Friday, 7 April 2017

Who Rigs Elections? Russia or the USA?

Boris Yeltsin with Bill Clinton: Our Man in Russia

Turn on the news these days and all you can find are reports of how Vladimir Putin and the Russians were responsible for the defeat of Hillary Clinton and the Democrats in the US election last November. Endless allegations but so far no hard evidence.

Yet we know thanks to Wikileaks that someone hacked in to the e-mails of the Democratic National Committee and a key Clinton associate, John Podesta. Was it the Russians? The Washington Deep State knows but no one is talking.

The Next Question, Please

As a former academic, the next question should be obvious. Has the USA ever interfered in a Russian election? Some might recall that in December 2015 Victoria Nuland, a well-known neocon, appointed by Hillary Clinton to be her Assistant Secretary of State for European Affairs, admitted in public that the U S government had spent $5 billion “promoting democracy” in the Ukraine since 1991.

It used to be that the CIA was charged with clandestine intervention in elections in foreign countries, often done via their front groups and foundations. Then Ramparts blew their cover, President Ronald Reagan responded in 1983 by creating the National Endowment for Democracy. The NED channels government funds through a stable of innocent sounding organizations, administered by the US Department of State. Other monies go through the US Agency for International Development and the US Information Agency.

The Old Cold War

The US government and its allies in NATO had as their primary goal the overthrow of the state socialist regimes based on the model of the Soviet Union, the end of all regimes which operated a  planned economy, and the re-introduction of a capitalist system with a market economy.

While it is usually claimed that the US government wanted to create liberal, representative democracies in these one party states, this was never a high priority for administrations in Washington. One recalls the strong support given to the vicious military dictatorships in Latin America and the historic support for the feudal regimes in Saudi Arabia and the Gulf region with their commitment to Sunni Islamist politics. US governments also supported the fascist governments of Salazar in Portugal and Franco in Spain in spite of the fact that these two regimes had fought on the side of Nazi Germany in World War II.  

In the USSR: Gorbachev v. Yeltsin

The liberal reform of the Soviet Union began in the 1980s. Mikhail Gorbachev, General Secretary of the Politburo, undertook a policy to “expand democracy within the socialist system.” In 1988 he created the Congress of the Peoples Deputies, a new more representative legislative body. Its first election was held in March 1989. The disintegration of the Soviet bloc began on a serious level in 1988.  In June 1990 the Russian branch of the Congress of Peoples Deputies declared national sovereignty.

At the same time radical reformers gathered behind Boris Yeltsin. They wanted an end to the socialist system and the introduction of a capitalist economy. In June 1991 Yeltsin ran for the office of President of the Russian Federation and won. Gorbachev dissolved the Central Committee of the Communist Party of the Soviet Union and resigned as Secretary. The breakup of the Soviet union followed and the United Nations recognized the new independent states.

The US Government Backs Yeltsin


The US government rushed to support those elements which pushed for national independence and the end of the state socialist planned economy. Much of the financial assistance was channelled through organizations and corporations  supported by the NED.

USAID provided around $300 million for the Russia project, run through the Harvard Institute for International Development (HIID). They institute promoted the “shock therapy” model identified with Jeffrey Sachs, who became head of HIID. Sachs had been chosen by the US government to lead a reform project in Poland after 1989.

Most of the “reforms” were imposed by President Yeltsin via decrees bypassing the legislature, which was opposed to the complete dismantling of the old socialist planned economy. They were often drafted by representatives from HIID. Yeltsin began by lifting price controls and ending state subsidies. The result was hyperinflation, a dramatic increase in unemployment, a serious rise of abject poverty and the disappearance of the medical and hospitalization system, which had been tied to places of employment under the planned economy. 

The Constitutional Crisis of 1993

The conflict between Yeltsin and the parliament continued through 1993. In September  Yeltsin abolished the federal Supreme Soviet and the Congress of Deputies by decree and called for a new constitution. There were major demonstrations in the streets against Yeltsin and his reform agenda. The police and military erected barricades of barbed wire around the “White House” – the Russian parliament building. Leaders in the Parliament called on demonstrators to seize the television station. Military from the Department of the Interior and Special Forces appeared in support of Yeltsin.

