Money is just an IOU, and the banks are rolling in it

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy”, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank’s new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don’t suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.

It’s this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say “there’s just not enough money” to fund social programmes, to speak of the immorality of government debt or of public spending “crowding out” the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits” … “In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.”

In other words, everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. So for the banking system as a whole, every loan just becomes another deposit. What’s more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with “quantitative easing” they’ve been effectively pumping as much money as they can into the banks, without producing any inflationary effects.

What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there’s no question of public spending “crowding out” private investment. It’s exactly the opposite.

Why did the Bank of England suddenly admit all this? Well, one reason is because it’s obviously true. The Bank’s job is to actually run the system, and of late, the system has not been running especially well. It’s possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.

But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that’s what’s happening here, we might soon be in a position to learn if Henry Ford was right.

— source theguardian.com By David Graeber

How a private water company brought lead to Pittsburgh’s taps

In the summer of 2015, Metropolis Magazine named Pittsburgh one of the world’s “most livable” cities and gushed about its infrastructure, “The city has more vertical feet of public stairways than San Francisco, Cincinnati, and Portland, Oregon, combined.”

But the magazine hadn’t done its research. Around the same time, the city’s water utility was laying off employees in an effort to cut costs. By the end of the year, half of the staff responsible for testing water throughout the 100,000-customer system was let go. The cuts would prove to be catastrophic. Six months later, lead levels in tap water in thousands of homes soared. The professor who had helped expose Flint, Michigan’s lead crisis took notice, “The levels in Pittsburgh are comparable to those reported in Flint.”

The cities also share something else, involvement by the same for-profit water corporation. Pittsburgh’s layoffs happened under the watch of French corporation Veolia, who was hired to help the city’s utility save money. Veolia also oversaw a change to a cheaper chemical additive that likely caused the eventual spike in lead levels. In Flint, Veolia served a similar consulting role and failed to detect high levels of lead in the city’s water, deeming it safe.

For-profit water corporations see America’s crumbling infrastructure as a business opportunity. Either they buy struggling water systems or market their services to cities like Pittsburgh that need the help. At the same time, they use their political clout to cut taxes, choking off the public money necessary to sustain vital water infrastructure. Veolia, along with other corporations like American Water, is a member of the National Association of Water Companies (NAWC), which actively lobbies for lower taxes.

Last Wednesday, Pittsburgh Mayor Bill Peduto announced the city would provide filters for drinking water, which is the right thing to do. But he’s also considering partnering with another for-profit water company to clean up Veolia’s mess.

Partnering with corporations that must turn a profit should be off the table. For-profit water corporations will always have a financial incentive to cut service, shrug off maintenance, and fire employees. When they’re in charge, the high costs of doing business are passed on to residents: privately owned water systems charge 59 percent more than those that are publicly owned. Every public dollar that goes to executives and shareholders is a dollar that could be invested in making water clean and affordable.

Pittsburgh’s water needs democratic control and public investment, not corporate takeover.

— source salon.com by Donald Cohen
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Is it Vitézi Rend medal

Is President Donald Trump’s top counterterrorism adviser, Sebastian Gorka, a member of a Hungarian far-right, Nazi-allied group? members of the Vitézi Rend elite order confirmed Sebastian Gorka took a lifelong oath of loyalty to their group, which is listed by the U.S. State Department as having been under the direction of Nazi Germany during World War II. Vitézi Rend was established in 1920 by self-confessed anti-Semite and Hitler collaborator Admiral Miklos Horthy.

Questions first emerged about Gorka’s ties to the group after the website LobeLog published photographs of Gorka wearing a Vitézi Rend medal on his lapel at a presidential inauguration ball January 20th. Like many members of the Vitézi Rend, Gorka has also listed his name with a lower-case “v” in the middle—Sebastian L.v. Gorka—including during his 2011 testimony before the House Armed Services Committee. Gorka has denied reports of his involvement with the Nazi-allied group

Larry Cohler-Esses talking:

