Tuesday, October 29, 2013

Fukushima - A Global Threat That Requires a Global Response

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The story of Fukushima should be on the front pages of every newspaper. Instead, it is rarely mentioned. The problems at Fukushima are unprecedented in human experience and involve a high risk of radiation events larger than any that the global community has ever experienced. It is going to take the best engineering minds in the world to solve these problems and to diminish their global impact.
When we researched the realities of Fukushima in preparation for this article, words like apocalyptic, cataclysmic and Earth-threatening came to mind. But, when we say such things, people react as if we were the little red hen screaming "the sky is falling" and the reports are ignored. So, we’re going to present what is known in this article and you can decide whether we are facing a potentially cataclysmic event.
Either way, it is clear that the problems at Fukushima demand that the world’s best nuclear engineers and other experts advise and assist in the efforts to solve them. Nuclear engineer Arnie Gundersen of Fairewinds.org and an international team of scientists created a 15-point plan to address the crises at Fukushima.
A subcommittee of the Green Shadow Cabinet (of which we are members), which includes long-time nuclear activist Harvey Wasserman, is circulating a sign-on letter and a petition calling on the United Nations and Japanese government to put in place the Gundersen et al plan and to provide 24-hour media access to information about the crises at Fukushima. There is also a call for international days of action on the weekend of November 9 and 10. The letter and petitions will be delivered to the UN on November 11 which is both Armistice Day and the 32nd month anniversary of the earthquake and tsunami that caused the Fukushima nuclear disaster.
The Problems of Fukushima
There are three major problems at Fukushima: (1) Three reactor cores are missing; (2) Radiated water has been leaking from the plant in mass quantities for 2.5 years; and (3) Eleven thousand spent nuclear fuel rods, perhaps the most dangerous things ever created by humans, are stored at the plant and need to be removed, 1,533 of those are in a very precarious and dangerous position. Each of these three could result in dramatic radiation events, unlike any radiation exposure humans have ever experienced.  We’ll discuss them in order, saving the most dangerous for last.
Missing reactor cores:  Since the accident at Fukushima on March 11, 2011, three reactor cores have gone missing.  There was an unprecedented three reactor ‘melt-down.’ These melted cores, called corium lavas, are thought to have passed through the basements of reactor buildings 1, 2 and 3, and to be somewhere in the ground underneath. 
Harvey Wasserman, who has been working on nuclear energy issues for over 40 years, tells us that during those four decades no one ever talked about the possibility of a multiple meltdown, but that is what occurred at Fukushima. 
It is an unprecedented situation to not know where these cores are. TEPCO is pouring water where they think the cores are, but they are not sure. There are occasional steam eruptions coming from the grounds of the reactors, so the cores are thought to still be hot.
The concern is that the corium lavas will enter or may have already entered the aquifer below the plant. That would contaminate a much larger area with radioactive elements. Some suggest that it would require the area surrounding Tokyo, 40 million people, to be evacuated. Another concern is that if the corium lavas enter the aquifer, they could create a "super-heated pressurized steam reaction beneath a layer of caprock causing a major 'hydrovolcanic' explosion."
A further concern is that a large reserve of groundwater which is coming in contact with the corium lavas is migrating towards the ocean at the rate of four meters per month. This could release greater amounts of radiation than were released in the early days of the disaster.
Radioactive water leaking into the Pacific Ocean:  TEPCO did not admit that leaks of radioactive water were occurring until July of this year. Shunichi Tanaka the head of Japan’s Nuclear Regulation Authority finally told reporters this July that radioactive water has been leaking into the Pacific Ocean since the disaster hit over two years ago. This is the largest single contribution of radionuclides to the marine environment ever observed according to a report by the French Institute for Radiological Protection and Nuclear Safety.  The Japanese government finally admitted that the situation was urgent this September – an emergency they did not acknowledge until 2.5 years after the water problem began.
How much radioactive water is leaking into the ocean? An estimated 300 tons (71,895 gallons/272,152 liters) of contaminated water is flowing into the ocean every day.  The first radioactive ocean plume released by the Fukushima nuclear power plant disaster will take three years to reach the shores of the United States.  This means, according to a new study from the University of New South Wales, the United States will experience the first radioactive water coming to its shores sometime in early 2014.
