CHAVEZ IS DEAD, THE MEDIA ARE ALIVE AND KICKING
By Pablo Navarrete | Latin America Bureau | March 13, 2013
On Tuesday 5 March, at the age of 58, Venezuelan president Hugo Chávez lost his almost two-year battle with cancer and passed away. Within seconds of the news being announced, the wheels of the global media bandwagon went into overdrive, with largely unsurprising results, in both the US and British media. At the most distasteful end of the spectrum was the headline in the New York Post, the paper with the 7th highest circulation in the US, that read ‘Off Hugo! Venezuela bully Chavez is dead’.
New York Post Cover on Chávez
Other US media followed closely behind. ‘Death of a Demagogue’ ran a headline on the website of Time, the world’s biggest selling weekly news magazine. These and other US media reaction were included in a piece by the US media watchdog Fair and Accuracy in Reporting (FAIR) that also examined the distorted, often hysterical, US media coverage of Chávez during his presidency. It’s worth recalling that following the 2002 US-supported coup that briefly removed Chavez from the presidency the New York Times declared that Chavez’s “resignation” meant that “Venezuelan democracy is no longer threatened by a would-be dictator.”
Following Chávez’s death, the antipathy towards a president that had so vehemently challenged the actions and interests of the United States was also evident in the British media. Rightwing outlets displayed the usual cynical disdain that had characterised their reporting of Chávez’s presidency, although Nicolas Maduro, Chávez’s former vice-president, the current interim president and the government’s candidate for the April 14th presidential election, was also now in the firing line. In the UK’s biggest selling broadsheet, the rightwing Daily Telegraph, its chief foreign correspondent David Blair described Maduro’s role as foreign minister under Chavez in the following terms: “Mr Maduro was the obedient enforcer of his master’s highly personal foreign policy”. For Blair, Maduro, rather than responsibly representing his government’s foreign policy, was “a loyal purveyor of ‘Chavismo’ around the world”.
The ‘liberal’ left in Britain
Britain’s liberal-left media also offered a timely reminder of where their loyalties lay in relation to Chavez, whose democratic mandate included presiding over 15 national elections since he took office in February 1999, a greater number of elections than were held during the previous 40 years in Venezuela. In a remarkable editorial, The Independent newspaper opined:
“Mr Chavez was no run-of-the-mill dictator. His offences were far from the excesses of a Colonel Gaddafi, say. What he was, more than anything, was an illusionist – a showman who used his prodigious powers of persuasion to present a corrupt autocracy fuelled by petrodollars as a socialist utopia in the making. The show now over, he leaves a hollowed-out country crippled by poverty, violence and crime. So much for the revolution.”
This from a newspaper that in June 2009, following a military coup that overthrew the democratically elected government of President Manuel Zelaya in Honduras, ran an editorial that included the following:
“The ousting of the Honduran President Manuel Zelaya by the country’s military at the weekend has been condemned by many members of the international community as an affront to democracy. But despite a natural distaste for any military coup, it is possible that the army might have actually done Honduran democracy a service.”
The Independent’s competitor in the UK’s liberal-left newspaper market, The Guardian, showed a similarly hostile stance towards Chavez during his presidency. In a piece on the New Left Project website examining the critical UK media coverage of Chavez following his death, Josh Watts noted how the anti-Chavez bias of Rory Carroll, a Guardian journalist and its former Latin America correspondent, “has been extensively documented”. As Samuel Grove noted in a damming 2011 article, Carroll’s Latin America coverage “has attracted widespread criticism for its selectivity and double standards, brazen anti-left bias, and above all slavish loyalty to Western interests”. There is now surely a book’s worth of material exposing Carroll’s distorted Venezuela coverage.
Carroll has managed to take his agenda beyond the confines of The Guardian. For example, in an Al Jazeera English debate on the continued demonisation of Chavez by the Western media that took place three days after Chavez’s death, Carroll repeatedly tried to present Venezuela under Chavez as an economic failure. He repeated this line of attack in a BBC 3 radio interview in late February, where he accused the Chavez government of being responsible for “decay, ruin, waste” in relation to the economy. Contrast this with the rigorous reports on the socio-economic changes under the Chavez presidency by the Washington-based think tank, the Center for Economic and Policy Research (CEPR), which completely undermine Carroll’s narrative of economic failure.
This fact-based approach to appraising elements of the Chavez legacy has not been lost on The Guardian’s associate editor Seumas Milne, who referenced CEPR’s latest report when he tweeted: “Media claims #Chavez ruined #Venezuela‘s economy absurd: here are the facts on growth, unemployment, poverty http://bit.ly/13Nnwno @ceprdc”
It was precisely these socio-economic gains, especially for those in the low-income neighbourhoods known as barrios that encircle Caracas and other Venezuelan cities and who formed Chávez’s support base, that lay behind his popularity and his repeated electoral victories.
Focus on denigrating the individual
Rather than try to explain Chávez’s appeal to large sectors of the Venezuelan population or understand the process of radical change underway in the country, the West’s media class preferred to focus almost entirely on the figure of Chávez. It was precisely this narrative that was so effective in discrediting the Venezuelan process through concealing the role of collective agency, silencing the people from below, and rendering them insignificant. While the mainstream media routinely ignores the voices of the government’s grassroots supporters, they have been instrumental in driving the Venezuelan process forward and should be at the centre of the story.
Thus, when we contrast Chávez’s popularity at home with the open hostility with which Western political elites viewed him, we’re left questioning the motivation behind the anti-Chávez mass media campaign that has systematically misrepresented events in Venezuela.
John Pilger is right when he writes:
“Never has a country, its people, its politics, its leader, its myths and truths been so misreported and lied about as Venezuela.”
Even though Chávez is dead, his vilification by the US and UK media is alive and kicking.
Pablo Navarrete is a LAB correspondent and a PHD student at Bradford University in the UK, researching the political economy of the Chavez presidency. He is also the director of the documentary ‘Inside the Revolution: A Journey into the Heart of Venezuela’ (Alborada Films, 2009). You can watch the documentary online here.
In the End, Awful Journalism
By Chris Carlson | Venezuelanalysis | March 12th 2013
On the occasion of Venezuelan President Hugo Chavez’s death last week, much of the international media responded in typical fashion, by painting the Chavez administration much as they painted it when Chavez was alive—as an autocratic regime led by a foolish tyrant who mismanaged the country and squandered its oil wealth.