I worked together with my colleague in Budapest, Lili Bayer, and we were going off of some of the work that was done at LobeLog and with others, where people noticed that Sebastian Gorka wore the medal of the Vitézi Rend, and asked him why, and he said, “Well, it’s a way to honor my father, who spent years fighting fascism and spent years fighting communism.” His father was born in Hungary. His parents fled Hungary after the 1956 revolution. And Sebastian Gorka, himself, was born in London. He wore these medals. He told the press that it was just about his father. And Lili, my colleague in Budapest, was able to find three senior members of the Vitézi Rend in Hungary who said, “No, he’s actually a member” “He’s actually a member.” And this began to seem very notable, because I found that the organization, because of its history, was listed by the State Department in its current Foreign Affairs Manual as a group under the direction—historically, during World War II, under the direction of Nazi Germany. Because of this, the Foreign Affairs Manual listed that there was a presumption of inadmissibility to immigrants who are affiliated with this organization.

Now, to be clear, there’s a couple of nuances here, and I should be very clear about this. After World War II, under the terms of the treaty with Hungary and the Allies, the Vitézi Rend was forcibly disbanded. But it reconstituted itself outside of Hungary among exiles who were loyalists to Admiral Horthy, the wartime ruler of Hungary, with the same ideals, with the same leadership and the same ideology. And after the fall of communism in 1989, the Vitézi Rend came back to Hungary and reconstituted itself there. It split into two factions based on personal leadership. And Sebastian Gorka, we were told by the members of the group, is affiliated with the faction called the Historical Vitézi Rend. We looked a lot at what Gorka himself has written. He has often written in publications. He’s written in publications that are notably anti-Semitic. He’s partnered, to start a political party in Hungary, with known anti-Semites from the far-right Jobbik party. But we have not found that he, himself, has ever said or written anything anti-Semitic. But the question is one about his partners and who he works with and whether he actually is a staunch opponent of anti-Semitism, when he works closely with groups like this.

the Vitézi Rend has some pretty firm rules. You do not get to wear the medal and use the “v” initial unless you join. And joining involves taking a lifelong oath, a oath of fealty to the organization and its principles and to Hungarian nationalism, which the organization is steeped in. We spoke with a senior member of the group, who took note of the “v” that he used both on his doctoral dissertation in Hungary and when he testified before Congress. And he said, “Of course. No ‘v’ without the oath.” So, under these terms of the organization, if he was trying to honor his father, he was dishonoring the rules of the organization that his father was honored by. And I cannot read his mind. I was not in Hungary. But we then found three separate sources in the organization who said he did take the oath, he was initiated in the formal initiation ceremony into the organization.

his status as an American citizen and as a legal immigrant could be undermined. I’m not an expert in immigration law, but in our reporting we spoke to Bruce Einhorn, who was an immigration judge for 17 years. He now teaches immigration and nationality law at Pepperdine University. And perhaps most importantly for this unique situation, before that, he was deputy director of the Justice Department’s Office on Special Investigations. This is the—this was the unit in the Justice Department charged with finding and deporting Nazis and members of other extremist groups who got into the United States by lying about or hiding their background. And he told us that someone who is asked, as you are asked in these applications for immigration and citizenship, about the organizations you joined, and you don’t write it down, is vulnerable to a reversal of their legal immigration status or their citizenship status. He told us that there would be defenses for Gorka if he was prosecuted, but as a prosecutor with OSI for that many years, he said, “This is a case that I would take up. It’s a legitimate case. And it would be a challenging one, but it’s a winnable one.” So, that is the state of the technical legal arguments involved, but they all spring from the fact that he was obligated, if he was a member, to disclose it at the time of his immigration and citizenship application.

there is a phenomenon, that we have commented on in The Forward, where you have people who, because of the role Israel plays in the Middle East and because of their bias against Muslims, they like Israel. And yet, domestically, they can be anti-Jewish. It is possible to be anti-Semitic and pro-Israel. It’s a phenomenon that’s emerged. I don’t know if Gorka is that. As I said, we have never found that Gorka wrote anything anti-Semitic or anti-Jewish. What we found are these troubling associations. He said in his White House official statement that it was absurd and outrageous for anybody to say that he was anything other than opposed to anti-Semitism. I don’t know how you define opposition to anti-Semitism, but partnering with a group like Vitézi Rend and with former members of the far-right, anti-Semitic Jobbik party would exclude many definitions of being opposed to anti-Semitism.
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Larry Cohler-Esses
The Forward’s editor for special projects.

