Jeffrey Sachs on TPP

Jeffrey Sachs on TPP

“This is a NAFTA Treaty Writ Large”

by Ben Beachy

Public Citizen Eyes on Trade (September 12 2014)

These are largely industry- and lobby-driven activities. They are not yet in any way proved to be in the interest of American people, and this is a matter of significant concern. I don’t understand how something of such vast significance for billions of people could even presume to be treated in this manner.

That’s the take on the controversial Trans-Pacific Partnership (TPP) {1} and Trans-Atlantic Free Trade Agreement (TAFTA) {2} from Jeffrey Sachs – prominent economist, Columbia University professor, and Earth Institute director.

Professor Sachs lambasted the proposed deals on Wednesday at a Forum on Free Trade Agreements, hosted by Congresswoman Rosa DeLauro. Other speakers who criticized the pacts and called for a new trade agreement model included Maine Attorney General Janet Mills, K J Hertz of AARP, Jared Bernstein of the Center on Budget and Policy Priorities, Thea Lee of the AFL-CIO, and Debbie Barker of the Center for Food Safety.

Click {3} to check out the video of their incisive critiques of the TPP and TAFTA.

Excerpts from Professor Jeffrey Sachs on the TPP and TAFTA (aka TTIP)

TRANSPARENCY: The fact that the public is not engaged means that we should worry because we do know that when things are managed in secret, as these negotiations have been, it’s the organized and powerful interests that by far dominate the proceedings. These are largely industry- and lobby-driven activities. They are not yet in any way proved to be in the interest of American people, and this is a matter of significant concern. I don’t understand how something of such vast significance for billions of people could even presume to be treated in this manner. One could imagine that negotiations over very specific tariff rates or very specific numerical clauses in some of these chapters could be held privately. But the idea that the main text around issues as broad as investor protection, dispute settlement, taxation, financial flows, intellectual property, would be done secretly, is shocking actually to me. But we’re talking about the basic rules of the international economy for the three major regions of the world. There is no reason in the world I can see for this text not to be public, not to be publically vetted, and not to be updated over time.

WRONG TRADE AGREEMENT MODEL: When President Obama talks about TPP and TTIP being 21st century trade agreements, the starting point should be that the phenomena of globalization more generally, the extent of financial crises, the growing environmental catastrophe worldwide of climate change and loss of biodiversity, the crises of international disease (such as we now have with Ebola in West Africa) need to be not only considered as footnotes. And they’re not even that in any way. They need to be in the forefront of our international economic relations … And in that sense I can’t support either of these negotiations with what I see now. I think that they would distract us from the more important global issues. I don’t think they rise close to the standard of being 21st century trade and investment agreements, not even close. They are very much 20th century agreements which were already out of date by the time they were negotiated. This is a NAFTA treaty writ large, or this is the same negotiation that we’ve had in many other cases.

TPP AND TTIP AS INVESTEMT PROTECTION AGREEMENTS, NOT TRADE PACTS: These proposed agreements are mostly investor protection agreements, rather than trade agreements. There are trade elements in them, but this is mostly about investor protection: investor protection of property rights of investors, of prerogatives of investors, of IP of investors, of the regulatory environment of investors, and so forth. Recognizing that, we have some reasons to support some of these issues, but a lot of reasons for worry, because it’s not true that everything that is in the investor’s interest is in the worker’s interest. It’s not true that everything that’s in the investor’s interest is in the broad interest of the American people or the people in host countries where the American investment may be going, or in the same way, investment that could be coming into this country. So we’re talking about mainly investment rules. And trade, which is already quite liberalized in the straightforward trade manner, doesn’t change all that much from what we know of these treaties. These are basically not trade agreements. They are investment agreements.

INVESTOR-STATE: The whole issue of investor-state dispute settlement: to my mind, it is quite alarming that the administration seems until this day to be pushing something which more and more observers, participants, legal scholars view as out of control … And the problem with this is that it creates an extra-legal venue for arbitration that has proven in many investment treaties in recent years to be highly deleterious for basic government regulatory processes and especially around issues of health, safety, environment, and other issues. The mechanism proposed here which is already part of many bilateral treaties and some multilateral investment treaties – is giving more and more power to investors to challenge general government regulatory actions. Not breach of specific investment contracts, but general regulatory and legislative actions on the claim that those general regulatory or legislative actions are against the interests of the investors and somehow therefore violate the implicit standards or guarantees that these investors have vis-a-viss the host countries. In other words, standards of general applicability against smoking or for environmental protection, or for taxation of natural resources and so forth are now coming under challenge in these investor-state dispute arbitration panels and forcing governments – the host governments – to back down or rescind or, in the face of a lost arbitration, to cancel laws of general applicability, and therefore to lose the sovereign right to pursue national interest at the face of investor interest … As far as I know the United States government continues to press this clause today. I regard that alone as reason to oppose both of these treaties. If this remains in place, it is absolutely in the wrong direction. And, these clauses have proven to be increasingly dangerous and I’ve seen publicly no response to this at all.