They showed little mercy for the larger-than-life leader, so beloved by the majority in his country, and by millions around the world, giving the impression that Hugo Chavez got almost everything wrong, and did virtually nothing right.
Many of the criticisms have an element of truth to them, as many problems persist in Venezuela. And the press made sure to highlight these problems as evidence of Chavez’s failure, making it sound as if any sensible leader or government in Chavez’s position could have resolved them. But what showed through more than anything in these anti-Chavez tirades was a very revealing, almost embarrassing, misunderstanding of Venezuela’s principal economic and social issues.
“It’s a pity no one took 20 minutes to explain macroeconomics to him,” writes Rory Carroll in an op-ed in the New York Times that claims Chavez was “an awful manager” who destroyed Venezuela. Carroll slams Chavez for everything from failing to fix up the presidential palace, to spending too much on education and health, to not investing enough in infrastructure.
As The Guardian’s correspondent in Venezuela since 2006, Carroll apparently had seen enough to conclude that Chavez had “left Venezuela a ruin”. Yet one wonders if he ever managed to talk to the millions of Venezuelans—those who packed the streets to mourn the president’s death last week—who feel the country has been forever transformed.
For literally days on end, non-stop, all day and all night, people filed through the building where Chavez’s body was displayed to pay their final respects. A line stretched for miles outside, as people waited several days, eating and sleeping in the line, just to see their president one last time. This immense outpouring of emotion is very hard to square with the image Carroll gives us.
It might be an exaggeration to say Chavez transformed the country—though many things were deeply changed—but one doesn’t have to be an expert to know that Venezuela’s problems are more complicated than one man and his personality quirks.
The Economist tells us that Chavez was a “narcissist” who was “reckless” with his country’s economy and who “squandered an extraordinary opportunity”. We are told Chavez could have used the country’s oil wealth to “equip [Venezuela] with world-class infrastructure and to provide the best education and health services money can buy”. But due to mismanagement, “the economy became ever more dependent on oil”. Carroll echoes this, blaming Chavez for a “withering” private sector, and decaying infrastructure.
But apparently these self-proclaimed experts have never taken even the most cursory look at Venezuelan history. Had they done so, they would know that since Venezuela’s oil wealth was first discovered nearly a century ago, no government has ever been able to do what they claim should have been accomplished by the Chavez government.
Past governments have invested the country’s oil wealth in infrastructure, industry, and development projects—though never as much as Chavez—yet not one of them managed to break dependence on oil, diversify the economy, create a flourishing private sector, or build adequate health and education services. Was it because they were all reckless narcissists? Or do these problems perhaps have an explanation that goes deeper than the president’s personal style?
Of course, the truth is much more complex than what the Chavez haters would like to admit. It is true that Chavez did not provide solutions to many of Venezuela’s problems, and that some problems even got worse, but contrary to the media claims, he probably did better than any previous government in Venezuelan history.
One gets the opposite impression from much of the international media. Take a look at the following paragraph from last week’s article in the The Economist:
Behind the propaganda, the Bolivarian revolution was a corrupt, mismanaged affair. The economy became ever more dependent on oil and imports. State takeovers of farms cut agricultural output. Controls of prices and foreign exchange could not prevent persistent inflation and engendered shortages of staple goods. Infrastructure crumbled: most of the country has suffered frequent power cuts for years. Hospitals rotted: even many of the missions languished. Crime soared: Caracas is one of the world’s most violent capitals. Venezuela has become a conduit for the drug trade, with the involvement of segments of the security forces.
Amazingly, almost every sentence in the paragraph is false. Agricultural output did not drop, but rather grew by 2 to 3 percent per year, and grain production, which was the government’s major focus, grew by 140 percent. Inflation was considerably lower under Chavez than the previous two governments. Food shortages and power cuts were caused by the explosion in consumption among the poor, not a fall in production.
Both electricity production and food production have increased to all time highs. Thousands of new health clinics have been built around the country. However, it is true that many hospitals remain inadequate, that crime has soared, and that Venezuela is still a conduit for the drug trade, as it shares a large border with Colombia.
The claims of increased oil dependence are also not borne out by the facts. It is true that oil as a percentage of total exports has increased, but this is largely due to the fact that oil prices have increased nearly ten-fold since Chavez came to power, making it inevitable that their value in relation to total exports would also increase.
The critics say Chavez squandered the country’s oil wealth, which he could have used to transform it into a modern state. Indeed, the oil boom left Venezuela awash in oil money, a situation that Chavez’s policies had a hand in creating, as he united OPEC and increased royalties and taxes on the oil sector, giving the state vastly more funds to work with. If only this “awful manager” knew how to administer the funds, critics say, Venezuela could have been well on its way to becoming a modern, developed nation.
But this is shortsighted. Nations do not develop on the basis of resource wealth or commodity booms. A country cannot spend its way into the first world. Rather, economic development is about systematic growth in productivity, innovation, and technical change, activities that typically fall on the shoulders of the private sector. In the developed world, it is largely the private sector that invests surpluses into new technologies and improvements in the productive process, something that does not occur in Venezuela in a systematic fashion.
Of course, critics and opponents of Chavez argue that this is also the fault of the government, that it is Chavez’s fault for not creating the right environment for private investment, and that with the “right” policies the private sector would decide to invest in the country and would produce the kind of economic development that will benefit all sectors of society. Apparently no Venezuelan government in history has been able to figure out what those “right” policies are.
But this ideology defeats itself with its own logic, for private investors in market economies don’t invest in productivity because they feel like it, or because the conditions are just as they like. They do so because they have to in order to match the competition, to survive in the market, and to avoid going out of business. In modern market economies, producers invest in improving productivity because they are compelled to do so by the market, not because they decide they want to.
The fact that much of the private sector in Venezuela has seldom been compelled to do the same only demonstrates that this economy does not function like the model market economy that these theories are based on.
Huge swaths of the nation’s agricultural land have long been dominated by large estates—the infamous latifundios—that feel very little pressure to improve productivity, and graze cattle on the nation’s best land. The commercial and industrial sectors have long been dominated by highly diversified conglomerates—the so-called grupos económicos—that control key sectors of the economy, and are rarely threatened by competition.
In other words, it goes against these critics’ whole line of reasoning to point out that what really determines whether a country is rich or poor is not commodity booms or resource wealth, but rather has to do with productivity growth—something that has seldom been a priority for much of Venezuela’s private sector.
