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The Left Must Seize This Moment, or Others Will |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=54131"><span class="small">Alfredo Saad-Filho, Jacobin</span></a>
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Sunday, 26 April 2020 08:09 |
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Saad-Filho writes: "The COVID-19 pandemic will transform our world. Massive state intervention is essential to head off an unprecedented slump. We must come out of this crisis with a better society."
The Teamsters Port Division, in collaboration with Labor Community Services and the Los Angeles Regional Food Bank, hosts a food distribution for port truck drivers impacted by the coronavirus shutdown measures at the Port of Los Angeles on April 22, 2020. (photo: Kevin Winter/Getty Images)
The Left Must Seize This Moment, or Others Will
By Alfredo Saad-Filho, Jacobin
26 April 20
The COVID-19 pandemic will transform our world. Massive state intervention is essential to head off an unprecedented slump. We must come out of this crisis with a better society.
 uddenly, we find ourselves in a transformed world. Empty streets, closed shops, unusually clear skies, and climbing death tolls: something unprecedented is unfolding before our eyes. News about the economy is alarming almost everywhere. The COVID-19 pandemic has triggered the sharpest and deepest economic contraction in the history of capitalism.
To paraphrase the Communist Manifesto, all that was solid has melted into air. “Globalization” has gone into reverse; long supply chains that were previously the only “rational” way to organize production have collapsed, and hard borders are back; trade has declined drastically, and international travel has been severely constrained.
In a matter of days, tens of millions of workers became unemployed, and millions of businesses lost their employees, customers, suppliers, and credit lines. Several economies expect contractions of GDP to be measured in double digits, and a long line of economic sectors beg governments for a bailout.
In the UK alone, banks, railways, airlines, airports, the tourism sector, charities, the entertainment sector, and universities are on the verge of bankruptcy, not to speak of the displaced workers and the (nominally) self-employed, who lost everything because of an economic shock that has not yet even been felt in full.
Neoliberalism Bereft
The political implications are uncertain. Ideologically, neoliberal discourses about the imperative of “fiscal austerity” and the limitations of public policy have vanished. Principled Austrians and neoliberals of every hue hastily retreated into a half-baked Keynesianism, as they tend to do when economies tank.
At the time of need, the first to grab the capacious teats of the Treasury wins the big prize, and state intervention is questioned only for what it has not yet done. The private sector and the media beg for government spending, and portentous preachers of the “free market” rush to the TV screens to plead for unlimited public spending in order to save private initiative.
No doubt, they will get back to normal when circumstances change and memories fade. At that point, the state will become “bad” again, and public services will be ready for another round of culling. In the meantime, neoliberalism finds itself bereft of ideologues.
The irate fringe of anti-vaxxers, Flat-Earthers, and religious fanatics has been reduced to denying the pandemic itself — at great personal risk — peddling miracle cures based on unproven remedies, or praying and fasting together with Brazil’s president, Jair Bolsonaro. May the Lord save us from them.
Shockingly, the epidemic itself was not unexpected. For decades, civilian and military strategists have considered a wide variety of scenarios, especially since the experiences with HIV in the 1980s, SARS in 2003, and, more recently, Ebola and other “new” diseases. The likelihood of a flu-type virus emerging in the animal markets in the South of China was well known.
It follows that the crises of public health and the economy were not caused by failures of planning. Instead, they reflected political choices, the dismantling of state capacities, staggering failures of implementation, and a shocking underestimation of the threat — for which, surely, reputations must be destroyed and heads must roll, as part of a systemic reckoning.
Western Fumbling
For several weeks in early 2020, China bought the world time to prepare for the epidemic, and offered an example of how to confront it. Other East Asian governments came up with (more or less intrusive) policy alternatives, especially Singapore, South Korea, Taiwan, and Vietnam, and they were highly successful.
Meanwhile, the West fumbled: faced with a problem that could not be resolved by sanctioning, blockading, or bombing a distant land, the governments of the wealthiest countries in the world did not know what to do. Unsurprisingly, the UK and US governments fared especially badly, while the EU has, once again, disappointed at an hour of need.
Although the magnitude of the implosion of several economies — centred in the advanced Western countries — was unprecedented and is bound to have long-term consequences for the operation of capitalism, COVID-19 did not hit a prosperous global economy. In early 2020, the world was already enmeshed in a “great stagnation” that had followed the 2007–8 global financial crisis. Even the best performing large Western economy, the United States, was noticeably slowing down.
