Wednesday, September 2, 2020
The profits of August
https://www.wsws.org/en/articles/2020/09/02/pers-s02.html?pk_campaign=newsletter&pk_kwd=wsws
2 September 2020
Over 30,000 people died in the US last month from the COVID-19 pandemic, while corporations carried out mass layoffs amid soaring unemployment, hunger and poverty.
At the same time, the US stock market recorded its biggest increase for the month since 1986. All three major American stock indexes have risen for five consecutive months since plunging in mid-March. The benchmark S&P 500 index has risen 65 percent, its biggest five-month gain since 1938.
Last month saw the wealth of Amazon chief Jeff Bezos climb to $200 billion. Tesla became the world’s biggest car company by share value, as its market capitalization rose to $465 billion, taking the personal fortune of its chief executive, Elon Musk, to more than $100 billion. Apple became the first company in the world with a market capitalization of more than $2 trillion.
Since the Federal Reserve’s bailout of major corporations in March, Apple’s stock has more than doubled, while Tesla’s stock has risen more than six-fold.
These figures underscore the nature of the Wall Street bonanza. It is taking the form of what has been called a “K-shaped recovery,” in which a group of corporate giants enjoy massive profits, driven by the run-up in stock prices, while most of the economy stagnates.
In 1914, the rolling out of the guns of August at the outbreak of World War I marked the start of a process that saw arms manufacturers rake in millions in profits amid death and destruction, the like of which had never been seen.
Likewise, the COVID-19 pandemic, which has brought devastation to the working masses in the US and around the world, has served as the occasion for all arms of the capitalist state to be mobilised to organise the greatest-ever redistribution of wealth to the heights of society.
There are two immediate causes for the massive stock run-up in August. First, the Federal Reserve carried out a far-reaching change in how it evaluates the risk of inflation, with the aim of ensuring ultra-low interest rates in perpetuity.
The announcement by the Fed last week that it was changing its basic monetary policy framework to aim for an “average” inflation rate of two percent meant that it could refrain from raising rates even if inflation hit and surpassed the two percent mark, allowing it to continue injecting money into the financial markets through asset purchases. In other words, as the Wall Street Journal put it, “Low Rates Forever.”
But even more important was the cutoff of the weekly $600 extended unemployment benefit provided to unemployed US workers under the CARES Act passed in March, which both the Democratic and Republican parties simply allowed to expire. Bypassing Congress’s exclusive constitutional power to tax and spend, Trump signed an executive order last month restoring, for a limited period, part of the weekly benefit; but the move was largely symbolic, with most workers getting no additional relief.
The Trump administration, backed by the Democrats, has provided some $2 trillion to bail out the corporations while cutting off what limited aid was provided to workers. At the same time, the Fed has funnelled $4 trillion into the financial system, functioning as the backstop for every financial market.
These measures are being accompanied by a murderous assault on the working class. The policy of governments around the world, spearheaded by the Trump administration, is to force workers back to work, no matter what the dangers to their health and lives, in order that profit accumulation can continue.
The fate of millions of workers who face destitution, including the prospect of being evicted in the coming weeks, is ignored. Democratic presidential candidate Joe Biden did not even bother to mention the cutoff of emergency unemployment benefits it in a major speech he delivered this week.
This is because the cutting off of federal aid directly serves the interests of the corporations and the financial aristocracy, whom the Democrats and Republicans serve.
In the period leading up to the pandemic, concerns were growing that the labour market was becoming “tight.” The COVID-19 outbreak has been seized upon to solve that problem. It has opened up the way for corporations to proceed with restructuring operations, based on making permanent what were initially announced as temporary layoffs, as well as lowering wages for those who remain and intensifying their exploitation.
While the orgy of speculation on Wall Street is hailed by Trump as indicating the power and strength of US capitalism, the run-up of the markets is an indication not of strength, but weakness.