One month after Fukushima, the FDA announced it was going to stop testing fish in the Pacific Ocean for radiation.  But, independent research is showing that every bluefin tuna tested in the waters off California has been contaminated with radiation that originated in Fukushima. Daniel Madigan, the marine ecologist who led the Stanford University study from May of 2012 was quoted in the Wall Street Journal saying, "The tuna packaged it up (the radiation) and brought it across the world’s largest ocean. We were definitely surprised to see it at all and even more surprised to see it in every one we measured." Marine biologist Nicholas Fisher of Stony Brook University in New York State, another member of the study group, said: "We found that absolutely every one of them had comparable concentrations of cesium 134 and cesium 137."
In addition, Science reports that fish near Fukushima are being found to have high levels of the radioactive isotope, cesium-134. The levels found in these fish are not decreasing,  which indicates that radiation-polluted water continues to leak into the ocean. At least 42 fish species from the area around the plant are considered unsafe.  South Korea has banned Japanese fish as a result of the ongoing leaks.
The half-life (time it takes for half of the element to decay) of cesium 134 is 2.0652 years. For cesium 137, the half-life is 30.17 years. Cesium does not sink to the ocean floor, so fish swim through it. What are the human impacts of cesium?
When contact with radioactive cesium occurs, which is highly unlikely, a person can experience cell damage due to radiation of the cesium particles. Due to this, effects such as nausea, vomiting, diarrhea and bleeding may occur. When the exposure lasts a long time, people may even lose consciousness. Coma or even death may then follow. How serious the effects are depends upon the resistance of individual persons and the duration of exposure and the concentration a person is exposed to, experts say.
There is no end in sight from the leakage of radioactive water into the Pacific from Fukushima.  Harvey Wasserman is questioning whether fishing in the Pacific Ocean will be safe after years of leakage from Fukushima.  The World Health Organization (WHO) is claiming that this will have limited effect on human health, with concentrations predicted to be below WHO safety levels. However, experts seriously question the WHO’s claims.
The United Nations Scientific Committee on the Effects of Radiation is in the process of writing a report to assess the radiation doses and associated effects on health and environment. When finalized, it will be the most comprehensive scientific analysis of the information available to date examining how much radioactive material was released, how it was dispersed over land and water, how Fukushima compares to previous accidents, what the impact is on the environment and food, and what the impact is on human health and the environment.
Wasserman warns that "dilution is no solution."  The fact that the Pacific Ocean is large does not change the fact that these radioactive elements have long half-lives.  Radiation in water is taken up by vegetation, then smaller fish eat the vegetation, larger fish eat the smaller fish and at the top of the food chain we will find fish like tuna, dolphin and whales with concentrated levels of radiation. Humans at the top of the food chain could be eating these contaminated fish.
As bad as the ongoing leakage of radioactive water is into the Pacific, that is not the largest part of the water problem.  The Asia-Pacific Journal reported last month that TEPCO has 330,000 tons of water stored in 1,000 above-ground tanks and an undetermined amount in underground storage tanks.  Every day, 400 tons of water comes to the site from the mountains, 300 tons of that is the source for the contaminated water leaking into the Pacific daily. It is not clear where the rest of this water goes.  
Each day TEPCO injects 400 tons of water into the destroyed facilities to keep them cool; about half is recycled, and the rest goes into the above-ground tanks. They are constantly building new storage tanks for this radioactive water. The tanks being used for storage were put together rapidly and are already leaking. They expect to have 800,000 tons of radioactive water stored on the site by 2016.  Harvey Wasserman warns that these unstable tanks are at risk of rupture if there is another earthquake or storm that hits Fukushima. The Asia-Pacific Journal concludes: "So at present there is no real solution to the water problem."
The most recent news on the water problem at Fukushima adds to the concerns. On October 11, 2013, TEPCO disclosed that theradioactivity level spiked 6,500 times at a Fukushima well.  "TEPCO said the findings show that radioactive substances like strontium have reached the groundwater. High levels of tritium, which transfers much easier in water than strontium, had already been detected."
Spent Fuel Rods:  As bad as the problems of radioactive water and missing cores are, the biggest problem at Fukushima comes from the spent fuel rods.  The plant has been in operation for 40 years. As a result, they are storing 11 thousand spent fuel rods on the grounds of the Fukushima plant. These fuel rods are composed of highly radioactive materials such as plutonium and uranium. They are about the width of a thumb and about 15 feet long.