— source democracynow.org

The problems with measuring tax systems

In the past few years there have been several efforts to understand and even measure ‘spillovers’ – that is, how one state’s tax or legal system can transmit damage to other states’ tax or legal systems. Perhaps the best known of these efforts is the Tax Justice Network’s Financial Secrecy Index (FSI), which attributes a secrecy score to every country measured, then combines that score mathematically with a size weighting, to create a ranking of the world’s most important secrecy havens. The index has been extremely effective in drawing attention to the issues, and in uncovering a lot of new data and analysis and understanding of the offshore phenomenon which lies at the heart of financial globalisation.

The FSI deals with secrecy: there is a clear need for something similar in the area of tax. Corporate tax loopholes in one country, for instance, can have similarly damaging effects on the corporate tax systems of other countries, by encouraging multinationals to shift profits to the lower-tax jurisdiction, depriving the higher-tax jurisdiction of revenues. People are, rightly, rather angry about this.

A little work has already been done in this area. The IMF published a paper in 2014 entitled ‘spillovers in international corporate taxation,’ a first stab at measuring the scale of the phenomenon. Coming at it from a different angle, Oxfam recently published a report on ‘the world’s worst corporate tax havens’ whose methodology produced a ranking a bit like Financial Secrecy Index’. The corporate tax havens of Ireland and the Netherlands recently published ‘spillover analyses’ of their own tax systems which, surprisingly or unsurprisingly, depending on how cynical you’re feeling, largely absolved themselves of blame.

This is an area where much more work needs to be done. Now Andrew Baker and Richard Murphy offer a new, broad framework for thinking about how one might go about it.

Their blog Reframing Tax Spillovers, and the associated paper for the APPG, rightly highlights the flaws in these other projects, and offers something more comprehensive and useful.

Crucially, Andrew and Richard recognise that there are different dimensions of spillover: not just from one country or state to another, but also between different taxes in the domestic economy. For instance, the corporate income tax was originally set up in order to defend the ordinary income tax: if you have no corporate tax then rich folk simply convert their ordinary income into corporate income and escape the income tax. As they put it: ‘Taxpayers will try to divert part of the income that should be subject to this tax to another tax or location, or both.’ This happens all the time – and of course there are spillovers that cross both tax boundaries and national borders. This early-stage concept is highly welcome, and I can imagine it flowering into something big and useful.

Yet there is another generic issue that also needs highlighting: the conservative bias in measurement itself.

Much has been said about neoliberalism – the disenchantment of politics by economics, as Will Davies has put it – in a sense, the effort to shoe-horn as many aspects as possible of life, the universe and everything into the price system.

Much has been written about how neoliberalism, neoclassical economics and the economics faculty at Chicago University have injected a conservative bias into economics. But there’s an even deeper problem than this: in the area of tax, the very act of measurement is likely to impart a conservative bias.

This is for a pretty simple reason. Take a corporate tax cut, for instance. Leave aside the question of tax spillovers to other countries, and start by asking: ‘does this tax cut help my own country?’ What does it look like from a purely selfish national perspective?

Many studies have done this. Does the corporate tax cut foster new corporate investment, or bring in Foreign Direct Investment (FDI)? Oceans of work have been done here, and plenty of the political discourse in Britain, and in many other countries, leaves the matter at that. If it attracts FDI then that tax cut is ‘competitive’ – so let’s do it. After all, who could oppose a ‘competitive’ tax system?

But of course the story doesn’t end there. FDI is a means to an end, not an end in itself. If you have to spend a lot of treasure to attract that FDI, the cost may not be worth it. Britain’s corporate tax rate cuts since 2010 are forecast to cost nearly £15 billion a year in lost tax revenues by 2021 – which is well over a third of the education budget. It’s hard to see that this equation makes for a ‘competitive’ tax system – whatever ‘competitive’ might mean in this context. I would argue that pretty much all of that academic work just measuring elasticities is, for this reason, pretty meaningless from a policy perspective.

If one could do a good cost-benefit analysis – as in ‘here are the benefits of a given tax cut, weighed against the costs’ – then one might be able to draw a better conclusion about the merits or disadvantages.

But this is where the conservative bias comes in. It’s relatively much easier to measure the ‘benefits’ side of a tax cut – FDI responses, elasticities and so on – than it is to measure the costs.