It’s a pity that no one took 20 minutes to explain this to Rory Carroll, The Economist and others who blame all of Venezuela’s problems on Hugo Chavez, for he did more than any president in history to try to change the unproductive logic of the private sector.
More than 3.6 million hectares of unproductive land were expropriated and redistributed to over 170,000 small producers—far more than the entire 40 years of pre-Chavez land reform. Major sectors of the economy were nationalized, and state companies expanded, in an attempt to improve production, raise investment, and remove bottlenecks. Massive investments were made in agriculture and industry—far more than under previous governments—in an attempt to spur their growth.
Many of these attempts were failures. The growing state sector often allowed for inefficiency and corruption. Chavez’s solutions to the country’s economic and social issues were not always the correct ones.
But the point is that Venezuela’s problems are quite complex and defy easy answers. Previous governments with previous oil booms also failed to resolve the country’s major problems, and did much less to help the poor, something that does not seem to interest those who want to blame everything on Chavez.
Instead of seeking to gain a better understanding of the country’s problems—to understand why they have been so intractable throughout the country’s history—the major media have preferred to vilify and condemn one man; a man who, right or wrong, spent his life trying to solve the problems that plague his country, and was undeniably dedicated to helping the poor; a man who constantly reminded his country’s poor majority that they mattered, that they were not inferior to anyone, and that they should feel proud of their national heritage. That doesn’t sound like a narcissist to me.
Related articles
NYT’ Steven Davidoff Doesn’t Consider the Successful 300 Years of Financial Transactions Taxes In London
CEPR Beat the Press | February 26, 2013
Steven Davidoff really doesn’t like financial transactions taxes (FTT) but is not honest enough to acknowledge this fact. Instead he tells readers that proponents of a tax haven’t thought about its consequences and uncritically repeats every piece of nonsense produced by the financial industry to attack the idea.
In the course of a 1300 word essay we get assessments of the tax from Credit Suisse, Blackrock, and the Partnership for the City of New York, which is effectively the New York City Chamber of Commerce. All of these accounts are presented uncritically, as though the purveyors of this information had no interest other than conveying the truth. We are also told that the New York Stock Exchange “threatened to jump across the Hudson River to New Jersey” in reaction to a plan to increase the city’s stock tax in the 1966 (interesting image). Davidoff apparently never heard of businesses making threats to extract concessions from governments.
The NYT running a column like Davidoff’s is like the Iowa City Press Citizen running a column on a plan to cut back farm subsidies where the views of the state’s leading wheat and corn farmers are presented as unquestioned truth, along with a study from the corn growers trade organization. I suspect that the Press Citizen has higher standards.
Meanwhile when it comes to the proponents of the tax, Davidoff lectures:
“advocates of this neat idea conveniently ignore the century of less-than-successful experience with this tax, including New York State’s own failed attempt.”
This comment is more than a little bizarre. Davidoff writes as though proponents of the tax are completely ignorant of economics and have not done research into the history of financial transaction taxes.
Contrary to this assessment, the proponents of the tax include some of the world’s most prominent economists. Furthermore, there is extensive research on the history of financial transactions taxes. Much of it can be found right here on the European Commission’s (EC) website.
Contrary to Davidoff’s bizarre comment, implying the New York tax is a rare example of a government implementing such taxes, nearly all financial markets operated with financial transactions taxes for long periods of time (more than 300 years in the case of London’s market). Most of the world’s major financial centers, including London, Switzerland, Hong Kong and Singapore, still have financial transactions taxes on their stock exchanges. Perhaps Davidoff should be lecturing these governments on how their taxes really don’t work.
As far as the substance, Davidoff tells us that research shows that the tax will increase rather than decrease volatility. There are two different notions of volatility at play here. One is the volatility associated with normal price fluctuations over the course of a day or week. This is likely to be increased by a tax since it will increase the costs for arbitragers to enter a market. That means that we may see somewhat larger divergences between prices than would otherwise be the case. This could mean that the gap in the price of oil between two markets may rise to 0.4 percent rather than 0.3 percent before arbitragers whittle it down again.
Proponents of FTTs are probably not much concerned about this sort of volatility. The economic consequences are likely close to zero. Furthermore, since the levels of taxation being debated would just raise transactions costs back to where they were 10-15 years ago, it is difficult to believe that the effects could be too severe. (We did have very liquid capital markets in the 1990s.)
The type of volatility that more likely concerns proponents of FTTs are the sharp movements that are not driven by fundamentals, such as the 1987 crash and the flash crash in the spring of 2011. While it is difficult to prove that a FTT will reduce the likelihood of such sharp movements, it is worth noting that such events did not occur in the 50s, 60s, and 70s, when trading costs were much higher than in the last three decades.
As far as the incidence of the tax, Davidoff gives us the assessment of Blackrock:
“that if the financial transaction tax were set at 0.1 percent per trade, an investor putting $10,000 in its global equity fund would lose more than $2,300 in expected returns over a 10-year period. This amount would rise to $15,000 if the money were invested in a more actively managed European fund.”
Incredibly, Blackrock assumes that its trading does not in any way respond to the tax. If this were true then Blackrock’s funds would quickly go out of business since their cost would be far higher than others in the industry. There have been a range of trading elasticities estimated by various studies (see the EC research), with most estimates close to -1.0. (None are near zero.) If the elasticity is near -1 then trading volume would decline by roughly the same amount that the tax increases trading costs.
This means that if the tax doubled trading costs, then trading volume would be roughly cut in half. That means that if Blackrock’s fund managers responded as the research suggests, then they would cut back the number of trades by enough so that the non-tax trading costs for their $10,000 account would fall by roughly $2,300 over the course of a decade or $15,000 in the case of its more actively managed European fund. This would be revenue lost to Blackrock, not to its clients.
In this respect it is worth noting that the sharp decline in trading costs over the last four decades has not been associated with higher returns to investors, but rather to a more than proportionate increase in trading volume. This has caused the total amount spent on trading financial assets to rise sharply relative to the size of the economy. These trading costs are money out of investors’ pockets and a drain on the economy.
