The Leave Campaign’s relentless focus on immigration has seen a rise in hate crime and been acclaimed by Far Right groups across the EU.

Members of the victorious Leave Campaign in June 23’s referendum on EU membership (Brexit) claimed to have noble ambitions for the UK. They wanted to “take back sovereignty” and “democratic control”.

The Leave Campaign’s relentless focus on immigration has seen a rise in hate crime and been acclaimed by Far Right groups across the EU.

Members of the victorious Leave Campaign in June 23’s referendum on EU membership (Brexit) claimed to have noble ambitions for the UK. They wanted to “take back sovereignty” and “democratic control”.

 However, in reality, their tactics were grubby and racist with a relentless focus on immigration. Nigel Farage, the influential Far Right politician who leads the United Kingdom Independence Party (UKIP), set the incendiary tone. At one point in the campaign, Farage stood in front of a gigantic poster of a long queue of Muslim immigrants with the slogan “Breaking Point”.

Naturally, liberals accused Farage of using Nazi-style tactics, but the perception that outsiders were stealing British jobs, driving down wages, and overburdening the health service and schools, proved a powerful narrative in disenfranchised parts of the UK. The poorest British citizens voted by 64% to 36% to leave the EU (compared to the overall 52-48% split), according to YouGov data. These voters are the same marginalised working-class white people that Donald Trump has seduced with his anti-Mexican speeches. Meanwhile, rich and middle-class British were much more likely to vote to remain.

Though UKIP has only one MP, it won 3.9 million votes in the last general election and has terrified the Tory Party. Not knowing how to react to the rise of the Far Right, the Government has panicked disastrously. David Cameron promised to reduce immigration to the 10s of thousands, which was exposed as a lie. Moreover, under pressure from UKIP and the Tory Far Right, he called a referendum that he felt he was sure to win.

 There is mounting evidence that the cynical anti-immigrant strategy could leave a lasting effect on British society by legitimising negative sentiments towards “outsiders”. The National Police Chiefs’ Council says there has been a 57% spike in the number of reported incidents of hate crime since the vote and immigrants have reported being ordered to “go back where they come” and taunted with shouts of “Out! Out! Out!”  

“This is especially sad in Britain which has always been considered tolerant and liberal and more attractive to many immigrants than, for example, France,” said Sofia Vasilopoulou, an expert in Far Right politics at the University of York.  She added, “We now have a society polarised by the 48% of citizens who feel progressive, internationalist and cooperative and people who want to retreat into a nostalgic view that life was better in the 1970s before mass migration.”

The Leave Campaign’s strategy may have been nasty and divisive, but it was much more effective than the Remain Campaign’s scaremongering about the devastating consequences of Brexit for the British economy. Citing the IMF, the World Bank and the Governor of the Bank of England was never going to convince anti-establishment sections of society that have been marginalised by globalisation.

“The Leave Campaign managed to use immigration as a framework, but link it to several other important issues for voters,” said Vasilopoulou. “They claimed that getting rid of immigrants would make it easier for the working class to get jobs and that border controls would mean fewer criminals and also that healthcare and education would improve if we didn’t have to pay for immigrants. Through the one masterframe of immigration they ran a multi-dimensional campaign that attracted people without good access to welfare, or who have lost jobs, or who don’t want cultural diversity.”

The distinguished American economist John Weeks, from London’s School of Oriental and African Studies, said the referendum result was the greatest electoral victory in British history for Far Right politics. “The economic programme of UKIP’s Nigel Farage and the Tory Brexiteers is an extreme version of neoliberalism,” he said. “Their real objections to the EU include regulations that protect consumers and workers, including The Charter of Fundamental Rights of the European Union, which in their view limit ‘free trade’ and free capital flow’. It’s an ultra free market approach.”

However, the Leave Campaign managed to hide its neoliberal goals behind anti-immigrant and pro-sovereignty claims and spurious claims about redirecting EU money into the cash-strapped National Health Service. The former Mayor of London, Boris Johnson, travelled around the UK in a bus carrying the populist slogan: “We send the EU £350 million a week. Let’s fund the NHS instead.”

However, within days of the referendum result, his Leave Campaign soul mate Nigel Farage had dismissed the £350 million for the NHS claim and written an article saying the NHS had to be funded with private healthcare insurance – a purely neoliberal policy at odds with mendacious promises that seduced millions of voters.

Meanwhile, Brexit dealt a savage blow to politics on the left. Within a few days of the result, the progressive Labour leader Jeremy Corbyn – the closest British politician to Bernie Sanders – faced a no-confidence vote from his MPs and lost it by 172 votes to 40. There were also mass resignations from his shadow cabinet.

The excuse for the coup was Corbyn’s lacklustre campaign for the Remain side. However, the real reason was that the right of the Labour Party wanted to return it to the type of Blairite neoliberal ‘Tory light’ policies they say will make it “electable”. This could mean a return to support for Tory austerity cuts and an end to Corbyn’s intentions to tightly regulate The City. Corbyn has refused to resign, but the Labour Party could be split in two.

“With an eye to the split in the Labour Party, the new Tory Prime Minister might hold a quick election in a few weeks time to solidify power,” said John Weeks. “If this is combined with a second Scottish independence referendum, it could deal a massive blow to progressive politics in what would be left of Britain.”

Weeks also feared that the Brexit result would embolden Far Right politics across Europe. In France, for example, the National Front’s Marine le Pen acclaimed the result as the start of the “people’s spring” and is angling for a French referendum on EU membership. Recent polls suggest the French are even more anti-EU than the British, with 60% perceiving it negatively. In the Netherlands, the anti-Muslim politician Geert Wilders has also called for a Dutch referendum on EU membership.

Meanwhile, in Germany, the anti-immigrant Alternative for Germany (AfD) party has been in existence for just three years but already has 15% of the vote, making it the third most popular party. The AfD is even more overtly racist than UKIP. Deputy leader Alexander Gauland said most Germans admire the skills of national team defender Jérôme Boateng, but “they don’t want a Boateng as their neighbour.” Though born in Germany, Boateng is black.

