WhirledView

California: The Greece of the US?

 By Wendi Maxwell, Guest Contributor

Wendi Maxwell brings personal insight and occasional stories from California. Maxwell is a former policy maker for California adult literacy projects.This is the second in a series about municipal bankruptcy in California.

My city, Stockton California, is beginning mediation with its creditors to try to forestall becoming the biggest city in the US to declare bankruptcy. Stockton’s financial crisis didn’t just come along overnight, and we’re not the only California municipality facing possible bankruptcy. Here in town, as we proceed, the questions on everyone’s lips are “How did this happen?” and “Who’s to blame?”

Recent articles in The Record (Stockton’s daily newspaper) list the major decisions that impact our recent finances. Four costly decisions center on retirement and health care benefits. Three are bonds for redevelopment projects, including the sports arena, ballpark, and marina. At the time, these decisions provided a sense of excitement. A few years later though, we all mourn the results of these financial decisions.    

But our city is not unique in having invested in infrastructure projects during the boom times, nor are we unique in investing in strong wages and benefits for our employees. Cities all over California, and across the nation, face similar problems.

Financial trouble all over the US

Before we use our 20/20 hindsight to condemn any decisions made in the past, let’s remember the financial climate in the state, and the US in general. During the early years of this twenty-first century, the world was awash in money. Stocks and bonds were skyrocketing; housing prices increased by double, then three times their purchase price. Construction and property sales were booming; tax revenues were pouring in. Nationally, we increased debt like there was no tomorrow. At the state level, we did the same thing. And in Stockton, we simply followed everyone else’s lead. Surprisingly, no one predicted an end to the prosperity.

Michael Lewis, in his recent book “Boomerang: Travels in the New Third World” traces the financial health of American states. Between 2002 and 2008, the US spent as freely as its residents, (who bought new houses, then when the value increased, got a second mortgage so they could buy a new car). States and cities did the same thing. Indebtedness across the US doubled, and spending grew by two-thirds. States also systematically underfunded their pension plans, depending on stock market growth to fuel future-funding for pensions. When the stock market dropped, pension plans dropped accordingly. Even though the Federal Reserve promised to keep interest rates at zero, states continued to build in an eight percent growth factor for their pension plans. And a few years later – guess what? There’s not enough money to fulfill the pension obligations. 

Under Water in the Golden State

By Wendi Maxwell, Guest Contributor

(Wendi Maxwell brings personal insight and occasional stories from California. Maxwell is a former policy maker for California adult literacy projects.)

 

My town, Stockton CA, is an agricultural and shipping hub with an inland port about 80 miles east of San Francisco. At 292,000 people it’s the 13^th largest city in California. (Ironically, our population is the same size as Iceland – site of an earlier financial meltdown.) But that’s not why we’re in the news; we’re currently staring bankruptcy in the face.

The banking industry uses the term “under water” to refer to homes whose value is less than the amount owed on the loan. Our houses are not only under water, but our city is too.

We’re used to headlines slamming our city, and we’ve learned to keep a sense of humor about it. If we’re not heading Forbes’ “Most Miserable” list, we’re named the “foreclosure capitol of the world.” We have low levels of literacy, high drop out rates, and a 19 percent unemployment rate. We know we have problems and we have taken dramatic measures to change things, but the hits just keep on coming. Now we’re making new headlines as the first city to test California’s Assembly Bill 506, designed to forestall cities from slipping into bankruptcy.

Stocktonians have been here since the Gold Rush, and we still love our city. Unlike the picture painted by the horror stories, it’s a beautiful place, lined with trees, and laced with waterways and public parks. We go sailing or fishing out our back doors year round, and drive a couple of hours to ski in the winter. We cheer our championship minor league hockey and baseball teams. We’re proud of our downtown redevelopment, our colleges and university, our museum and symphony, our diverse cultural heritage. We have fresh fruit and vegetables all year round, picked ripe from the fields on the edges of town. We’re awash in outdoor festivals with live music and food. We greet each other on the streets and laugh about the hard times. This month though, we’re shell-shocked.   

I spent last Tuesday night watching the live broadcast of the Stockton City Council while they reviewed the appalling state of our city finances. After six hours of financial information, the Stockton City Council declared a state of fiscal emergency (the third year in a row), and voted to suspend debt payments for the rest of the year. With this decision, the city will formally enter into mediated negotiations with its creditors under new legislation created in January 2012. The process is designed to prevent cities from having to declare bankruptcy. (Note: California is one of nineteen states where municipalities can legally file for bankruptcy.)