Categories: Uncategorized

TPP: Limiting the US Government’s Ability …

2014/09/18 1 comment

… to Control Rising Drug Costs

by Ben Beachy

Public Citizen Eyes on Trade (August 28 2014)

This is the third post in a three-part series on how the Trans-Pacific Partnership (TPP) {1} could increase medicine prices in the United States. Click {2} for the first post’s introduction to the problem, and {3} for the second post’s outline of new rights that the TPP would give to Big Pharma.

A leaked draft TPP annex {4} with the Orwellian title “Transparency and Procedural Fairness for Healthcare Technologies” would set broad limits on governments’ prerogatives to negotiate or mandate lower drug prices, including for taxpayer-funded programs such as Medicare, Medicaid and veterans’ and military health programs. Pushed by US negotiators, these proposed TPP rules would conflict with existing and proposed policies to reduce healthcare costs for seniors, military families and the poor.

Rolling back medicine cost savings for US veterans

The US government uses automatic price reductions to secure lower drug costs for US veterans who benefit from health programs administered by Veterans Administration. US law allows VA to access drug prices at 24 percent below average market prices {5}, and requires drug companies to offer these reduced prices for VA-administered programs as a condition for their medicines being included in other government health programs.

However, this cost-saving mechanism could run afoul of the proposed TPP annex, which requires government drug reimbursements to be based on “competitive, market-derived prices”, or on a system that “appropriately recognizes the value” of the drugs. The government-mandated price-setting system for VA programs would be subject to challenge as not being “competitive” and “market-derived”. VA-secured prices that fall significantly below the prices of patented drugs also could be challenged under the TPP as not “appropriately recognizing” drugs’ value. These TPP provisions, if enacted, could expose the US government to challenges before international tribunals for not rolling back policies that cut healthcare costs for veterans and taxpayers.

Threatening policies that make medicines more affordable for the poor

US federal and state governments currently use several methods to tamp down the prices of drugs provided to low-income families through Medicaid. For example, the US federal government requires drug corporations, as a condition for having their drugs covered by Medicaid, to sign discount agreements that oblige the firms to provide the state and federal governments with rebates to lower the cost of the drugs {6}. These rebates have resulted in a 45 percent reduction in Medicaid spending {7} for brand-name drugs.

State governments can further cut costs by, for example, negotiating lower prices with drug companies in return for placing their medicines on a Preferred Drug List (PDL) – a list of medicines that the state’s Medicaid program will cover without requiring prior authorization from a doctor. States have calculated substantial cost savings from usage of PDLs: New York saved an estimated $381 million {8} in one recent year, while Texas saved an estimated $115 million {9} and Utah saved an estimated $434 million {10}.

Such Medicaid cost containment measures could be challenged under the TPP. Leveraging the government’s buying power to set prices could be attacked as not being “market-derived” or as not “appropriately recognizing” the value of patented drugs. Some argue that the TPP provisions would primarily target federal policies, while Medicaid is administered by state governments. But even if limited to federal policies, the pact’s proposed terms directly contradict Medicaid’s federal cost control efforts, such as requiring drug firms to sign discount agreements. And state-level tools like PDLs could still be challenged under the TPP as part of a program created and controlled by the federal government.

Challenging Obamacare cost reductions for seniors

Before implementation of the landmark Patient Protection and Affordable Care Act of 2010, seniors faced a gap in Medicare drug coverage. After passing a given threshold of drug costs, Medicare beneficiaries went from having to pay 25 percent of a drug’s cost to having to pay 100 percent out of pocket, until reaching a second threshold at which Medicare again covered most costs. Closing this “doughnut hole” was a key objective of the Affordable Care Act, which required drug manufacturers to offer a fifty percent drug price discount to Medicare beneficiaries within the coverage gap {11} if they wanted their drugs to continue being covered under Medicare. As a result of this discount and a gradual increase in Medicare coverage, Medicare beneficiaries within the coverage gap were only responsible for 47.5 percent of brand-name drug costs in 2013 and will be responsible for only 25 percent by 2020.

But under the TPP, the requirement for drug companies to halve the price of their drugs within the coverage gap could be challenged for neither reflecting “competitive market-derived” prices nor “appropriately recognizing the value” of patented drugs. The Obama administration’s TPP healthcare annex thus threatens the cost savings that the administration’s own signature health law has provided to seniors.

Chilling future reforms that could further reduce healthcare costs for retirees

Governments in countries ranging from New Zealand to Japan have kept healthcare costs in check by leveraging the government’s large purchasing power for taxpayer-funded public health programs to negotiate lower drug prices with pharmaceutical corporations. In contrast, for Medicare, which covers more than fifty million Americans {12}, the US government is barred by law from directly negotiating drug prices with pharmaceutical corporations.