Like UKIP, the AfD emits a relentless stream of anti-immigrant rhetoric and there are an increasing number of Germans willing to listen. With Germany accepting 1.1 million refugees last year alone, mass migration is a concern to many citizens.

On the left of European politics, there is a tendency to dismiss concerns about high levels of immigration as ‘racist’. The Remain Campaign in the UK referendum justified the net levels of 332,000 a year by arguing for the economic benefits. However, John Weeks says this argument is disingenuous and ignores people’s genuine concerns.

“When my working-class friends hear this argument about making a contribution, they say that if an English person did the same job, they would also be making a contribution. In addition, they are right. The free movement of capital and labour, which are rigid principles of the EU single market, are both neoliberal policies in the interests of capital. I would set controls on both. David Cameron could have set up rules around immigration to make it fairer, but he wasn’t prepared to do so because his business friends said ‘oh no, be careful how you negotiate David.’”

Without controls on migration, the strengthening of Far Right politics in Europe is inevitable, he said. The policy provides a perfect opportunity to scapegoat immigrants for the struggles of the working class in a neoliberal economy. “We’ve recently seen big gains for the right-wing People’s Party in Spain. In Italy there will be a referendum on electoral reform in November and, if it is defeated, the anti-EU right-wing forces in Italy will grow stronger in the form of the Northern League and the Five Star Movement,” he said.

Nationalist forces in Scotland, although more Social Democrat than right wing, are now pushing for a second referendum on independence. Scotland voted by 62% to 38% to stay in the EU (in England the vote was split 53.4% to 46.6% to leave) and First Minister Nicola Sturgeon has said Scotland’s desire to remain in the EU would justify a re-run if the UK leaves. This time, polls suggest that Scotland is likely to become independent.

There is just a chance, however, that the UK may never even leave the EU. Constitutional lawyers have argued that the British Parliament still needs to ratify a decision to invoke Article 50, which would trigger the two-year formal process of withdrawal. A majority of MPs voted to remain. 

Sofia Vasilopoulou also argues that the referendum result could be nullified, as the entire process was undemocratic. Only one of the choices available was properly defined. “The option to remain in the EU was pretty clear, but the option to leave was not clear at all,” she said.

“There are many ways to leave – it could mean total exit from the economic area, or it could mean the Norwegian Model of remaining in the European Economic Area (EEA), but not being a member of the EU. Alternatively, it could be going it alone. No one in the vote campaign had a consistent line and if people did not know what they were voting for, that could be considered undemocratic.”

EU politicians won’t want to offer too many compromises in negotiations with the British, however, in case it creates a domino effect. With Far Right parties pressurising European governments to hold their own referendums, an entirely pain-free withdrawal might not be in the EU’s best interests.

The post British Brexit was a Victory for Far Right Politics appeared first on Economy Watch.

In trying to associate herself with her husband Bill Clinton’s economic legacy, Hillary Clinton is in danger of making herself look vulnerable and weak.  With opinion polls showing a clear lead for Hillary Clinton over Donald Trump, especially among female and ethnic minority voters, it is highly likely the US will have its first female President In November.

In trying to associate herself with her husband Bill Clinton’s economic legacy, Hillary Clinton is in danger of making herself look vulnerable and weak.  With opinion polls showing a clear lead for Hillary Clinton over Donald Trump, especially among female and ethnic minority voters, it is highly likely the US will have its first female President In November.

The bookmakers have historically been reliable predictors of election results and they make her 4-11 on to defeat Trump. However, Hillary Clinton’s gender will not be the most unusual aspect if she arrives at the seat of power in Washington. Even more groundbreaking is that two Presidents will reside at the same time in the White House. 

The awkward matter for Hillary Clinton, who will need to step out of her husband Bill’s shadow, is that he remains much more popular than she is. Her weak favourability ratings have hovered at around 40%, with as many as 55% of voters not trusting her. In contrast, YouGov research has suggested Bill Clinton has higher approval ratings than his wife among Democrats, Republicans and Independents.

“Whether Clinton, or Trump wins the election, the new President will start off facing a high level of dislike, suspicion and distrust,” said Professor Richard Wolff, from New School University in New York. “There’s no parallel in recent US history. The normal pattern is over-enthusiasm at the start, and then they get gradually worn down and end up being hated.”

Political scientist John Pitney, the co-author of Bill Clinton: The Postmodern Presidency agrees that whoever becomes President will enter the White House will a daunting set of image problems. “With Trump it’s because of his bigoted statements and with Hillary, it’s because of the ongoing ethical scandals that stretch back to the early days of the Clinton administration and the Whitewater controversy,” he said. “Either candidate will limp into the White House with a lot of baggage and Americans will have pre-paid on the next President’s unpopularity.”

Aware of her poor image, Hillary Clinton has sought to bask in the reflected glory of Bill Clinton’s presidential record by promising to appoint him as an “economic tsar”. Although Clinton’s political legacy is hotly disputed, most Americans remember with affection the boom years of the 1990s when 22.7 million jobs were created. His role, she says, is to revitalise disenfranchised parts of the US economy, including coal country and the inner cities. However, the strategy of relying on her husband to boost her approval ratings is fraught with danger, according to Professor Wolff.  

“Clinton knows people are really unhappy about their economic situation and she is hoping they have a ‘good ole days’ mentality about the go-go years of the 1990s before everything went down the pan and she can associate herself with that,” he said. “But it could have the opposite effect. By giving Bill a powerful role on the economy, she inadvertently underscores her own fragility and nothingness by comparison with him. She has made herself into the person who cannot solve those problems and needs him to do it for her. There’s also a danger she is undermining her bona fides as a feminist leader.”

