive to increase housing supply and make it more affordable.

Government policies to address housing affordability should include “thinking about ways to incentivize state and local governments to reduce regulatory burdens and enact zoning reform to promote density where the market demands it,” Dietz said.

_{Casey Quinlan is an economy reporter for States Newsroom, based in Washington D.C. For the past decade, they have reported on national politics and state politics, LGBTQ+ rights, abortion access, labor issues, education, Supreme Court news and more for publications including The American Independent, ThinkProgress, New Republic, Rewire News, SCOTUSblog, In These Times and Vox.}

The Entry of a New German Left Party Shakes up the Country / by Vijay Prashad

_{^{Photograph Source: Martin Heinlein – CC BY 2.0}}

_{Reposted from Counterpunch}

In October 2023, 10 members of the German parliament (Bundestag) left Die Linke (the Left) and declared their intention to form their own party. With their departure, Die Linke’s parliamentary group fell to 28 out of the 736 members of the Bundestag, compared to the 78 members of the far-right Alliance for Germany (AfD). One of the reasons for the departure of these 10 MPs is that they believe that Die Linke has lost touch with its working-class base, whose decomposition over issues of war and inflation has moved many of them into the arms of the AfD. The new formation is led by Sahra Wagenknecht (born 1969), one of the most dynamic politicians of her generation in Germany and a former star in Die Linke, and Amira Mohamed Ali. It is called the Sahra Wagenknecht Alliance for Reason and Justice (Bündnis Sahra Wagenknecht, BSW) and it launched in early January 2024.

Wagenknecht’s former comrades in Die Linke accuse her of “conservatism” because of her views on immigration in particular. As we will see, though, Wagenknecht contests this description of her approach. The description of “left-wing conservatism” (articulated by Dutch professor Cas Mudde) is frequently deployed, although not elaborated upon by her critics. I spoke to Wagenknecht and her close ally—Sevim Dağdelen—about their new party and their hopes to move a progressive agenda in Germany.

Anti-War

The heart of our conversation rested on the deep divide in Germany between a government—led by the Social Democrat Olaf Scholz—eager to continue the war in Ukraine, and a population that wants this war to end and for their government to tackle the severe crisis of inflation. The heart of the matter, said Wagenknecht and Dağdelen, is the attitude to the war. Die Linke, they argue, simply did not come out strongly against the Western backing of the war in Ukraine and did not articulate the despair in the population. “If you argue for the self-destructive economic warfare against Russia that is pushing millions of people in Germany into penury and causing an upward redistribution of wealth, then you cannot credibly stand up for social justice and social security,” Wagenknecht told me. “If you argue for irrational energy policies like bringing in Russian energy more expensively via India or Belgium, while campaigning not to reopen the pipelines with Russia for cheap energy, then people simply will not believe that you would stand up for the millions of employees whose jobs are in jeopardy as a result of the collapse of whole industries brought about by the rise in energy prices.”

Scholz’s approval rating is now at 17 percent, and unless his government is able to solve the pressing problems engendered by the Ukraine war, it is unlikely that he will be able to reverse this image. Rather than try to push for a ceasefire and negotiations in Ukraine, Scholz’s coalition of the Social Democrats, the Greens, and the Free Democrats, say Dağdelen, “is trying to commit the people of Germany to a global war alongside the United States on at least three fronts: in Ukraine, in East Asia with Taiwan, and in the Middle East at the side of Israel. It speaks volumes that Foreign Minister Annalena Baerbock even prevented a humanitarian ceasefire in Gaza at the Cairo summit” in October 2023.

Indeed, in 2022, Thuringia’s prime minister and a Die Linke leader, Bodo Ramelow, told Süddeutsche Zeitung that the German federal government must send tanks to Ukraine. When Wagenknecht called Gaza an “open-air prison” in October 2023, the Die Linke parliamentary group leader Dietmar Bartsch said that he “strongly distanced” himself from her (the phrase “open-air prison” to describe Gaza is used widely, including by Francesca Albanese, UN Special Rapporteur on the situation of human rights in the Palestinian Territory occupied since 1967). “We have to point out what is happening here,” Dağdelen tells me, “It is our duty to organize resistance to this collapse of Die Linke’s anti-war stance. We reject Germany’s involvement in the U.S. and NATO proxy wars in Ukraine, East Asia, and the Middle East.”