This is not to minimize the magnitude of the hurricane, since any economy would have been overwhelmed. However, since COVID-19 hit fragile countries, it immediately exposed their vulnerabilities.
Hollow States
The pandemic hit after four decades of neoliberalism had depleted state capacities in the name of the “superior efficiency” of the market, fostered deindustrialization through the “globalization” of production, and built fragile financial structures secured only by the state, all in the name of short-term profitability.
The disintegration of the global economy left the most uncompromisingly neoliberal economies, especially the UK and the United States, exposed as being unable to produce enough face masks and personal protective equipment for their health personnel, not to speak of ventilators to keep their hospitalized population alive.
At the same time, service provision has been transformed beyond recognition, with online work becoming the norm in countless areas in a matter of days, rather than the years that this transition would have normally taken. Meanwhile, the neoliberal worship of consumption dissolved into undignified scrambles for hand sanitizer, pasta, and sardines, and fistfights for toilet paper.
Neoliberalism was quickly shown to have hollowed out, fragmented, and partially privatized health systems in several countries. It also created a precarious and impoverished working class that is highly vulnerable both to disruptions in their earning capacity, and to health scares because of their lack of savings, poor housing, inadequate nutrition, and work patterns incompatible with healthy lives. In the meantime, the destruction of the social-democratic left had rendered the working class politically unprotected.
These processes culminated in unseemly commotions for (state-led) Chinese output, in which the United States has increasingly behaved like a crazed bully, stealing the masks and ventilators that it could neither produce nor buy, and insulting weaker countries to boot.
Herd Inanity
Human enroachment upon nature may have created the problem in the first place, but there is no doubt that the destruction of collectivity under neoliberalism exacerbated the impact of the pandemic. Emblematically, neoliberalism has devalued human lives to such an extent that valuable time was wasted in several countries — notably those with more uncompromisingly right-wing neoliberal administrations: the United States, the UK, and Brazil — with government attempts to impose a strategy of “herd immunity.”
That approach would inevitably have eliminated the old, the weak, and those with fragile health (which might alleviate their “burden” on the fiscal budget), as an alternative to imposing a lockdown that, although proven to reduce the loss of life, would hurt profits, as well as — shock, horror! — showing that states can play a constructive role in social life.
Eventually, mass pressure and the evidence of success in China and elsewhere forced even the most reluctant governments to impose lockdowns, but sometimes only partially and hesitantly. Moreover, those decisions always risked being undermined by mixed messages and incompetent implementation. In these countries, testing also tended to be restricted, and health-service staff were often left to cope with unmanageable workloads without adequate protection. This approach to the pandemic will lead to many thousands of unnecessary deaths.
In the UK, the shambolic administration led by the ever unreliable Boris Johnson found itself confronting two evils: on the one hand, mounting estimates of deaths and, on the other hand, ever-worsening estimates of the potential drop in GDP. Pressed early on by the Conservative Party and by some of the most vocal business supporters of Brexit, the UK government wheeled out their “medical experts” to justify the protection of profits and the idea of a “small state” in the name of science.
Faced with an increasingly angry public opinion, the government turned around dramatically in mid-March. By then, it was already too late. Because of the government’s earlier choice to delay action, their lack of preparedness and mind-boggling ineptitude, the UK would inevitably end up in the worst of both worlds: countless dead — literally countless, since there has been a deliberate effort to underreport the loss of life — and economic losses in the hundreds of billions of pounds.
Essential but Exposed
The social implications of the pandemic emerged rapidly, for example, through the differential ability of social groups to protect themselves. In brief, the uber-rich moved into their yachts and the merely rich fled to their second homes, while the middle class struggled to work from home in the company of overexcited children.
But the poor — who already have worse health, on average, than the privileged — either lost their earnings entirely or had to risk their lives on a daily basis to perform much-praised but (needless to say) low-paid “essential work” as bus drivers, care workers, nurses, porters, shopkeepers, builders, sanitation officers, and delivery workers. Their families remained locked up in cramped accommodations. It is not surprising that poor people and people of color are dramatically overrepresented in the death statistics.