How did we get here?

Beginning in the mid-nineties and lasting almost a full decade, Stockton experienced an unprecedented boom. Construction exploded. The city issued 3000 building permits per year for four years in a row. Median home prices for our blue-collar town reached $430,000. Tax revenue increased. We were named an “All American City.” With the coffers flush with money, and with no one predicting the recession, city leaders invested in the city.

City leaders and developers embarked on large-scale redevelopment of the urban core, building a new ballpark and arena, establishing redevelopment zones to encourage investment in downtown, and entering into public-private partnerships for additional development. Although many city residents felt the Council was embarking on unnecessary (if not grandiose) plans, there was a sense of promise and excitement. The signs of better times are easy to spot: the lovely marina on the San Joaquin Delta, the gleaming waterfront sports arena and ballpark, and a handsome high-rise meant to house a new city hall.

The city also negotiated contracts with employee unions improving their retirement and health care benefits. Since many city employees are not eligible for Social Security, limiting raises for the promise of health care in their retirement was a good deal. No one seemed to disclose how much it would cost over the long run.

And then the bottom fell out.

Recession

Like many others, Stockton leaders assumed that the boom times would extend indefinitely. When the recession hit, Stockton was deeply impacted. The “All American” city became an example of the new America – out of money and struggling to keep afloat.

West Coast Port Shutdown

By Wendy Maxwell, Guest Contributor

(Wendi Maxwell looks behind the two-dimensional news stories to find the real motivations of the California Bay Area's radicals. Maxwell is a former policy maker for California adult literacy projects.)

If you’ve been wondering what direction the West Coast Occupy groups would take, the answer is here. Are they going to endorse a political candidate? Sponsor legislation? Lobby the government? Use their media time to deliver a well-honed message?

No. Occupy Oakland called for a West Coast Port Strike, and has been joined by cities up and down the West Coast. Together they plan to throw a wrench in the works of American capitalism by closing down the West Coast ports on December 12. Occupy groups from Alaska to Mexico - including Anchorage, Vancouver BC, Seattle, Tacoma, Portland, Oakland, Long Beach, Los Angeles, and San Diego - have all voted to stage a one-day blockade of the ports, closing them to land traffic, and halting shipping out of those ports for that day. It’s a massive flexing of grassroots power with an estimated loss to the Export Grain Terminal (EGT) and Goldman-Sachs of tens of millions of dollars for the one-day strike. (Photo left above: official poster of the December 12, 2011 port strike).

Do the Longshoremen support the port closures?

The West Coast Port Closures are an independent action taken by the Occupy groups, and are not supported by the ILWU (International Longshore and Warehouse Union). In fact, the ILWU sent a formal memo to its 15,000 longshore members and leaders “emphasizing the union’s internal democratic process, and stating its rejection of third-party calls for job actions that have not been sanctioned by its Officers or voted on by member representatives.”

The ILWU is not affiliated with the Strike; the closures are organized and supported solely by Occupy groups in the cities involved. At first glance, this sounds like Occupy moved too quickly to declare the port strikes – either an act of naivete or of hubris. Dig a little deeper though, and you find this is the same thing that happened with the November 2 General Strike in Oakland. (See photo far right). That General Strike resulted in closing the Port of Oakland to truck and train traffic for the day, which in turn meant that ships could not be loaded. How did the ILWU react? (Photo left: Oakland port strike poster with sun in background)

“To Our Friends, We Are Here” Anarchists in Occupy Oakland

By Wendi Maxwell, Guest Contributor

(Wendi Maxwell looks behind the two-dimensional news stories to find the real motivations of the California Bay Area's radicals. Maxwell is a former policy maker for California adult literacy projects.)

“Anarchists have a reputation for running the red lights of history – a practice that can get you where you’re going faster, but can also get you killed.” (Rolling Thunder magazine - An Anarchist Journal of Dangerous Living, fall 2009)  Revolutionary action can take many forms, from street fighting to sabotage to long term infrastructure projects and accountability processes.  We may think the black clad kids smashing Wells Fargo’s windows are simple hooligans; sometimes they’re knowledgeable, philosophically-driven anarchists.

Wait – there’s anarchists?