Many policymakers, healthcare professionals and even President Obama {13} have called for changes to this law so that the government could ask drug companies to provide lower prices in exchange for getting subsidized access to millions of Medicare recipients. Other reform proposals, including legislation {14} now pending, would have the federal government set maximum prices for drugs covered by Medicare (as it does for health programs provided to veterans) or require that drug companies provide drug rebates (similar to the rebates required under Medicaid). Indeed, the White House itself has proposed requiring drug companies to pay Medicaid-like rebates {15} to providers for treating low-income Medicare beneficiaries. The administration estimates this would deliver $117 billion in savings over ten years.

However, the TPP presents an obstacle to these proposals to control soaring Medicare costs. All of the above-mentioned policies involve direct government intervention in price setting, conflicting with the TPP requirement for market-derived prices, and inviting challenges for failing to “appropriately recognize” the value of patented drugs.

Undermining drug discounts for underserved communities

Under a program known as 340B, the US federal government enables nongovernmental health centers – including migrant health centers, homeless health centers, children’s hospitals and family planning centers – to offer their diverse constituencies more affordable drugs. The federal government requires pharmaceutical firms to offer discounted drug prices to 340B-covered health centers {16} via rebates, as a condition for having their drugs covered by Medicaid.

As a federally-run program that mandates below-market prices, the program could be challenged as a violation of the proposed TPP rules requiring drug prices to be market-derived or to reflect the value of patented drugs. In addition, the leaked TPP annex would require the US government to allow pharmaceutical corporations to appeal drug pricing decisions such as the rebate amounts set under the 340B program, though they have very limited appeal rights for such decisions under US domestic law. The TPP would thus give pharmaceutical corporations a new means of challenging 340B policies that reduce drug prices for underserved populations.






{5} h












Categories: Uncategorized

TPP: Expansive Rights for Big Pharma …

… Expensive Medicines for US Consumers

by Ben Beachy

Public Citizen Eyes on Trade (August 26 2014)

This is the second in a three-part series on how the Trans-Pacific Partnership (TPP) {1}could increase medicine prices in the United States.  Click {2} for the first post’s introduction to the problem.

Leaked draft intellectual property texts {3} for the TPP reveal broad monopoly protections for pharmaceutical corporations, which elevate the costs of medicines and medical procedures. Inserting these sweeping corporate privileges into the pact would undermine US efforts to make healthcare more affordable.

Some of the leaked TPP monopoly protections for Big Pharma could require scrapping the Obama administration proposal to save more than $4 billion on biologic medicines. Biologics –  the latest generation of drugs to combat cancer, rheumatoid arthritis and other diseases –  are exceptionally expensive, costing approximately 22 times more than conventional medicines {4}.

Under US law, pharmaceutical corporations enjoy monopoly protections for biologic drugs, even in the absence of a patent, for a twelve-year period of “exclusivity”. During these twelve years, the Food and Drug Administration is prohibited from approving more affordable versions of the drugs, inflating the cost of these life-saving medicines {5} as pharmaceutical firms accrue monopoly profits.

To lower the exorbitant prices and the resulting burden on programs like Medicare and Medicaid, the Obama administration’s 2015 budget would reduce the exclusivity period for biologics from twelve to seven years. The administration estimates this would save taxpayers more than $4.2 billion {6} over the next decade just for federal programs.

However, at the request of Big Pharma, US trade negotiators are demanding the twelve-year exclusivity requirement for biologics in the TPP {7}. This would lock into place pharmaceutical firms’ lengthy monopolies here at home. That is, Obama administration negotiators would effectively scrap the administration’s own proposal to save billions in unnecessary healthcare costs and lock in rules that would forbid future presidents or Congresses from doing so.

Investor Privileges: Empowering Big Pharma to Directly Attack US Health Policies

Another TPP text – the leaked draft investment chapter {8} – reveals that the deal would grant foreign firms the power to skirt domestic courts, drag the US government before extrajudicial tribunals, and directly challenge patent laws and medicine cost containment policies as violations of their new TPP foreign investor “rights”.

The tribunals, comprised of three private attorneys, would be authorized to order unlimited taxpayer compensation for domestic policies perceived as undermining pharmaceutical corporations’ “expected future profits”. Effectively, this system would elevate individual pharmaceutical firms to the same status as the countries that may sign the TPP, empowering such firms to privately enforce the public agreement.

Such extreme “investor-state” rules have been included in past US “free trade” agreements, forcing taxpayers to pay firms more than $430 million {9} for toxics bans, land-use rules, water and timber policies and more. Just under US pacts, more than $38 billion is pending in corporate claims against patent policies, pollution cleanup requirements, climate and energy laws, and other public interest polices.