That is, it’s relatively easier to measure things like investment responses, elasticities, which in isolation tend to favour tax-cutting, than to measure the other side of the ledger where the damage of tax cuts shows up: such as by reducing the long-term benefits of (tax-financed) infrastructure or education, which might play out over decades; or confidence in the overall tax system and democracy itself, as corporate tax rates fall far below personal income tax rates, or the effects of higher inequality exacerbated by corporate income tax cuts, and so on.

As the US public finance expert Robert G. Lynch put it to me recently: ‘It is much harder to measure the damage from reductions in public investment due to tax cuts than it is to measure the benefits from tax cuts.’

Researchers often stick to what they can measure, and to the extent that they do acknowledge the other, harder to measure side of the equation, it tends to be in more narrative form. So even when there’s a suitably nuanced report, policy-makers can cherry-pick out the numbers and throw away the narrative as so much fluff. This happens all the time. And that’s before we even get to the lobbying and role of private finance sponsoring some academic research.

There’s no obvious way around this: more narrative emphasis on the hard-to-quantify stuff will just get airbrushed out of the way of tax cuts. What is necessary is to de-emphasise of the role of economics and measurement in these debates, and to rekindle the politics. Civil society has been doing a decent job here: but academia and policy-makers have too often been in the thrall of the economists.

What is needed, at the end of the day, is to pursue the disenchantment of economics by politics.

— source speri.dept.shef.ac.uk by Nicholas Shaxson

Burning more fat and less glucose could lead to diabetes

Making muscles burn more fat and less glucose can increase exercise endurance, but could simultaneously cause diabetes, says a team of scientists from Baylor College of Medicine and other institutions.

Mouse muscles use glucose (carbohydrate) as fuel when the animals are awake and active and switch to fat (lipid) when they are asleep. The team discovered that disrupting this natural cycle may lead to diabetes but, surprisingly, also can enhance exercise endurance.

The switch is controlled by a molecule called histone deacetylase 3, or HDAC3. How the muscle uses glucose is regulated by its internal circadian clock that anticipates the level of its activity during the day and at night,

The circadian clock works by turning certain genes on and off as the 24-hour cycle progresses. HDAC3 is a key connection between the circadian clock and gene expression.

Skeletal muscles, the voluntary muscles, are important in the control of blood glucose in the body. They consume most of the glucose, and if they develop insulin resistance and consequently are not able to use glucose, then diabetes likely will develop.

When normal mice eat, their blood sugar increases and insulin is released, which stimulates muscles to take in and use glucose as fuel.

when the HDAC3-knocked out mice ran on a treadmill, they showed superior endurance, their muscles break down more amino acids. This changed the muscles’ preference from glucose to lipids and allowed them to burn lipid very efficiently. This explains the high endurance, because the body carries a much larger energy reservoir in the form of lipid than carbohydrate.

The finding challenges the widely-used carbohydrate-loading (carbo-loading) strategy for improving endurance performance. “Carbo-loading didn’t make evolutionary sense before the invention of agriculture,”

In normal mice, when the mouse is awake, the clock in the muscle anticipates a feeding cycle and uses HDAC3 to turn off many metabolic genes. This leads the muscles to use more carbohydrate,” said Sun. “When the animal is about to go to sleep and anticipates a fasting cycle, the clock removes HDAC3. This leads the muscles to use more lipid.

The study opens the possibility of promoting body fat burning by increasing exercise activity during the periods in which muscles use lipid, which is at night for people.

“Losing body fat would be easier by exercising lightly and fasting at night,” said Sun. “It’s not a bad idea to take a walk after dinner.”

— source bcm.edu

US-backed South Sudanese regime organizing genocidal crimes

The South Sudan civil war, which erupted in December 2013, is assuming an increasingly genocidal character, according to the United Nations Commission on Human Rights (UNCHR). In the course of the war, both the US-backed government led by the Sudan People’s Liberation Army (SPLA) and President Salva Kiir, and SPLA opposition faction led by Vice President Riek Machar, have carried out atrocities against civilians.

On February 7, UN experts officially began registering “warning signs for ethnic cleansing” and “indicators for genocide.” The situation is characterized by “massive insecurity” and “large-scale polarization of communities,” the UN found.