Local media equates anarchism with chaos, but listen to some Oakland anarchists and you will find they are anything but chaotic. An anarchists’ non-hierarchical decision-making process requiring 90 percent agreement takes lots of talking. And the Oakland anarchists do a lot more than talk and take to the streets. As one person posted online:

“We’ve been helping the poor and homeless in Downtown Oakland for over 10 years. An anarchist was serving the people food and clothing. Anarchists fought to stop the closing of Oakland libraries. Anarchists are teachers, gardeners, and community organizers… Our contributions to OO include direct democracy through the General Assembly (GA), the consensus process, facilitation, most of the proposals we all vote on in the GA, Food not Bombs kitchen, communalism, infrastructure, a rejection of state authority, taking to the streets without a permit, taking the OO space, policing the occupied space ourselves, providing protest medics, security training, safer spaces…”

Part of the current Oakland controversy is the role of Black Bloc which some anarchists employ. Demonstrators using Black Bloc tactics wear unlabelled black clothing and scarves or ski masks to conceal their faces and prevent their identification. A group of protestors “blocked up” appears as one large solid spooky black mass.

Wikipedia notes: “Tactics of a black bloc can include vandalism, rioting and street fighting, demonstrating without a permit, misleading the authorities, assisting in the escape of people arrested by the police, administering first aid to persons affected by tear gas in areas where protesters are barred from entering, building barricades, and resisting the police. Property destruction carried out by black blocs tends to have symbolic significance: common targets include banks, institutional buildings, outlets for multinational corporations, gasoline stations, and video-surveillance cameras.” (Photo left top: anarchist tearing down Wells Fargo sign, November 2011)

Black Bloc participants make a conscious decision to engage in confrontational protest. They have little vested interest in the status quo, and no apparent interest in becoming vested. They practice marching, determine exit strategies ahead of time, and are prepared for conflict and possible arrest. They are the street soldiers of the rebellion. As one protestor noted, “When the cops stop playing around and get real aggressive, I would thank my lucky stars to have the Black Bloc and other aggressive demonstrators at my back. We can't all be Gandhi.” (Photo left of Black Bloc in Oakland Generat Strike by  K. Snicklefritz, November 2011)

Occupy Oakland – the Oakland Commune

By Wendi Maxwell, Guest Contributor

(Wendi Maxwell looks behind the two-dimensional news stories to find the real motivations of the California Bay Area's radicals. Maxwell is a former policy maker for California adult literacy projects.)

What if the Occupy movement is not just about holding demonstrations in public places? What if its real impact is the ability to empower and unite communities to identify their own problems, propose their own solutions, and take matters into their own hands? Meet the Oakland Commune. (Photo right:  Oakland Occupy Wall Street, hella occupy).  

 Oakland – Radical Politics

 Oakland, birthplace of the Black Panthers, has a long history of radical activism. It’s no wonder then, that the Occupy Oakland movement has a different flavor than the original Occupy Wall Street.  Occupy Oakland takes the term “occupation” literally. As an Occupy Oakland rally poster articulates:

 "We live in a world where unemployment and staggering levels of debt are the new normal, where poverty and homelessness are met by police violence and incarceration. The entire global economy is broken, and politicians in the US and elsewhere remain powerless to do anything about it. It’s time to take power into our own hands, to occupy the spaces from which we have been excluded and reclaim everything that has been stolen from us.”

Banners at Occupy Oakland say “Occupy Everything.” An occupation challenges ownership of the space involved, and by taking control of the space, changes its usage. When foreign governments occupy a country after a war, they take control of the territory and change the rules. Occupy Oakland is taking control of the public plaza next to the Oakland City Hall. (Photo left: First Amendment Torn, by David Id, IndyBay)

In two weeks, it has changed from an open plaza where downtown workers take coffee breaks and homeless people sleep at night, to a miniature city inhabited and managed by hundreds of activists. The fledgling city boasts food and shelter, childcare, discussion groups, first aid stations, and even a media room powered by bicycle-driven generators. A weekly print “zine” – The Occupation Times – is issued every week.

Oakland Commune

The newly named Oakland Commune at one time numbered up to 150 tents, with evening gatherings of up to 3000 people in the downtown plaza opposite City Hall. (As of this writing, the downtown plaza has been “retaken” by the occupiers after having been leveled by police, and is actually larger than before the raid.) Oakland City Council, while professing sympathy with the occupiers, expressed concerns about public health issues.