John Pitney, however, took a different view. He described the involvement of Bill Clinton as a “shrewd tactic” because most Americans remember the 1990s fondly. “There is a slight danger that she won’t emerge from his shadow because she has to show her identity and resources to gain respect. But on the other hand, she has an amazing resource under the same roof, someone with vast institutional and policy knowledge and it would be crazy not to take advantage of that,” he said.

Where Professor Wolff and John Pitney agree is that Bill Clinton’s reputation as the economics mastermind that presided over the boom of the 1990s is largely a figment of the imagination. “The influence of a President on the ebbs and flows of the economy is pretty small and mostly reactive when dramatic action is required,” said Professor Wolff. “What happens over eight years in power is best attributed to a host of phenomena that happened before he became President.”

Clinton was largely a passive participant in the democratic embrace of neoliberal policies, Wolff says. He followed the ‘triangulation’ strategy of his chief political advisor Dick Morris, aiming to position the Democrat party above the polarities of right and left. However, Clinton, Wolff says, simply “went along for the ride”. Economic policy was set by his advisors, many of whom were bankers, including the Secretary of the Treasury Robert Rubin. “In the economics departments of the elite US colleges, Bill Clinton had a well-deserved reputation for knowing nothing and caring less about economics,” said Professor Wolff.

Even if we give Clinton credit for the jobs boom during his years in power, his reputation has to be counterbalanced by the long-term negative impact of some of his policies. “There’s no question he presided over one of the most hysterical debt-fuelled economic expansions in US history,” he said. “The expansion started in the 1970s and 1980s and didn’t need him, but he blithely presided over it and did nothing to stop it even though it was clearly based on debt. Eventually, it led to the stock market collapse of 2000 and the 2008 financial crisis. Anyone who considers that to be ‘masterful economic management’ has lost his mind to delirium.” 

The influential political commentator Robert Reich, who was Secretary of Labor under Bill Clinton, agrees with Professor Wolff that Hillary Clinton’s attempt to associate herself with her husband’s legacy is fraught with peril. For Reich, this is largely because of the lasting failures of Clinton’s policies.

Reich points out that Clinton passed the North American Free Trade Agreement (NAFTA), which undermined manufacturing jobs and unions, while benefiting the biggest corporations who could shift production out of the US, to Mexico and other nations. In addition, he signed the Welfare Bill that “subsequently forced millions into poverty because it limited welfare to five years in a recipient’s lifetime”. Clinton also repealed the Glass-Steagall Act, which contributed to the rise of too-big-to-fail banks.

“Again, I don’t really blame Bill Clinton for the deregulation agenda,” said Professor Wolff. “The banking sector fought for decades to get the Act repealed and they began weakening it when the political winds changed at the time of Ronald Reagan and Margaret Thatcher. Yes, Bill Clinton signed it in the end, but he did it with massive bipartisan support from both Republicans and Democrats.”

Whatever the extent of Bill Clinton’s culpabilities, Donald Trump will try to exploit the Clintons’ vulnerable points in the months ahead. There will be a lot of talk about the damaging effects of NAFTA, but his major strategy is likely to be to remind the US people regularly of Bill Clinton’s alleged sexual misconduct. Several women have either accused him of rape, or sexual harassment. Other women have alleged adulterous affairs and the White House is still haunted by the ghost of Monica Lewinsky.

“The one thing Trump does well is finding an opponent’s weak dimension and then vulgarly exploiting it. He will remind the US people that Bill was an out-of-control sexual predator. There are half a dozen women we know about and heaven knows how many we do not know about. Mrs Clinton has never said much about it, but Trump will,” he said.

John Pitney does not rule out further indiscretions on the part of Bill Clinton. The media, he says, will be keeping a close eye on him. “Democrats will tend to look upon Bill favourably unless he gets into more trouble, which he could because he’s Bill Clinton and that’s what happens,” he said. “What makes it less likely now is his age as he won’t have the same energy he did in the 1990s. Not many men do.”

As well as the strategic and ethical complexities that the Clintons will have to resolve, there are fun aspects to the co-habitation of two Presidents in the White House. What, for example, should people call Bill Clinton? Hillary Clinton has joked that he might be called “first dude”, or “first mate”, and Bill Clinton has suggested he could go by the name of “Adam” as the first man. Although he has the right to be called Mr President, that could get confusing when he’s alongside his wife, so he is more likely to be called Former President Clinton. The Office of the First Lady will also have to be renamed, presumably something like the “Office of the President’s Spouse”.

Being a man may work in Clinton’s favour, however, allowing him to avoid some of the more onerous tasks expected of a First Lady of the United States (FLOTUS). There won’t be the same pressure to look stunning in an inaugural gown, or win the traditional first-lady bake-off, for example. He could carry on his work for his Foundation in New York, whilst taking an advisory role that avoids the limelight allowing his wife to take centre stage.

“It’s an unprecedented situation and no one knows how it will play out,” said John Pitney. “We’ve had very skilled and knowledgeable spouses in the past. No one knew how shrewd and intelligent Jackie Kennedy was and Lady Bird Johnson could have been a great politician in her own right. But we’ve never had a situation where we have a spouse who we have to address as Mr. President!”

The post Hillary Plays Dangerous Game with Bill’s Legacy appeared first on Economy Watch.

When it comes to forecasting elections, opinion polls that are often proved wrong bombard the public. Meanwhile, the betting markets get it right every time, so when they say Hillary Clinton will score a comfortable win over Donald Trump, we can take it as read.

When it comes to forecasting elections, opinion polls that are often proved wrong bombard the public. Meanwhile, the betting markets get it right every time, so when they say Hillary Clinton will score a comfortable win over Donald Trump, we can take it as read.

Liberal Americans are becoming alarmed at the prospect of a Donald Trump Presidency. In his now inevitable battle with Democrat Hillary Clinton, Trump has taken a lead of 0.2% based on an average of polls, causing commentators to say, “it’s now time to panic”. Meanwhile, Professor Helmut, from Stony Brook University, has published a study claiming Trump has a 97% chance of winning the US Presidency. Norpath says his model has only proved inaccurate in one election since 1912 – the Bush-Gore race of 2000.