In the post-World War II period, American and world capitalism rested on the strength of the US dollar. But the American dollar is being undermined by the endless supply of cheap money by the Fed. At the end of July, Goldman Sachs warned there were “real concerns” about the longevity of the US dollar as the world reserve currency, as well as the stability of the entire international monetary system, as governments debased their fiat currencies. These warnings have proliferated in the month since.
US capitalism is confronted by the confluence of mounting social, economic and political crises and the growth of social opposition centred in the working class. Every measure taken by the ruling class to respond to the crisis, grounded in the class interests of a parasitic oligarchy, has the effect only of exacerbating the crisis.
Up to this point, the response to the pandemic has been dominated by the social prerogatives of the ruling class. But another social force is entering onto the scene: the working class, which is increasingly coming into struggle against the ruling elite’s back-to-work campaign.
Capitalism’s homicidal response to the COVID-19 pandemic has exposed this bankrupt social order before the eyes of the entire world. As workers enter into struggle, they will take up the demand for the expropriation of the capitalist class and the socialist reorganization of society.
Nick Beams
Postal Banking: Brought to You by JPMorgan Chase?
Raul Carrillo August 31, 2020
https://citizentruth.org/postal-banking-brought-to-you-by-jpmorgan-chase/
The largest Wall Street bank is reportedly in discussions with the U.S. Postal Service for the exclusive right to solicit postal banking customers.
(Common Dreams) Imagine if activists and elected officials were clamoring for emergency provision of food and McDonald’s offered to place a drive-thru window in every post office. Calling it #postalfood. That makes as much sense as JPMorgan Chase’s recent attempt to place its own ATMs in every post office and call it #postalbanking.
According to recent reports, JPMorgan Chase — the largest bank in the United States, with $3.2 trillion of assets — has offered to lease space from USPS in exchange for the “exclusive right” to solicit postal banking customers.
First off, let’s be clear: this is not “postal banking.” As Mehrsa Baradaran told Fast Company right after the news broke, “having a private middleman defeats the entire purpose of postal banking, which is a public bank competing against banks like JPMorgan Chase.”
Although some advocates have discussed ways private sector entities might facilitate postal banking — aiding in the provision of savings and checking accounts, electronic money transfers, cash and coin conversion, bill payment services, etc. — most proposals envision USPS, in conjunction with the Federal Reserve or the Treasury Department, taking the lead and retaining control.
That’s because postal banking is about building on the core fact that USPS is legally required to serve everyone at uniform price and quality, without centering the profit motive…like JPMorgan Chase does. Even if this Wall Street bank were to successfully place an ATM in every post office branch, people without the appropriate accounts would still be unable to use them. And people without JPMorgan Chase accounts wouldn’t be able to use the ATM without paying higher fees.
Although many advocates envision postal branches housing ATMs, the plan would entail free usage, at least for people using Treasury Direct Express cards and other government payment services. From a financial inclusion standpoint, JPMorgan Chase’s proposal accomplishes nothing — except for giving an already large and powerful bank an unfair advantage.
Secondly, the involvement of a multinational bank complicates the privacy and security dimensions of postal banking. As a general rule, unlike private businesses, USPS only collects information necessary to satisfy a statute or executive order. Legal firewalls prevent USPS from sharing information with other government agencies, to say nothing of third party corporations. But if a private bank has access to the data, these protections collapse.
Finally, experts at the Action Center for Race and the Economy (ACRE), a member of the Take on Wall Street coalition, have pointed out, JPMorgan Chase has a particularly troubling history when it comes to racial discrimination. The bank has historically refused to provide proper branch services in immigrant and low-income neighborhoods of color in major cities. It has been the fossil fuel industry’s biggest backer. The trade associations that represent them and other big banks have donated tens of thousands of dollars to the campaigns of white supremacist Congressional candidates.