The SPLA regime has organized a “scorched earth” campaign and is carrying out “population engineering” through forced relocation of ethnic minorities. Kiir and other top SPLA officials have directly ordered mass killing and property seizures against civilian communities. SPLA members frequently abuse civilians at military checkpoints and during warrantless searches of residential areas.

Barely six years after its secession from the Sudan, a development hailed by Western bourgeois public opinion as a victory for “democracy” and “the self-determination of nations,” South Sudan is experiencing levels of chaos and social breakdown which bring to mind the worst catastrophes of the 20th century.

Three years of civil war have produced widespread famine and a massive refugee crisis. Some 1.5 million South Sudanese have already become refugees, and 2 million have been displaced internally as a result of the war. Some 700,000 are in refugee camps across the border in Uganda. One million South Sudanese are at risk of starving in the coming year.

The crisis in South Sudan is an advanced manifestation of the unviability and breakdown of the nation-state system across Africa and worldwide. The pressure of world imperialism against the oppressed countries finds its sharpest expression in the weakest nations.

South Sudan’s political structure, controlled by a coalition of generals and aspiring dictators cobbled together with US cash and weapons, ruled for only two years before breaking in two. Between 2012-2013, the Kiir leadership pursued policies aimed at driving the Machar faction out of the government. In an effort to tighten his grip over the South Sudanese government, President Kiir ordered the firing of hundreds of military and political officials and reorganized the top committees of the state so as to entrench his own supporters in power. In December 2013, gunfire broke out during meetings of the SPLM’s National Liberation Council amid circumstances that remain unclear. President Kiir seized on the clashes to accuse Machar of planning a coup, and expel him and his supporters from the government.

The state of war between the SPLA factions has since served, to a large extent, as a pretext for the expropriation and murder of ethnic minorities and civilians generally. The UN found that: “Civilians have been deliberately and systematically targeted on the basis of their ethnicity by armed forces and groups, including SPLA and SPLM/A in Opposition, and also by groups aligned with them. Individuals have been targeted for killing, arbitrary arrest and detention, sexual violence, sexual slavery and forced marriage. Communities have been subjected to scorched-earth policies that result in the destruction of their homes and means of livelihood. Many of the attacks have been carried out by SPLA soldiers and the militias affiliated with them. Armed groups attack villages, burn homes, kill and rape.”

“Tens of thousands of civilians have been killed in horrific attacks, often targeted on the basis of their ethnicity or perceived allegiances,” the UN found.

For all this savagery, the SPLA is merely a local enforcer of the policies and economic interests of the American ruling class. The men organizing the killing from Juba were placed in power as part of a geopolitical operation aimed at opening Sudan’s oil resources to exploitation by American firms. Washington has sought for decades to exploit long-standing conflicts between the Sudan’s northern and southern elites as a means of projecting power against the central Sudanese government in Khartoum, whose ties to China and the Soviet Union threatened to block American companies from accessing Sudan’s oil fields.

Founded in 1983, the SPLA became a favored proxy army of US imperialism, developing close ties with the US political elite and rising, during the 2005-2011 transition process, to assume control of the newly-formed South Sudanese state. The signature black cowboy hat of President Salva Kiir, without which he never appears in public, was a gift from none other than US President George W. Bush, given to Kiir at the White House in July 2006.

While in power, the Kiir and the SPLA have employed ethno-nationalism as an ideological cover for its self-serving collaboration with imperialism. Advertising themselves as leaders of a “liberation” movement, the SPLA’s cadres could be more accurately described as networks of US-backed warlords. They view the South Sudanese state as nothing more than a means of expanding their property and privileges. Despite being expelled from the Juba government, Machar’s opposition forces continue to manage significant business interests and maintain ties to foreign government and corporations. Machar’s militias remain armed and continue to occupy territory and move about the country largely at will. In a telling detail reported by the Sentry, the families of Kiir and Machar, who pose as mortal enemies in public view, live just miles apart in luxurious mansions near Nairobi.

New Kiirs and Machars are being cultivated by American imperialism in countless countries. The historic processes that pushed the United States to support the break-up of the Sudan are active on every continent. They are essentially the same tendencies of development that have defined world politics for 100 years: the domination of finance capital and the economic rivalry between the major nations produces an endless chain of regional wars, military dictators and ethnic slaughters.

