Thursday, August 09, 2007

Banking Against Disaster

A New New Deal

When the levees broke in New Orleans, I wrote about the desperate need for a New Deal for the 21st Century – one which would rebuild a crumbling infrastructure, help address glaring income inequality, and repair the damage done by a Bush administration fiercely hostile to the notion that government can serve the public good.

The collapse of the I-35W bridge in Minneapolis is yet another alarm, alerting us to our skewed priorities and need for a public investment agenda.

As The Nation argues in its forthcoming lead editorial, the neglect of our infrastructure is seen in collapsing bridges and exploding steam pipes, flooded subways, traffic-choked streets and clogged-up ports, electrical power brownouts, corroding drinking water systems, uneven broadband access, and an antiquated air traffic system.

The US Department of Transportation estimated that freight bottlenecks cost the economy $200 billion a year--nearly 1.6 percent of GDP. The Environmental Protection Agency estimated that it would cost $151 billion and $390 billion every year over the next 20 years to repair obsolete drinking water and wastewater systems, respectively -- systems that average 50 to 100 years of age. According to the Federal Highway Administration, $131.7 billion and $9.4 billion is needed every year over the next 20 years to repair deficient roads and bridges, respectively. Moreover, the American Society of Civil Engineers estimated that $1.6 trillion over the next five years would be required to alleviate problems with the nation's infrastructure. As John Nichols wrote, "That $1.6 trillion figure sounds like a lot of money, unless it is compared with the anticipated cost of $1 trillion or more for completing George Bush's mission in Iraq."

This is eminently doable, it's a question of political will.

Following the bridge collapse, Senators Christopher Dodd and Chuck Hagel introduced legislation to establish a National Infrastructure Bank that would enable the federal government to help finance infrastructure projects – partly through federal guarantees to state and local governments. Projects would include publicly-owned mass transit systems, roads, bridges, drinking water and wastewater systems, and housing properties. In the House, Congressmen Dennis Kucinich and Steven LaTourette introduced The Rebuilding America's Infrastructure Act which would create a low-cost federal financing mechanism to administer zero-interest loans to localities. States choose which projects to fund with the loans according to their specific needs.

The problem is that the Dodd bill, as well-intentioned as it is, would still invest only $60 billion a year – which pales in comparison to the scope of the problem. Similarly, Senator Bernie Sanders good bill to foster green collar jobs – which passed in the House too – also allots only $100 million. A much bolder undertaking is needed.

In a forthcoming paper for the New America Foundation economist (and sometime Nation contributor) James K. Galbraith writes, "Contrary to considerable myth, economic development in America has never been a purely private matter." Galbraith cites the Congress of 1862 and its authorization of land grant universities, homesteading, and the transcontinental railroads. And the New Deal which "laid down much of the public architectural legacy with which we live today."

Galbraith describes attempts in the 1980's to foster higher infrastructure investment on a systematic basis – such as Representatives Lee Hamilton and James Howard's effort to create a Federal Infrastructure Bank "which would have provided funds on a revolving basis to states and cities to support local and regional infrastructure." And late in the Clinton administration similar ideas were discussed "but of course died with the arrival of the Bush government."

In order to address the infrastructure needs – and the transition to a low-carbon emissions society that is required to meet the challenge of global warming – Galbraith calls for a Federal Infrastructure Bank to assist state and local governments with financial resources; and investments in universities and research centers to develop the needed specialists in urban design, environmental engineering, energy economics, transportation systems, carbon sequestration, the management of carbon trading markets and other fields. Galbraith estimates that a new large scale public investment initiative could be undertaken that amounts to new expenditures rising to two percent of GDP over a period of a few years – approximately 290 billion dollars per year in present dollars. (Roughly one-half of the current national security budget.)

In Hometown America, a report based on two years of research by a group of progressive thinkers, the authors write that "for the past 20 to 30 years, major parts of our economy and society have been short-changed – trillions of dollars of investment needed but not made in healthcare, education, energy independence, and a broad range of other essentials. We conclude that serious reforms are needed to make up for these shortfalls and to build a new generation of growth and middle class prosperity."