Controversies

On February 25, 2023, Wagenknecht and her followers organized an anti-war protest at Brandenburg Gate in Berlin that drew 30,000 people. The protest followed the publication of a “peace manifesto,” written by Wagenknecht and the feminist writer Alice Schwarzer, which has now attracted over a million signatures. The Washington Post reported on this rally with an article headlined, “Kremlin tries to build antiwar coalition in Germany.” Dağdelen tells me that the bulk of those who attended the rally and those who signed the manifesto are from the “centrist, liberal, and left-wing camps.” A well-known extreme right-wing journalist, Jürgen Elsässer tried to take part in the demonstration, but Dağdelen—as video footage shows—argued with him and told him to leave. Everyone but the right-wing, she says, was welcome at the rally. However, both Dağdelen and Wagenknecht say their former party—Die Linke—tried to obstruct the rally and demonized them for holding it. “The defamation is intended to construct an enemy within,” Dağdelen told me. “Vilifying peace protests is intended to put people off and simultaneously mobilize support for repugnant government policies, such as arms supply to Ukraine.”

Part of the controversy around Wagenknecht is about her views on immigration. Wagenknecht says that she supports the right to political asylum and says that people fleeing war must be afforded protection. But, she argues, the problem of global poverty cannot be solved by migration, but by sound economic policies and an end to the sanctions on countries like Syria. A genuine left-wing, she says, must attend to the alarm call from communities who call for an end to immigration and move to the far-right AfD. “Unlike the leadership of Die Linke,” Wagenknecht told me, “we do not intend to write off AfD voters and simply watch as the right-wing threat in Germany continues to grow. We want to win back those AfD voters who have gone to that party out of frustration and in protest at the lack of a real opposition that speaks for communities.”

The point of her politics, Wagenknecht said, is not anti-immigration as much as it is to attack the AfD’s anti-immigrant stand at the same time as her party will work with the communities to understand why they are frustrated and how their frustration against immigrants is often a wider frustration with cuts in social welfare, cuts in education and health funding, and in a cavalier policy toward economic migration. “It is revealing,” she said, “that the harshest attacks on us come from the far-right wing.” They do not want, she points out, the new party to shift the argument away from a narrow anti-immigrant focus to pro-working-class politics.

Polls show that the new party could win 14 percent of the vote, which would be three times the Die Linke share and would make BSW the third-largest party in the Bundestag.

_{This article was produced by}_Globetrotter_.

_{Vijay Prashad’s most recent book (with Noam Chomsky) is The Withdrawal: Iraq, Libya, Afghanistan and the Fragility of US Power (New Press, August 2022).}

Reports Expose Deep Harms of Corporate Tax Cuts and ‘Trickle Down’ Ideology / by Jake Johnson

_{^{President Ronald Reagan pictured speaking at a fundraiser | Photo: Dirck Halstead/Getty Images}}

“Failing to reimagine a more ambitious and comprehensive use of corporate tax policy prevents us from achieving a more equitable, sustainable, and democratic economy.”

_{Reposted from Common Dreams}

Two new reports published Tuesday by the Roosevelt Institute argue that robust corporate taxation is key to creating a strong economy and improving the well-being of families and children—objectives that have been undermined in the decades since the Reagan era by regressive tax cuts enacted on the false premise that benefits would “trickle down” to the rest of society.

The first report, A Mapping of the Full Potential of U.S. Corporate Taxation to Enhance Child and Family Well-Being, examines what the authors describe as the understudied notion that “increasing corporate taxation will necessarily help children and families by providing additional revenue for essential public services.”

That perspective runs counter to what the Roosevelt Institute’s second report calls “a ‘cut-to-grow’ mentality” that rose to prominence in the 1970s and was enthusiastically embraced by the administration of President Ronald Reagan.