Davidoff’s effort to claim that the tax could not raise any revenue approaches the bizarre. He tells readers:
“In Britain, for example, where the financial transaction tax has fluctuated from half a percent to 2 percent, the tax has raised significantly less revenue than one might expect, about £3 billion a year. The reason is that investors who trade regularly in Britain use options to avoid the tax, which applies only to trading in stock. The result may be that the tax pushes investors into more risky securities in their efforts to avoid it.”
First, it is worth noting that £3 billion comes to 0.2 percent of UK’s GDP. (The UK had raised almost 0.3 percent of GDP from this tax before the 2008 crash [Table 2].) This would be the equivalent of almost $400 billion over the 10-year budget horizon in the United States. That is almost 3 times as much as President Obama has proposed to save by cutting the Social Security cost of living adjustment. In other words, in the current budget debates it would be regarded as real money.
Second, the decision to not tax derivatives like options is a political one made by governments that have been closely allied with the financial industry. The tax being put in place by 11 countries in the European Union would tax options and other derivatives. In the 1980s Japan had a broadly based tax that was imposed on a wide range of financial assets including options. This tax raised an amount of revenue that was close to 1.0 percent of its GDP. This would amount to $2 trillion over the 10-year budget horizon in the United States.
At one point Davidoff tells readers:
“As for seeking revenue gains to solve budget problems, if the tax is too small, it will have no effect.”
Huh? The Securities and Exchange Commission imposes a tax of 0.002 percent on stock trades in the United States. This tax raises roughly $1.2 billion to finance its budget. Is Davidoff suggesting that the SEC should get rid of this tax because it is not really raising money?
As I said, Davidoff doesn’t like FTTs, that’s pretty clear from reading this piece even though he tells us:
“This is not to say that a financial transaction tax by itself is such a terrible idea.”
He has a case built with non-sequitors (one example of the horror of FTTs is that traders fled a tax imposed by Sweden in the 1980s and instead did their trades in London, which also had a tax). And he ignores all sorts of evidence that FTTs can and do raise large amounts of revenue without disrupting capital markets. This piece lets us know where Davidoff stands on FTTs, it doesn’t provide much information on the merits of the policy.
Related articles
- Economist: Financial Transactions Tax Would Bring in Hundreds of Billions a Year (voicerussia.com)
- 5 Reasons Why The U.S. Needs A Financial Transactions Tax (thinkprogress.org)
Reporting on Romer’s Charter Cities: How the Media Sanitize Honduras’s Brutal Regime
By Keane Bhatt | NACLA | February 19, 2013
On the evening of Saturday, September 22, human rights lawyer Antonio Trejo stepped outside a wedding ceremony to take a phone call. Standing in the church parking lot of a suburb of Tegucigalpa, Honduras, he was shot six times by unknown assailants. Despite his requests, he had been granted no police protection in the face of death threats; Trejo had believed he would be targeted by wealthy landowners over his outspoken advocacy on behalf of small farmers seeking to reclaim seized territories.1 In his death, Trejo joined dozens of fallen peasant leaders whom he had defended, as well as murdered opposition candidates, LGBT activists, journalists, and indigenous residents. All were victims of the violence and impunity that has reigned in Honduras since the 2009 coup d’état against its democratically elected and left-leaning president, Manuel Zelaya.
Earlier that day, Trejo had appeared on television, denouncing the powerful interests behind the government’s push for ciudades modelos—swaths of land to be ceded to international investors and developed into autonomous cities, replete with their own police forces, taxes, labor codes, trade rules, and legal systems. He had helped prepare motions declaring the proposal unconstitutional.
This concept of “charter cities” has been promoted for a couple of years by Paul Romer, a University of Chicago–trained economist teaching at New York University. He described his brainchild in a co-authored op-ed as “an effort to build on the success of existing special zones based around the export-processing maquila industry.” A “new city on an undeveloped site, free of vested interests” could bypass the “inefficient rules” that hinder “peace, growth and development” worldwide, he argued. With new and stable institutions, the charter city could become an “attractive place for would-be residents and investors.”2
The international press swooned over Romer’s revolutionary idea: Foreign Policy magazine named him one of its Top 100 Global Thinkers of 2010 for “developing the world’s quickest shortcut to economic development”;3 that same year, The Atlantic dedicated a 5,400-word paean to Romer and his “urban oases of technocratic sanity,” which held the promise that “struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed.”
But the applicability of Romer’s radical vision in Honduras always depended on the enthusiasm of the authoritarian, post-coup government of Porfirio Lobo. Lobo owes his presidency to the sham elections of 2009, which took place under the U.S.-backed de facto military government that overthrew Zelaya and were marred by violent repression and media censorship. With the exceptions of the U.S.-financed International Republican Institute and National Democratic Institute, international observers boycotted the electoral charade that foisted Lobo into power.
Romer’s lofty theories also remained utterly detached from the brutal nature of the collaborating government. “Setting up the rule of law” from scratch in a new city, he contended, would be an antidote to “weak governance” (weak in no small part due to Lobo’s appointment of coup perpetrators to high-level government positions).4 In a co-authored paper, Romer also mischaracterized his allies, the “elected leaders in Honduras,” as earnest in their intent to end a “cycle of insecurity and instability that stokes fear and erodes trust.”5 (Romer offered no comment when Lobo designated Juan Carlos “El Tigre” Bonilla, accused of past ties to death squads, as the national chief of police.)6
Even on its own terms, Romer’s development theory is disconnected from reality. He has repeatedly invoked Hong Kong as the sunny inspiration for the remaking of Honduras: “In a sense, Britain inadvertently, through its actions in Hong Kong, did more to reduce world poverty than all the aid programs that we’ve undertaken in the last century,” he claimed.7 Romer neglected to add that the city developed as a hub for the largest narcotrafficking operation in world history, through which Britain inflicted untold misery on the Chinese mainland. Britain dealt a humiliating military defeat to China (which had attempted to prohibit illegal British opium from entering its borders), took over Hong Kong, and forced China to abandon its tariff controls in 1842. Given that Hong Kong was one of the spoils of a drug war, and that its inhabitants were permitted democratic elections only 152 years after its incorporation into an empire, Romer’s dream for Honduras could just as easily be considered a nightmare.