The biggest and most immediate challenge is the 1,533 spent fuel rods packed tightly in a pool four floors above Reactor 4.  Before the storm hit, those rods had been removed for routine maintenance of the reactor.  But, now they are stored 100 feet in the air in damaged racks.  They weigh a total of 400 tons and contain radiation equivalent to 14,000 times the amount released by the Hiroshima atomic bomb.
The building in which these rods are stored has been damaged. TEPCO reinforced it with a steel frame, but the building itself is buckling and sagging, vulnerable to collapse if another earthquake or storm hits the area. Additionally, the ground under and around the building is becoming saturated with water, which further undermines the integrity of the structure and could cause it to tilt.
How dangerous are these fuel rods?  Harvey Wasserman explains that the fuel rods are clad in zirconium which can ignite if they lose coolant. They could also ignite or explode if rods break or hit each other. Wasserman reports that some say this could result in a fission explosion like an atomic bomb, others say that is not what would happen, but agree it would be "a reaction like we have never seen before, a nuclear fire releasing incredible amounts of radiation," says Wasserman.
These are not the only spent fuel rods at the plant, they are just the most precarious.  There are 11,000 fuel rods scattered around the plant, 6,000 in a cooling pool less than 50 meters from the sagging Reactor 4.  If a fire erupts in the spent fuel pool at Reactor 4, it could ignite the rods in the cooling pool and lead to an even greater release of radiation. It could set off a chain reaction that could not be stopped.
What would happen? Wasserman reports that the plant would have to be evacuated.  The workers who are essential to preventing damage at the plant would leave, and we will have lost a critical safeguard.  In addition, the computers will not work because of the intense radiation. As a result we would be blind - the world would have to sit and wait to see what happened. You might have to not only evacuate Fukushima but all of the population in and around Tokyo, reports Wasserman. 
There is no question that the 1,533 spent fuel rods need to be removed.  But Arnie Gundersen, a veteran nuclear engineer and director of Fairewinds Energy Education, who used to build fuel assemblies, told Reuters "They are going to have difficulty in removing a significant number of the rods." He described the problem in a radio interview:
"If you think of a nuclear fuel rack as a pack of cigarettes, if you pull a cigarette straight up it will come out — but these racks have been distorted. Now when they go to pull the cigarette straight out, it’s going to likely break and release radioactive cesium and other gases, xenon and krypton, into the air. I suspect come November, December, January we’re going to hear that the building’s been evacuated, they’ve broke a fuel rod, the fuel rod is off-gassing."
Wasserman builds on the analogy, telling us it is "worse than pulling cigarettes out of a crumbled cigarette pack." It is likely they used salt water as a coolant out of desperation, which would cause corrosion because the rods were never meant to be in salt water.  The condition of the rods is unknown. There is debris in the coolant, so there has been some crumbling from somewhere. Gundersen  adds, "The roof has fallen in, which further distorted the racks," noting that if a fuel rod snaps, it will release radioactive gas which will require at a minimum evacuation of the plant. They will release those gases into the atmosphere and try again.
The Japan Times writes: "The consequences could be far more severe than any nuclear accident the world has ever seen. If a fuel rod is dropped, breaks or becomes entangled while being removed, possible worst case scenarios include a big explosion, a meltdown in the pool, or a large fire. Any of these situations could lead to massive releases of deadly radionuclides into the atmosphere, putting much of Japan — including Tokyo and Yokohama — and even neighboring countries at serious risk."  
This is not the usual moving of fuel rods.  TEPCO has been saying this is routine, but in fact it is unique – a feat of engineering never done before.  As Gundersen says:
"Tokyo Electric is portraying this as easy. In a normal nuclear reactor, all of this is done with computers. Everything gets pulled perfectly vertically. Well nothing is vertical anymore, the fuel racks are distorted, it’s all going to have to be done manually. The net effect is it’s a really difficult job. It wouldn’t surprise me if they snapped some of the fuel and they can’t remove it."
Gregory Jaczko, Former Chairman of the U.S. Nuclear Regulatory Commission concurs with Gundersen describing the removal of the spent fuel rods as "a very significant activity, and . . . very, very unprecedented."