“Under this view, the thinking went, it was necessary to reduce the corporate tax rate to grow the economy—and that this growth would allow gains to eventually ‘trickle down’ from the rich shareholders to the middle class,” the report states. “During this time, the corporate tax rate was gradually reduced to 35% before it was dramatically cut to 21% in 2017. These cuts resulted in corporate tax revenues falling to less than 10% of total federal revenues.”

“Perhaps more than any other, President Ronald Reagan leveraged mounting backlash to taxation and government spending to dramatically reduce both, regardless of the consequences to American families,” the report observes.

“Corporate tax policy since Reagan has been driven by the trickle-down economics narrative that cutting the taxes on ‘job creators’ will benefit less wealthy U.S. taxpayers.”

The decades-long decline in corporate tax rates has severely undermined the federal government’s ability to finance critical public goods, from education to childcare.

“Since regressive corporate tax cuts don’t significantly increase earnings for working families (through either wage or employment increases), but they do reduce the government’s ability to fund family income and care supports, childcare costs—which are already rising—can become a relatively more expensive line item in working parents’ household budgets,” reads the Roosevelt Institute’s first report, authored by Emily DiVito and Niko Lusiani.

“When they can’t afford childcare,” they added, “parents face the difficult choice of having to cut costs in other places—often on the basic necessities that allow children to thrive, like food, clothing, and enrichment activities—or taking on additional caregiving duties themselves.”

At the state and local levels, DiVito and Lusiani noted, “corporations’ successful efforts to avoid their full property tax liability devastate public school budgets.”

DiVito, deputy director for the corporate power program at the Roosevelt Institute, said Tuesday that “we have a false idea in the U.S. that corporate tax policy is unrelated to equitable social reforms.”

“However, strong corporate tax policy is vital to all aspects of a thriving economy,” she argued. “And the failing to reimagine a more ambitious and comprehensive use of corporate tax policy prevents us from achieving a more equitable, sustainable, and democratic economy and society for all families.”

The new reports come a week after a bipartisan pair of House and Senate negotiators announced a deal to expand the child tax credit (CTC) for three years in exchange for a series of corporate tax cuts. The American Prospect‘s David Dayen estimated that “in the time period when all the tax credits are actually in place, the business tax changes are five times more costly than the CTC changes.”

“Who knows if this deal can pass in time to take effect in the upcoming 2023 tax season, if ever. Sen. Mike Crapo (R-Idaho), the ranking Republican on the Senate Finance Committee, is already asking for changes to make it even more generous to businesses. That’s in part a function of the dissembling that there is ‘parity’ in the deal. The truth is that this is not an equal trade. And it may extend that inequity well into the future.”

That warning is in line with the Roosevelt Institute’s new research, which argues that a corporate tax code generous to big business fuels inequality by “benefiting capital interests (i.e., business owners, partners, and shareholders) at the expense of workers and their families.”

“When corporations enjoy low taxes on their profits, they face a trade-off for how to otherwise disperse them: make investments in the workforce and productive capacity (e.g., raise wages, hire more workers, and/or upgrade buildings, equipment, or technology) or distribute them to shareholders (i.e., pay out dividends and buy back stock to inflate prices). Data shows that executives typically choose the latter.”

Reuven S. Avi-Yonah, a professor of law at the University of Michigan and the lead author of the new report on “cut to grow” ideology, said in a statement that “corporate tax policy since Reagan has been driven by the trickle-down economics narrative that cutting the taxes on ‘job creators’ will benefit less wealthy U.S. taxpayers.”

“Such an idea is often offered in tandem with the notion that this is the only way tax policy can help American families,” said Avi-Yonah. “But this just isn’t true. In fact, this false ‘cut-to-grow’ narrative has made it very difficult to argue for a more expansive, progressive vision of corporate tax reform—contributing to a decades-long stalemate in efforts toward real comprehensive corporate tax reform.”