However, according to the leading British expert on election forecasting, liberal Americans have no reason to panic. Professor Leighton Vaughan Williams, who is Director of the Political Forecasting Unit at Nottingham Business School, says Trump has very little chance of winning the US election.

Poll data, he argues, consistently gets its political predictions wrong because of its weak methodology. There is, though, a vastly more reliable resource available. The betting markets have proved almost infallible in predicting the results of elections in both the US and the UK for decades. In addition, right now, they make Clinton a two in three favourite.

“Betting markets are much more accurate historically than polls,” he said. “There is a lot of money at stake, so the bookmakers carefully select which polls are worth looking at and which ones have a political bias. The Rasmussen polls have a consistent 2% Republican bias, but you don’t need to discard them, just factor the bias in. Other polls are so feeble that it’s akin to wildly throwing darts and hoping one hit the bull’s eye.”

The bettors themselves also influence the odds. Experts who are more likely to make correct predictions tend to stake the largest sums.  The bookmakers know to ‘follow the money’ and pay attention to these punters when they set the odds.  Some betting websites, such as Betfair, owned by high-street bookmaker Paddy Power, work as peer-to-peer gambling exchanges so the punters bet with each other. As Alfredo di Francesco, editor of 123Scommesse and expert on Italian betting sites ( siti scommesse in native Italian ) confirms – these bookmakers are also present in the Italian regulated environment.

Betting exchanges update the odds immediately, whereas polls take days to publish new data. “With the betting markets, we’ve created, almost by accident, a ‘high-tech’ crystal ball that taps into the accumulated expertise of mankind and makes it available to all,” said Professor Vaughan Williams.

The pollsters’ methods are comparatively crude. Their snapshots of voter intentions rarely identify candidates, but simply ask people for which party they would vote. Neither do they take into account the likelihood of tactical voting and late switches. Another flaw is that they always overestimate voter turnouts. Finally, they ignore the tendency towards a late swing to the incumbent candidates, or to the status quo. “The bookmakers always adjust raw poll data for this late swing,” he said.

Professor Vaughan Williams has published research comparing the success of bookmakers in predicting the winners of elections in both the US and the UK, with the many failures of the pollsters. No one studying his data would ever trust the polls again. Since 1985, the bookmakers have called every British general election correctly, whereas the polls have failed almost as often.

In the most recent General Election of May 2015, the pollsters showed the race between Labour and Conservatives as neck and neck. On Election Day, they made a confident prediction that the Labour Party would win significantly more seats. However, they were wrong. The Conservatives won a lot more seats, which was just what the betting markets had been saying consistently for months.

“The betting market was unmoved even by last-minute polls indicating a late swing to Labour. The polls were indicating most seats for Labour while the betting markets had the Conservatives as short as 6 to 1 on favourites to win most seats – meaning £6 to win £1. That shows great confidence,” said Professor Vaughan Williams.

The pollsters were interviewed everywhere in the British media and made excuses for the failure. However, it wasn’t the first time they had erred spectacularly. In the 1992 UK General Election, they predicted a Labour victory, only for John Major’s Conservatives to win by seven percentage points. Of course, the betting markets had forecast a comfortable Tory win all along.

Armed with his knowledge of the accuracy of the betting market forecasts, Professor Vaughan Williams told The Economist magazine two weeks before the 2005 UK General Election that there would be a 60-seat majority for the Labour Party. In a BBC live debate, a leading pollster wanted to bet him a large sum that his own figure of a majority of 100 for Labour would be more accurate.

“I declined the bet and saved him some money. The Labour majority was 66 seats. The assumption here is that the collective wisdom of many people is greater than the conclusions of a few,” said Professor Vaughan Williams. Similarly, in 2010, the polls had the Tories 12 points ahead on Election Day, whereas the betting markets predicted a hung parliament. Needless to say, betting markets were spot on again.

In American politics, the pattern is identical. In one famous study, the betting markets predicted correctly almost every US presidential election between 1868 and 1940. In only one year, 1916, did the candidate favoured in the betting the month before the election end up losing. However, that was in a very tight race and the markets got it right on the day.

A more recent example was in the 2012 US Presidential Election when both Gallup and Rasmussen called it for Mitt Romney by 4%, and the national polling average had the candidates tied. Meanwhile, Barack Obama was very short odds-on to win with the bookmakers and triumphed easily by a 4% margin.

In 2004, one betting exchange hit the jackpot in the US when their market favourite won every state. Professor Vaughan Williams compared this result to a “tipster calling the winner of 50 football matches in a row simply by naming the favourite”. Meanwhile, Gallup failed to forecast the winner of the 2004 Presidential Election.

The betting markets are just as successful at forecasting the results of referendums. In 2014’s Scottish Referendum, the polls were tight and some called it for independence. However, the betting markets pointed unwaveringly to a solid ‘No’. Likewise, in the 1995 Quebec Separation Referendum, the final polling showed ‘Yes to separation’ with a 6% lead.

In the event, ‘No to separation’ won by 1%. Naturally, the betting markets had seen that all along. Finally, in the Irish Gay Marriage Referendum of 2015, the polls pointed to a 70%-30% win for ‘Yes’, whereas the betting markets anticipated a 60%-40% split. In the event, ‘Yes’ won by 62%-38%.

Professor Vaughan Williams also respects the work of the Sabato Crystal Ball Project at the University of Virginia’s Center for Politics. The project uses expert judgment on a state-by-state level and much of the same methodology as the bookmakers’ websites.

They predict a strong win for Clinton by 347 votes to 191 for Trump. By comparison, Obama won 332 in 2012 to Romney’s 206. The betting and prediction markets, Professor Vaughan Williams says, tell a broadly similar story. Another source of accurate forecasts is the PollyVote project, which combines evidence from polls, prediction markets, and econometric models. It has been spot on with its forecasts since 2004 and predicts a Clinton win by 52% to 48%, the same as Obama’s defeat of Romney.