To address the issue, on Day Two a labor coalition contacted by the demonstrators supplied porta-potties – something new and much-needed for the homeless people previously living in the plaza. The Council was concerned about outdoor fires for cooking; protestors arranged with a neighboring church to start using their kitchen.

Vacillating between supportive tolerance and irritation, City Hall soon had new complaints – there were more rats in the plaza than when only the homeless had lived there. Protestors took their success as an excuse to party, and police were concerned about things getting out of hand. Efforts at self-policing became violent. Finally the City issued an eviction notice to clear the plaza of all temporary structures. Oakland Commune ignored it. 

The UK May election results: settling in or a bumpy ride ahead?

By John Dyer, Guest Contributor

(John Dyer is an American dual citizen who relocated permanently to the UK in retirement from public life in the US.  He now lives in Lytham St. Annes on England's West Coast.)

In advance of the 5 May, 2011 UK elections, pundits and politicians alike billed it as a bell weather of the British electorate’s feelings toward the Coalition currently administering central government for the country. 

The UK has been governed by a Coalition of Conservatives and Liberal Democrats  who have run the government since Gordon Brown and the Labour Party were booted out of office in May 2010.  At formation, the new coalition partners received 59% of the vote.   That will become an important statistic later.

In advance of the 5 May election, the British electorate was known to be reeling from the “austerity programme” introduced by the Coalition since taking power.  This “austerity programme” is also sometimes called the “European Plan” after the measures the IMF required of Greece, Ireland, and Portugal in return for their Bailouts. It consists of draconian public service cuts and reinvention of how government delivers services through greater privatization. 

As the Coalition took office, the UK was under significant pressure from the IMF, its own manufacturing sector, financial markets, allies, the Chinese, and Rupport Murdoch, among others, to reduce its significant budgetary deficit.  Spin abounds as to how significant the deficit was/is, but the crucial point for this post is the fact that the Coalition decided to eliminate the budget deficit over the course of the Parliament (e,g, by 2015) largely through serious cuts to public expenditure.  Compare that with current US proposals.

The Two Most Controversial Measures – Higher Education and National Health

The austerity measures included some of high controversy.  Among them, the two most powerful to date have been changes to the financing of higher education and an overhaul of the National Health Service. 

The Coalition shifted the cost of financing higher education from the government to the student in the form of loans, with the government carrying the paper.  They also doubled the basic cap for tuition fees and tripled the maximum cap.  While the government said it expected the new maximum cap of £9,000 a year ($14,580 at today's exchange rate) would be the exception, in the weeks that followed it proved very much the rule. 

Last fall and winter, the streets of London literally ran riot in reaction to this proposal.   Importantly, Liberal Democrats and its leader, Nick Clegg, had pledged never to agree to a rise in tuition fees.  A great deal of their support during the election came from students and University related faculty and staff.

From “Competition” to “Choice” – Translation “Privatization”  

The Conservatives went back on a pledge of their own, although they will argue they did not.  They pledged to leave the National Health Service alone. Instead they have proposed a radical overhaul, introducing measures first described as “competition” then as “choice” but which everyone else translates as “privatization.”  They have also proposed eliminating the current administrative structure in favour of consortiums of general practitioners, The Royal College of Physicians, the GPs and the College of Nursing have all loudly condemned the proposals.  

The economy slowed to zero net growth over the past six months. The Coalition also raised VAT to very high levels.  They countenanced major bank bonuses (although they did tax them).    Labour’s cry became, “It’s hurting but it isn’t working.” That cry appeared to resonate, especially in the North, which has always been the “step child” of “The City.”

Initial Result: The economy slowed to zero net growth over the past 6 months. 

Ink spilled in torrents as the pundits sought to predict outcomes and the politicians manage expectations   In the end, the election was less revolt and more reestablishing pre-Blair political loyalties.  It was also a reaffirmation of the practical political wisdom that the electorate is more engaged, if at all, by self- interest than by rarefied ideas.

Evidence and limits of the “demonstration effect” in the Middle East

By William A. Rugh, Guest Contributor

(Ambassador William A Rugh is a retired career US Foreign Service Officer with extensive Middle East experience.)

Recent developments in the Arab world have shown signs that the so-called “demonstration effect” has been working. That is, Egyptians watching the uprising in Tunisia against President Ben Ali on al Jazeera Television were inspired to copy it and demonstrate against their own long-serving president,  Husni  Mubarak.  Public protests had taken place in Egypt many times before but they had not been sustained and they had not led to regime change.