Wasserman sums the challenge up: "We are doing something never done before – bent, crumbling, brittle fuel rods being removed from a pool that is compromised, in a building that is sinking, sagging and buckling, and it all must done under manual control, not with computers."  And the potential damage from failure would affect hundreds of millions of people.
The Solutions
The three major problems at Fukushima are all unprecedented, each unique in their own way and each has the potential for major damage to humans and the environment. There are no clear solutions but there are steps that need to be taken urgently to get the Fukushima clean-up and de-commissioning on track and minimize the risks.
The first thing that is needed is to end the media blackout.  The global public needs to be informed about the issues the world faces from Fukushima.  The impacts of Fukushima could affect almost everyone on the planet, so we all have a stake in the outcome.  If the public is informed about this problem, the political will to resolve it will rapidly develop.
The nuclear industry, which wants to continue to expand, fears Fukushima being widely discussed because it undermines their already weak economic potential.  But, the profits of the nuclear industry are of minor concern compared to the risks of the triple Fukushima challenges. 
The second thing that must be faced is the incompetence of TEPCO.  They are not capable of handling this triple complex crisis. TEPCO "is already Japan’s most distrusted firm" and has been exposed as "dangerously incompetent."  A poll found that 91 percent of the Japanese public wants the government to intervene at Fukushima.
Tepco’s management of the stricken power plant has been described as a comedy of errors. The constant stream of mistakes has been made worse by constant false denials and efforts to minimize major problems. Indeed the entire Fukushima catastrophe could have been avoided:
"Tepco at first blamed the accident on ‘an unforeseen massive tsunami’ triggered by the Great East Japan Earthquake on March 11, 2011. Then it admitted it had in fact foreseen just such a scenario but hadn’t done anything about it."
The reality is Fukushima was plagued by human error from the outset.  An official Japanese government investigation concluded that the Fukushima accident was a "man-made" disaster, caused by "collusion" between government and Tepco and bad reactor design. On this point, TEPCO is not alone, this is an industry-wide problem. Many US nuclear plants have serious problems, are being operated beyond their life span, have the same design problems and are near earthquake faults. Regulatory officials in both the US and Japan are too corruptly tied to the industry.
Then, the meltdown itself was denied for months, with TEPCO claiming it had not been confirmed.  Japan Times reports that "in December 2011, the government announced that the plant had reached ‘a state of cold shutdown.’ Normally, that means radiation releases are under control and the temperature of its nuclear fuel is consistently below boiling point."  Unfortunately, the statement was false – the reactors continue to need water to keep them cool, the fuel rods need to be kept cool – there has been no cold shutdown.
TEPCO has done a terrible job of cleaning up the plant.  Japan Times describes some of the problems:
"The plant is being run on makeshift equipment and breakdowns are endemic. Among nearly a dozen serious problems since April this year there have been successive power outages, leaks of highly radioactive water from underground water pools — and a rat that chewed enough wires to short-circuit a switchboard, causing a power outage that interrupted cooling for nearly 30 hours. Later, the cooling system for a fuel-storage pool had to be switched off for safety checks when two dead rats were found in a transformer box." 
TEPCO has been constantly cutting financial corners and not spending enough to solve the challenges of the Fukushima disaster resultingin shoddy practices that cause environmental damage. Washington’s Blog reports that the Japanese government is spreading radioactivity throughout Japan – and other countries – by burning radioactive waste in incinerators not built to handle such toxic substances. Workers have expressed concerns and even apologized for following order regarding the ‘clean-up.’
Indeed, the workers are another serious concern. The Guardian reported in October 2013 the plummeting morale of workers, problems of alcohol abuse, anxiety, loneliness, Post-Traumatic Stress Disorder and depression. TEPCO cut the pay of its workers by 20 percent in 2011 to save money even though these workers are doing very difficult work and face constant problems. Outside of work, many were traumatized by being forced to evacuate their homes after the Tsunami; and they have no idea how exposed to radiation they have been and what health consequences they will suffer. Contractors are hired based on the lowest bid, resulting in low wages for workers. According to the Guardian, Japan's top nuclear regulator, Shunichi Tanaka, told reporters: "Mistakes are often linked to morale. People usually don't make silly, careless mistakes when they're motivated and working in a positive environment. The lack of it, I think, may be related to the recent problems."