Though arguments will rage for months, the November 8 Presidential Election is already predictable, Professor Vaughan Williams says. We can expect Trump to launch attacks on Clinton’s integrity and bring up the scandals that have stuck to her name. He will use some of Bernie Sander’s criticisms about her close ties to the big banks and the political ‘establishment’. He will call her ‘crooked Hillary’ and the fight will get dirty. However, the bookmakers have already factored all these things into their predictions.

“Both Clinton and Trump are known quantities. If Bernie Sanders were running, it might be a different matter. He has not been victim to the sorts of personal attacks levelled at Trump and Clinton and it’s possible Trump could dent his ratings by accusing him of being a Communist, spending his honeymoon in Russia and wanting to abolish Christmas, and so on.

Clinton hasn’t attacked him viciously because she will need his supporters to vote for her. But it’s hard to see what Trump can throw at Clinton that isn’t already in the open,” he said.

For an accusation to influence popularity ratings, it has to be unpredictable and change the broad perception of the candidate. In the 2010 UK general election Labour leader, Gordon Brown was heard on camera accusing a supporter of being a “bigoted woman”.

Despite widespread negative publicity, it had no effect on his ratings as he was already perceived as “a bit of a bully boy leader”, Professor Vaughan Williams says. The Bill Clinton scandal with Monica Lewinsky also barely affected Clinton’s ratings, although a similar event would prove disastrous for a politician such as Obama whose appeal is based on being a ‘decent family guy’.

In the case of both Clinton and Trump, their views are so well-known it would be hard to change them now. Mitt Romney managed to achieve this trick in 2012. He went from calling himself a “severe Conservative” in the Republican race, to claiming to be a “compassionate Conservative” in his early debates with Obama. Romney got away with his transformation because his views were less well-publicised.

Over in the UK, there is also trepidation about the outcome of the June referendum on European Union membership. According to the Economist Brexit poll tracker, 40% of voters back the remain campaign, 39% want to leave and the rest are undecided. Anyone following the polls would expect it to be a close-run thing. However, the bookmakers disagree. Most of them rate a ‘vote to remain’ a near certainty at 7-1 on. A punter would need to bet £70 to win just £10.

In addition, Professor Vaughan Williams says wins for Clinton and the Brexit Remain campaign are even more likely than the odds imply. The phenomenon of “favourite longshot bias,” means bettors tend to overvalue “long shots” and undervalue favourites, he says. “This means that if the odds suggest the favourite is going to win 80% of the time, it’s probably more like 90% of the time,” he said.

As for Professor Norpath’s claims that Trump is a near certainty to win the Presidential Election, Professor Vaughan Williams dismisses them out of hand. “If he really believes that, he will become a millionaire just by betting on Trump and he can retire after the election. However, I’d rather listen to the betting markets. It seems only sensible to make the most of them when they are so consistently accurate.”

Update: Thanks to populist rhetoric and appealing to American’s manufacturing heartlands, Trump won the 2016 election. 2020 presidential betting was equally popular, with betting sites such as Bovada and Bet Online tipping Trump to defeat Biden. However, Biden secured victory. Looking forward, safe betting sites is already starting to preview the 2024 election, with The Rock emerging as a potential candidate, at odds of 25/1.

The post Betting Markets ‘Trump’ the Polls when it comes to Presidential Forecasting appeared first on Economy Watch.

In both the US and the UK, politicians are using racial smears and anti-Muslim rhetoric to try to gain white votes. However, the strategy carries risks in increasingly multi-cultural societies.

Within days of his election last week as London mayor, Sadiq Khan entered into a war of words with Donald Trump over the Republican candidate elect’s decision to ban Muslims from entering the US. Trump had offered to “make an exception for Khan”, who is a devout Muslim, but his offer was rejected.

In both the US and the UK, politicians are using racial smears and anti-Muslim rhetoric to try to gain white votes. However, the strategy carries risks in increasingly multi-cultural societies.

Within days of his election last week as London mayor, Sadiq Khan entered into a war of words with Donald Trump over the Republican candidate elect’s decision to ban Muslims from entering the US. Trump had offered to “make an exception for Khan”, who is a devout Muslim, but his offer was rejected.

“Trump’s ignorant view of Islam could make both our countries less safe. It risks alienating mainstream Muslims around the world and plays into the hands of the extremists,” Khan said.

However, Khan has been fighting anti-Muslim rhetoric on all fronts of late. Khan’s rival in the Mayoral election, the Conservative billionaire Zac Goldsmith, tried to smear him by suggesting he had “shared a platform” with extremists and Islamists, including controversial cleric Suliman Gani.

Goldsmith wrote that Khan had “repeatedly legitimised those with extremist views”. However, Khan dismissed Goldsmith’s election strategy as “Trump-like”. He told the Observer newspaper: “They used fear and innuendo to try to turn different ethnic and religious groups against each other – something straight out of the Donald Trump playbook.”

The Goldsmith campaign carried little force because Khan is known for his liberal views. He received death threats after voting for equal marriage and his campaign team included gay men and Jewish women.   

Though the “politics of slurs” is increasingly prevalent in both US and UK politics, the strategy is being used in different ways. In the US, Trump has made more explicit use of race and religion to earn the support of disaffected whites. His main targets have been illegal Latino immigrants and the Muslim community. Speaking of Mexicans, Trump has said, “They’re bringing drugs. They’re bringing crime. They’re rapists.” Meanwhile, he has advocated a ban on all Muslims entering the US.

The bluntness of Trump’s attacks has astonished liberal Americans, but they are firmly in a Republican tradition known as the Southern strategy, which successfully wooed Southern white Democrats by exploiting their anti-black animosities.

Jessica Brown, an assistant sociology professor at University of Houston, said, “The Southern strategy emerged in the late sixties when Presidential Candidate Richard Nixon and Senator Barry Goldwater consciously appealed to the racial resentment of whites to win the support of the historical slave states which had been staunchly democratic.