In response to the shock, many governments dusted off the economic policies implemented after the 2008 crash, but they rapidly proved to be insufficient. This economic collapse is much more comprehensive, the crisis will be much bigger, and bailouts will be much more costly than ever before. Unprecedentedly, central banks have started to provide direct finance to large companies: essentially, they are handing select capitalists “helicopter money” (which, in some cases, was immediately transferred to shareholders as dividends).
To disguise the unseemly spectacle of billionaires — often tax exiles — begging for subsidies from the same exchequer they had previously evaded, some governments have promised to support the incomes of workers, but usually through their employers rather than directly.
In the United States, the federal government will send a one-off measly check (pointedly signed by Donald Trump himself) to all households in order to disguise the staggering handouts being offered to capital. An unprecedented $2 trillion lifeline is bound to escalate as the shutdown continues to hurt profits and the presidential election approaches.
Thatcher’s Nemesis
If the economic implications of the pandemic are certain to be catastrophic, the political implications cannot be anticipated precisely. In the UK, the pandemic unmasked the Conservative Party — and, at a further remove, the ill-fated Coalition government and its predecessor, New Labour — for having attacked social resilience and systematically ground down the NHS.
Even when money was spent in the health service — as was the case during the New Labour years — the goal was to disorganize and slice up the NHS, introduce competition regardless of cost, hollow out the service, and privatize whatever could be sold off, in order to increase the health system’s reliance on the profit motive.
With the pandemic, Conservative sermonizing about the imperative of “fiscal austerity” was obliterated by the evident capacity of the state to create money from nothing and deliver salvation to selected sectors, as long as they were deemed “essential” (which, consequently, was not the case for housing, health, and employment). At the same time, the ideology of individualism was shown to be a fraud because, although there may be opportunities for individual flight from the virus, there can be no individual solutions to the catastrophe.
One person alone can never be safe from an epidemic, or nursed when they fall sick, and who but the state is going to contain the economic meltdown, secure income flows when the economy seizes up, enforce the lockdown, and resource the health service?
As the Left had always known, and the UK prime minister was forced to recognize, there is, after all, such a thing as society. And the inhumanity of capitalism’s profit imperative was unmasked through the mass rejection of its favored policy of “herd immunity,” with its consequent decimation of the non-workers.
Learning the Right Lessons
We can now focus on what the Left should press for. The first priority is to learn the lessons. The health crisis and the economic collapse in the West, compared to much more efficient responses in the East, have demonstrated that radically neoliberal administrations are unable to perform the most basic functions of governance: to protect lives and secure livelihoods.
The pandemic is also likely to be a marker in the transfer of hegemony from West to East. It is plain to see — and cannot be forgotten — that centralized and capable states and a sophisticated manufacturing base matter for people’s lives. This holds true whether those states are more or less democratic (experience shows that the nature of a political regime has little to do with its policy competence). It’s also now evident that, when the chips are down, borders can be closed, and friends can disappear.
The second priority is the imperative to secure life itself. States must secure jobs, incomes, and basic services, including the rapid expansion of the health system. This is not merely for reasons of economic policy, but as part of efficient health policies: guaranteed jobs and incomes will make it possible for more people to stay at home, which will ease the load on the health system, speed up the end of the pandemic, and accelerate the recovery.
In order to do this, the banking system should be nationalized to secure the flow of credit and prevent speculation, and central banks should ensure that there is enough liquidity to keep the economy afloat. Key services should be taken over by the state to ensure that basic needs are served. If the central authorities can give tens of billions of dollars to the airlines, the railways, and supermarket chains, the public might as well own them.
The third priority is to consolidate the rediscovery of collectivity and the irreducible sociability of the human species that has emerged through the strains of the crisis. The Left must stress that the economy is a collective system (“we are the economy!”), that we are bound together as humans, and that public services are essential. This could pave the way for a progressive alternative to neoliberalism, which has now clearly assumed a zombie form.
The fourth priority is the allocation of costs. The economic burden of this crisis will be much higher than that of the financial crisis, and there is no way that public services can, or should, bear this burden. The only way out is through progressive taxation, nationalization, default where necessary, and a new “green” growth strategy.