The history of TEPCO shows we cannot trust this company and its mistreated workforce to handle the complex challenges faced at Fukushima. The crisis at Fukushima is a global one, requiring a global solution.
In an open letter to the United Nations, 16 top nuclear experts urged the government of Japan to transfer responsibility for the Fukushima reactor site to a worldwide engineering group overseen by a civil society panel and an international group of nuclear experts independent from TEPCO and the International Atomic Energy Administration , IAEA. They urge that the stabilization, clean-up and de-commissioning of the plant be well-funded. They make this request with "urgency" because the situation at the Fukushima plant is "progressively deteriorating, not stabilizing." 
Beyond the clean-up, they are also critical of the estimates by the World Health Organization and IAEA of the health and environmental damage caused by the Fukushima disaster and they recommend more accurate methods of accounting, as well as the gathering of data to ensure more accurate estimates. They also want to see the people displaced by Fukushima treated in better ways; and they urge that the views of indigenous people who never wanted the uranium removed from their lands be respected in the future as their views would have prevented this disaster.
Facing Reality
The problems at Fukushima are in large part about facing reality – seeing the challenges, risks and potential harms from the incident. It is about TEPCO and Japan facing the reality that they are not equipped to handle the challenges of Fukushima and need the world to join the effort. 
Facing reality is a common problem throughout the nuclear industry and those who continue to push for nuclear energy. Indeed, it is a problem with many energy issues. We must face the reality of the long-term damage being done to the planet and the people by the carbon-nuclear based energy economy. 
Another reality the nuclear industry must face is that the United States is turning away from nuclear energy and the world will do the same. As Gary Jaczko, who chaired the US Nuclear Regulatory Commission at the time of the Fukushima incident says "I’ve never seen a movie that’s set 200 years in the future and the planet is being powered by fission reactors—that’s nobody’s vision of the future. This is not a future technology." He sees US nuclear reactors as aging, many in operation beyond their original lifespan.  The economics of nuclear energy are increasingly difficult as it is a very expensive source of energy.  Further, there is no money or desire to finance new nuclear plants. "The industry is going away," he said bluntly.
Ralph Nader describes nuclear energy as "unnecessary, uneconomic, uninsurable, unevacuable and, most importantly, unsafe."  He argues it only continues to exist because the nuclear lobby pushes politicians to protect it. The point made by Nader about the inability to evacuate if there is a nuclear accident is worth underlining.  Wasserman points out that there are nuclear plants in the US that are near earthquake faults, among them are plants near Los Angeles, New York City and Washington, DC.  And, Fukushima was based on a design by General Electric, which was also used to build 23 reactors in the US.  
If we faced reality, public officials would be organizing evacuation drills in those cities.  If we did so, Americans would quickly learn that if there is a serious nuclear accident, US cities could not be evacuated. Activists making the reasonable demand for evacuation drills may be a very good strategy to end nuclear power.
Wasserman emphasizes that as bad as Fukushima is, it is not the worst case scenario for a nuclear disaster. Fukushima was 120 kilometers (75 miles) from the center of the earthquake. If that had been 20 kilometers (12 miles), the plant would have been reduced to rubble and caused an immediate nuclear catastrophe.
Another reality we need to face is a very positive one, Wasserman points out "All of our world’s energy needs could be met by solar, wind, thermal, ocean technology." His point is repeated by many top energy experts, in fact a carbon-free, nuclear-free energy economy is not only possible, it is inevitable.  The only question is how long it will take for us to get there, and how much damage will be done before we end the "all-of-the-above" energy strategy that emphasizes carbon and nuclear energy sources. 
Naoto Kan, prime minister of Japan when the disaster began, recently told an audience that he had been a supporter of nuclear power, but after the Fukushima accident, "I changed my thinking 180-degrees, completely." He realized that "no other accident or disaster" other than a nuclear plant disaster can "affect 50 million people . . . no other accident could cause such a tragedy." He pointed out that all 54 nuclear plants in Japan have now been closed and expressed confidently that "without nuclear power plants we can absolutely provide the energy to meet our demands."  In fact, since the disaster Japan has tripled its use of solar energy, to the equivalent of three nuclear plants. He believes: "If humanity really would work together . . . we could generate all our energy through renewable energy."
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The Coming Grand Bargain: "We're All Neoliberals Now"