Romer’s focus on good rule making is similarly fanciful; his effort to change the rules that engender poverty conspicuously excludes the international legal privileges that allow undemocratic leaders to sell a country’s resources and borrow in its name (he wrote positively of a trade agreement that Lobo struck with Canada this summer).8 Romer also approved of the legal architecture that “gives the United States administrative control in perpetuity over a piece of sovereign Cuban territory, Guantanamo Bay,” through a 1901 treaty that he failed to mention was ratified by a militarily occupied Cuba. Whether Romer knows it or not, his endorsement of power politics is clear: Investor-owned cities would be safe from future efforts by governments to repossess sovereign territory, because “Cuba respects the treaty with the United States, even as they complain bitterly about it.”9
Romer rebutted criticisms that his idea smacks of neocolonialism: “There are some things that it shares with the previous colonial enterprises,” he admitted, “but there’s this fundamental difference: at every stage, there’s an absolute commitment to freedom of choice on the part of the societies and the individuals that are involved.”10 Which choices are available to individuals living under a coercive, illegitimate government is a question left unanswered, and the adulating press could not be bothered to probe further.
After all, it would be impolite to reveal Romer’s close cooperation with a government whose security forces—many of whom are personally vetted, armed, and trained by the United States—killed unarmed students Rafael Vargas, 22, and Carlos Pineda, 24, as well as pregnant indigenous Miskitu women Juana Jackson Ambrosia and Candelaria Trapp Nelson, among others.11 Indeed, the Committee of Families of the Detained and Disappeared of Honduras observed that more than 10,000 official complaints have been filed against Honduras’s military and police since the coup. Such unsavory details might have chastened The Atlantic’s ebullient portrait of the “elegant, bespectacled, geekishly curious” professor, and would have tarnished President Obama, who praised Lobo for his “strong commitment to democracy” while providing his brutal security apparatus with $50 million in aid last year.12
In their coverage of Romer’s charter cities, the media have almost entirely excised the innumerable human rights violations occurring under the undemocratic Honduran regime. The New York Times is a case in point. About a week after Amnesty International, Human Rights Watch, the Inter-American Commission on Human Rights, and even the U.S. State Department were compelled to release statements of condemnation over Antonio Trejo’s assassination, Times reporter Elisabeth Malkin fawned over Romer’s idea while ignoring the killing of one of its most prominent critics. (Romer himself offered no public statement in the wake of Trejo’s death-squad-style killing.) Charter cities promised to “simply sweep aside the corruption, the self-interested elites, and the distorted economic rules that stifle growth in many poor countries,” asserted the imperturbable Malkin. She added with uncommon journalistic authority, “Nobody disputes that impoverished, violent Honduras needs some kind of shock therapy.”13
This is not the first instance in which the Times has glossed over inconvenient facts to laud shock therapy, a doctrine of massive privatization and investor-friendly deregulation developed at the University of Chicago.14 Many years after Chile’s coup government pushed through a rash of measures designed by economist Milton Friedman and his acolytes, the Chicago Boys, the Times reported that “Chile has built the most successful economy in Latin America, and one of the vital underpinnings of that growth was the open economic environment created by the former military dictator, Gen. Augusto Pinochet.”15 Leaving aside Pinochet’s torture and murder of tens of thousands of dissidents, Chile’s per capita gross domestic product was practically unchanged 13 years after the coup; Pinochet’s “free-market” experiment also ended with re-nationalizations in banking and copper extraction, the institution of capital controls, and continuous state support for Chile’s exports.16
Following in this dubious tradition of portraying a reactionary societal experiment as a formula for prosperity, the Times’ first piece on Honduran charter cities appeared in its Sunday magazine in May 2012. Author Adam Davidson, co-creator and host of National Public Radio’s Planet Money program, considered charter cities a “ridiculously big idea” for fixing an “economic system that kept nearly two-thirds of [Honduras’s] people in grim poverty.” Davidson related the story of Octavio Sánchez, Lobo’s chief of staff, who met with Romer to develop a “secure place to do business—somewhere that money is safe from corrupt political cronyism or the occasional coup.”17 Davidson, however, scrupulously avoided Sánchez’s own role as an apologist for the 2009 military overthrow of Zelaya. Days after Zelaya’s ouster, Sánchez advised Christian Science Monitor readers not to “believe the coup myth,” and in an Orwellian flourish, the Harvard Law graduate declared that “the arrest of President Zelaya represents the triumph of the rule of law.”18
In November, Planet Money provided an obsequious follow-up on Romer and Sánchez’s collaboration, scrubbing any mention of the 2009 coup and Lobo’s emergence from it, and portraying Sánchez as an idealistic dreamer. “Instead of fighting to do two, three or four reforms during the life of a government,” Sánchez asked, “why don’t you just do all of those reforms at once in a really small space? And that’s why this idea was appealing. It’s really the possibility of turning everything around.”19
Planet Money’s co-hosts unwittingly conveyed the fundamental obstacle to shock therapy: “Paul Romer has this killer idea and no real country to try it in; Octavio has the same idea, but no way to sell it to his people.” They acknowledged that even with “a government that’s ready to go,” the “people in Honduras” viewed Romer’s plan as “basically Yankee imperialism.” The episode concluded by explaining the apparent collapse of the charter cities initiative, resulting partly from the post-coup government’s lack of transparency (Romer was “stunned”), as well as a Honduran Supreme Court ruling in October that found charter cities unconstitutional. Romer remains unfazed, the hosts said. He has a promising lead in North Africa—another opportunity to answer “one of the oldest problems in economics: how to make poor countries less poor.”
Regardless of what Romer and his media sycophants think of the charter city’s (questionable) efficacy, their deafening silence on its antidemocratic implications and Honduras’s human rights abuses is unconscionable. In this insulated world, Honduran victims of economic hardship and state terror, and their own proposals to solve poverty, remain invisible. Pinochet, the original administrator of shock therapy, distilled the insouciance of today’s intellectual and media culture when, in 1979, he remarked, “I trust the people all right; but they’re not yet ready.”20
Keane Bhatt is a regular contributor to the MALA section of NACLA Report and the creator of the Manufacturing Contempt blog on the NACLA Website.
1. Alberto Arce, “Slain Honduran lawyer Complained of Death Threats,” Associated Press, September 25, 2012.
2. Paul Romer and Octavio Sánchez, “Urban Prosperity in the RED,” The Globe and Mail: April 25, 2012.
3. “The FP Top 100 Global Thinkers,” Foreign Policy, November 26, 2012. Sebastian Mallaby, “The Politically Incorrect Guide to Ending Poverty,” The Atlantic, July/August 2012.