By the late sixties, explicit racism wasn’t allowed so Republicans used coded language and spoke about ‘state rights’, ‘urban crime’ and the urban welfare poor’. However, all the voters knew they meant ‘blacks’.”

Trump has created his own version of the Southern strategy, focusing mainly on Latino immigrants rather than the black community. The emphasis has changed because they are the fastest-growing minority group, accounting for 20% of pupils in suburban public schools. In Trump-land, undocumented Latino immigrants are the ones demonised as welfare abusers.

However, the emphasis on Latinos does not mean blacks escape censure. Trump supporters have attacked black protesters at his rallies. At one event in North Carolina, a protester was punched in the face by an audience member, while another yelled a racist slur. Afterwards, Trump condoned the behaviour, saying: “That’s what we need more of.”

“Trump’s strategy shows it’s still possible to run on a platform of unapologetic racism and get enough conservative support in the US,” said Brown. “Because there is very little about the Republican’s pro-business policies that appeal to the working-class voter, the Southern strategy is used as another means of winning working-class white votes.”

Trump’s electorate are especially vulnerable to being manipulated by the ‘Southern strategy’. Wages for the US working-class have long been stagnant and the job market has collapsed for workers without college degrees. A recent study by Princeton University Professor Anne Case and her co-author Angus Deaton found that white working-class Americans are increasingly dying from suicide, alcohol abuse, and drugs.

In 1999 people in this group died from accidental drug and alcohol poisonings at four times the rate of Americans with a bachelor’s degree, or higher. By 2013, they were dying at seven times the rate and committing suicide at more than twice the rate of people with more education, the study found.

They were also dying from alcoholic liver disease and cirrhosis at five times the rate of those with a college degree. As a group, they are looking for someone to blame for their plight. Instead of targeting establishment politics, they are seduced into blaming immigrants.

Despite its insidious power, the Southern strategy is doomed to fail in the long term in a nation with rapidly changing demographics. In 2011, the US reached a tipping point where there were more babies born to minority parents than white parents.

“The Republicans are running a race to the edge of a cliff and will either have to rethink their strategy or risk irrelevance in a majority-minority nation,” said Brown. “It also seems unlikely that Trump could win the national election for the same reason. His electorate is too narrow.”

Back in London, Zac Goldsmith’s disastrous mayoral campaign showed the dangers inherent in Trump’s ‘dog-whistle’ strategy of appealing to bigoted whites. London is one of the most ethnically diverse cities on earth.

Around 37% of the population was born abroad and more than 300 languages are spoken. Liberal, tolerant and left-leaning, the city overwhelmingly rejected Goldsmith’s divisive campaign on May 5, with Khan winning 56.9% of the vote.

As the backdrop to the London mayoral elections, however, there was a more complex and far more powerful attempt to smear the entire Labour Party as “anti-Semitic”. At one point, the accusations dominated all UK media to the extent that Khan feared he might lose the election and the Labour Party feared they would lose hundreds of seats in local council elections last week.

Behind the allegations was the right-wing political commentator Paul Staithes, whose Guido Fawkes website is one of the powerhouses of new media. He mounted a campaign against Labour’s alleged anti-Semitism that moved into the national press.

Staithes unearthed the two-year old Facebook postings of Labour MP Naz Shah, who had shared a graphic suggesting that the best solution to the Israel-Palestine conflict was to relocate Israel to the US. Shah apologised profusely and was suspended from the Labour party. However, that was just the beginning of the storm.

Veteran Labour left-winger Ken Livingstone defended Shah’s remarks on BBC radio, saying Hitler had once supported “Zionism” before going mad. Livingstone was then attacked verbally in front of TV cameras by the Labour MP John Mann who accused him of being a “disgusting racist and Nazi apologist”. Livingstone, too, was suspended, but the media claimed Labour had a “huge problem” with anti-Semitism.

“The only reason it blew up in the media was because Jeremy Corbyn is the leader of the Labour Party,” said Steven Fielding, a political philosopher at the University of Nottingham. “Corbyn and Livingstone are both from Labour’s hard left and share a belief that the state of Israel shouldn’t exist and Zionism is an imperialist, racist ideology.

Although neither is anti-Semitic, they have shared platforms with anti-Zionist groups who are anti-Semitic, and have carried out terrorist atrocities, such as Hamas and Hezbollah.”

On occasions, the right has distorted the hard left’s pro-Palestinian, anti-Zionist views and labelled them “anti-Semitic”. “Infelicitous language about Jews is easily distorted. All this is meat and drink to people in the media like Guido Fawkes and journalists at The Sun newspaper, who spend days trawling through old speeches and Tweets looking for something they can use.”

The slurs about Labour anti-Semitism carry far more force than Goldsmith’s attacks on Sadiq Khan. The entire right-wing media is behind the campaign to discredit the Labour leader Jeremy Corbyn. Even the left-leaning The Guardian has run several articles by columnists, including Nick Cohen and Jonathan Freedland, in support of the allegations.

“They are slurs and media distortions, which happens in Britain all the time,” said Fielding. “But if there were nothing there they wouldn’t be able to spin it. It’s difficult for Corbyn to distance himself from his past associations.”

There is a profound irony in the right-wing Conservative Party attacking the Labour Party for being racist, however. One of the most vocal critics was discredited mayoral candidate Zach Goldsmith, who made the exaggerated claim that: “There is anti-Semitism running right the way through the Labour Party.”

Meanwhile, the previous Conservative incumbent as London mayor, Boris Johnson, used racist language to dismiss the validity of US President Obama’s opinion in the UK’s Brexit campaign.

Johnson, who is leading the ‘out’ campaign, which wants to leave the EU, said Obama’s support for Britain’s continued membership was based on his “part-Kenyan” heritage and “ancestral dislike of the British empire”. Johnson has form in this respect. He once referred to black people as “piccaninnies” and talked about their “watermelon smiles”.