The report argues that the last great American middle class – created on rising wages, a strong industrial economy, and government programs that expanded public education, increased home ownership and eliminated poverty in old age – has eroded over the last three decades due to globalization, financial liberalization at the expense of middle class prosperity, an increased tax burden on the middle class, and military adventures abroad over public investments at home. The authors call for using "government much like an earlier generation did to create a high-wage and technologically advanced economy with a broad base of middle class jobs."

The report outlines "a new federal revenue sharing and regional decision-making process…."; a National Capital Budget and Development Bank "to finance and oversee the substantial resources that federal, state, and local governments will need to accomplish major reforms in healthcare, education, energy use, and other key areas"; and "reining in an over-reliance on military projection and strengthening economic and diplomatic engagement…."

Specifically, Hometown America calls for investment in the following areas: basic infrastructure – roads, bridges, levees, water systems, electrical grids; a new energy infrastructure for biofuels, hydrogen, solar, and other renewables; the build-out of America's broadband infrastructure; an expanded and advanced air and rail transportation system, including a new Skyways and Rail system to for the American heartland to complement the Interstate Highway system; a new system of federal research centers to push the frontiers of science of technology; and a network of public health clinics, new technology extension centers, and regional art and culture centers. And, as many have pointed out, "For national security, environmental, and economic reasons, the promotion of a renewable energy industry must be the first priority of any new public investment initiative." The Apollo Alliance has provided a blueprint to do just that – with $300 billion invested over the next 10 years, creating 3.3 million jobs, leading to economic growth, more tax revenues, and energy independence.

Citizens need to make it clear to the presidential candidates – and their representatives – that they seek a bold vision to renew our shredded social contract and rebuild our public infrastructure. Otherwise we can expect continued tragedies as we saw last week, and the same path of privilege for the few and treading water for the rest.

Sunday, August 05, 2007

Canadian Mercenaries Abroad

Just Because It’s Canadian, Does That Make It Good?
by Yves Engler / August 5th, 2007

A few weeks ago, four Montreal-based GardaWorld (“fifth largest integrated physical security and cash logistics firm worldwide” — according to the company website) employees were kidnapped while providing security for BearingPoint Consultants in Iraq. In a front page Ottawa Citizen article headlined, “How a nice Quebec firm found itself in a war zone”, the head of the company deflected criticism of its 5,000 private soldiers in the Middle East by claiming, “we’re perceived differently because we’re Canadian.”

Of course he didn’t mention if the Iraqi mothers whose children have been shot by mercenaries (unaccountable to any law) feel that way on discovering the bullets originate from a Canadian company.

The company’s eagerness to point out their heritage is a strategy that milks Canadians’ deep-seated perception of this country’s altruism. Numerous studies demonstrate that Canadians’ self-appraisal of their country’s foreign policy is the highest in the world.

But do the facts fit our self-image?

It is well known that Canada participated militarily in the Boer War, First World War, Second World War, Korean War, first Gulf War, bombing of Serbia and the war in Afghanistan. What is less well known is that Canada did so without facing a serious threat of invasion and that none of these wars were morally justifiable. (WWII may have been justifiable after the fact, but
Canadian motives for participating were not a high-minded struggle against anti-semitism or fascism. In a summer 1937 meeting with Hitler, Prime Minister McKenzie King lauded the Nazi’s support for the Fascists in Spain and during the war the Canadian government had a “none is too many” policy on immigration for fleeing European Jews.) Canada’s entry into the first three wars was more or less automatic because this country was part of the British Empire. We joined the last four conflicts because, quite frankly, Canada had become part of the U.S. Empire.

Many of us cite peacekeeping as a great Canadian endeavor. Canada and the Early Cold War, a book financed by the Department of Foreign Affairs, lays the myth of benevolent peacekeeping to rest. “The more extreme version of this myth, which makes Lester Pearson [the founder of peacekeeping] into Herbert Evatt raging against Great Power dominance and transforms Canada’s peacekeeping into neutralism or even pacifism, receives no support in the
DCER [documents on Canadian external relations].” Through peacekeeping, Canada was fighting the Western world’s Cold War “by other means.”