The removal of the Union of Soviet Socialist Republics (USSR) from the geopolitical landscape has, since 1991, cleared the way for 25 years of relentless economic and military warfare against the former colonial countries. A quarter century of unobstructed capitalist world-rule has produced nothing less then the liquidation of entire sections of world society. Tens of millions are living as homeless refugees, with no social or political rights, as a consequences of the wars and counterrevolutionary economic policies of the world’s capitalist governments.

Last Friday, UN humanitarian leader Stephen O’Brien described the international humanitarian situation as “worse then any time since 1945.” Spreading famine and disease are threatening the lives of 20 million people living in Yemen, South Sudan, Somalia and Nigeria, O’Brien said.

More South Sudans are being prepared. In every part of the world, the economic and political objectives of the US ruling elite demand not peaceful development and the raising of living standards, but ever greater levels of destruction and robbery. During the epoch of imperialism, as Leon Trotsky wrote, the capitalist organization of world economy becomes its opposite, that is, “barbarous disorganization and chaos.” In lines that could easily have been written yesterday, as an explanation of the broader historical process that has led to the catastrophe in South Sudan, Trotsky wrote:

“The future development of world economy on the capitalistic basis means a ceaseless struggle for new and ever new fields of capitalist exploitation, which must be obtained from one and the same source, the earth. The economic rivalry under the banner of militarism is accompanied by robbery and destruction which violate the elementary principles of human economy.”

The fate of South Sudan, like that of Iraq, Afghanistan, Yemen and Somalia, shows the future that capitalism and imperialist war have in store for humanity unless stopped by the mobilization of the African and international working class in revolutionary struggle.

— source wsws.org by Thomas Gaist

Climate change key suspect in the case of India’s vanishing groundwater

In three short months during monsoon season, India historically receives 75 percent of their annual precipitation. Imagine awaiting this promised, bountiful rainfall and receiving 14 percent less than average. This is what happened in 2015 – and it compounded decades of drought. India is suffering a water scarcity crisis but, until recently, most people believed that over pumping groundwater was the number one reason behind it. Now, a new study published by the Indian Institute of Technology (IIT) Gandhinagar in Nature Geoscience, shows that variable monsoon precipitation, linked to climate change, is likely the key reason for declining levels of groundwater.

India’s rainfall has decreased since the 1950s. When rainfall decreases, so does the water table. By observing climate patterns and well depths, researchers found that groundwater storage dropped in northern India about two centimeters per year between 2002 and 2013. Today, groundwater irrigates over half of India’s crops, but aquifer levels are falling, threatening both water and food security.

India’s groundwater problem is detectable from space. From 2002-2013, a satellite from NASA mapped aquifers around the world. The Gravity Recovery Climate Experiment (GRACE) satellite detects the Earth’s mass below it and uses this data to measure groundwater pumping. GRACE reported that 54 percent of 4,000 measured groundwater wells are declining, some dropping by more than three feet per year.

A warming world has made India’s monsoon season less predictable. During the past century, the Earth warmed 1.5 degrees, largely due to humans’ unprecedented burning of fossil fuels. What appears to be a small change in temperature is causing drastic upheavals in natural patterns. Increased atmospheric temperatures are changing wind currents and causing more frequent and intense storms. In some cases, this is also redistributing rain and intensifying drought.

In India, warmer air over the Indian Ocean has altered the path of monsoons – leaving Indian farmers high and dry the past two years in a row.

There is no singular definition for water scarcity that takes into account the availability, accessibility, and quality of potable water. However, the Falkenmark Indicator (FI) is a popular tool that measures water runoff and population to determine levels of water stress. According to the FI, a country is considered ‘water scarce’ when they have less than 1,000 cubic meters of usable water per person annually. In 2015, analysis using FI categorized India as having ‘absolute scarcity’, with less than 500 cubic meters of water per person annually.

So little water affects security. Last September, protesters set 56 busses on fire in Bengaluru when the Supreme Court ordered that Karnataka must release more water from Cauvery Dam to be used by a bordering state. Retrofitted oil trains deliver millions of liters of water to Lature, a district east of Mumbai. Madhya Pradesh, a state in Central India, deployed armed guards to protect one of its reservoirs after farmers from a neighboring state attempted to steal water last year.