On October 4 the Army began to shoot at the White House. Soon after tanks began shelling the top floors of the White House. Then the armed forces stormed the building. As the members of the parliament and their supporters left the building they were arrested and jailed. The following day Yeltsin banned the opposition parties and all their publications. Yeltsin’s action was strongly supported by the US government and its NATO allies.

Yeltsin proclaimed a new constitution and held elections for the new legislature in December. But the parliament elected was still dominated by the Communist Party and Russian nationalist parties which were strongly opposed to the liberal path being pushed through by Yeltson and his team of US advisers.

The Russian White House in 1993. Yeltsin/Clinton Democracy



The Elections of 1996

Yeltsin moved ahead strongly with his privatization program. Major state assets were sold, generally for about 10 cents on the dollar. This was the plan advocated by the US government.  However, the creation of a new capitalist class also produced a stable of very wealthy oligarchs who soon lined up behind Vladimir Putin.

Much of this was implemented by the Russian Privatization Center, which was created in 1992 by the HIID with a grant of $45 million from USAID. Other grants came from the Ford Foundation.

In the election for the new parliament in December 1995, the Communist Party and the Russian nationalist parties won a majority of the seats on a program which opposed Yeltsin’s policies. Public opinion polls showed that Gennady Zaganov, the Communist Party candidate for president, was well ahead of Yeltsin.

Once again it was the USA to the rescue. The Clinton Administration put together $14 billion in loans, much of it from the International Monetary Fund. The German government kicked in $2.7 billion, and the French added $392 million.

Yeltsin had the advantage of total control of Russian television, a state monopoly. Throughout this conflict the parties in the parliament, who represented an alternative vision, were denied all access. 

The Yeltsin campaign was run by three Americans, Richard Dresner, George Gordon and Joe Shumate. They were assisted by Steve Moore of Video International which had been trained by Ogilvy and Mather, the famous US PR firm. They flooded television with evidence of the horrors of the Stalin regime. It worked.

Manipulating Elections

Putin may have wanted Donald Trump to win the US election. Trump did pledge a new era of detente with Russia. But intervention? The NED directly operates  in over 80 countries doing their best to influence elections. Where is the Russian equivalent?

For more:

William Blum, Rogue State. Monroe, Maine: Common Courage Press, 2000.
Stephen F. Cohen, Soviet Fates and Lost Alternatives. NY: Columbia University Press, 2011.
https://www.thenation.com/article/harvard-boys-do-russia/https://www.thenation.com/article/harvard-boys-do-russia/
https://www.foreignaffairs.com/articles/russian-federation/2017-03-10/russia-trump-and-new-d-tente.
https://www.monthlyreview.org/2006/12/01/the-myths-of-democracy-assistance-u-s-political-intervention-in-post-soviet-eastern-europe/                   









Saturday, 4 March 2017

Bernie Sanders: "Don't Do as I Do -- Do as I Say!"

Donald Trump was not the only surprising political story of 2016. But given the total media focus on the new US President, we have almost forgotten the amazing political campaign of Bernie Sanders for the nomination of the Democratic Party for president.  I still remember the massive turnouts for his rallies and the long lines of  people waiting to get in to the events to hear him speak.

Out of nowhere we saw an America we had not seen since FDR and the Great Depression. Thousands cheered the attacks on Wall Street, the rule of the 1%, his criticism of the gross inequalities of income and wealth, and the corporate media. Sanders called for a political revolution, one which would give first priority to the most vulnerable, create a universal public health care system, end tuition at state universities, and shut down the “prison industrial complex.” Public opinion polls found that one half of American youth  preferred the Scandinavian version of “socialism” to capitalism. There seemed to be the beginning of a “political revolution.” It was astonishing.

Sanders’ Political Strategy  
Bernie's New Boo


Sanders was born and raised in Brooklyn. He went to the University of Chicago, where he joined the Young Peoples Socialist League (YPSL) and the Congress for Racial Equality (CORE). He supported Martin Luther King and opposed the war in Vietnam. In 1968 he moved to Vermont where he joined the Liberty Union Party. In 1972 they needed a candidate for the U.S. Senate, and Sanders stepped up. He got only 2% of the vote but did not give up. In 1974 he ran for governor for the Liberty Union Party and got 6% of the vote.