“Now is the time,” he added, “to reverse this trend with a more historically grounded support of the corporate tax.”

_{Jake Johnson}_{is a senior editor and staff writer for Common Dreams.}

Commentary – Why I Believe What I Believe About the Chinese Revolution / by Vijay Prashad

_{^{Liu Hongjie (China), Skyline, 2021.}}

_{Late last year, a colleague sent me a letter decrying some of my writings about China, notably the last newsletter of 2023. This newsletter is my response to him.}

_{Reposted from the Tricontinental}

Dear friends,

Greetings from Tricontinental: Institute for Social Research.

The situation in China is the cause of a great deal of consternation amongst the left. I am glad you have raised the issue of Chinese socialism with me directly.

We are living in very dangerous times, as you know. The United States’ accelerating tension with other powerful nations threatens the planet more now than perhaps any period since 1991. The war in Ukraine and genocide in Gaza are illustrative of the dangers before us. In the interim, I worry about the US trying to draw Iran into the conflict, with Israel threatening to escalate tensions with Hezbollah in Lebanon and then draw Tehran into making a step that would allow the US to bomb Iran. The New Cold War against China will take these conflicts to another level. Taiwan is already the lever. I hope that sober minds will prevail.

All socialist projects, as you well know, are formed in the process of the class struggle and through the development of the productive forces. Not the least China. You recall Bill Hinton’s book The Great Reversal: The Privatisation of China, 1978–1989, published in 1990. I was with Bill in Concord, Massachusetts a year or so before he died in 2004 and had several discussions with him about China. No one in the US knew China as well as Bill, his entire family (including his sister Joan and her husband Sid Engst, who modernised dairy farming in China), and of course their friends Isabel Crook, Edgar Snow, Helen Foster Snow, and, later, the translator Joan Pinkham, the daughter of Harry Dexter White.

In the 1990s and early 2000s, there was great trepidation about China. When I visited the country decades earlier, I was confounded by the poverty in rural areas. But at the same time, I was taken by the dignity of a people inspired by the great history of the struggles that created the Chinese Revolution of 1949 who knew that they were building a socialist project. Bill held fast to Maoism, clear about the contradictions of the socialist project, as he wrote in Through a Glass Darkly: U.S. Views of the Chinese Revolution.

Inequality had risen to high levels during the Jiang Zemin (1993–2003) and Hu Jintao (2003–2013) years. In Poorer Nations: A Possible History of the Global South (2013), I wrote about the Chinese Revolution with some of that pessimism, despite understanding the difficulties of building socialism in a poor country (the only place, after Russia, to try and do so since revolutions failed in the West). A few years after that, I read Ezra Vogel’s terrific assessment of Deng, Deng Xiaoping and the Transformation of China (2011), which placed Deng’s decisions in 1978 in the context of the entire revolutionary process. That book gave me a better understanding of the Deng reforms. One of the key lessons I took away was that Deng had to confront the stagnation of the economy, allowing the market to advance the productive forces. Without that, it was clear that China – a poor, backward country – would slip into a socialism of despair. It had to pioneer a new approach. Of course, the Deng reforms turned toward market forces and opened the door to a very dangerous situation. Bill’s pessimism was a response to that reality.

***_{Sheyang Farmers Painting Institute (Jiangsu, China), part of the ‘farmers painting’ project, 2017.}***

By the late 1990s, discussions began – including in the journals of the Communist Party of China (CPC) – to tackle rising rates of inequality and poverty through mass action. At the fifth plenum of the 16th CPC congress in October 2005, the party announced a ‘great historic mission’ to ‘construc[t] a new socialist countryside’, using the new phrase the ‘three rurals’ to refer to agriculture, farmers, and rural areas. This mission sought to improve rural infrastructure through state investment, provide free and compulsory education, and develop cooperative medical services while retreating from the market reforms in the medical sector, the latter of which became a nationwide policy across China from 2009. It interested me that the campaign was run with a mass character and not bureaucratically, with thousands of CPC cadre involved in carrying out this mission. This was a forerunner of the poverty eradication campaign that would come a decade later.