Out of the Crisis
I am cautiously optimistic that capitalism cannot wash this stain. It is now time to imagine what kind of society can serve the majority, and to avoid the repetition of the disgraceful outcomes that we are experiencing. Instead of the crimes and inefficiencies of neoliberalism, we need progressive taxation, the expansion of public services with built-in spare capacity for emergencies, and a society based on solidarity, human values, and respect for nature.
This is easy to say, and it is unquestionably correct, but the Left has been on the defensive almost everywhere, sometimes for decades, and the pandemic may well lead to authoritarian, racist, and reactionary responses.
To sum up, while the COVID-19 pandemic may have happened by chance, it was not unexpected. Its consequences are much more than scandalous: they are criminal, and the Left must say this loudly and clearly.
Neoliberal capitalism has been exposed for its inhumanity and criminality, and COVID-19 has shown that there can be no health policy without solidarity, industrial policy, and state capacity. This is a desperate fight. We must come out of this crisis with a better society. The Left is needed like never before, and it must rise to the challenge.
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Take It From Me, Voter Fraud Is Part of the GOP Playbook |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=54115"><span class="small">Dan McCready, The New York Times</span></a>
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Saturday, 25 April 2020 12:49 |
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McCready writes: "By now most of us have seen the photos from the Wisconsin primary, where voters had to stand for hours in lines that wrapped around city blocks in cold, pouring rain."
A polling precinct. (photo: News Parliament)
Take It From Me, Voter Fraud Is Part of the GOP Playbook
By Dan McCready, The New York Times
25 April 20
Republicans look the other way when electoral cheating helps them.
 y now most of us have seen the photos from the Wisconsin primary, where voters had to stand for hours in lines that wrapped around city blocks in cold, pouring rain. To exercise what was supposed to be their most sacred democratic right, people had to risk catching the deadly coronavirus — and several did.
To avoid a repeat of the situation and hold a fair election in November, when America may still be in the middle of a pandemic, elections experts and public health officials say we must ramp up voting by mail. Voters on both sides of the aisle agree, as do Democratic and some Republican lawmakers. But mail-in voting has a loud opponent: President Trump. He’s calling for Republicans to fight it, saying it’s a recipe for fraud.
The thing is, fraud isn’t Mr. Trump’s true concern, or the Republican Party’s. I should know. Ballot fraud is extremely rare. But when a case was uncovered in my congressional race in 2018 — orchestrated by my Republican opponent’s campaign — the president and party officials looked the other way. Mr. Trump’s concern is more sinister: Alleging fraud is a cover to rig elections by suppressing Democratic votes.
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RSN: Depraved-Heart Massacre |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=27921"><span class="small">Mort Rosenblum, Reader Supported News</span></a>
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Saturday, 25 April 2020 11:53 |
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Rosenblum writes: "Donald Trump, shaping fingers into a pistol at a 2016 Iowa rally, exulted: 'I could stand in the middle of Fifth Avenue and shoot somebody and wouldn't lose any voters, okay?"
Donald Trump. (photo: Saul Loeb/AFP/Getty Images)
Depraved-Heart Massacre
By Mort Rosenblum, Reader Supported News
25 April 20
 onald Trump, shaping fingers into a pistol at a 2016 Iowa rally, exulted: “I could stand in the middle of Fifth Avenue and shoot somebody and wouldn’t lose any voters, okay?” Today, it is as if he had blasted away in Manhattan with a machine gun.
For two months, he dismissed the clear and present Covid-19 threat, mocking it to crowds as yet another Democratic hoax. “It’s one person from China; we have it totally under control.” True believers put their lives at risk — and everyone else’s.
Now he rejects any blame in daily delusional ravings — fact-free self-focused hubris — as the virus kills in the tens of thousands. His past actions were perfect. His natural gift for science enabled him to see the pandemic coming before anyone.
“Depraved-heart murder,” Wikipedia says, is “a ‘depraved indifference’ to human life” that causes death” whether or not there is explicit intent to kill. It applies if “defendants commit an act even though they know their act runs an unusually high risk of causing death or serious bodily harm to a person.”
The case is clear-cut in America. And by scapegoating the World Health Organization, withholding funds it needs to thwart the pandemic and other killer diseases, Trump extends depraved indifference to an entire planet.
He imperiled the nation he swore to protect, ignoring his experts’ warnings as he fired up crowded rallies, thumbed inane tweets, and golfed. He tried to stop sick U.S. citizens on a ship off California from landing. That, he said, would drive up infection statistics.