In 1980 a group of progressive friends decided to back Sanders as an independent candidate for mayor of Burlington. The strategy was to build a coalition that started with local trade unions, tenants, neighbourhood organizations, and environmentalists. They began in the poor and working class neighbourhoods, knocking on doors and pushing a very progressive platform. He was opposed by a Democrat and a Republican.. He finished first in a three way split.

Sanders had two allies on the city council with eight Democrats and two Republicans in opposition. They formed a new political party, known first as the Independent Coalition and then the Progressive Coalition. It became the model for the Vermont Progressive Party.

The Progressive Coalition administration of Sanders carried out many radical reforms in Burlington. Sanders took 70% of the vote in low income and working class wards. In 1987 the Democratic Party and the Republican Party worked together and chose only to run one candidate against him, a Democrat from city council.  But Sanders and the Progressive Alliance won 54% of the vote.

Going to Washington

In 1990 Sanders ran for the single seat that Vermont had in the U .S. House of Representatives. He defeated the candidate for the Democratic Party by 16 points. Elected as a member of the Progressive Alliance, he was the first person in Congress from a third party in 40 years. But to get a position on a Congressional Committee, he joined the caucus of the Democratic Party.

While in the House, Sanders opposed President Bill Clinton’s deregulation of Wall Street, the changes to the tax system which benefited the rich and the corporations, and stood against the new free trade agreements.

In 2006 one of Vermont’s seats in the US Senate came open, and Sanders declared that he would run. He got the support of Harry Reid, the leader of the Democrats in the U. S. Senate. With the Democratic Party not fielding a candidate, he won 65% of the vote, a landslide victory against the Republican candidate.

Rally in Oregon

Running for President

In 2015 Sanders made the decision to challenge Hillary Clinton for the nomination of the Democratic Party for president. He did not like Clinton’s politics; she seemed even more tied to Wall Street and the corporate elite than her husband. Furthermore, it seemed like there was never a war that she did not enthusiastically support.

The campaign showed just how the political process in the USA is rigged. The media largely ignored the Sanders campaign. The Democratic Party structured the whole primary process in order to support Hillary Clinton, the candidate supported by Wall Street. The neo-conservative elite, who had backed George W. Bush, supported Clinton as well. 

Numerous public opinion polls showed that Sanders would easily beat Donald Trump. In contrast,  the public distrusted Clinton almost as much as Trump. The Democrat Members of Congress who were backing Sanders could be counted on one hand. That was no surprise as they were all dependent on corporate funding for their own election campaigns and had moved to support the neoliberal program associated with the Democratic Leadership Council and the “New Democrats.”

When it became evident that Sanders could not win the Democratic Party nomination, Jill Stein, the candidate  of the Green Party, offered to step aside and let Sanders run as their candidate.  Together, they would “continue the political revolution.” Sanders said no. When Clinton was nominated, Sanders appealed to his supporters to back her and the Democrats. The political revolution, he argued, would continue, but inside the Democratic Party. There would be no attempt to create a third party to challenge the Duopoly.





 Where is Our Revolution?


The election of Donald Trump as President has come as a major shock to a majority of Americans. The Democrats are trying to blame it all on the Russians. Bernie Sanders insists that the future of his movement should be in the Democratic Party. A test case came when the Democrats chose the new chair of the Democratic National Committee. Sanders pushed for Keith Ellison, who had supported him through the primary campaign. The opposition was led by Barrack Obama and the conservatives in the party, including Bill and Hillary Clinton. They chose Tom Perez. There was no way that they would tolerate a swing to the left.

It is not enough to join anti-Trump protest demonstrations. The USA and the world face major problems at this time. The public wants an to end continuous wars. It should be evident that the Democratic Party remains the Party of Wall Street. The best alternative, the road to real change, is to follow the path used by Bernie Sanders in his political career in Vermont. There is the need for a revival of a national Progressive Party. The alternative is growing despair and withdrawal from political activity.                                                                                                                                                                                                                                                               




Monday, 20 February 2017

How Did We Get Those Free Trade Agreements?

In 2016 “free trade” once again made the headlines. There was the Trans Pacific Partnership (TPP)  and  the Trans Atlantic Trade and Investment Partnership (TTIP).  In the United States, both Bernie Sanders and Donald Trump insisted that the North American Free Trade Agreement (NAFTA) had been good for Mexico but had greatly damaged the US manufacturing economy. Now President, Donald Trump is insisting that NAFTA has to be renegotiated.