4. Romer and Sánchez, “Urban Prosperity.” Dana Frank, “Honduras: Which Side Is the US On?,” The Nation, May 22, 2012.
5. Brandon Fuller and Paul Romer, “Success and the City: How Charter Cities Could Transform the Developing World,” Macdonald-Laurier Institute, April 2012.
6. Katherine Corcoran and Martha Mendoza, “New Honduras Top Cop Once Investigated in Killings,” Associated Press, June 1, 2012.
7. Sebastian Mallaby, “Politically Incorrect Guide.”
8. Romer and Sánchez, “Urban Prosperity.”
9. Can “Charter Cities” Change the World? A Q&A With Paul Romer,” Freakonomics.com, September 29, 2009.
10. Jacob Goldstein and Chana Joffe-Walt, “Episode 415: Can a Poor Country Start Over?” NPR’s Planet Money, November 9, 2012.
11. Javier C. Hernandez, “An Academic Turns Grief Into a Crime-Fighting Tool,” The New York Times, February 24, 2012; Annie Bird and Alexander Main, “Collateral Damage of a Drug War,” Center for Economic and Policy Research and Rights Action, August 2012.
12. U.S. Office of the Press Secretary, “Remarks by President Obama and President Lobo of Honduras Before Bilateral Meeting,” whitehouse.gov, October 5, 2011; Dana Frank, “Honduras.”
13. Elisabeth Malkin, “Plan for Charter City to Fight Honduras Poverty Loses Its Initiator,” The New York Times, September 30, 2012
14. Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (Metropolitan Books, 2007).
15. Nathaniel C. Nash, “Terrorism Jolts a Prospering Chile,” The New York Times, April 9, 1991.
16. Paul Krugman, “Fantasies of the Chicago Boys,” The Conscience of a Liberal (blog), The New York Times, March 3, 2010.
17. Adam Davidson, “Who Wants to Buy Honduras?,” The New York Times Magazine, May 8, 2012.
18. Octavio Sánchez, “A ‘Coup’ in Honduras? Nonsense,” The Christian Science Monitor, July 2, 2009.
19. Goldstein and Joffe-Walt, “Can a Poor Country.”
20. John B. Oakes, “Pinochet in No Rush”, The New York Times, May 3, 1979.
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- Honduras: Murdered Lawyer’s Brother Killed in Aguán (alethonews.wordpress.com)
- NPR Examines One Side of Honduran “Model Cities” Debate (alethonews.wordpress.com)
- IMF Ignores Proven Alternatives With Recommendations to Honduras (alethonews.wordpress.com)
- Killings Continue in Bajo Aguán as New Report Documents Abuses by U.S.-Trained Honduran Special Forces Unit (alethonews.wordpress.com)
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When You’re Cutting Social Security, ‘Wealthy’ Begins at $25K
By Jim Naureckas | FAIR | February 21, 2013
Here’s a proposal for Social Security that was on the New York Times‘ op-ed page yesterday (2/20/13):
The top third of beneficiaries (by lifetime income) [would] receive no annual cost-of-living adjustment in retirement. The middle third would get half of today’s adjustment, and the bottom third would receive the same annual increase they do now. Such a reform…would reduce Social Security spending by more than a tenth over a decade and fix the program’s long-term financing.
This is part of Paul Ryan adviser Yuval Levin‘s attempt to find “common ground” on the entitlement issue: “Both sides should agree at least to spend less money on the wealthy.” So who are these “wealthy” people who would be getting a benefit cut equal to the rate of inflation every year? According to the SSA, about 34 percent of people over 65 have family incomes of $50,000.
Now, you can argue about what “wealthy” is, but I think you would find pretty widespread agreement on what wealthy isn’t: $50,000 a year. If you sent the New York Times an op-ed outlining your plan to balance the budget by raising taxes on “wealthy” people who make 50k a year or more, it would be put in the same pile that gets the submissions about Elvis’s UFO diet. But when you’re talking about cutting entitlements, if you want to call those people “wealthy,” that’s perfectly reasonable.
But wait! Those aren’t the only people who are getting too much from the government and need to have their benefits cut–the middle third of the elderly are also “wealthy” and need their benefits cut–but by only half the rate of inflation per year. The ones making more than $50,000 must be the super-wealthy, the regular wealthy make…between $25,000 and $50,000, roughly.
For comparison purposes, the poverty line for a family of four is $23,350. Talk about a shrinking middle class!
This idea of “means testing” as a painless way to solve the supposed entitlement crisis is very popular among wealthy pundits. It’s not hard to understand why. One of the principles Levin suggests we should all be able to agree on is “give less to the wealthy rather than take more from them.”
OK, so let’s say you’re wealthy–not Levin’s pretend wealthy, but truly super-rich, in the top 0.01 percent of income. Average income in this group is about $24 million a year. So you can easily afford to give up their whole Social Security paycheck. If you’ve paid in the maximum possible amount and retire at 66, that’s $2,513 a month–or $30,582 a year. You have sacrificed for your country.
But let’s say that instead of taking away your Social Security check, we tax your income–which comes entirely in the form of investment income, since you’re a wealthy retiree–at the rate for regular income rather than at the special lower fat-cat rate. So instead of paying (very roughly) $4.8 million in federal income tax, you’ll be paying about $9.5 million.
Now, you can surely afford to live on $14.5 million a year rather than $19.2 million–just as you can afford to give up your Social Security check. Somehow, though, making the latter sacrifice is probably going to seem more appealing.
And the thing is, there aren’t that many really wealthy people who won’t miss their Social Security checks–so in order to save any appreciable amount of money, you have to take a substantial chunk away from people who actually aren’t very wealthy at all. That’s a principle we can all agree on. All of us making $24 million a year, anyway.
Reporting Ahead of Ecuadorean Elections Fits a Familiar Narrative
By Dan Beeton | CEPR Americas Blog | February 17, 2013
International media reporting ahead of Ecuador’s elections today has sounded familiar themes, understating the achievements of the Rafael Correa government and attributing Ecuador’s recent economic and social progress to “luck” or happenstance, and high oil prices. Correa is depicted as an enemy of press freedom, despite the fact that Ecuadorean media is uncensored and the majority of it opposes the government; and despite his granting of political asylum to Julian Assange. He is also depicted as a member of Latin America’s “bad left” who has ambitions of regional leadership should “bad left” leader Hugo Chávez succumb to illness or otherwise be unable to continue in office.
