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Ecomonic Crisis & Atlantica - modified speaking notes, "Getting out of the Storm"

Blog posts reflect the views of their authors.

This is the first part of my portion of the presentation that me and Jason Fraser put together, Getting out of the Storm:

ATLANTICA

What is Atlantica?

Atlantica is an in-development "free trade" zone & transportation and energy corridor that encompasses all the Atlantic provinces, Quebec south of the St. Lawrence River, and the states of Maine, New Hampshire, Vermont and upstate New York. The design of Atlantica is to make the region more of a gateway for the delivery of massive amounts of commodities and energy to the United States from cheap Asian production markets.

The concept of Atlantica was reportedly introduced by Atlantic Institute for Market Studies' (AIMS) president Brian Lee Crowley in a 2001 speech to the Atlantic Canadian premiers and New England Governors, but it has only been aggressively promoted since approximately 2005. The proponents include AIMS, the Atlantic Provinces Chamber of Commerce (APCC), the Eastern Maine Development Corporation, and the largest corporations in the region, including Irving (NB-based), Emera and Cianbro (Maine-based construction giant). Governments are also lining up support behind the backs of the people they claim to represent.

Crowley, speech to Halifax Shipping Association, April 28, 2008)

Notice his excited adjectives in describing global trade ...

“It is not the industrial production of Atlantica that is straining to cross the border, but the industrial might of China, India and the Asian Tigers. It is straining to cross the border for the reasons that people in this room already know well: the emergence of China and India as the workshops of the world, the mighty wave of manufactures heading from their factories to our consumers, the congestion of the west coast ports under this onslaught, the growth of the giant ships carrying this burgeoning cargo who have reached the point where they can no longer pass through the Panama Canal to reach east coast ports from Asia and must instead borrow the Suez Route, and our strategic position as a deepwater wharf jutting into the north Atlantic ...”

For more in-depth information about Atlantica and broader connections, see no-atlantica.org, look in the downloads section for … Deconstructing Atlantica

Ok. Now some people may be wondering why you don’t often hear about Atlantica at all. But you may have heard about the Atlantic Gateway. How are these different? Well, they’re not really different concepts in the big picture. One is just a part of the other. The Atlantic Gateway is the Atlantic Canada portion of the corridor, but Atlantica includes the US portion as well. Now here’s a description of the Gateway from NS corporate Premier, Rodney MacDonald (http://theatlanticgateway.ca/premiersmessage.htm)

So it’s really all a part of Atlantica, so we’ll just use this name for the remainder of the presentation.

ECONOMIC CRISIS

We’ll be breaking down what sorts of projects Atlantica proposes to bring further along, and detail the environmental and social impacts.

But before we get into that, I’m going to get into some background on the economic crisis, which emphasizes why Atlantica is a road to disaster.

Here's some useful context to begin with: Currently the U.S. contains 5 % of the world’s population, but it consumes 30% of the world’s resources. The proponents of Atlantica wish this to grow, obviously.

Let’s start with the scenario in Halifax in the present. Last year, the Halifax Southend port handled 12,238,908 metric tonnes of cargo. Provincial and federal governments want to increase this volume. As we know, the activity within the ports is highly dependent on the US economy. As of June 2008, the port of Halifax authority acknowledged a decrease in consumer spending on commodities south of the border.

But we need to see what this means in the bigger picture. Let's start with something people have been hearing about, job losses. And this is just a snapshot, focusing on the areas most relevant to this presentation’s subject.

In China, in January alone, there were 40 million jobs lost, and speculation that things will get worse. In the US, there have been 500,000 – 600,000 jobs lost in each of the last several months. In Canada, there have been over 340,000 jobs lost since October, 129,000 lost in January alone.

Is this bleeding likely to stop any time soon? US economists don't think so.

U.S. job losses: economist reaction
Posted: April 03, 2009, 2:50 PM by Alia McMullen
Economics, Economy, Employment

Since the recession began in December 2007, the U.S. economy has lost 5.13 million jobs, of which 72% has occurred in the past six months.

Joshua Shapiro, Chief U.S. Economist, MFR
"We expect labor market conditions to remain appalling for many months to come, which will reinforce the decline in consumer spending that is occurring for other reasons as well.

Sal Guatieri, Senior Economist, BMO Capital Markets
"The job losses were widespread, and show only the slightest signs of slowing. Construction, manufacturing, business and financial services, and retail outlets all continue to bleed workers in big numbers...

Roots of Economic Crisis

It's important to identify root causes because these show how Atlantica only exacerbates the conditions that led to the crisis. But before diving into the economic crisis root causes, lets' remind ourselves of what Atlantica's function is:

To act as a gateway to bring resources into the US, largely from Asia.

Alright, some roots...