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After the U.S. government shutdown you’d expect Republicans and Democrats to remain at each others’ throats, so different was their vision for the country, or so it appeared.
In reality, however, only a bit of the political theater was reserved for “Tea Party” Republicans to invest in their political future by denouncing Obamacare, which they know will enrage millions of people forced to buy shoddy corporate health care; many of these future victims of Obamacare will become diehard Teapartiers.
But the real intent behind the government shutdown was lost on the mute American media. The Republicans were once again allowed to use the threat of government default to steer the Obama administration to the right — the right-leaning tail wagging the dog of government in the direction of a “Grand Bargain” to cut “entitlement” programs such as Social Security, Medicare, and other public services.
But like real dogs, government body and tail cannot be separated: the Democrats are allowing themselves to be “wagged” because they fully agree with the Republican’s neoliberal agenda.
The essence of neoliberalism can be reduced to the following: government should be used exclusively to help big business and the wealthy with tax cuts, subsidies, privatizations, anti-labor laws, etc., while all government programs that help working and poor people should be eliminated. It’s really that simple.
In practice, Obama’s neoliberalism is blatant: after bailing out the banks he continues to approve of the printing of thousands of billions of Federal Reserve dollars to give to the wealthy and big banks who are racking in record profits, while the jobs crisis is ignored and public services slashed on a state by state level without hope of a government bailout.
Since Obama has been in office, a shocking 95 percent of income gains went to the richest 1%. This is not the blind hand of the free market, but government policy, which can be adjusted to reflect the priorities of working people.
Obama dodges responsibility for his neoliberal policies by giving empty speeches about “hope” and whining about the very wealth inequality that he creates via policy. He gives speeches to labor unions about how it’s “unfair” that the rich just happen to be getting richer, while working people continue to suffer. Working people learned long ago to ignore Obama’s “progressive” blather, while the leaders of national unions drink in his words as if gulping from the Holy Grail.
The first steps of the coming Grand Bargain have already been taken: the “sequester” — massive cuts to national social programs including Medicare — have been extended as a result of government shutdown “negotiations.” And now the media is casually reporting that a Grand Bargain that further “reduces entitlements” is inevitable, but it will be only a “small” bargain, so no need to worry.
“Republicans on Capitol Hill are determined to mitigate those [military sequester] cuts by spreading them among various social programs, like education and Social Security…”
Obama has said several times that he’s more than prepared to use Social Security as a bargaining chip in his Grand Bargain.
At a time when more services are needed, they will be cut instead. Aside from the suffering it will cause millions of people, a “small” Grand Bargain will also create a precedent for even more “bargains” in the future, since the first step in creating negative social change is often the hardest, but once the foot is in the door the process accelerates.
Neoliberalism has already advanced on a state-by-state basis in the U.S., with Democrat and Republican governors in bi-partisan agreement that has drastically cut education and other social services, attacked the wages and benefits of state workers, while lowering the state taxes on the wealthy and corporations.
Large scale neoliberalism on a national level — like the coming Grand Bargain — is sometimes referred to as a “structural reform,” meaning that a major component of a nation’s economic policy is shifted, or eliminated.
For example, Social Security and Medicare are two bedrock social programs that constitute a major piece of U.S. budget spending, affecting hundreds of millions of people.
The attacks on Social Security, Medicare, and public education are neoliberal-style ”structural reforms,” essentially a corporate attempt to change the underlying social compact of U.S. society that was created under Franklin D. Roosevelt and expanded under Lyndon Johnson’s “Great Society” programs.
How was the U.S. social compact formed? Like all social policy, it was a reflection of power, specifically the balance of forces between the corporate and working classes in the U.S. In the 1930s and 1940s, massive strike waves led to an ever-larger unionized workforce that repeatedly flexed its muscles by demanding living wages, health care, and other social programs.
These demands were backed up by waging mass demonstrations and industry-wide actions along with sympathy strikes. After WWII a third of the U.S. workforce was organized in labor unions, which shifted the entire labor market in favor of all working people, while also shifting the ground on which national social policy was created. A semblance of democracy was not possible without recognizing the demands of the powerfully organized working class.
When arch-conservative Richard Nixon famously declared “we’re all Keynesians now,” he was merely recognizing the balance of power that existed in the U.S. political system, and the unwillingness of the elites to challenge this social pact for fear of the destabilizing effects that would result.
This Keynesian consensus was essentially a truce declared in the U.S. class war, where the power of both sides — capital and labor — were balanced, both independently strong enough to repel attacks from the other. In response, Nixon’s economic policies make Obama seem like a right-wing neoliberal fanatic.
But while Nixon agreed to the Keynesian consensus at home, he gave his blessing to the radical right-wing economist Milton Freidman to “reform” the economy of Chile under the bloody dictator, Pinochet, whom the U.S. brought to power over the corpse of the democratically elected President Salvador Allende, as well as the thousands of his supporters who were butchered. Chile was essentially a neoliberal experiment that, if successful, would be transferred to the United States.
Due to the Keynesian consensus, Milton Freidman’s radical pro-corporate doctrine was at the time viewed as right-wing fanaticism, which it is. Now, however, with labor’s faltering power, the corporations feel confident enough to flex their muscles unhindered. To enhance their new power they needed an accompanying ideology — Friedman’s neoliberalism, free market capitalism unleashed.
Margaret Thatcher and Ronald Reagan’s “revolution” ushered in the neoliberal transformation of the U.S. after seeing the “success” of the Chilean economy. Chile successfully increased corporate profit rates by removing “barriers” to profits, such as trade unions, socialists, and any democratic voice that opposed the “restructuring” of the Chilean economy to reflect the interests of the rich, finally unshackled from the “constraints” of wealth accumulation. Reagan and Thatcher followed in lock-step, targeting unions for destruction, lowering tax rates for the rich, and preaching the virtue of neoliberal “trickle down” economics.
Implementing the neoliberal shock doctrine breaks the social contract and thus ends the truce of the class war. The first shots were fired by Reagan and the onslaught has continued under the two Bush’s as well as under Bill Clinton. The 2008 recession has pushed both parties to double down on neoliberalism as their solution to the ongoing economic crisis.
Naomi Klein’s book, “The Shock Doctrine,” tells in gruesome detail the brutality that has accompanied the “implementation” of neoliberal reforms across the globe over the last 30 years. And while the U.S. has slow played this process since 2008, U.S. politicians are slated to follow the example of the European Union elites by accelerating the cuts on a national level.
The labor and community groups that have tried to deal with the corporate attack by hiding from it still have time to unite their forces to fight for full funding for a national jobs program, expanded Social Security, Medicare for all, accessible, quality public education, and other public services, all to be paid for by taxing the rich and corporations.