A common theme in press accounts is that the Correa administration’s social programs are “funded by the country’s oil proceeds.” While some reporting has gone deeper and noted that “Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country’s debt while touting his poverty reduction efforts,” others have not. “High prices for oil exports resulted in higher revenues which the government invested in social programs and public infrastructure,” the Christian Science Monitor reported in a Friday article. The New York Times’ William Neuman presented a contradictory picture of the economic importance of Ecuador’s petroleum sector, writing that “Ecuador is the smallest oil producer in the Organization of the Petroleum Exporting Countries, yet oil sales account for about half of the country’s income from exports and about a third of all tax revenues, according to the United States Energy Information Administration,” just before stating in the next paragraph that “Mr. Correa has taken advantage of high oil prices to put money into social programs, earning him immense popularity, especially among the country’s poor.”
Petroleum exports have been important to Ecuador’s economy for a long time; this did not suddenly come about with Correa. While Correa was favored by high oil prices during most of his six years in office, the collapse of oil prices in 2008 was a major blow to the economy. Also, an important change during Correa’s first term has been the Ecuadorean government’s relationship with foreign oil companies. Correa notably has driven a much harder bargain than his predecessors, “imposing a windfall profits tax for concessions made to companies for the exploitation of domestic natural resources” that “raised over $500 million for the government in 2010,” as our latest paper notes. A raft of financial and regulatory reforms have also put a considerable amount of revenue in the government’s coffers, contributing to the increase from 27 percent of GDP in 2006 to more than 40 percent in 2012. Stimulus spending – 5 percent of GDP in 2009 – boosted the economy and allowed Ecuador to get through the global recession with minimal damage, losing only about 1.3 percent of GDP during three quarters of recession, despite being one of the hardest hit countries in the hemisphere by external shocks. Non-petroleum sectors such as construction, commerce and services have also been important drivers of growth in recent years, including in 2011, when Ecuador had some of the highest real GDP growth in the region at 7.8 percent, second only to Argentina in South America.
As we have pointed out, this additional revenue has in turn allowed the Correa government to ramp up social spending in ways that are significantly improving Ecuadoreans’ living standards. While much news coverage has reported that state spending has boosted Correa’s popularity and may explain his huge lead (some 20 – 50 percentage points, according to polls) over his opponents coming into the election, some reporting has characterized this – as with last year’s election coverage of Venezuela’s state spending– as a form of vote-buying. “Public policies and subsidies are needed to temporarily keep certain sectors content,” the Christian Science Monitor quotes an analyst as saying. “[T]hey also give him votes.” The Associated Press described this as state “largesse,” a term that Merriam-Webster’s dictionary defines as “liberal giving (as of money) to or as if to an inferior; also: something so given.” The media seems at times to forget that the purpose of economic development is to raise peoples’ living standards.
The New York Times presented Ecuador’s recent economic progress by using a passive voice: “[Correa] has governed during a period of relative prosperity,” which not only understates the impact of the Correa administration’s policies but also the challenges presented over the past several years – most notably the global recession, which collapsed not only oil prices but remittances, on which Ecuador was also heavily dependent.
Some reporting has understated some of the ways in which the government’s policies have impacted Ecuadoreans’ lives. For example, the Associated Press reported that “The bulk of [Correa’s] backers are poor and lower-middle class Ecuadoreans who in 2010 represented 37 and 40 percent, respectively, of the country’s population according to the World Bank.” Bloomberg’s Nathan Gill, meanwhile, wrote:
As the head of a nation where about one in three of its 15.4 million citizens live in poverty, Correa defaulted on $3.2 billion of bonds in 2008 and pushed through laws nationalizing the country’s oil reserves during his first two terms in office. While the moves provided short-term gains, the 49-year-old Correa, an ally of Venezuela’s Hugo Chavez, is now paying the cost with stagnant crude output and declines in private investment needed to boost slumping growth.
In fact, as we noted in our new paper, “The national poverty rate fell to 27.3 percent as of December 2012, 27 percent below its level in 2006,” (before Correa came to office). (The New York Times’ Neuman noted this accomplishment: “In a country of 14.6 million people, about 28 percent lived in poverty in 2011, down from 37 percent in 2006, the year before Mr. Correa took office, according to World Bank data.”)
Nor are Ecuador’s recent gains “short term,” as Gill described them. The data shows sustained progress on reducing unemployment and poverty, for example.
Other common themes include that Correa has clamped down on freedom of press. Such statements are often ironically followed by mention of Correa’s granting of political asylum to Wikileaks founder Julian Assange, such as in the Christian Science Monitor sub-header “President Correa has been criticized internationally for limiting press freedoms and granting Julian Assange asylum in Ecuador’s London embassy.” Readers of AFP might be led to believe Assange was granted asylum in order to “irritat[e] the United States …after the anti-privacy group released tens of thousands of secret US military and diplomatic reports.”
Press coverage has emphasized that Correa is “an ally of Venezuela’s Hugo Chavez,” rather than a friend or “ally” of Brazilian President Dilma Rousseff, for example. This meme positions Correa as “part of a group of leftist presidents in the region that include Mr. Chávez in Venezuela and Evo Morales in Bolivia,” also known as the “bad left” in Washington policy circles and among media commentators. (Brazil has always been considered part of the “good left,” despite the Brazilian government’s longstanding support for Chávez, Morales and other “bad left” leaders and opposition to various U.S. government projects and policies.)
Another theme has been whether Correa seeks to be – or has the potential to be – a “successor” to the “ailing” Hugo Chávez in a “regional leadership role.” The New York Times’ Neuman wrote on Friday that “[A new four-year term] may also give Mr. Correa a chance to raise his international profile. With the ailing president of Venezuela, Hugo Chávez, sidelined by cancer, Mr. Correa is arguably the most vocal leftist leader in the region.” No evidence for Correa’s supposed regional leadership ambitions is presented, other than that “He made international headlines last year when he defied Britain by granting asylum to Julian Assange, the founder of WikiLeaks.”
Related article
- Ecuador’s Correa breezes to 2nd re-election (businessweek.com)
Light on the Dark Side of Dorner’s Rampage
By Linn Washington Jr. – This can’t be happening – 02/11/201
On September 10, 2012 the Los Angeles Times published an article with the headline: “LAPD to hold meetings on use of force policies.”