After visiting the CDC, Trump told Fox News that experts, and also Vice President Mike Pence, wanted to bring the people to shore, but he disagreed. “I like the numbers being where they are,” he said. “I don’t need to have the numbers double because of one ship that wasn’t our fault.”
He hurled “fake news” insults at a briefing when asked about The New York Times’ April 14 investigation by six seasoned reporters with damning details, leaked documents, and video. Then he showed a shameless propaganda montage, edited so that Maggie Haberman’s words on camera came out as praise for him.
He claims he was the first leader to close borders to Chinese, neglecting to say Americans returning home brought in more virus. That was late January after 38 other countries imposed strict border controls. During February and into March, he continued to mock the threat.
Despite Trump’s repeated assertions, just over 1 percent of Americans have been tested, mostly the seriously sick and medical workers. There is almost no contact tracing. As a result, the actual number of cases is far higher than official figures report.
Known cases are fast closing in on one million, one third of the world total. Nearly 50,000 deaths, 25 times the number Osama Bin Laden killed on 9/11, are a fourth of the global toll. This in a country that makes up 4.25 percent of the world’s population.
America now tests 150,000 people a day. A study by Harvard specialists says that should be six times higher now and then increase by at least 10 times more during the summer before a likely resurgence in late fall when temperatures drop.
Against all but unanimous scientific advice, Trump is pushing hard to reopen for business. “People want to return to work,” he repeats, not adding that his reelection hinges on the economy. He urges his base to “liberate” swing states with Democratic governors.
Georgia, which lags far behind safety guidelines, is opening even massage salons, tattoo parlors, bowling alleys, and theaters. Governor Brian Kemp, a staunch Republican, forces mayors in Atlanta and Albany to comply despite vehement objections. People from other states can drive in to join crowds at restaurants and beaches.
Even Germany, a model of quick testing, containment, and low mortality, is restoring isolation after a cautious reopening. Pathogens are like spermatozoa. It only takes one to slip past protection.
When a novel coronavirus appears, unfazed by antibiotics or vaccines, urgent broad testing is crucial to find infected people so teams can track down their recent contacts. Even if borders are sealed to foreigners, returning citizens bring it home.
But Trump refused German-made tests that WHO provided to Asian and European countries to curb infections and prevent spikes that overwhelm hospitals. Tests also reassure fearful people when results are negative. This is about humans, not statistics.
Bungling and bureaucracy delayed U.S.-made tests for nearly two months. Trump declined to invoke the Defense Production Act, so profiteers sold vital necessities to the highest bidder. States compete with the federal government for overseas suppliers.
Meantime, Trump forges ahead on his devastating projects: The Wall, pipelines, plunder of national parks and wilderness. He is reversing limits on air and water pollution that will kill more people in the long run than Covid-19.
He claims absolute power, packing the courts at blinding speed and raising fears that he may attempt to delay November elections. Authoritarians elsewhere use the pandemic to blot out democracy. Terrorists seize the moment to recruit and attack.
After Congress voted to spend $2.2 trillion as emergency relief, Trump fired the inspector general charged with preventing corporate insiders and favored friends from creaming off funds meant for desperate families and struggling small businesses.
A recent exchange at the daily unhinged campaign-rally press briefing defines him.
Yamiche Alcindor of PBS said, “A man’s family got sick because they listened to you about the coronavirus,” and she asked, “Are you concerned you could have gotten people sick?”
He replied, “And a lot of people love Trump, right? A lot of people love me, right? To the best of my knowledge, I won.”
A few days ago, a reporter recalled that Mike Pence promised there would be 4 million new tests by the end of the week, which is more than the total so far. He asked what happened. Trump, oozing condescension, said, “I’ll say it for the fifth time. We have tested more than any country.”
An NBC poll found only 36 percent of Americans trust Trump to manage Covid-19, just over half of those who trust Anthony Fauci. Clearly miffed at being upstaged, Trump now eclipses him at briefings. He had to disgrace himself by recanting his assessment on CNN: Had the government acted more effectively, lives would have been saved.
Still, the NBC poll showed Trump’s approval ratings are unchanged from April 2019: 46 percent for, 51 percent against.