Farmers are on the frontlines of the water crisis with India seeing a serious uptick in farmer suicides. Some estimates put the number of related suicides at 500 in 2015, but the central government only publicly acknowledges that 13 farmers’ suicides were related to water shortages. According to the Government of India, 52 percent of agricultural households were in debt in 2014. Heavy debts have resulted in an exodus of farmers, who are now seeking daily labor in large cities.

“Farmers invest their own borrowed money for sinking bore wells to develop agriculture,” said Secretary R.H. Sawkar of the Secretary, Geological Society of India (GSI). Bore wells are similar to tube wells, long shafts that are drilled into the earth. Electric pumps are used to draw the groundwater through the tube to the surface. Most rural farmers pay a flat fee for unlimited electricity to pump from tube wells, leading to over-pumping.

But farmers don’t have the money, tools, or know-how to drill deeper wells that can access sinking water tables. This creates a serious dilemma in areas where levels drop by almost a meter per year.

“Only rich farmers can effectively pump groundwater from deep aquifers and the urban rich can buy extra water for their luxuries like car washing, [maintaining] lawns near their residence and [using] bottled water for drinking purpose,” said Sawkar.

There are over 20 million tubewells in India today, a technology that enabled the Green Revolution in India. The Green Revolution was a global shift in agricultural production, beginning in the 1930s; it mechanized farming for developing nations and utilized new technologies, like pesticides and genetically modified crops, to feed a booming population. Developing countries could suddenly grow more food on the same amount of land.

When India gained independence in 1947 the central government – along with the Rockefeller and Ford foundations –brought the Green Revolution to India. This meant cultivation of genetically adapted, high-yielding seeds, a deluge of fertilizers, and flood irrigation. Tube-wells proved to be the best way to irrigate more land, since they reached untapped groundwater. But today, annual groundwater pumping removes at least 24 times what was consumed in the 1950s.

“India also inherited Britain’s water policies that were based on water abundance. Any landowner had the right to pump as much groundwater as they wanted… India doubled ag[riculture] productivity between 1972 and 1992 under this system,” said Trevor Birkenholtz, political ecologist at the University of Illinois Urbana-Chapmaign. “In short, there was no groundwater law.”

Laissez-faire pumping is today reflected in the fact that farmers pay a single flat fee for electricity to power tubewell pumps.

The same revolution that once sustained India’s growing population is partly to blame for the cracked and barren landscape that farmers try to cultivate today. According to the World Bank, India’s population tripled since the 1960s, hitting 1.3 billion in 2015. As India continues to battle climate change and overpumping, an equitable distribution for groundwater, if it ever comes, will take considerable intervention.

“This requires strong political will to address this issue, which is lacking,” Sawker said.

Groundwater law and rulemaking falls under the purview of individual states in India. Researchers say that the central government will have a difficult time overcoming this decentralized system, if they wish to establish national water laws. To date very few politicians have fought to limit water pumping.

“No politician wants to be the one that tells farmers – who vote at rates upwards of 85 percent – that they can no longer pump groundwater at current rates,” said Birkenholtz.

It’s more likely that authorities will mandate drip irrigation or restrict the supply of electricity, perhaps through metering, to limit pumping. Using drip irrigation and gaining “more crop per drop” is an efficient alternative to flood irrigation.

Unfortunately, groundwater pumping is only half of the problem. Taking on climate change is equally important in solving India’s water scarcity. Climate change weakens monsoons, groundwater fails to recharge, wells run dry, and families go without water. The future of India’s water security, in part, rests on international agreements to combat climate change like the United Nations Paris Agreement.

“Weather is uncertain by nature, and the impacts of climate change are extremely difficult to predict at a regional level,” explained Wada. “But our research suggests that we must focus more attention on this side of the equation if we want to sustainably manage water resources for the future.”

Today, India accounts for 4.5 percent of global greenhouse gas emissions. Under the Paris Agreement, the country has committed to generating at least 40 percent of its electricity from renewable sources and decreasing carbon emission intensity related to GDP by 33-35 percent by 2030. This means India’s emissions will likely rise, depending on the level of its economic growth.

— source news.mongabay.com by Kayla Walsh