Private-sector partnerships might save the USPS some money. They might not. But revenue generation is not the primary point of postal banking. The point is the people. Wall Street has consistently opposed the return of postal banking since its destruction in the 1960s. JPMorgan Chase and other nefarious actors are attempting to prevent competition before it even forms. The 2020 Democratic Party Platform and Biden-Sanders Unity Task Force recommendations both call for postal banking. But they also call on policymakers to separate retail banking institutions from more risky investments and protect consumers from high rates, onerous fees, inequitable credit reporting, and other harms. Allowing a multinational megabank like JPMorgan Chase to hawk its own products within public infrastructure only undermines these goals.
Facebook’s Business Model Thrives on the Virality of Hate
Prabir Purkayastha August 31, 2020
https://citizentruth.org/facebooks-business-model-thrives-on-the-virality-of-hate/
The problem of hate news is built into the genes of big digital monopolies like Facebook. We need to break up these monopolies and regulate them as the new public utilities of the digital age.
A recent Wall Street Journal (WSJ) article, “Facebook’s Hate-Speech Rules Collide With Indian Politics,” has blown the lid off Facebook’s unholy alliance with the Bharatiya Janata Party (BJP), the right-wing ruling party in India.
In the August 14 article, WSJ reporters Newley Purnell and Jeff Horwitz detail how Ankhi Das, Facebook’s high-flying public policy director for India and South and Central Asia, blocked action against the ruling BJP party leaders. Facebook had tagged these leaders internally as promoting “hate speech” and “dangerous” and with the potential to cause, as Purnell and Horwitz write, “real-world violence.” The reason Das reportedly gave for letting these violations of Facebook’s policy go unpunished was that such action would harm Facebook’s business in India.
Facebook also has recently invested $5.7 billion in leading Indian telecom company Reliance Jio for 9.99 percent of its shares—one of the largest investments ever by any tech company for a minority stake. The largest number of Facebook and WhatsApp users in the world are from India, with Facebook having more than 300 million and WhatsApp in excess of 400 million users. Facebook bought WhatsApp for $19 billion in 2014 and has business offerings on this platform, whose rules of engagement are completely opaque. Even more than Facebook, WhatsApp has been the major social media platform for the BJP and its troll army to spread disinformation, as it was for President Jair Bolsonaro in Brazil.
On August 21, Horwitz and Purnell wrote that Facebook has subsequently come under attack internally for its failure to address violations of its hate speech policy in India: “Facebook employees are pressing the company’s leadership to review its handling of hate speech in India, saying [in a letter addressed to ‘FB Leadership’ that] the company has tolerated toxic content by prominent political figures.”
This is not the first time Facebook’s sheltering of hate speech and divisive right-wing figures has been exposed. In a 2017 article for Bloomberg, Lauren Etter, Vernon Silver, and Sarah Frier wrote that Facebook “actively works with political parties and leaders including those who use the platform to stifle opposition—sometimes with the aid of ‘troll armies’ that spread misinformation and extremist ideologies.” They also wrote that “a little-known Facebook global government and politics team… led from Washington by Katie Harbath, a former Republican digital strategist who worked on former New York Mayor Rudy Giuliani’s 2008 presidential campaign,” has helped specific political parties “from India and Brazil to Germany and the U.K.—the unit’s employees have become de facto campaign workers.” In 2018, a five-article series for Newsclick by Cyril Sam and Paranjoy Guha Thakurta ahead of India’s 2019 general elections investigated the close ties between Facebook executives and the BJP, particularly Prime Minister Narendra Modi’s team, and found that the ties went far beyond Facebook’s relationships with other political parties in India.
The August 14 WSJ article identified three prominent BJP figures whose Facebook posts included hate speech: T. Raja Singh, a state legislator from Telangana, had threatened to kill Muslims who ate cows and to shoot Rohingyas, Muslim refugees fleeing Myanmar; Anantkumar Hegde, a member of Parliament from Karnataka, posted cartoons and essays on Muslims spreading “Corona Jihad.” (The WSJ reported that after it asked Facebook about some of Singh’s and Hegde’s posts, “Facebook deleted some of… them” and “said Mr. Singh no longer is permitted to have an official, verified account, designated with a blue check mark badge.” Similarly, “Facebook took no action until the Journal sought comment from the company about… [Hegde’s] ‘Corona Jihad’ posts.”) Kapil Mishra, a former Delhi legislator, played an active role in inciting violent riots earlier this year in New Delhi, for which he has been widely condemned by opposition parties, independent groups, the press, and even (though not by name) Facebook CEO Mark Zuckerberg. These three were among BJP figures flagged internally by Facebook’s team implementing its policy on “Dangerous Individuals and Organizations” as worthy of a permanent ban, as was done in other countries including the United States.