The present crisis – and there have been others -- didn’t just start, arising out of nowhere, due to a few bad apples make some rotten trades, as is being implied.

For a lot more theoretical depth about some of this stuff, see kapitalism 101, a set of detailed, relatively easy to understands videos about capitalism, the economic crisis and related subjects. They can be found at: kapitalism101.wordpress.com

To understand the roots of the present economic crisis, a good period to focus some attention is during the 1970s.

At that time, you can see that wages in Canada and the US, and around the world essentially, becoming stagnant … they're not going up to meet the increasing costs of living.

This is a really important backdrop.

But we have to go back a bit further to see what's behind this trend.

Here's some more background … Post – world war II, there was a boom in capitalism. Companies began to grow during the years of post war construction …and population booms were seen everywhere. In the US and Canada, for example, intense individualism was promoted, which was actually part of the anti-communism message. Single family homes in newly developed suburbs were built, helping egg people on to buy more crap, including cars.

Watch “The End of Suburbia” to get more into the packaging of this kind of lifestyle.

Basically, there was a mass production of crap for people to buy a process pushed by rising corporations so they could keep growing their profits. Capitalists produce things, then try and force/entice people to buy them. The capitalists will tell us that they produce what we ask them to, that demand drives supply, but this is not how it happens at all -- that view contradicts all that is happening and has been happening to spur on the crisis.

What was happening was that companies, such as auto manufacturers – the same ones receiving those big bailouts today – were all producing stuff that's essentially the same, all fighting for consumer dollars. What they were all doing was trying to reduce their costs, particularly labour costs which are the most significant, so that they can undercut their competitors.

So, you have more and more machinery replacing human labour and firms competing with each other to produce more crap faster.

Two things are happening to cause profits to stagnate;

1) An overaccumulation of stuff because consumer markets were becoming saturated. They can’t find new markets fast enough.

2) Additionally, the machines, which included massive, mechanized factories, were extremely expensive, and kept having to be upgraded to keep up with competitors. Companies threw themselves into debt in order to get this machinery. The US auto manufacturer crisis in the 1970s is a perfect example of this

So, the profits are stuck because the products are stuck in bottlenecks. The machines grind to a halt. How the hell are they ever going to pay back the money for those machines?!

One of the attempted “solutions” was to re-locate production to countries with lower labour standards, where people were forced to work more for less. of course, people don't just accept these conditions. They are forced into them:

1) Financial pressure from 1st onto 3rd world – See the history of the World Bank and IMF & Structural adjustment programs; foreign investment into poorer countries comes with conditions that rich countries' corporations get cheap labour.

2) Military pressure - history of the US-based United Fruit Company in Latin America is a very good case study of how guns are used to keep workers down.

Remember the line by Crowley about Asia representing the workshops of the world. What he is really talking about is sweatshops.

The other “solution” to the profit crisis is the most significant one, was to tease people to spend more money than they had - remember, their wages are not going up – to keeping buying stuff, which is increasingly being produced in the “third world”.

How were people forced to buy more:

Welcome to the wonderful world of debt! A couple of things are important to focus on:

− Credit cards - they boomed through the 1970s (American Express, Bank Americard – VISA, Mastercard) and beyond

− Banks' increasing leniency on loans, obviously endorsed by governments - people were able to continue accumulating houses and cars since the banks welcomed their debts. Expensive, individualistic buying habits were encouraged.

So, due to this dipping into the negatives, and increased exploitation of workers globally, corporations' profits shoot back up again.

Since the 1970s in the US – and no doubt the numbers in Canada are the same – household debt has more than tripled, showing us where the corporate profits came from.

Since real wages have not gone up – I'm going to keep repeating this – while people’s debts have accumulated, one of the results has been more people have been working longer hours to try and dig themselves out, just so they can have “good enough credit” to keep the buying cycle going … and to not be punished by the banks and the government for not paying back.

And here's where things really get even more fucked up...

Those who had the capital to dish out – and it's only the big ones that really matter – began to throw proportionally more money at investments in assets, such as housing, stocks and currencies, rather than production. These investments are part of the money/financial market. It basically amounts to gambling on the likelihood of people and corporations winning the game of digging out of holes and climbing financial mountains.

Debt trading boomed from the 1970s onwards – debt was valuable, sounds like an oxymoron, because it, supposedly, came back with interest. Whole companies were created to focus on this debt market, including the massive debt insurers, AIG, which went bankrupt through the recent crisis, cuz they couldn't cover everyone's ass.

A big part of the debt market was in housing. Remember housing is built on mortgages, which is debt. When a lot of investors throw money at housing, you get massively inflated prices, creating such scenarios where you can’t afford to get housing in New York unless you’re ready to go deep into debt because your wages aren’t going up.