They’re Coming For Your Savings

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Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.

Before we look at the coming wave of asset confiscations, let’s stroll through some notable episodes of the past, just to make the point that government theft of private wealth is actually pretty common.

• Ancient Rome had a rule called “proscription” that allowed the government to execute and then confiscate the assets of anyone found guilty of “crimes against the state.” After the death of Julius Caesar in 44 BC, three men, Mark Anthony, Lepidus, and Caesar’s adopted son Octavian, formed a group they called the Second Triumvirate and divided the Empire between them. But two rivals, Brutus and Cassius, formed an army with which they planned to take the Empire for themselves. The Triumvirate needed money to fund an army of its own, and decided the best way to raise it was by kicking the proscription process into overdrive. They drew up a list of several hundred wealthy Romans, accused them of crimes, executed them and took their property.

• In the mid-1530s, English king Henry VIII was short of funds, so he seized the country’s monasteries and claimed their property and income for the Crown. As historian G. J. Meyer tells it in The Tudors: The Complete Story of England’s Most Notorious Dynasty:

“By April fat trunks were being hauled into London filled with gold and silver plate, jewelry, and other treasures accumulated by the monasteries over the centuries. With them came money from the sale of church bells, lead stripped from the roofs of monastic buildings, and livestock, furnishings, and equipment. Some of the confiscated land was sold – enough to bring in £30,000 – and what was not sold generated tens of thousands of pounds in annual rents. The longer the confiscations continued, the smaller the possibility of their ever being reversed or even stopped from going further. The money was spent almost as quickly as it flooded in – so quickly that any attempt to restore the monasteries to what they had been before the suppression would have meant financial ruin for the Crown. Nor would those involved in the work of the suppression … ever be willing to part with what they were skimming off for themselves.”

• Soon after the French Revolution in 1789, the new government confiscated lands and other property of the Catholic Church and used the proceeds to back a new form of paper currency called assignats. The resulting money printing binge quickly spun out of control, resulting in hyperinflation and the rise of Napoleon.

• During the US Civil War, Congress passed laws confiscating property used for “insurrectionary purposes” and of citizens generally engaged in rebellion.

• In 1933, in the depths of the Great Depression, president Franklin Roosevelt banned the private ownership of gold and ordered US citizens to turn in their gold. Those who did were paid in paper dollars at the then current rate of $20.67 per ounce. Once the confiscation was complete, the dollar was devalued to $35 per ounce of gold, effectively stealing 70 percent of the wealth of those who surrendered their gold.

• In 1942, after entering World War II, the US moved all Japanese citizens within its borders to concentration camps and sold off their property. The detainees were released in 1945, given $25 and a train ticket home – without being reimbursed for their losses.

Since the 2008 financial crisis, various kinds of capital controls and asset confiscations have become common. A few examples:

• Iceland required that firms seeking to invest abroad get permission from the central bank and that individual Icelanders get government authorization to buy foreign currency or travel overseas.

• Greece pulled funds directly from bank and brokerage accounts of suspected tax evaders, without prior notice or judicial due process.