This includes a $500 million claim that US pharmaceutical corporation Eli Lilly launched in 2013 against Canada’s legal standard for granting patents. The firm is demanding compensation because Canadian courts enforcing Canadian patent law ruled that two of Eli Lilly’s medicines failed to meet the Canadian standard to obtain a patent, which requires demonstrating a drug’s promised utility. This is the first attempt by a patent-holding pharmaceutical firm to use the extraordinary investor privileges {10} provided by US “trade” agreements as a tool to push for greater monopoly patent protections.

The TPP would vastly expand the investor-state threat to US public health policies, given the thousands of corporations based in TPP countries that would be newly empowered to launch cases against US laws on behalf of any of their more than 14,000 US subsidiaries {11}.

Stay tuned for Post #3 on yet another way that the TPP could limit the US government’s ability to control rising drug costs.













Categories: Uncategorized

The “Trade” Deal that Could Inflate Your Healthcare Bill

by Ben Beachy

Public Citizen Eyes on Trade (August 21 2014)

Much has been said about how the Trans-Pacific Partnership (TPP) {1} threatens to raise medicine prices in TPP developing countries {2}, thanks to the deal’s proposed expansion of monopoly protections for pharmaceutical corporations {3}.

Less has been said about the proposed TPP rules that could increase medicine prices in the United States {4}.

Americans pay far more for healthcare than people in any other developed country {5}, even though US life expectancy falls below the average for developed countries. A major contributor to our bloated healthcare costs is the high prices for medicines in the United States {6}. According to the Government Accountability Office, US drug prices increased more than seventy percent faster {7} than prices for other healthcare goods and services over 2006 to 2010. As a result, millions of Americans cannot afford the medicines they need to live healthy lives.

Soaring drug prices also drive up the amount that taxpayers must pay to fund public health programs such as Medicare, Medicaid and programs covering the US military and veterans. Indeed, rising healthcare costs are the number one contributor to the US government’s projected long-term budget deficits {8}.

To try to combat the twin problems of unaffordable healthcare and unsustainable deficits, US federal and state governments already use several tools to tamp down the cost of drugs – for Medicare, Medicaid and for military healthcare under TRICARE and the Department of Veterans Affairs (VA). Many more such cost containment policies have been proposed.

Yet, the TPP threatens to chill such proposals and even roll back existing policies to rein in exorbitant medicine prices. Leaked draft TPP texts – an intellectual property chapter, investment chapter and healthcare annex – contain expansive rules that would constrain the ability of the US government to reduce medicine prices. Getting these terms into the TPP was a key objective of large US pharmaceutical corporations that stand to reap monopoly profits from expansive patent terms and restrictions on government cost containment efforts. This incentive may explain why pharmaceutical corporations have lobbied Congress for the TPP more than any other industry.

The TPP’s threats to the affordability of US healthcare have spurred major groups that have not traditionally taken part in trade policy debates to warn against the TPP’s provisions. For example, AARP – representing more than 37 million Americans over the age of fifty – joined unions and consumer groups in a November 2013 letter to President Obama to express “deep concern” that texts proposed for the TPP would “limit the ability of states and the federal government to moderate escalating prescription drug, biologic drug and medical device costs in public programs”. The groups concluded that the TPP could “undermine access to affordable health care for millions in the United States and around the world”.

Stay tuned for Post #2 on specific TPP threats to affordable US healthcare: Expansive Rights for Big Pharma, Expensive Medicines for Consumers.












Categories: Uncategorized

US Corporate Executives to Workers:

Drop Dead

Naked Capitalism (September 16 2014)

The Washington Post has a story that blandly supports the continued strip mining of the American economy. Of course, in Versailles that the nation’s capitol has become, this lobbyist-and-big-ticket-political-donor supporting point of view no doubt seems entirely logical.

The guts of the article {1}:

Three years ago, Harvard Business School asked thousands of its graduates, many of whom are leaders of America’s top companies, where their firms had decided to locate jobs in the previous year. The responses led the researchers to declare a “competitiveness problem” at home: HBS Alumni reported 56 separate instances where they moved 1,000 or more US jobs to foreign countries, zero cases of moving that many jobs in one block to America from abroad, and just four cases of creating that many new jobs in the United States. Three in four respondents said American competitiveness was falling.

Harvard released a similar survey this week, which suggested executives aren’t as glum about American competitiveness as they once were …

Companies don’t appear any more keen on American workers today, though. The Harvard grads are down on American education and on workers’ skill sets, but they admit they’re just not really engaged in improving either area. Three-quarters said their firms would rather invest in new technology than hire new employees. More than two-thirds said they’d rather rely on vendors for work that can be outsourced, as opposed to adding their own staff. A plurality said they expected to be less able to pay high wages and benefits to American workers.

The researchers who conducted the study call that a failure on the part of big American business. They say the market will eventually force companies to correct course and invest in what they call the “commons” of America’s workforce. “We think this mismatch is, at some fundamental sense, unsustainable”, Michael Porter, one of the professors behind the studies, said in an interview this week.

But what if it’s not?

Why, if you were a multinational corporation, would you feel a need to correct that mismatch? Why would you invest in American workers? Why would you create a job here?