The standard line from big business, the mass media and mainstream academics is that everyone benefits from free trade.  Consumers profit from lower prices for all goods and services. So Canadians are waiting to see how the proposed new NAFTA negotiations will go. It might useful to remember the major political battle that transpired as the Canada-US Free Trade Agreement (CUSFTA) and NAFTA were created.

The Push from the United States

At the beginning, a free trade agreement between the United States and Canada was proposed by Ronald Reagan in his 1980 Presidential campaign. In 1983 Paul Robinson, the U..S. ambassador to Canada, began talks with Sam Hughes, President of the Canadian Chamber of Commerce. The US insisted that the official request for negotiations had to come from Canada in order to try to contain nationalist political opposition.

The US administration had goals: the elimination of the Foreign Investment Review Agency,  the National Energy Program and the Canada-US Auto Pact.  They wanted the agreement to include services, agriculture and culture. All federal and provincial government subsidies should be eliminated and “national treatment” guaranteed for American investments. The big surprise was that the final draft of CUSFTA also included a continental energy agreement that gave US investors a preferred status and guaranteed access.

The US government initiative had strong support among the American corporate sector. In 1987 over 400 large corporations created the American Coalition for Trade Expansion with Canada. They spent heavily on advertisements and began a major lobbying campaign in Washington.

Canadian Business Support for the Agreement

In Canada the Chamber of Commerce led the campaign. They were joined by the powerful Business Council on National Issues, the Canadian Manufacturers Association, the Canadian Bankers Association, the Canadian Federation of Independent Business, and many other business organizations. They achieved support from the Royal Commission on the Economic Union and Development Prospects, headed by Donald Macdonald. After Brian Mulroney and the Conservatives were elected in 1984, the Canadian government pushed hard for a bilateral free trade agreement.

There was strong opposition to the agreement in Canada. It was led by the Action Canada Network, anchored by the Canadian Labour Congress and the Quebec trade union federations. The coalition included teachers organizations, most farm organizations, the major women’s organizations, the Assembly of First Nations, the Canadian Environmental Network, and the Canadian Conference of the Arts. Public opinion polls revealed strong majority opposition to any agreement.

The Canadian business alliance played a key propaganda role in the federal election in the fall of 1988, known as the “free trade election” because of the strong opposition taken by John Turner, the leader of the Liberal Party. The New Democratic Party also opposed the agreement, but its leader, Ed Broadbent, played down the issue in his campaign.

The Conservatives won a majority of the seats in the House of Commons, but the Liberals and the NDP together took 56 percent of the popular vote. This explains why big business in Canada is so committed to keeping the British first-past-the-post electoral system. Ronald Reagan declared CUSFTA “the new economic constitution for North America.”

Negotiating NAFTA

Historically, Mexican business organizations had not opposed the Keynsian “populist” agenda. They had clearly benefited from one policy in particular: when a foreign-owned corporation sought permission to build a plant in Mexico, they were required by law to find a Mexican partner and give them 51% of the voting stock. This had resulted in strong business organizations. As they said in Mexico, “300 businessmen run the country.”

This was quite a contrast to Canada which put up tariffs under the National Policy to try to force American corporations to manufacture in Canada. The result was the “miniature replica” problem: high foreign ownership, very inefficient Canadian branch plants, and a relatively weak capitalist class.

This changed in Mexico with a new political leadership that had largely been trained at elite American universities. They absorbed the neoliberal agenda advanced by Margaret Thatcher and Ronald Reagan: free trade, the free market, government deregulation, the privatization of profitable state-owned enterprises, including public utilities, and a broad attack on labour unions and the welfare state.

The media emphasized the benefits to consumers of the removal of tariffs. But tariffs in general were below the 10% level. Big business, with excess capital, wanted the right to invest anywhere, sell their products and services anywhere, and repatriate their profits without government interference. Corporate taxes would be reduced and tax havens expanded.

The Alternative Agenda  
Manuel Lopez Obrador at Mexico City Rally


The Canadian and American anti-free trade coalitions were still in place. In Mexico, a similar coalition was formed, the Mexican Network on Free Trade (RMALC). Their goal, supported by their American and Canadian counterparts, was to raise Mexican wages and standards of work up to the highest levels in the northern states. This included human rights protections as found in the European Union, rules of the International Labour Organization on labour rights, and health and safety rules. The coalitions also argued that corporations should not be permitted to move to Mexico to avoid environmental regulations.