Rejecting bipartisan harmony, Trump heaps scorn on Democrats. He obliges states to beg for federal resources as if they were his own. He claimed absolute power, but then backpedaled. He can take credit for any successes and blame governors for all failures.
Trump pushed hard for hydroxychloroquine, an anti-malarial used for lupus and arthritis. It can’t hurt, he said. That spiked the price and limited supply to people who depended on it. Initial studies suggest it is useless against Covid-19 and may increase the risk of death.
After first praising Xi Jinping for transparency, Trump now blames the pandemic on China because it hid the truth. Of course, China is secretive and punishes people for speaking out. It’s China. The United States has a higher standard.
He says Barack Obama left no emergency stockpile, a bald lie. Even if that were true, he had three years to restock it. He says he inherited useless tests. As a very stable genius, he might have found a way to foresee a novel coronavirus that surfaced in late 2019.
He calls the outbreak a surprise to everyone. Who knew this might happen? In fact, he was blindsided because he dismantled Obama’s extensive global alert network, removed the health expert from the NSC, and hobbled U.S. intelligence.
Trump’s America-first approach shuns cooperation with well-run allies. Die Welt am Sonntag reported that he offered $1 billion for rights to a vaccine being developed if it would be exclusive to the United States.
He also ignores outbreaks in poor countries already facing collapsed food supply. When the Covid-19 pandemic is eventually blunted, it may well live on, endemic in regions from which refugees are forced to flee toward Europe and America.
This horrifies Michel Lavollay, a source I have trusted for 40 years, who knows as much as anyone about pandemics. He was a French volunteer doctor before linking up with Jonathan Mann, an American epidemiologist, to focus on HIV-AIDS.
When AIDS began to run wild in the 1980s, WHO focused on finding a medical magic bullet. But Mann, who did the first AIDS research in the Congo, knew the urgent priority was to stop people from exposure to it.
Lavollay supervised testing when Mann set up the U.N. Global Program on AIDS in 2000. Later, he saw diplomacy from the inside as the French Embassy health attaché in Washington. As a U.N. adviser, he was a confidant of Kofi Annan and Richard Holbrooke. Then he worked with Jonas Salk, who made the polio vaccine available to everyone. As Salk put it, “You don’t patent the sun.”
This, Lavollay told me, is the first global health threat in two decades not being countered by governments working together with volunteer agencies and private companies coordinated by the U.N. with America playing a lead role.
“No one trusts the United States anymore,” Lavollay said. “It’s impossible to deal with Trump. Governments and companies fight with each other, driving up costs. Without cooperation, a free-for-all and privatization will take an enormous toll.”
After talking with him, I watched Trump head off into an unhinged ramble about how much foreign aid America squanders on Africa. He stumbled over the acronym, PEPFAR, clearly new to him. “You don’t know about this,” he told reporters. “Nobody does.”
In fact, most of them do. George W. Bush launched the President’s Emergency Plan for AIDS Relief in 2003, which funneled $80 billion into sub-Saharan Africa. By 2018, it had saved more than 17 million lives and kept countless family units from falling apart.
It was not what Trump calls needless charity to places he terms “shitholes.” For all of his faults, Bush knew that unless Africans and other impoverished people were helped to give their kids a shot at survival, “security” anywhere was out of the question.
Today, it is cruel as well as stupid not to cooperate globally against a virulent plague that crosses borders and oceans indiscriminately, exposing unfathomable numbers to lingering, lonely death. That sounds like a definition of depraved-heart murder.
Mort Rosenblum has reported from seven continents as Associated Press special correspondent, edited the International Herald Tribune in Paris, and written 14 books on subjects ranging from global geopolitics to chocolate. He now runs MortReport.org.
Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.
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FOCUS: The Oil Industry Is Dying Right Now. Don't Resuscitate It. |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=54113"><span class="small">Chris Saltmarsh, Jacobin</span></a>
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Saturday, 25 April 2020 11:29 |
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Saltmarsh writes: "The massive oil price crash we've seen this week is an opportunity for governments to do what we have long needed to do: keep the remaining fossil fuels in the ground and invest in a Green New Deal to save the planet and stimulate the economy."
'As a consequence of fossil fuels, the impacts of climate breakdown are already becoming more frequent, severe, and geographically spread to new places.' (photo: Jacobin)
The Oil Industry Is Dying Right Now. Don't Resuscitate It.