At what point does it become a rational business decision for American companies to write off most Americans?

It’s hard to know where to begin with this. First, Harvard Business School is hardly a bastion of socialist thinking. Porter and his colleagues are correct to call out short-sightedness in the incumbents of C-suites. And there’s nary a mention of the role of the long-overvalued dollar, thanks to the lessons that China and the Asian tigers learned in the wake of the 1997 Asian crisis: keep your currency pegged low, run a big trade surplus so you have such a large foreign exchange warchest as to never again be subject to the tender ministrations of the IMF.

But second, and more worrisome, is a vastly larger intellectual failure on the part of the Washington Post and even the Harvard investigators. They’ve completely lost sight of whose interests are at work. The HBS grads are looting the American economy for their own personal profit. Making better products and developing new markets is hard and it takes time for that effort to pay off. Cutting costs is easy. Getting a pop in the price of your stock due to investors’ belief that offshoring and outsourcing will lower costs is even easier.

It’s far from a given, particularly at this juncture, that more outsourcing and offshoring is good for anyone aside from top executives, well-placed middle managers, and the various intermediaries in the outsourcing industry (yes, there is such a thing). We’ve been writing for years that even in the 1990s, we were hearing from executives at companies that sent operations overseas that the business case was weak, but they went ahead regardless to please Wall Street. Chief investment officers have said flatly that outsourcing is overrated as a cost saver. {2}

In the early 2000s, we heard regularly from contacts at McKinsey that their clients had become so short-sighted that it was virtually impossible to get investments of any sort approved, even ones that on paper were no-brainers. Why? Any investment still has an expense component, meaning some costs will be reported as expenses on the income statement, as opposed to capitalized on the balance sheet. Companies were so loath to do anything that might blemish their quarterly earnings that they’d shun even remarkably attractive projects out of an antipathy for even a short-term lowering of quarterly profits.

And even when these projects actually do lower costs (as opposed to transfer income from lower-paid workers to middle managers, who need to do more coordinating, and senior executives), there are hidden costs in terms of extended supply chains, lost flexibility, and ceding the opportunity to develop expertise to vendors. In other words, even when profits improve, it’s typically achieved by making the company more fragile.

This unwillingness to invest represents a failure of capitalists to do their job on a massive scale. US-style short-termism has become all too common around the globe. As yours truly and Rob Parenteau wrote for the New York Times in 2010 {3}:

For instance, IMF and World Bank studies found a reduced reinvestment rate of profits in many Asian nations following the 1998 crisis. Similarly, a 2005 JPMorgan report noted with concern that since 2002, US corporations on average ran a net financial surplus of 1.7 percent of GDP, which contrasted with an average deficit of 1.2 percent of GDP for the preceding forty years. Companies as a whole historically ran fiscal surpluses, meaning in aggregate they saved rather than expanded, in economic downturns, not expansion phases.

The big culprit in America is that public companies are obsessed with quarterly earnings. Investing in future growth often reduces profits short term. The enterprise has to spend money, say on additional staff or extra marketing, before any new revenues come in the door. And for bolder initiatives like developing new products, the up front costs can be considerable (marketing research, product design, prototype development, legal expenses associated with patents, lining up contractors). Thus a fall in business investment short circuits a major driver of growth in capitalist economies.

Companies, while claiming they maximize shareholder value, increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in financial speculation. They turn their backs on the traditional role of a capitalist – to find and exploit profitable opportunities to expand his activities

Some may argue that lower investment rates are the result of poor prospects, but the data does not support that view. Corporate profits have risen as a share of GDP since the early 1980s, reaching unprecedented levels right before the global financial crisis took hold. Even now, US profit margins are nearly two thirds of the way back to their prior cyclical high, despite a subpar recovery.

More than four years later, those sorry trends have continued, with profits now at a record share of GDP. But the top brass has been handsomely rewarded for its sorry behavior. They’ve discovered that the more they squeeze workers, both here and abroad, the more they can keep for themselves.

And in a bit of unintended irony, the Washington Post shows a headline for another way they’ve succeeded in making the greater public subsidize their profits: How the Postal Service subsidizes cheap Chinese goods {4}. As readers know, the sources of corporate welfare are legion. Walmart’s super low wages are subsidized by $6.2 billion a year in public assistance, a significant portion of its $17 billion in reported 2013 profits {5}. And that’s before you factor in the value of state and local tax breaks that Walmart gets by pitting communities against each other when it is planning new store locations. These concessions are particularly dubious given that Walmarts don’t create jobs, but do a combination of destroy them (by putting smaller retailers out of business) and steal them (by syphoning retail sales and hence other jobs) from neighboring communities.

While Walmart is the poster child of subsidized profits, the Bentonville giant has plenty of company, including large financial firms (so heavily subsidized and backstopped as to not be properly considered private companies), Big Pharma (a huge beneficiary of decades of NIH-funded research) and Big Auto (which has played the “pit communities against each other” game as adeptly as Walmart in securing subsidies for moving plants into union-hostile Sunbelt states).