Of course, when the final draft of NAFTA was released none of these objectives were included. Corporations were moving to Mexico to maximized profits by specifically taking advantage of much lower wages, lower taxes and weaker regulations.

For many years public opinion polls in Mexico have shown majority opposition to NAFTA. Economic growth and job creation was much higher during the `populist” period. That opposition has been enhanced by the politics of Donald Trump. This is reflected in the rise of support for Manuel Lopez Obrador in recent public opinion polls. .
                                                                
John W. Warnock is retired from teaching political economy and sociology at the University of Regina. He is author of Free Trade and the New Right Agenda (1988) and The Other Mexico: The North American Triangle Completed (1995).               

Monday, 13 February 2017

On Re-negotiating NAFTA


Most people who are following the Trump phenomenon know that big business is worried that the new Republican President will carry through on his pledges to pull the USA out of the various “free trade” agreements and put forth alternatives which will “bring the good jobs back to America.” The Globe and Mail reflects this concern through its editorials and its stable of men committed to the neoliberal program, enhanced in recent years by opinion pieces contributed by propagandists from the many right wing “Think Tanks” based at Canada’s universities.

A recent piece by Ian McGugan is typical. “...trade is a mutual exchange in which countries buy from one another and invest in one another...this back-and-forth usually works to both parties’ benefit because it allows each country to specialize in what it does most profitably.” Oh?




Who does the trading and why.

Historically, trade began as a democratic process in horticultural societies. People came together to exchange their surplus goods for goods that were in short supply. I was fortunate to observe one of these markets in rural Chiapas one day while travelling in Mexico. Once a week there was a community market where individuals (usually women) came, spread a blanket on the ground and laid out their agricultural products and crafts. They bargained with buyers on a price, usually based on labour time. The products had a use value for buyers.

I also saw this in a public market in San Cristobal which I visited with local friends. On several tables a woman from an indigenous community had stacked the clothes that she had created. The needlework was amazing. Her daughter, around 10 years old, was explaining how a price was set for the various items. It was based on the labour time needed by her mother to create the individual item. The labour theory of value.

The mercantile system.

This democratic trade was replaced in Europe during the feudal era by professional merchants who had a different value system: maximizing profit by buying cheap and selling dear. Slowly this form of trade came to challenge the feudal system.

Merchant trade was radically changed by the creation of the territorial states with absolute monarchs and a class system founded on a landed aristocracy. Trade was controlled by the ruling classes and state-created monopoly corporations like the Hudson Bay Company. State military power became an important factor in this new system of trade. Historians hold that the mercantile system lasted from around 1500 to 1750.

A key factor was the development of European imperialism and colonialism. “Trade” under this structure was more like military pillage. Slavery was introduced on a large scale. Europeans began moving to areas of the world where the indigenous peoples had been forcibly removed from their land and resources.

The new liberal political economy. 

A new class with wealth was developing under mercantilism, a capitalist class which demanded the end to the old order and the freedom to invest and trade anywhere in the world. John Locke is often cited as the founder of liberalism. But what he did was put together a unified political position based on demands by the new capitalist class.

Locke was primarily concerned with justifying the seizure of land and resources from indigenous communities. He supported slavery, was a partner in the New Royal African Company, which was engaged in the slave trade, and invested in sugar plantations in Barbados, which depended on slavery for productive labour.

The early liberals like Locke argued that the only reason for government to exist was to defend private property rights. Citizenship and any role in parliament should be limited to men who owned private productive property. 

When the new ruling class of capitalists took power, they fiercely supported colonialism and imperialism through the 19th century and the first half of the 20th century. Trade under such a system could not be anything but unequal.

The orthodox view of trade today continues to follow the model set forth by David Ricardo in his Principles of Political Economy (1817). Free trade benefits all. Every country has a relative comparative advantage. Great Britain should emphasize manufacturing. Portugal should give up on manufacturing and concentrate on making wine. How did that turn out? 