By Chris Saltmarsh, Jacobin
25 April 20
The massive oil price crash we've seen this week is an opportunity for governments to do what we have long needed to do: keep the remaining fossil fuels in the ground and invest in a Green New Deal to save the planet and stimulate the economy.
 n April 20, prices for a barrel of US oil dropped so low that traders would actually pay you to take the asset off their hands. At its lowest point, it was priced at -$37.63. The problem that caused such a sharp drop in prices in this instance was storage capacity. As the BBC helpfully explained, “Oil is traded on its future price and May futures contracts are due to expire on Tuesday [April 21]. Traders were keen to offload those holdings to avoid having to take delivery of the oil and incur storage costs.”
The financialization of the economy is predicated on real-world assets that are used for real-world things, like oil for providing energy, being traded on financial markets for speculative investors to make a profit. Usually, this passing around happens on a computer, with the owner of however many barrels of oil never having to deal with them as physical entities. This dramatic oil price drop happened because traders realized that the collapse in demand meant they may actually have to receive and store the asset. I suspect that trading companies like Barclays and Citigroup don’t have abundant oil barrel storage space in the basement of their headquarters.
Just as the Great Recession of 2008 was instigated by financial markets being impacted by pesky real-world events — in that case, people defaulting on their mortgages — here we see that shocks to the real economy will be passed on to the financial sector. The COVID-19 pandemic has forced large sections of the economy to grind to a halt, such that we need less oil than usual due to reduced transport and production.
But this crisis isn’t just a momentary blip. Goldman Sachs has said that the oil market remains “massively oversupplied” and that that will continue to push prices down. Howie Lee, an economist at the OCBC Bank in Singapore, suggested that the lack of storage for oil won’t improve based on current conditions. Both agree with ING Economics’s analysis that a further fall in prices can only be avoided with either a reduction in supply (if the US cuts oil production) or a boost in demand (getting the economy running again). In practice, this means a planned contraction of the oil industry in line with the wider economy.
The real question is, what happens after this contraction? As a consequence of fossil fuels, the impacts of climate breakdown are already becoming more frequent, severe, and geographically spread to new places. More and more, we will see extreme weather events, flooding, and drought disrupt business as usual around the world. Cyclone Idai destroyed 90 percent of the city of Beira when it ripped through Mozambique in 2019. Though the details are different from COVID-19, economies can no longer rely on long stretches of relatively undisturbed “normality.” That’s why crises have to provide us with opportunities to rethink how society operates — and no sector is more urgent in this regard than energy production.
Green New Deal
Calls for a Green New Deal, which over the last year have grown in both policy detail and popular support, were made for moments like this. The Green New Deal is a plan for a government-led program of investment and regulation to transform the economy to eliminate inequality, guarantee good and secure jobs, and bring emissions down to zero.
The plan is the practical articulation of a long-overdue politics that brings together climate and workers’ justice as united in the need to confront capitalism and build a new democratic economy. Amid this drop in oil price, Deirdre Michie, the CEO of Oil & Gas UK, makes clear that although the US market operates differently than the UK’s, the impact will be felt: “Ours is not just a trading market; every penny lost spells more uncertainty over jobs.”
The oil industry is an increasingly unreliable source of secure employment for workers. Crises like these will persist, and jobs will become at even greater risk, as the industry is forced to ratchet down output. Workers can be sure that when the management of this contradiction is left to CEOs and shareholders looking primarily to protect their profits, guaranteeing jobs won’t be a priority. That’s why we can’t allow a conflict between protecting good jobs and saving the climate to emerge.
We have yet to understand the full extent of the looming unemployment crisis we will face in the recovery from the COVID-19 pandemic. In the United States, a record 3.3 million people filed for unemployment during one week in March alone. Whether businesses can survive the current economic stagnation will influence how structural mass unemployment becomes, but there will surely be lots of people chasing not very many jobs quite soon.
This is the moment when the principles of a Green New Deal can be put into action. Governments can themselves lead the recovery by investing to create new public industries that address the unemployment crisis and the climate crisis at the same time. We need a massively expanded renewables sector to supplant oil, gas, and coal. The initial construction of that industry and infrastructure will provide a medium-term boost to employment while laying the groundwork for the sustainable economy of the future.