Aid is probably the most benevolent aspect of Canadian foreign policy. Yet, an important principle of Canadian aid is that where the US kills, Canada provides aid. Canadian aid expanded drastically in South Vietnam during the American War. More recently, the three major recipients of Canadian aid are Iraq, Afghanistan and Haiti. In Haiti, that aid was used to help overthrow
an elected government and then legitimate the brutal 26-month coup regime.

Geopolitics has always been the primary reason for disbursing Canadian aid. In the wake of the Chinese revolution, Canada began its first significant [non–European] allocation of foreign aid through the Colombo plan. The man in charge of Canada’s participation in the plan, Nik Cavell, explained the rationale behind the plan. Communism “has made a great inroad in Asia … and is busy day and night softening up, and preparing, other populations ready for the day when they too can be made satellites of an ever-growing world of terrible totalitarian slavery of the human mind and body.”

If some of India and Pakistan’s post-colonial population had not set their sights on a communist solution to their troubles –- with the possibility of Soviet or Chinese assistance — Canada probably would not have been willing to provide aid. The Colombo plan was then extended to Commonwealth Africa and the Caribbean amidst fears the British Empire’s old territories would fall under the influence of the communist bloc.

A 1969 background paper for the Canadian International Development Agency (CIDA) summarizes the rationale of Canadian aid. “To establish within recipient countries those political attitudes or commitments, military alliances or military bases that would assist Canada or Canada’s western allies to maintain a reasonably stable and secure international political
system. Through this objective, Canada’s aid programs would serve not only to help increase Canada’s influence within the developing world, but also within the western alliance.”

The second motivation driving Canadian aid is to advance capitalist interests. Initially all Canadian aid was tied, meaning that the money had to be spent on Canadian-produced goods or services. Even after four decades of criticism half of all Canadian aid is still tied. Additionally, many of the projects funded are chosen because they benefit Canadian corporate interests. A boon to Canadian-owned hotels and airlines, Canadian aid has been used to build airports throughout the Caribbean. And, by the late 1980s, aid became a way to coerce developing countries to adopt structural adjustment programs.

The third motivation behind Canadian aid is domestic: It aims to weaken the Quebec sovereignty movement and social movements generally across the country. In the late 1960s, Canada began to expand its aid to francophone nations as a way to placate Quebec nationalists. Prior to this, Canadian aid was focused on the recently decolonized former British colonies. The aid to the Francophonie was designed to convince Quebec nationalists that the Canadian government was sympathetic to francophone culture. Quebec’s large number of CIDA-funded international non-governmental organizations (and the jobs they provide, especially to young people) is a testament to the federal government’s policy of tying Quebecers to its overall aid objectives.

Of course, state funding for social/political organizations always has an element of co-optation. In the case of international assistance, the federal government would prefer activists join the Canadian University Services Overseas and go teach somewhere in Africa then organize to oppose the capitalist system at home. It’s a way of directing activists towards issues the government finds less politically sensitive as well as making them dependent on the federal government.

The other motivations behind Canadian aid are to feed the hungry, to build schools and other infrastructure, and to help people climb out of poverty. Unfortunately, these motivations are less acted upon than the ones cited above. That is because there are powerful actors in business and government who make sure their interests are satisfied before all others.

Unfortunately, most of us have, so far, paid more attention to the words than to the deeds of our governments and corporations. Only when the vast majority of Canadians pay attention to the reality of foreign affairs and demand altruistic aid, real international co-operation, benevolent peacekeeping instead of militarism, and the rule of law instead of an empire’s might, will these things happen.

Yves Engler is the author of two books: Canada in Haiti: Waging War on the Poor Majority (with Anthony Fenton) and Playing Left Wing: From Rink Rat to Student Radical. Read other articles by Yves.