Unfortunately, Porter appears to have characterized the problem accurately when he depicts the attitude of these self-serving executives as a looting of the commons of labor, meaning much of America. And the precursor of the early industrial period show that this can be a sustainable strategy until workers finally rebel. The Bolshevik revolution, which was actually a peasant revolt, was more than a century after the enclosure movement began its successful program to turn independent yeoman farmers into desperate factory wage-slaves. So while history suggests that capitalists will push workers beyond their breaking point, that rupture can be a very long time in coming.








Categories: Uncategorized

US Leadership Against Russia …

… Crippled by its Own Hypocrisy

Washington’s major limitation towards Russia is not a lack of military leadership, but a lack of moral leadership.

by Stephen Zunes

Foreign Policy in Focus (September 15 2014)

The fragile ceasefire between the US-backed Ukrainian government and Russian-backed rebels could help pave the way to a peaceful resolution to the conflict – or simply postpone a worsening of the crisis. Unfortunately, Washington’s leadership of international efforts against Russian aggression has been severely compromised by its own hypocrisy and double standards.

As with Russia in eastern Ukraine, the United States has a long history of arming, training, and even providing personnel in support of rebel groups in such countries as Afghanistan, Angola, Nicaragua, Libya, Syria, and elsewhere in contravention of international legal norms of non-interference in the internal affairs of foreign nations. While it doesn’t make Russia’s role in Ukraine any more legitimate, at least Moscow can point to the fact that in none of the cases of US intervention in civil conflicts was the conflict along the US border, nor were the rebel movements led by those who identified as Americans.

Similarly, while demands by the United States for the Russian government to apologize for its role in the downing of a civilian airliner over Ukraine are quite appropriate, it’s important to note that the United States never apologized for the 1988 downing of an Iranian airliner over Iranian waters by a US Navy warship. Indeed, the two officers responsible for shooting down the civilian plane were given medals for “meritorious service” following the incident.

Selective Outrage

The international community has legitimate concerns regarding Russia’s aggrandizement. The so-called referendum used to justify its takeover of Crimea did not include the option of maintaining the peninsula’s current legal status with Ukraine and took place under the presence of tens of thousands of armed foreign troops. Polls as recently as last year showed only a minority of the population in Crimea supporting a union with Russia, and a poll this spring showed the same for the residents of eastern Ukraine. Furthermore, the Russian annexation constitutes a direct violation of both the Ukrainian constitution and the 1994 Budapest Treaty signed by Russia, Ukraine, and the five permanent members of the UN Security Council. It is important to recognize, however, that Crimea was not the first such illegal annexation in recent years. Indeed, despite the leadership Washington has taken in mobilizing international opposition to Russian expansionism, the United States has taken a very different attitude in most of these other cases.

In 1975, in violation of two unanimous UN Security Council resolutions and a landmark decision by the International Court of Justice, Morocco invaded and annexed the former Spanish colony of Western Sahara. That same year, Indonesia invaded and annexed the newly independent island nation of East Timor, also in violation of a series of UNSC resolutions. Though the United States voted in favor of these unanimous resolutions, US ambassador to the United Nations Daniel Patrick Moynihan blocked the Security Council from enforcing them, later acknowledging that

… the United States wished things to turn out as they did, and worked to bring this about. The Department of State desired that the United Nations prove utterly ineffective in whatever measures it undertook.

Not only did the United States refuse to impose sanctions on Morocco or Indonesia, but US military aid to these two countries actually increased following their conquests. This included direct support for their bloody counter-insurgency operations against the popular nationalist movements resisting the occupations.

Thanks to years of campaigning by the international human rights community, along with the tenacious and largely nonviolent resistance by the East Timorese, Indonesia finally rescinded its annexation and withdrew from East Timor in 1999. Unfortunately, the Obama administration, like the Bush administration before it, appears to be pushing for international recognition of Morocco’s illegal annexation of the occupied Western Sahara under that autocratic monarchy’s dubious “autonomy” proposal.

The United States has similarly offered few objections to Israel’s annexation of greater East Jerusalem following its conquest of the Palestinian-populated area in 1967. While the US allowed six Security Council resolutions to pass demanding that Israel rescind its annexation and reverse other efforts to alter the city’s legal status, Washington has blocked their enforcement. During the 1990s, congressional legislation and executive actions by the Clinton administration effectively recognized the illegal Israeli takeover. More recently, a bipartisan congressional resolution in 2007, along with the 2008 and 2012 platforms of both the Republican and Democratic parties, recognizes Jerusalem as “the undivided capital of Israel”.

The US government also appears to have effectively endorsed Israel’s illegal 1980 annexation of much of Syria’s Golan province. As in the case of the other land grabs, rather than impose sanctions on the conquering power, the US government has actually increased its aid to Israel since its annexation of the Golan Heights.