Karl Marx once asked: Cuba today is a sugar plantation. When did the Cubans decide that this was their international comparative advantage? In fact, the Cuban indigenous populations were all killed or fled to other areas around the Caribbean. They were replaced by Spanish immigrants and African slaves.

The real world of trade is quite different from that described in the current economics text books.  Governments establish policies to try to regulate trade. But it is the large corporations and the major financial interests who direct the policies and who do the trade in goods, services and control the capital flows. Different social and economic classes have different political views on trade and trade policy. This all became very evident in the debate surrounding the Canada-US Free Trade Agreement and the North American Free Trade Agreement.

John W. Warnock is retired from teaching political economy and sociology at the University of Regina. He is author of Free Trade and the New Right Agenda (1988) and The Other Mexico: The North American Triangle Completed (1995).



Wednesday, 16 March 2016

U.S. Presidential Election: Trump v. Clinton?

There were five important primary elections in the United States yesterday, and the results seem to suggest that the candidate for the Republican Party will be Donald Trump and the candidate for the Democratic Party will be Hillary Clinton.

Donald Trump now has around 674 delegates of the 1237 that he needs for the nomination. Ted Cruz, the right-wing Christian fundamentalist from Texas, born in Canada, trails behind with 396. John Karich, the “moderate” from Ohio, has only 142. The proposal of the Republican establishment to mobilize around Karich will not work, as the rules for the Republication convention require that a candidate have won in at least eight states, and he has won only Ohio.  On average, Trump has been winning 37% of the votes cast in the Republican primaries, but most of the states remaining have a “winner take all” delegate system which will greatly aid him.

Hillary Clinton won all five of the contests yesterday for the Democratic nomination. She is slowly adding to her delegate lead over Bernie Sanders: it presently stands at 1132 to 818, with 2383 delegates needed to win the nomination. Clinton swept the solid south, and this has given her the lead, but these are states where the Democrats rarely win. Sanders will have to win many of the big states by a good margin to catch up with her.

Clinton as the Democratic candidate
There are a number of significant obstacles to Hillary Clinton winning the Presidential election in November 2016. They are as follows:

(1) In the primaries there has been a significantly greater turnout of voters for the Republicans. For example, in the five primaries on March 15 the Republicans received 54% of the total votes and the Democrats 46%. If this trend holds, Clinton will have to move to the right to attract Republican voters. No doubt this is part of her strategy to defeat Trump.

(2) 43% of potential voters are identified as independents. Only 19 states have open primaries where independents can vote. But public opinion polls showed that 70% of independents have preferred Sanders over Clinton. What can Clinton do to change this situation?

(3) Young people have turned out in mass to support Sanders. Clinton is part of the political and corporate establishment that they oppose. Sanders was winning 80% of the vote of those under 30 years of age. Will they vote for Clinton? One poll reported that 33% would not, and a second poll put this at 20%.

(4) In the CNN/ORC poll released on March 1, 55% of those surveyed had an unfavourable view of Clinton. Only Trump was higher at 60%. Sanders was at 33% and was the only candidate which had a favourable rating over 50%. Can Clinton change this situation?

I can see a possible scenario developing. Clinton could enter the convention with a majority of the elected delegates, but less than a margin of 493, the number of super delegates who will vote without being elected. If the public opinion polls show that Sanders would win in a contest with Trump and Clinton would not, would they break with tradition and not back the candidate with the most elected delegates?

Monday, 29 February 2016

For Canadians: A Heads Up on Elections in the USA


Here are a few things to keep in mind while watching the news from south of the border on this year's federal elections. That's right, I was once a U.S. citizen, at university I had a major in political science/political economy, and while living in Washington D.C. I was close to the John F. Kennedy camp. Long ago.  

(1) Voter turnout in the USA is quite low by the norms of modern liberal democracies. In non-Presidential federal elections, it tends to be near 35%. In Presidential elections it is around 50%.

(2) In recent elections, the trend has been for a drop in voter support for the Democrats and an increase in support for the Republicans. In the 2014 off year (non- Presidential) federal election, the Republicans won 51% of the vote for members of the House of Representatives and the Democrats won 45%.

(3) The Republicans have a firm control on the House of Representatives, 247 to 188 seats. They also control the Senate, 54 seats to 46. They now appear to be the majority party.