A little side-note, I keep mentioning the subject of wages not going up ... The reduction of militancy of unions was definitely connected to wages remaining stagnant; just wanted to mention that, but that's a whole other story that needs specific focus.

Anyway, back to this part of the story. So, while most are digging themselves into holes, the movers of capital saw their mountains of money go up.

Let's look at some of these disturbing trends ...

- Twenty five years ago, the richest 10 % of families in Canada made 31 x more than the poorest 10%. Now, current Canadian Census data shows that the richest 10% make 82 x more.

- Another staggering statistic is that the top CEOs in Canada make over 240 x what their average workers make!

The gap has been growing massively and as it does, the capitalists throw their oversupply of money into riskier and riskier investments because the world is still getting too full of crap for them to want to invest in production and get stuck in more consumption market bottlenecks.

The riskiest of investments, which grew en masse in the last several years in the US, were subprime mortgages. So, banks were suddenly allowed to let people with low incomes go deep into debt to get homes, WHICH WERE NOT AFFORDABLE. Remember, investors are buying up housing stocks, inflating the prices … and workers' wages are not going up.

So, when all of a sudden people are unable to pay back large loans for housing, and it happens en masse, and there are people that invested in their debt, it all comes crashing down hard.

- Crumbling banks, housing pyramids, debt pyramids, etc.

- Other large companies, that had large investments tied into the collapsing financial markets, fall;

- Since, there’s a lack of capital for investment, there’s a purge of labour to save money, thrusting more into the folds of the unemployed, and this happens globally. Unemployed people don’t have much spending money, obviously, so corporations’ profits keep sinking. In the US, as unemployment escalates, further declines in consumer spending drives unemployment in the places where consumers in the US get most of their stuff, mainly China. So much is interconnected to US mega consumption. that the crisis of capitalism around the globe escalates.

So, what sense does Atlantica make amongst this!? Think of all the unemployed in the US and China.

Now, remember that line by Crowley:

“ ... the emergence of China and India as the workshops of the world, the mighty wave of manufactures heading from their factories to our consumers”

Really?

Let’s give a reminder of what led to the economic crisis ... overaccumulation of stuff, leading to product bottlenecks, and an overaccumulation of machinery, including big, expensive plants. What does Atlantica bank on for “success”? Mega-consumption in the US, and mega production in Asia. So, the inherent trends within capitalism that led to the crisis is hoped to be further nurtured. Great idea, huh?

One dynamic at play is that the capitalists are so focused on looking at fortunes directly in front of their faces, and the prospects of these piles getting bigger, that they are completely blinded to the future destruction they are unleashing on people. They can’t pause for a second, or some other capitalist will beat them to the market

Another dynamic that’s very important to focus on is that they are gambling on the prospect of the consumer markets reviving, and everyone lines of credit just being extended to keep it going. Their fortuned depend on it. All the major capitalists, with their mega corporations, are vying to be the survivors. They are all aware that some will fall and be bought up by the “winners” (a result in all major economic crises, called “capital consolidation”). Essentially, they are gambling with our future.

But how do they, and the governments supporting them, push Atlantica while the markets are falling and people are losing their jobs? Well, they offer people garbage and claim it’s gold. Even though Atlantica is just a big doormat to the US – and doormats don’t usually do to well – the proponents of Atlantica argue that Atlantica will bring jobs in infrastructure development ... and people are looking for any kind of job these days. This needs to be critically examined.

Here’s Atlantic Institute for Market Studies Vice President, Charles Cirtwill talking about jobs, in an arrogantly titled article, “Follow or Get Out of the Way” (Feb. 2009, atlantica.org).

“So, instead of, for example, subsidizing a dying industry in a small rural community, we are actually figuring out that there are opportunities in the Gateway to retrain those people and put them to work in lasting, valuable, sustainable jobs.”

The jobs are NOT sustainable. These jobs completely depend on the market and economy of the United States. And the jobs are NOT lasting. The jobs created for the most part are going to be dealing with infrastructure. It does not take a lifetime to build a road. Once the infrastructure projects are done, workers will be tossed to the side once again. This will be similar with a lot of the projects. See this document (page 25) for a chart of the major projects being pushed.

They present the idea that all people should expect is anything that they are willing to offer. Some very critical questions need to be asked. Here are a few:

What kind of jobs?
For who?
Are they taking place on indigenous lands?
What control do we have over what is produced and how things are produced?
For how long will they last?
What are the environmental impacts?
What are the impacts on communities?

The real bottom line is that the reality they present is pushing more and more people into further marginalized positions. But the worst effects are that their profiteering goal, their crisis they are imposing on us, is debilitating the ability of the planet to sustain people and other life. More on this in the next section. But check out this link for now: http://www.risingtidenorthamerica.org


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