Defending the Indefensible

US Secretary of State John Kerry, citing the illegality of any country acquiring “part or all of another state’s territory through coercion or force”, has quite appropriately demanded that Russia withdraw completely from Crimea.

However, he insists that it is “unrealistic” to demand the same of Israel regarding the territories it has seized by force. Indeed, both he and Vice President Joe Biden, when they were in the US Senate in 2004, endorsed the late prime minister Ariel Sharon’s controversial proposal which, while withdrawing settlers from the Gaza Strip, would have Israel unilaterally and illegally annex large swathes of the West Bank to incorporate illegal Israeli settlements and surrounding areas into Israel. That same year, Kerry insisted that questions regarding Israeli compliance with international humanitarian law in the occupied West Bank should be determined not by the International Court of Justice but by domestic Israeli courts, effectively recognizing Israeli sovereignty over the conquered territory.

Our own recent history of invasions hurts US credibility as well: Just days after Russian troops moved into Crimea, for example, Kerry condemned the Russia action on the grounds that “You just don’t invade another country on phony pretext in order to assert your interests”, correctly noting that the Russian actions constituted a “direct, overt violation of international law”. Unfortunately, this gave the Russians an opening to point out that Kerry, along with Biden, had been an outspoken supporter of the illegal 2003 US invasion of Iraq under the false pretext that Iraq still had “weapons of mass destruction”.

Though Obama opposed the invasion of Iraq, he has been put on the defensive by the hypocrisy of his secretary of state and vice president. In a speech in Brussels on March 27, he insisted that the US invasion of Iraq was not as bad as the Russian invasion of Crimea since “We did not claim or annex Iraq’s territory”. While this is indeed an important distinction, it overlooks the fact that the US invasion of Iraq has been responsible for the deaths of hundreds of thousands of people, while the Russian annexation of Crimea resulted in essentially no fatalities and the death toll from eastern Ukraine has been limited to 3,000 people – with most of the civilian casualties a result of shelling and air strikes by the US-backed Ukrainian military. The human costs in eastern Ukraine are tremendous, but they pale in comparison to Iraq, where the United States is again sending airstrikes to deal with the ongoing fallout of its disastrous invasion.

Obama also tried to differentiate between the two invasions by claiming that “America sought to work within the international system”, seemingly implying that if Russian President Vladimir Putin, like US President George W Bush, had sought UN approval, failed, and then invaded anyway, it would have somehow been okay.

Obama’s insistence that, unlike Russia, “We did not grab [Iraq's] resources for our own gain” is questionable, given the generous oil production sharing agreements imposed on the Iraqis during the US occupation. Similarly, even if one accepts his claim that the US “left Iraq to its people in a fully sovereign Iraqi state that can make decisions about its own future”, Bush-era documents have made clear that this was certainly not the intention of the invasion’s architects. And recent developments put this into further question.

It is critical that the right-wing narrative about President Obama’s alleged “weakness” towards Russia be challenged. In doing so, however, it is also important to stress that Washington’s major limitation is not a lack of military leadership, but a lack of moral leadership.

Categories: Uncategorized

The Manufactured Need

Just Say No

by John K White

CounterPunch (September 02 2014)

In a self-interested society, competition is king and individualism reigns supreme, nowhere more evident than in the world of advertising, which peddles lifestyles instead of products, ignorance over intelligence, and wants rather than needs. But such thinking is a “race to the bottom”, resulting in greater inequality and widening economic disparity. What’s worse, when we fall for scrubbing bubbles, bouncy hair, and “plop, plop, fizz, fizz”, how much easier is it to stomach the bigger lies like war in the name of peace, trickle-down economics, or a 6,000-year-old world where glaciers don’t melt?

According to advertising giant Ogilvy & Mather, “Our job is to make advertising that sells, and the advertising that sells best is advertising that builds brands”. Responsible for the likes of Huggies Happy Babies and the Barbie Fan Club, such ad masters know that name recognition is best served up in oft-repeated slogans such as “Don’t leave home without it” and “Schweppervesence”, which in fact serve only to increase the costs of everyday purchases. Increasing from $500 million in 1950, advertising expenditures today are more than $500 billion worldwide. The sizzle not the steak. Style over substance. Mad men insane.

The most damning indictment of our permanently switched-on consumerism is the dumbing down of critical analysis, which encourages a minimal understanding of products and ideas. In Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole (2008), Benjamin Barber noted that

… for consumer capitalism to prevail you must make kids consumers or consumers kids. That is to say, smarten up the kids – “empower” them as spenders; and dumb down the grown-ups, disempower them as citizens.

Disempowered citizens willing to believe what they’re told and to buy without thinking. Peter Pans with pockets full.