(4) In the four state primary elections prior to Super Tuesday (March 1), there has been a significant increase in voter participation in the Republican primaries and a decline in participation in the Democratic primaries.There are nineteen states which have "open primaries" where a person can vote for a party without being a member. In 2015 26% of American voters registered Republican, 30% Democrat and 43% declared that they were Independent. Bernie Sanders is the most popular candidate among Independents, who won't vote in the major primaries, like California and New York.

(5) Hillary Clinton is expected to do well in the primaries in the Southern states, which the Democrats do not normally win in the general elections. A good example is South Carolina, where blacks are in the Democratic party as the Republican Party, which completely dominates the state, is seen as the White Man's Party.

(6) As of this date, it looks like Donald Trump will most likely be the Republican candidate for President. There is no moderate alternative. Ideologically, Ted Cruz and Marco Rubio are not that different. Trump's stand against undocumented immigrants from Latin America is popular as is his stand against Muslim immigrants. He has also taken a strong stand against the free trade agreements and the loss of good jobs to Asian countries, and this is also a very popular position.

(7) The powers that be in the United States are united in their opposition to Bernie Sanders, even though several polls show he would be the best bet to defeat Trump in the federal election. Polls indicate that many people do not like or trust Hillary Clinton. Check out the results posted on Huffington Post. http://elections.huffingtonpost.com/pollster#favorability-ratings

(8) There is a movement among the younger Bernie Sanders supporters to pledge that they will not vote for Clinton. For good reason, they are angry at the way the Democratic Party structure is backing Clinton.

(9) In a contest between Trump and Clinton, I would not be at all surprised to see Trump the winner.

Wednesday, 10 February 2016

Leamington, Ontario: Growing Tomatoes in the Era of Free Trade

H. J. Heinz plant in Leamington

Southwestern Ontario is the historic home of Canadian tomato growers. The bulk of the crop goes to processing, and since 1909 the dominant corporation had been H. J. Heinz, a food giant based in Pittsburgh. But in 2013 the Heinz Corporation was bought by Warren Buffett’s Berkshire Hathaway (26%) and 3G Capital (51%), based in Brazil. It was soon announced that they were planning to close their plant in Leamington. The story has been a snapshot of what has happened to the manufacturing industry in Ontario following the free trade agreements with the United States.

The free trade economy
In 1988 Canadians were informed that their government, headed by Brian Mulroney, had been negotiating a free trade agreement with the U.S. government. The push for this had come from organizations representing big business and finance on both sides of the border. The Action Canada Network was formed, representing many democratic organizations who opposed the free trade agreement with the United States. Along with many Canadian political economists, they warned that given the reality of Canada’s branch-plant economy, any free trade agreement would likely lead to many plants closing and their operations moved back to the United States. But Canada’s political leadership pushed through the “New Economic Constitution of North America,” as U.S. President Ronald Reagan termed it.  Over the next 25 years Ontario communities saw factory after factory shut down. The food industry was not immune to this development.

The “free trade agenda” is part of the new political economy commonly known as neoliberalism, a return to the open free market system that existed before the Great Depression and the social democratic governments that dominated the political agenda for thirty years following World War II. The liberal package included the repeal of `populist`national policies which were aimed at promoting domestic manufacturing, the privatization of state owned enterprises, deregulation of the economy, reversing legislation which protected workers`rights and trade unions, cuts to social programs and the repeal of progressive tax systems designed to promote greater equality. 

The goal of the organizations representing the corporate sector was to increase their rate of profit. They wanted the right to produce anywhere in the world, sell their products anywhere, and not be subject to any government controls on the movement of their products or capital. In more recent years, with the world economy characterized by overproduction, excess capacity and limited profitable investment opportunities, the corporate sector has sought to open investment opportunities in all areas of the public sector, including health, education, social services, social housing and government services.

Free trade comes to Leamington
Tomato harvest near Leamington
  In 2013 the new owners of Heinz announced that they were going to shut down the plant in Leamington. 3G Capital had a reputation for taking over companies, laying off many workers, and putting top priority on raising the profit ratio. Warren Buffett, the other major partner in the new ownership, said that the Canadian plant was `not efficient`: it relied on fresh tomatoes grown in Canada, bypassing cheaper tomato paste that could be imported from producers in Mexico and elsewhere.