Top Los Angeles police officials announced those community meetings to counter growing criticism about videoed brutality incidents involving LA police officers in the preceding months, that article noted.
On November 24, 2012 The Daily Beast posted an article with the headline: “In Los Angeles, Questions of Police Brutality Dog LAPD” reporting abuse incidents by officers of that department placed under federal oversight between 2001 and 2009 after repeated brutality and corruption scandals.
Over two months after that Daily Beast posting about LAPD brutality a fired LAPD officer unleashed a murderous rampage as revenge against his claimed unfair firing by the LAPD.
That former LAPD cop, military veteran Christopher Dorner, claimed his attack campaign was retaliation against retaliation LAPD personnel directed against him for his reporting a 2007 brutality incident he observed while on duty.
LAPD officials found Dorner’s brutality claim against a policewoman unfounded and fired him for filing false statements. The father of the alleged victim said his mentally ill son confirmed Dorner’s account.
LA police officials contend that man sustained facial injuries from falling into some bushes while resisting arrest by Dorner, not from the female officer’s kick.
Despite the recent record of brutality detailed in news coverage last fall, a New York Times article on the Dorner rampage inferred brutality by Los Angeles police – brutality that sparked two of America’s most destructive urban riots – was not a current problem.
The last sentence in the seventh paragraph of that February 7, 2013 New York Times article stated: “Mr. Dorner laid out grievances against a police department that he said remained riddled with racism and corruption, a reference to a chapter of the department’s history that, in the view of many people, was swept aside long ago.”
That ‘view’ of many people cited in the NY Times article obviously did not include the views of the dozens participating in an October 2012 demonstration against police brutality outside the LAPD headquarters.
On October 22, 2012 the Los Angeles Times published an article with the headline: “Downtown L.A. streets closed by protest at LAPD headquarters.”
Yes, the 1992 riots that rocked LA following the state court acquittal of the four LA police officers charged in the videoed savaging of Rodney King – a disturbance causing over $1-billion in damages and claiming 53 lives – arguably qualifies as long-ago.
But long-ago does not apply to incidents within the past year like the woman kicked in her groin by a female LAPD officer in July 2012 who died minutes later while hog-tied inside a patrol car.
That ‘view’ cited in the NY Times article is not shared by victims of the incidents triggering those LAPD brass community meetings like the skate boarder suckered punched by police, the nurse slammed to the ground by two officers who gave each other a fist-bump for their take-down and the handcuffed man shot by police.
While ‘many people’ certainly believe or want-to-believe LAPD brutality is long gone, perhaps by reforms implemented during that federal oversight, news media accounts pushing that view without balance of companion context comprise an element (albeit small) in the constant framing of police brutality as isolated incidents instead of long standing, systemic procedure by police across America.
At least that NY Times article referenced racism and brutality unlike many media entities that reported Dorner’s rampage without providing context beyond his crazed reaction to his firing.
The March 1968 Kerner Commission Report on sixties-era urban riots – the majority triggered by police abuse incidents including the deadly 1965 LA Watts Riots – criticized the news media for failing to “analyze and report adequately on racial matters” in America that included coverage of festering grievances like police brutality.
Compounding context-deficient coverage, news media reportage on police brutality rarely examines the central role played by prosecutors in perpetuating the problem.
The Los Angeles DA’s Office pushed one case protecting alleged police misconduct all the way to the U.S. Supreme Court, where in 2006 that court’s conservative majority issued a ruling experts said eroded protections for whistle-blowing public employees.
The case involved a veteran LA prosecutor who said supervisors retaliated against him arising from his exposing improprieties by a deputy during a drug investigation. Those supervisors pursued the drug prosecution despite those improprieties and then bashed the whistle-blower for providing the defense details of the improprieties as required by law.
That 11/12 Daily Beast article began with an anecdote about LA city prosecutors declining to charge officers caught lying about a December 2010 incident where a woman was beaten and tazed by four officers, one of whom videoed the incident.
Fired Officer Dorner alleged that his LAPD problems began in July 2007 when his training officer, a female, kicked a man during an arrest outside a hotel. Dorner claimed that training officer and their immediate supervisor compelled him to fudge his official report omitting the kicking, according to court findings.
LAPD officials found Dorner guilty of making false statements relying largely on an Internal Affairs investigation. The IA investigator interviewed the training officer and two hotel employees but neither Dorner nor the victim according to an October 2011 California state appellate court ruling that upheld a trial court ruling rejecting Dorner’s appeal of his 2009 LAPD firing.
LAPD officials, in their administrative proceeding, faulted Dorner for failing to immediately report the alleged kicking incident. Officials brushed aside Dorner’s stated fears of backlash for exposing that alleged misconduct and his having quickly reported that incident privately to two LAPD supervisors he knew whom he also had told about racial slurs directed at him during his police academy training.
Officials also claimed Dorner manufactured the brutality complaint to maliciously deflate an adverse performance evaluation he suspected he would receive from his training officer.
LAPD officials have initiated a reexamination of Dorner’s firing since the rampage began.
Dorner, in an online manifesto posted before his rampage, criticized the fact that officers involved in both the Rodney King and other brutality scandals were promoted not penalized.
An analysis of the Dorner incident prepared by Drexel University professor George Ciccariello-Maher and Mike King, a PhD candidate at UC Santa Cruz reminded that brutality against non-whites remains a “structural function” of the LAPD.
“It is the commonness of excuses for police abuse/murder, the erasure of the victims as collateral damage that should be highlighted when trying to make sense of this broken, rogue, former Los Angeles cop,” Ciccariello-Maher and King wrote.
Photo – credit Wikipedia
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From the Archives
Long Before Epstein: Sex Traffickers & Spy Agencies
By Elizabeth Vos | Consortium News | August 23, 2019
The alleged use of sexual blackmail by spy agencies is hardly unique to the case of Jeffrey Epstein. Although the agencies involved as well as their alleged motivations and methods differ with each case, the crime of child trafficking with ties to intelligence agencies or those protected by them has been around for decades.
Some cases include the 1950s -1970s Kincora scandal and the 1981 Peter Hayman affair, both in the U.K.; and the Finders’ cult and the Franklin scandal in the U.S. in the late 1980s. Just as these cases did not end in convictions, the pedophile and accused child-trafficker Jeffrey Epstein remained at arms’ length for years. … continue
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