But the purpose of a market is choice, which comes not from a predetermined menu but from a wide spectrum of possibilities. The citizen-consumer decides, freely choosing between Product A and Product B, Politician 1 versus Politician 2, based on need and purpose. Instead, we choose the easy over the hard, the simple over the complex, watchwords for a disconnected society. A Roger Federer Rolex versus a Brad Pitt Tag Heuer is not choice. Nor are the smells of Nicole Kidman versus Charlize Theron.

The inherent flaw in capitalism –  which its first great proponent Adam Smith fully understood –  is that prices are reduced with increased competition, where companies adapt to create viable alternatives. Continuously. But the more successful a venture becomes, the more market share it realizes, which creates an advantage or monopoly position and, thus, less competition. In the process, we become losers in the race to pay more as our world is swamped with profit-only-minded junk, which “result in inefficient patterns of consumption and investment” as Frank and Cook noted in The Winner-Take-All Society (1996). The ultimate result is a reduction of choice, fuelled by the feedback loop of commerce. Just what the advertisers want. To crush the opponents.

Take Christmas, fast approaching (only X shopping days left). Christmas has become an annual consumerist joke. But Christmas wasn’t always the mad selling frenzy it’s become. In The Americans: The Democratic Experience (1974), Daniel J Boorstin noted that the previously little observed holiday became the “spectacular nationwide Festival of Consumption” we know today only after the American Civil War, when department stores such as Macy’s and Woolworth’s began encouraging greater giving to spur on Christmas sales. Christmas is an entirely made-up celebration, begun in a burgeoning American consumerist society by eager “go-getters” looking to make money on the backs of unwitting consumers.

As if anointing the transformation from religious to consumerist celebration, F W Woolworth even instructed his store managers on the importance of the Christmas season, saying,

This is our harvest time. Make it pay.

And, to ensure full participation by his workforce, the Christmas bonus was created not to reward past service or to share the company profits as one might think, but to keep employers from striking during the buying bonanza. In fact, Christmas consumerism was so important that President Roosevelt moved Thanksgiving forward by a week to increase the buying.

An ever-greater plague of advertising upon our houses, but why is selling the purpose of markets? Buying is the purpose, based on need and not manufactured wants, particularly important as we face limits to energy and resources.

Excessive buying is also related to a culture based on growth, where waste is encouraged and false values promoted. Barber cited a Stanford University study that reported “up to eight percent of Americans, 23.6 million people, suffer from compulsive shopping disorder” and a Mintel study that reported “almost one in four Britons admits being addicted to shopping”. According to Heidemarie Schwermer –  a German teacher, psychotherapist, and author who set up her own skills-and-possession exchange shop and lived without money for fifteen years –  consumerism is about

… an attempt to fill an empty space inside. And that emptiness, and the fear of loss, is manipulated by the media or big companies.

This thinking hasn’t gone without some consternation among economists. In The Affluent Society (1958), John Kenneth Galbraith even went so far as to question the whole value system of for-profit production.

Few economists in recent years have escaped some uneasiness over the kinds of goods which their value system is insisting they must maximize. They have wondered about the urgency of numerous products of great frivolity. They have been uneasy about the lengths to which it has been necessary to go with advertising and salesmanship to synthesize the desire for such goods.

Modern advertising is like a glass repairman breaking windows, a virus software company infecting files, a hotelier posting bad reviews about competitors, or, as Galbraith noted, a doctor knocking over pedestrians to get patients: “As a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied”. The desire to be economically enhanced in an increasingly unequal society acts as a catalyst to buy.

And so we’re stuck with the junk, and the long list of Hollywood stars willing to peddle their souls for another dollar, even the ones it seems have a social conscience. George Clooney and Matt Damon coffee. Leonardo DiCaprio bourbon. Gwyneth Paltrow perfume …

It might seem innocuous when peddled by the stars, but commercialism keeps creeping into our everyday lives from the naming of sports arenas to the sponsoring of highways to placing logos on outdoor public basketball courts, as was revealed last week in New York by a large soda company (any guesses which one?) “Theft of cultural space”, as Naomi Klein called it. Half a trillion worth of manufactured Hollywood American Dreams.

What is the true cost of all this unbridled selling? Foreseeing globalization and the movement of production to cheaper labor markets, E F Schumacher wrote in Small is Beautiful (1973), that “the role of the poor is to be gap-fillers in the requirements of the rich”. Slaves, essentially. With less choice and limited access, we become limited in lifestyle –  poor education, cheap consumables, lowest-common denominator entertainment – constantly ripped off by pay-as-you-go charges, high-interest-rate repayments, and hucksters endlessly hawking their junk.

Don’t believe the lies. If we are not beholden, we become free. All we have to do is say no.


John K White, an adjunct lecturer in the School of Physics, University College Dublin, and author of Do The Math!: On Growth, Greed, and Strategic Thinking (Sage, 2013). Do The Math! is also available in a Kindle edition. He can be reached at

Categories: Uncategorized

Get every new post delivered to your Inbox.

Join 30 other followers