Was there an alternative? Sam Diab, the plant manager at the Leamington operation, found several investors in the Toronto area and put forth a plan to keep the plant open and operating.  Changes had to be made to continue production under the free trade model.

(1) There would be a major downsizing in the plant`s operation. The regular work force would be initially reduced from 740 to 250. The workers, primarily women, were represented by a trade union, United Food and Commercial Workers. Production workers who kept their jobs would see their hourly wages reduced from $25 to $16. The union accepted the changes as there was no alternative.

(2) The business in its new form survived because of a regulation under the Canadian Agricultural Products Act. This specified that tomato juice sold in Canada must be made from fresh tomatoes and not paste. Heinz had 50% of the Canadian tomato juice market and did not want to give this up. They negotiated a five year contract with the new owners, now known as Highbury Canco. Business interests complained that this type of “trade distorting regulation” was supposed to be eliminated under the terms of the existing free trade agreements. Such regulations will likely be eliminated if the Trans-Pacific Partnership (TPP) free trade agreement is ratified.

(3) The number of tomato growers has declined since the plant changed ownership. In 2013 Heinz had contracts with 119 tomato growers; that was down to only 10 in 2015. The tonnage of tomatoes grown in this area of Ontario declined from 555,092 in 2012 to 432,175 in 2015. There remain two other tomato and vegetable processor in the region, ConAgra Foods, a U.S. food giant  in Dresden, and Canadian-owned Sun-Brite Foods which is located near Leamington. Vegetables are also processed in Quebec by Bonduelle North America, a French corporation.

(4) Highbury Canco wants to expand the company`s production by introducing a new class of tomatoes, to be called “industrial paste.” They argue that this could add an additional 250,000 tons of tomatoes and 25 - 30 more growers. Farmers who lost their contracts have had to switch to corn-soybean production, with lower returns. Of course, tomatoes in this new fourth class would bring farmers less money, as the industrial paste would be sold bulk to other processors at a discount. Regular tomato paste in 2014 brought farmers $110 per ton. The company argues that the new class would bring farmers at least $95 per ton, the paste price in 2013.

(5) Standing in the way of total free trade in this case would be the Ontario marketing boards. The Ontario Farm Products Marketing Commission has not approved the introduction of a new fourth class of industrial paste tomatoes. Neither has the Ontario Processing Vegetable Growers. They do not have the economic power of the supply management marketing boards (like milk, poultry and eggs), but as marketing agents they do have considerable influence. They are there to provide some power for farmers when negotiating with agribusiness. Corporate interests, and their liberal academic supporters, expect that the Trans-Pacific Partnership agreement will eventually put an end to the influence of farmer-controlled marketing boards.

(6) In order to try to keep businesses in Canada, governments have increasingly offered them subsidies. Leamington granted Highbury Canco subsidized municipal water and re-assessed the value of the plant, cutting their property taxes in half. The city council abolished all development charges for building construction. The provincial government “invested” $2.5 million in Highbury Canco to help it expand production lines. Such practices have become a normal part of business under free trade. Most people are aware of the huge subsidies that are given to automobile corporations.

What is it like to work in a manufacturing corporation operating under the new free trade, free market regime? Of course workers were not happy when their wages were cut as at Leamington. But they lined up to work at the new plant as there were very limited alternatives.

We can get an idea by looking at the comments posted by workers at the Kraft Heinz plant, as reported at .www.glassdoor.ca. “Previous company was good to work for but not 3G.” “Deep cost cutting.” “New 3G culture . . . very focused on the bottom line.” “Was great place to work . . . until 3G/Heinz merger.” “Daily grind, week after week.” “Great people and horrible Senior Management.” “Go back to Brazil, please.”

Conclusion
The experience of the tomato industry in Southwest Ontario is a case study of manufacturing in Canada under the new free trade regime. As the democratic opposition warned, the free trade regime has resulted in a major loss of manufacturing plants and good jobs in Canada. It is widely expected that the new Trans-Pacific Partnership will only make matters worse.

There is also a new factor on the horizon: climate change. As weather systems become more unstable and destructive, a crisis is expected to develop in the production and distribution of food. There will be greater pressure on Canada to expand our own production of food, especially fruits and vegetables. It is likely that we will need to move to a production system similar to that used during World War II, with significant government intervention. This would be the opposite of the free trade model. A growing crisis will provoke a new political struggle.