As this mission unfolded, I was very interested in the fact that places with ‘red resources’ were highlighted for action (such as Hailufeng in Guangdong Province, which was the heart of China’s first rural Soviet). It is telling that scholars in the West did not focus on these new shifts, fixated as they were on the country’s Pacific coastline rather than studying the conditions in China’s rural interior. Among the few exceptions are sincere people such as Professor Elizabeth Perry and Professor Minzi Su (the author of China’s Rural Development Policy: Exploring the ‘New Socialist Countryside’, 2009), who are ignored by most commentators on China.

This push for a new socialist countryside enlivened the CPC and a tacit movement to counter pure free-market forces, which created the dynamic that led to Xi Jinping’s election as party leader in late 2012. Xi’s concern for the country’s rural areas comes from spending part of his youth in China’s underdeveloped northwest and from his time as the party secretary of the Ningde Prefecture in the late 1980s, which was then one of the poorest regions in Fujian Province. A widely acknowledged element of Xi’s leadership during this period is that he helped decrease poverty in that area and improve social indicators, making youth less prone to migrate to cities.

Did China’s growth need to come at the expense of nature? In 2005, while in Huzhou (Zhejiang Province), Xi laid out the ‘Two Mountains’ theory, which suggested that economic and ecological development must go hand in hand. This is evidenced by the fact that, from 2013 to 2020, particulate pollution in China decreased by 39.6%, increasing average life expectancy by two years. In 2023, Xi announced a new ecological strategy to build a ‘beautiful China’, which includes an environmental plan for rural areas.

I was struck by some of your claims, in particular that ‘forcible return to the countryside is now state policy’, which I think bears special reflection due to it being part of the broader ‘new socialist countryside’ policy. It is true that President Xi has been talking about the need for rural revitalisation since 2017, and it is also true that various provinces (for instance, Guangdong) have action plans for college graduates to go to the countryside and participate in making the rural as attractive as the urban. However, this is not done by force, but by innovative programmes.

***_{Zhang Hailong (China), Horses and Herdsmen Series 3, 2022.}***

At the frontlines of these programmes are youth, many of whom were among the three million cadres who went to villages as part of the policy to abolish extreme poverty (it is worth noting that 1,800 cadres died while carrying out this task). Xi is very sensitive, as Mao Zedong was, to the importance of party members experiencing the reality in rural China, given China’s vast rural landscape, and was himself sent to China’s rural northwest during the Cultural Revolution. Reflecting on this experience, Xi wrote in 2002: ‘At the age of 15, I came to Liangjiahe village perplexed and lost. At the age of 22, I left with a clear life goal and was filled with confidence’. There is something of this attitude in China’s policy. Is it bad for party members, many of whom might have jobs in the state apparatus, to spend time in the countryside? Not if you want them to better understand China’s reality.

I have been to China many times over the past ten years and have travelled extensively in both rural and urban areas. The dual circulation strategy that Xi has pursued (driven by this ‘new socialist countryside’ policy) is of interest, and I have been working with a range of scholars to build up a detailed, empirical understanding of the Chinese project from within and through their own categories. That is the basis of the work we have been doing, some of it published in Wenhua Zongheng and some of it in the Tricontinental: Institute for Social Research’s study on the eradication of extreme poverty in China. Is it propaganda? I hope not. I hope that we are getting closer and closer to being able to offer a theoretical assessment of the Chinese Revolution as it proceeds forward. Is the revolution perfect? Not at all. But it requires understanding rather than clichés, which abound in the West when it comes to China.

***_{Abdurkerim Nasirdin (China), Young Painter, 1995.}***

Take, for instance, the allegations of the oppression of Chinese Muslims (25 million or 1.8% of the total population). I remember being in Central Asia in the 2000s when al-Qaeda and the Taliban had a serious impact on the region, including through the offices of the Islamic Movement of Uzbekistan (IMU). The IMU formulated a policy to take over the entire Xinjiang region, which is why some Uygurs moved to the leadership of Juma Namangani.