Johnson’s remarks about Obama’s ancestry carry echoes of how Trump took the “birtherism” conspiracy – the belief that Obama is foreign-born and thus an illegitimate president – and turned it into a political movement. Even though Obama has since produced his birth certificate, 62% of Trump’s supporters still believe he is a Muslim, and 61% believe he was born in another country. 

It’s not beyond the bounds of possibility that Johnson and Trump could one day compare notes as leaders of their respective countries. Such is Johnson’s popularity in the Tory Party that there is every chance he could take over from David Cameron when he steps down as Prime Minister.

In the unlikely event that Trump becomes President of the United States, the UK and US would be led by two right-wing politicians willing to use racial smears to manipulate public opinion. Both men are also celebrities with media-friendly personalities. However, that’s not all they have in common. Trump’s hair has been described as “Boris-like”, whereas Johnson has been accused of sporting a “Donald Trump-style comb-over”. 

The post ‘Dog Whistle’ Smear Attacks Dominating Elections in US and UK appeared first on Economy Watch.

The English tax accountant Richard Murphy has done more than anyone to expose tax havens. Now Murphy says businesses are scared witless of appearing on the front pages and we are seeing a shift in their behaviour, even though there are many battles ahead.

The English tax accountant Richard Murphy has done more than anyone to expose tax havens. Now Murphy says businesses are scared witless of appearing on the front pages and we are seeing a shift in their behaviour, even though there are many battles ahead.

English tax accountant Richard Murphy is arguably the world’s greatest crusader against tax abuse. The European Commission and the OECD have cited his pioneering work for Tax Research UK on tax avoidance and evasion and his idea of compelling transnational corporations to produce country-by-country reporting has been taken up by the British Government and the EU. Naturally, such a man has made many bitter enemies and Murphy was dubbed “the leader of the international tax Taliban” by the head of the Cayman Islands’ Monetary Authority. One suspects, however, that he would be happy with that as the inscription on his gravestone. 

Naturally, Murphy was elated when journalists uncovered 11.5 million documents from the Panamanian law firm Mossack Fonseca, exposing the tax avoidance of the rich and powerful. However, what Murphy took from the revelations was different from the majority of observers. He noted that since 2008 Mossack Fonseca had offloaded twice as many incorporated companies as it has signed up. “This shows the offshore market is declining, which means people like me are winning. The businesses are scared witless of being on the front page of the Financial Times,” he said.

Shaming companies into behavioural change has been Murphy’s strategy since he co-founded Tax Research UK in 2003. The first organisation in the world to focus on tax evasion and avoidance, it aimed to get as many tax-dodging companies as possible in the headlines. “We are increasing the chance tax payers will be voluntarily compliant. That’s what we call the ‘behavioural’ model of tax compliance,” he said. “Country-by-country reporting is about putting the information on public record which will force the company to change its behaviour as it doesn’t want to be seen relocating profits in tax havens.”

Murphy says the humiliating headlines are beginning to take effect. Amazon is now billing from the UK rather than Luxembourg, Starbucks has relocated its European HQ to the UK from the Netherlands and Google has made a tax settlement with the British Government. “None of these measures are perfect, but I am not looking for utopia. They are huge steps in the right direction,” he said.

The fear of reputational risk, he feels, will eventually spread to the Big Four accountancy firms, Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young and KPMG. The Big Four are the only constant presence in all the world’s tax havens and if they left, most tax abuse would end. “The media attention is getting to them as well. They rely on bright students, but the next generation is questioning whether it wants to spend a career helping corporations to hide tax,” he said. “A partner at one of the Big Four recently said to me in Luxembourg that they will not be present in tax havens in 10 years time. I asked why and he said ‘We haven’t got a hope if we stay there. Reputation-wise, we have to get out of those places’.”

The public’s anger about tax evasion has grown since Murphy lit the bonfire in 2003. After working as an accountant for KPMG and being forced to do things he found unethical, his campaigns have always been infused with moral fervour. He produced research for Tax Research UK showing there was US$11.5 trillion held in tax havens, equating to US$255 billion in unpaid tax. More research revealed that EU states lose €1 trillion a year to ‘treasure islands’, the equivalent of 17.6% of EU government spending. When the OECD and European Commission adopted his figures, he was no longer an obscure accountant, but one of the biggest influences on global tax policy.

Politicians and public figures took up the fight. In 2009, British Prime Minister Gordon Brown announced the first, faltering steps towards greater transparency. In the US, lawyer Jack Blum and economist Jim Henry started their work with the Tax Justice Network. Google and Amazon were publically humiliated during a Public Accounts Committee investigation into tax avoidance by large corporations. Murphy was behind the scenes briefing the chair of the committee, Margaret Hodge. The Panama papers, whilst revealing nothing new in terms of strategy, are part of the same process of media exposure.

“Companies are beginning to realise the massive reputational risk and politicians have been forced to comply. Prime Minister David Cameron put my idea of country-by country reporting on the agenda at the G8 summit in 2013. I was amazed at the progress. When I wrote my paper, I thought only about two people would ever read it.”

After the Panama Papers, the European Commission felt the need to react to the change in public mood. The Commission was already working on measures to force international companies to disclose their earnings and tax bills in the EU, but following the Panama leaks, EC officials toughened up the plans to include tax havens as well. If the move goes ahead, all large companies trading in Europe, including subsidiaries of non-European businesses, will have to publish how much tax they pay outside the EU, including detailed country-by-country information on their finances in tax havens.

Despite the changes in policy, there is clearly a long way to go in tackling the tax abuse of global corporations. One stumbling block in the EU is the absence of an official list of tax havens, although Commission officials have promised one will within months. A further problem is the deep ambivalence of global leaders on the issue. This is exemplified by the contradictory positions of David Cameron.

The British PM claims to be doing more than any previous British leader to tackle tax evasion, but he rushed to the defence of his father Ian, who ran an offshore fund, Blairmore Holdings, which was based in the Bahamas and concealed millions of pounds in tax for decades. Cameron implausibly said his father had done nothing unethical and the trust had not been set up to hide tax, but the stigma caused his popularity ratings to plummet.  