The WSJ coverage may make us believe that the problem in Facebook is an individual’s fault, that of Ankhi Das, its policy head for India. The real issue goes far deeper. The power of digital monopolies—Google, Facebook, Amazon, Apple, and Microsoft—is not merely determined by their wealth. The social media platforms—Google and Facebook—have taken over the media space, not only in terms of advertising revenue, the lifeblood of the media under capitalism, but also in terms of influence. The greater the engagement that you can generate, the greater the likelihood of gaining a significant viewership and following. Purnell and Horwitz reported that “within two months of the video of the speech” by Kapil Mishra—in which he incited physical violence in clearing protesters—“being posted, the engagement for Mr. Mishra’s Facebook page grew from a couple hundred thousand interactions a month to more than 2.5 million.”
Earlier, it was widely accepted that the press—what Thomas Carlyle had called the Fourth Estate in a democracy—has a social role and therefore needs to be regulated for public good. The Press Council of India, however weak it might be in actual practice, has a code that the press is expected to follow. In the U.S., cross-holdings between different kinds of media are regulated.
There are two issues we need to recognize. The first is that the media is not just any other business but is important for democracy. And the second is that monopoly by itself is also a danger to democracy. U.S. Supreme Court Judge Louis Brandeis is widely quoted to have said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
More than 75 years after Brandeis lived, his words on monopoly were cited in the congressional hearing in July with the CEOs of Google, Amazon, Facebook, and Apple. The combined market value of the four companies is nearly $5 trillion. If we compare this to the GDPs of entire countries, they come out above Germany, and behind only the U.S., China and Japan. It is this market power that gives them the ability to bend, or in the case of weaker economies, twist out of shape, their legal and regulatory structures.
Unfortunately, the interests of tech companies with this much capital are less and less often aligning with the interests of society. This is becoming clearest with the case of Facebook, as 98.5 percent of its income is from advertisements. Advertisements depend on the number of views, and the virality of posts and engagement are the main drivers of Facebook’s revenue model. Facebook has discovered, as MIT researchers did, that hate and fake news posts drive virality, and therefore it has no incentive to curb such posts. While it has professed lip service for community standards and healthy discourse, the driving force of its business empire comes from its need to have more eyeballs, and therefore it feeds off hate and fake news. An internal study had found that 64 percent of members who had joined extremist groups did so thanks to Facebook’s recommendation tools.
This pathology of social media is not limited to Facebook. Google’s search engine has shown similar problems, as has its image recognition algorithms. But undoubtedly, Facebook has been the leader in spreading hate politics and fake news in the world.
What Trump, Bolsonaro and Modi have in common, apart from their right-wing politics, is their reliance on Facebook and WhatsApp in their campaigns. Though we have seen the phenomena of troll TV—Fox News in the U.S. and Republic TV in India—penetrating the traditional media space, WhatsApp and Facebook have been the primary playground of trolls, aided by Facebook’s algorithms. While it may seem that the right understands digital platforms better than others, and that is why it has had so much success with them, there is increasing evidence that the support that Facebook provides to various right-wing figures and hate speech is not an accident but a part of its strategy.
In the language of new tech, hate speech is not a bug in the systems of social media but a basic feature. The problem of hate speech cannot be solved by politely petitioning the Zuckerbergs of digital monopoly platforms to behave more responsibly. It needs, at the very least, breaking up their monopolies and regulating them as public utilities.
Subscribe to:
Comments (Atom)