The Turkistan Islamic Party, led by people close to al-Qaeda (such as Abdul Haq al-Turkistani, who was a member of al-Qaeda’s shura), was born out of those sorts of contacts. Bombings of public places became commonplace, including in the Xinjiang Uygur Autonomous Region. Abdul Shakoor al-Turkistani, who in 2010 took over leadership from Abdul Haq (the engineer of the 2008 bombings in Beijing during the Olympics), was responsible for the Kashgar attacks in 2008 and 2011 and the Hotan attack in 2011. In 2013, this group moved to Syria, where I met a few of them on the Turkish-Syrian border. They are now based in Idlib and are a key part of the al-Qaeda formation there. This is their characteristic feature: not mere Turkic nationalism, but Islamic fundamentalism of the al-Qaeda variety.

At the time, several approaches could have been taken to the insurgency. The one that the US and its allies in the region favoured was to use violence, including by attacking areas suspected of being run by these insurgents and arresting them en masse, with some of them ending up in US-run black sites. Many of the members of this group, including Abdul Haq and Abdul Shakoor, were killed by US drone strikes on the Afghanistan-Pakistan border. Interestingly, China did not follow this approach. Some years ago, I interviewed former members of the Libyan Islamic Fighting Group who had turned away from violence and the ideology of al-Qaeda. Their group, the controversial Quilliam Foundation (based in London), was led by people such as Noman Benotman who followed the approach of the Egyptian ‘repentance’ and the Algerian ‘reconciliation’ projects. These programmes essentially tried to adopt both cognitive and behavioural approaches to deradicalisation (changing the ideology and stopping the violence, respectively). The former Libyan jihadis were eager to bring this approach to play both in Libya (which failed) and in the West (where many of them resettled), rather than the alternative of targeted violence and mass arrests. They were rebuffed (except in Germany, where the Hayat Programme was established in 2012). The problem with the violent approach that the West opted for instead was that it demonised all Muslims rather than merely trying to deradicalise those drawn into a toxic politics.

In the case of China, rather than waging a frontal war against the radical groups in Xinjiang and then the society in which they lived and demonising all Muslims, the government sought to conduct forms of deradicalisation. It is useful to recall the meeting between the Chinese Islamic Association and the CPC in Beijing in 2019 that built on the Five-Year Planning Outline for Persisting in the Sinification of Islam and sought to make Islam compatible with socialism. This is an interesting project, although it suffers from a lack of clarity. Making Islam Chinese is one part of the project; the other is to make the practice of Islam consonant with the socialist project. The latter is a sensible sociological approach for the modern world: to make religion – in a broader sense – compatible with modern values, and, in the case of China, with ‘core socialist values’ (such as combatting gender discrimination).

***_{Liu Xiaodong (China), Belief, 2012.}***

The former is harder to understand, and I have not truly grasped it. When it comes to the idea that religion must be aligned with modern values, especially socialist values, I am fully on board. How should this happen? Does one, say, ban certain practices (such as headscarves in France), or should one begin a process of debate and discussion with the leaders of religious communities (who are often the most conservative)? What does one do when confronted by an insurgency that has its roots outside the country, such as in Afghanistan, Uzbekistan, and even Syria, rather than inside the country, such as the contradictions in Xinjiang? These are all pressing dilemmas, but the ludicrous statements about genocide and so on pushed by US State Department and its cronies – including by dodgy people who work for dodgier ‘think tanks’ near the CIA’s headquarters in Langley, Virginia – cannot be allowed to define our discussion within the left. We need a greater understanding of the matters at hand so as not to fall into the Biden-Netanyahu line of questioning, which boils down to the ‘do you condemn Hamas’ sort of debate.