The demonstration effect does not always work automatically. Indeed, many factors account for the Egyptian revolution, and the reports in al Jazeera of Tunisian street protests alone were not enough. One difference this time was that the Tunisian protestors actually succeeded in ousting Ben Ali. His downfall had an especially powerful impact on Egyptians because of all the long-serving dictators in the region, Ben Ali was considered one of the least likely to fall: Tunisia is economically relatively well off and there have been few outward signs of real discontent.  When he actually fled the country, the Egyptian opposition was inspired to persist. They no longer feared the Egyptian authorities.

The "demonstration effect" and shared common language and culture

One major reason the demonstration effect worked at all in Egypt – and has now been seen in several other countries, notably Yemen, Bahrain and Libya – is that all of these countries share a common language and culture. When the Iranian revolution in 1979 ousted the shah, some people predicted that there would be a demonstration effect in the Arab world, but it did not happen.  Persians and Arabs live in the same region but they do not share the same language or culture.

Unique local conditions also significant

Although the demonstration effect has had an impact elsewhere, it has so far not yet succeeded in regime change other than in Egypt and Tunisia, because local conditions elsewhere are not exactly the same.  On most of the Arabian Peninsula the regimes seem to be shaken but still relatively stable, despite the fact that they are authoritarian systems with limited accountability. There have been some signs of public protest in Kuwait and Saudi Arabia but the governments there are very wealthy and they have handed out money to quiet the complaints and that may work.

Obama’s challenges in Egypt involve delicate diplomacy and public diplomacy

By William A. Rugh, Guest Contributor

(Ambassador William A Rugh is a retired career US Foreign Service Officer with extensive Middle East experience.)

It is difficult to comment with any certainty on the situation in Egypt at this moment because it is changing so rapidly and there are so many unknowns.

We do know that what is happening is a major political upheaval that will have a significant impact on the country and the Middle East whatever the outcome. Egypt has had street protests many times before, but never like this. I was in Cairo working at the US Embassy in January 1977 when serious riots erupted against the Sadat government and Sadat lost control of the streets for two days. But the protest was caused by the rise in the price of bread, and when he reversed the price rise, the rioting stopped and he regained control.

That was simple. Today Mubarak is facing an existential challenge of far greater proportions. It was touched off when the Egyptian people, who have been complaining privately for years, saw how the Tunisian public was able to get rid of its autocratic leader and watch him leave the country.

Mubarak, who has been in office for three decades and was expected to run again in the September election,  has now promised not to do so. But the protesters want him out right now. Many are saying he should leave the country as Ben Ali did. Already there are reports that his son and presumptive heir Gamal has fled to London. No one can predict with certainty what will happen in the next few weeks and months.

An unprecedented popular uprising with no clear leader

We do know that what has taken place in Egypt is a genuine popular uprising that is without precedent in recent decades. It is a popular uprising because it has not been instigated by Egypt’s major opposition political parties, the Wafd, the al Ghad and the Muslim Brotherhood.  They have joined in the protest but belatedly trying to participate in a real outburst of popular anger.  And it has been sustained, not only for days without diminishing, but even during hours when the government’s curfew was supposed to empty the streets. That shows how powerful the uprising is.  We also know that the single demand and the one unifying factor of the many thousands of Egyptians demonstrating and shouting slogans and carrying banners is their insistence that President Mubarak must go.  

What we do not know is what kind of leadership will emerge in this new inchoate movement that has no clear leader, and no articulated program except to get rid of Mubarak. One potential leader is Muhammad El Baradei. He is the former head of the International Atomic Energy Agency.

The Muslim Brotherhood has no leader with national stature, and the Brotherhood has spoken out in support of El Baradei, who is widely respected in Egypt but has no political ambitions and no experience in domestic politics. Some Egyptian analysts believe he could lead post-Mubarak Egypt for a brief interim period if the political parties, including the Muslim Brotherhood as well as the main secular ones, agree the party leaders may be expecting that they can come to power behind him as a figurehead. El Baradei has appeared in the demonstrations, has called for Mubarak to leave immediately, and said that free and fair elections must be conducted. The Muslim Brotherhood is calling for a change in the constitution and an end to emergency laws. But the focus of the crowds is simply on seeing Mubarak leave.