• Argentina banned the purchase of U.S. dollars for personal savings and required banks to make loans in pesos at rates considerably below the true inflation rate.

• The US Fed proposed that money market funds be allowed to limit withdrawals of customer cash in times of market stress.

• Cyprus, a eurozone country, responded to a series of bank failures by confiscating 47.5% of domestic bank accounts over €100,000.

• Poland in September responded to a budgetary shortfall by confiscating the assets of the country’s private pension funds without offering any compensation.

• Spain was recently revealed to have looted its largest public pension fund, the Social Security Reserve Fund, by ordering it to use its cash to buy Spanish government bonds. Currently 90% of the €65 billion fund had been invested in Spanish sovereign paper, leaving the fund’s beneficiaries dependent on future governments’ ability to manage their finances.

Now for the big one, reported by Automatic Earth on Saturday October 12:

The IMF Proposes A 10% Supertax On All Eurozone Household Savings
This is a story that should raise an eyebrow or two on every single face in Europe, and beyond. I saw the first bits of it on a Belgian site named Express.be, whose writers in turn had stumbled upon an article in French newspaper Le Figaro, whose writer Jean-Pierre Robin had leafed through a brand new IMF report (yes, there are certain linguistic advantages in being Dutch, Canadian AND Québecois). In the report, the IMF talks about a proposal to tax everybody’s savings, in the Eurozone. Looks like they just need to figure out by how much.

The IMF, I’m following Mr. Robin here, addresses the issue of the sustainability of the debt levels of developed nations, Europe, US, Japan, which today are on average 110% of GDP, or 35% more than in 2007. Such debt levels are unprecedented, other than right after the world wars. So, the Fund reasons, it’s time for radical solutions.

The IMF refers to a few studies, like one from 1990 by Barry Eichengreen on historical precedents, one from April 2013 by Saxo Bank chief economist Steen Jakobsen, who saw a 10% general asset tax as needed to repair government debt levels, and one by German economist Stefan Bach, who concluded that if all Germans owning more than €250,000, representing €2.95 trillion in wealth, were “supertaxed” on their assets at a 3.4% rate, the government could collect €100 billion, or 4% of GDP.

French investor site monfinancier.com talks about people close to the Elysée government discussing how a 17% supertax on all French savings over €100,000 would clear all government debt. The site is not the only voice to mention that raising “normal” taxes on either individuals or corporations is no longer viable, since it would risk plunging various economies into recession or depression.

Here’s what the October 2013 IMF report, entitled Fiscal Monitor : Taxing Times, literally says on the topic, in the chapter called:

Taxing Our Way Out Of – Or Into? – Trouble
The sharp deterioration of the public finances in many countries has revived interest in a capital levy, a one-off tax on private wealth, as an exceptional measure to restore debt sustainability. (1) The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, and, until he changed his mind, Keynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth tax on bondholders that also falls on non-residents).

It should probably be obvious that there is one key sentence here, one which explains why the IMF is seriously considering the capital levy (supertax) option, even if it’s presented as hypothetical:

The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

It all hangs on the IMF’s notion – or hope – that it can be implemented by stealth, before people have the chance to put their money somewhere else (and let’s assume they’re not thinking of digging in backyards, and leave tax havens alone for now). Also, that after the initial blow, people will accept the tax because they are confident it’s a one-time only thing. And finally, that a sense of justice will prevail among a population, a substantial part of whom will have little, if anything, left to tax.

Some thoughts
Will more countries introduce capital controls or asset confiscations in the next few years? Duh, of course. Debt levels are unmanageable, so they have to be lowered. And there are only three ways to do it: deflationary collapse that wipes out the debt through default, inflation that wipes out the debt by destroying the world’s major currencies, or stealing enough private sector wealth to reset the clock. Option one – depression – is political poison so will be avoided at all costs. Option two is being tried and is failing because the deflationary effect of trillions of dollars of bad debt more or less equals the inflationary impact of trillions of dollars of new currency.

That just leaves door number three, demonize the successful and take what they’ve accumulated. Recall from the historical list that opened this post that governments like to pick on members of society who 1) have lots of money and 2) have lots of enemies or can easily be framed for crimes. This time around it will be “the rich” who are living well at the expense of the rest of us. The trick will be to define “rich” down far enough to make possible the confiscation of middle-class IRAs and 401(K)s, since that’s where the real money is.

Interesting that the build-up to asset confiscation is coinciding with a coordinated take-down of gold and silver, the two assets that will be hardest to steal when the time comes.