Ensuring these new industries are made up of public companies means governments can guarantee that jobs are well paid, secure, and unionized. As well as renewables, governments should be looking to use this moment to invest in securing society and the economy against future shocks precipitated by climate breakdown. Emergency services require investment to be beefed up to respond to the growing threats of climate impacts.
This pandemic has exposed the fragility of public services like health care when dealing with new crises (as if they weren’t put under enough strain in normal times). Much of our physical infrastructure like buildings, homes, and roads will not survive extreme weather events and must be upgraded. All of this requires government investment, which will immediately guarantee jobs where the oil industry cannot, and begin adapting our economy to the climate chaos that is certain to come.
Demand the Inevitable
The oil industry has already agreed reductions in output of around 10 percent amid collapsing demand, but this is being managed by the industry itself and has caused infighting among producers. If there’s one thing the last four decades has shown us, we cannot trust this industry to manage itself. It was companies like Exxon and Shell that knew first that their extractive industries were causing climate change. Not only did they not tell the public, they went on to fund climate change denial and lobby against the most modest climate policies.
Significantly contracting oil output is now inevitable. Looking at both the crisis of demand exemplified by this price drop and worsening climate breakdown driven by extracting and burning oil and other fossil fuels, it is a question of when rather than if. Oil producers will manage that reduction reluctantly, safeguarding their profits as much as possible along the way. They won’t be close to quick enough if we are to bring emissions down on the timescale needed to avoid catastrophic climate change that develops beyond human control.
At this juncture, governments must be prepared to step in and introduce strict regulations to manage the contraction of the oil industry through the state. We need a managed windup of fossil fuel production and just transition guarantees for all affected workers globally. Where governments continue to subsidize the fossil fuel industry (through tax breaks, trade restrictions, or direct transfers), these must end immediately. There is no sense in a government continuing to inflate an industry that must be quickly contracted.
Exploration for new fossil fuels must end immediately, too. Investing to discover new reserves locks the industry into extracting and then burning them to generate sufficient returns to cover those costs. Finally, governments should end the construction of all new fossil fuel infrastructure such as oil pipelines. These continue to pop up around the world with the active support of leaders like Donald Trump, Justin Trudeau, and the European Commission. As they build this infrastructure, they expand capacity for transporting oil. By expanding capacity, you lock the economy into increased production so there is oil to flow through those pipelines.
As with exploration, production must be increased to make the initial investment worthwhile. If it is inevitable that production will be contracted, why is there so much investment in expanding it? Even with the end in sight, the fossil fuel industry is squeezing every last drop of profit from the planet. If we care about maintaining a livable climate, we must demand the inevitable happen now.
Nationalize the Oil Industry
In responding to the COVID-19 pandemic, climate crisis, and the oil price drop, our priorities as a society should be people and planet, not the profits of fossil capital. President Trump has already said his government will buy oil for national reserves in response to the price drop, but we need a different kind of government intervention. This industry has had too many last chances. It does not deserve to be resuscitated again. Governments should plan to nationalize it — to avoid further short-term shocks and manage its decline in the medium term.
The collapse in the price of oil is an opportune moment for governments committed to an energy transition to buy it up and set a sustainable course for the future. Oil stocks still haven’t recovered from a slump at the end of March that took prices to new lows — and it’s likely the latest crisis will push them lower still. With fossil fuel company shares just as volatile as oil prices, governments should get ready to take advantage of further slumps to buy up controlling shares in the companies.
There is only so far investment in competitive renewable industries and regulation will go. If we are to wind down the fossil fuel industry and guarantee justice for affected workers and communities, we will have to bring the industry into public ownership to manage its contraction as part of a planned transition. Liberating the industry from its current drive toward profit is the only way to ensure it does not throw all its remaining resources at undermining a just transition and a Green New Deal.
This strategy is the only way to ensure that energy is clean, treated as a public good, and universally provided as a basic right by public companies. As we recover from the COVID-19 pandemic, we cannot go back to normal. There should be no place for the rogue oil industry in the future we build for ourselves.
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ovid-19 has killed tens of thousands of Americans, and will clearly kill many more. The lockdown needed to contain the coronavirus is causing an economic slump several times as deep as the Great Recession.