***_{Tang Xiaohe and Cheng Li (China), Mother on the Construction Site, 1984.}***

In your email, you write that ‘there is no question that the living standards of ordinary Chinese people, especially city-dwellers, have improved dramatically over the last decades’. In fact, all the data – and my own travels – shows that this is not only the case ‘especially’ for city-dwellers but across the country and increasingly in the areas of the far west and far north. International Labour Organisation data, for instance, shows that China’s annual real wage growth was 4.7%, far and away above that of other countries in the Global South, and certainly higher than in India (1.3%) and the US (0.3%) In just eight years, from 2013 to 2021, the disposable per capita income of China’s 498 million rural residents increased by more than 72.6% while that of the 914 million residents of urban areas increased by 53.5%. Meanwhile, the gap of disposable income between rural and urban areas declined by 5% during this period, and the growth rate of disposable income of rural residents has outpaced that of urban residents for twelve consecutive years (2009–2021).

Between 2012 and 2020, targeted poverty alleviation lifted 98.99 million people in rural areas out of extreme poverty and enabled every single family suffering from extreme poverty to receive assistance. As part of this innovative process, the CPC combined the training and development of grassroots cadres with digital technology, thus enhancing modern governance capabilities at the local level and enabling party members and cadres to serve the people more accurately and efficiently.

For comparison, using the Gini index, which does not cover public services (ignoring items like subsidised rentals for rural homes), income inequality in India is 24% higher than in China.

Those who look at the data on inequality in China often focus on China’s billionaires. That was clear in your email, which noted that China ‘is awash with state-subsidised millionaires and even billionaires. Indeed, a mounting class of super-bourgeoise, many of whom “invest abroad”’. Certainly, the reform era produced the social conditions for some people to get rich. However, that number is in decline: in 2023, of the 2,640 billionaires in the world, about 562 were in China, down from 607 in the previous year, and the last few CPC congresses have made it a priority to reverse the engine of this billionaire-production process. Of the 2,296 delegates to the 20th National Congress, only 18 were private sector executives, most of whom are from small and medium-sized enterprises, down from 34 who participated in 18th National Congress in 2012.

As you might know, in 2021 Xi called for a policy of ‘common prosperity’ (a term first used by the CPC in 1953), which alarmed many of these billionaires. They have since sought to run for the hills (‘invest abroad’, as you say). However, China has very strong capital controls, allowing only $50,000 to be remitted overseas. A range of illegal operations have opened up in the past few years to assist the rich in exiting their cash, including through the more porous region of Hong Kong. But the state has been cracking down on this, as it has cracked down on corruption. In August 2023, the police arrested the leaders of an immigration firm in Shanghai that facilitated illegal foreign exchange transfers. The pressure on Jack Ma (fintech company Ant Group), Hui Ka Yan (property developer Evergrande), and Bao Fan (investment bank Renaissance Holdings) is indicative of the CPC’s current position regarding billionaires.

You write that while living standards have improved in China, ‘socialism is not on the agenda in that country’. If not for the socialist agenda pursued by the CPC, how has China been able to abolish extreme poverty and bring down inequality rates, especially in times of rising global inequality when the social democratic agenda in the capitalist Global North and in large parts of the Global South has failed to come anywhere close to these achievements? It helps that large banks in China are under the control of the state so that large-scale capital can be managed efficiently to solve social problems, as we saw during the COVID-19 pandemic. The class struggle continues in China, of course, and that class struggle impacts the CPC (with its extraordinary membership of 98 million).

***_{Wang Zihua (China), When the Wind Blows Through the Summer, 2022.}***

I have tried not only to provide some facts to guide our discussion but also to thread them into the theory of socialism that I believe is most attractive. According to that theory, socialism is not an event but a process, and this process – rooted in the class struggle – goes in zigs and zags, a back-and-forth tension that is often accentuated by the urgent need to increase the productive forces in poor countries. It is important to accompany such processes rather than taking an omniscient standpoint.

Warmly,

Vijay

_{Vijay Prashad is an Indian historian, editor, and journalist. He is a writing fellow and chief correspondent at Globetrotter. He is an editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest books are Struggle Makes Us Human: Learning from Movements for Socialism and (with Noam Chomsky) The Withdrawal: Iraq, Libya, Afghanistan, and the Fragility of U.S. Power.}