“Cameron has revealed himself to be corruption’s friend not its enemy,” said Murphy. “He has refused to make fresh demands of Britain’s overseas territories, such as Guernsey, Jersey, the Isle of Man, Bermuda and Gibraltar. On the one hand he says let them have their independence and, on the other hand, he says we need openness and transparency. This paradox is un-resolvable, which is why Cameron is unsuited to the task of heading the international conference on anti-corruption on May 12 in London. He will be the first problem the conference has to address.” 

Murphy says the UK’s pro-tax haven policies are directly related to the pressure imposed on the Government by the City of London. “The City authorities are so insecure about their ability to compete on the world stage they demand the existence of a network of tax havens that will transmit untaxed money to London and return it in the same form,” he said. “This unfair competitive advantage over other financial markets means we have a massively overinflated financial services sector in the UK.”

Murphy calls this the UK’s ‘Finance Curse’, which is similar to the ‘Resource Curse’ faced by many developing countries with substantial raw materials. The overbearing importance of one economic sector crushes other activity. “The UK’s over-inflated currency means the country’s manufacturers cannot compete on the world stage because their products are overpriced,” he said.

Although Murphy’s focus has been mainly on Europe, he acknowledges that the US remains an even bigger issue for tax campaigners. Even if loopholes are closed in British dependencies, there will still be the option of transferring assets to US tax havens. This is not to say that US corporations do not use overseas tax havens. In fact, they do use them on a colossal scale. A recent report from Oxfam, entitled Broken at the Top, showed how US corporate giants hide US$1.4 trillion in tax havens despite receiving trillions of dollars in taxpayer support. The sum is held in an “opaque and secretive network” of 1,608 offshore subsidiaries. Apple topped Oxfam’s league table, with US$181 billion held offshore in three subsidiaries. General Electric was next with US$119 billion stored in 118 tax haven subsidiaries and Microsoft was third with US$108 billion. Also in the top ten were Pfizer, Google’s parent company Alphabet and Exxon Mobil.  

Ironically, Transparency International says it is so easy to create a vehicle to hide your money and identity in the US that there’s really no need to go to Panama. The US was ranked third in a list of “the most attractive tax havens to hide assets” produced by the Global Tax Network. Only Switzerland and Hong Kong came higher. Almost every US state allows individuals to incorporate an LLC (a limited liability company), whose beneficiary is secret. Transparency International rates Delaware as the most ‘corrupt’. More than 1,000,000 business entities have made Delaware their legal home, including more than 50% of all publically traded companies and 64% of the Fortune 500. Instead of hiding cash in Panama, or the Cayman Islands, companies and individuals could still turn to the US, Transparency International says.

“I see the US as the ultimate tax haven and the world’s number one problem, with the UK in second place,” said Murphy. “If you want to form a secret shell company, just go to Delaware. You don’t have to say who owns the company and you don’t have to put your accounts on record. It’s a perfect tax haven. The US refuses to participate in automatic exchange processes. Therefore, it demands information from other parts of the world, but supplies nothing in exchange. It is the most transgressing country in the world. The libertarian right in the US says there is an absolute right to privacy, including corporations. So, although they demand that every other country discloses, they will not. It’s absurd.”

Although he aware of the huge challenges, Murphy remains optimistic. One reason is that in the era of WikiLeaks, Edward Snowden and the Panama Papers, there are bound to be more revelations, increasing the danger of reputational risk. Ronen Palan, a Professor of International Politics at City University London and co-author with Murphy of a book about tax havens, says there is a new player on the scene in the digital age.

“It’s not simply about the Government and businesses any more. The new players are the hackers, who will leak information and scandals. This is a worrying for the tax abusers, as they will never know when their names could be leaked. There are likely to be more leaks that have a huge deterrent effect. We already knew about it, but it’s quite another thing to see papers and proof. That’s why there’s such uproar.”

Murphy expects, too, that the pressures on companies, governments and the Big Four will ratchet up. “It’s a vital issue for the world economy. Tax havens have been created by the neoliberal market to allow big corporations to float freely above the regulations as if they are stateless entities. However, increasingly, civil society and politicians won’t allow it. We should also remember that the same mechanisms are being used for pernicious activities, including money laundering, drug trafficking and people trafficking. Like tax avoidance, these activities depend on secrecy and the abuse of regulations. There’s no difference in the processes.”

The post How the Panama Papers is the Beginning of the End for Tax Abusers appeared first on Economy Watch.

Tax breaks for elite colleges cost the taxpayer billions, which would be better spent on making public colleges free.

The bestselling Canadian author Malcolm Gladwell made headlines recently with a series of Tweets about national Government subsidies of private universities in the US, including Harvard, Princeton and Yale. His objective was to expose the imbalance between private and state college subsidies.

Tax breaks for elite colleges cost the taxpayer billions, which would be better spent on making public colleges free.

The bestselling Canadian author Malcolm Gladwell made headlines recently with a series of Tweets about national Government subsidies of private universities in the US, including Harvard, Princeton and Yale. His objective was to expose the imbalance between private and state college subsidies.

One Tweet said, “Value of annual per student taxpayer subsidies at Harvard: $48,000, Yale: $69,000, Princeton: $105,000.” A second Tweet read: “Annual per student taxpayer grants and subsidies at a typical state college like Penn State: $9000.” Later Tweets were more sarcastic, such as “If we don’t subsidize Ivy Leaguers now, how will they learn how to ask for a bail out later.”

As so often, Gladwell was exposing an issue that largely goes unnoticed by the public, yet profoundly affects the lives of millions. The US Government is effectively donating money to elitist private institutions, which could instead eliminate, or at least drastically reduce, tuition fees at public colleges.

The two Democrat candidates, Hillary Clinton and Bernie Sanders, have recognised the importance of this issue to young Americans and produced policies aimed at reducing the soaring debt burden. US tuition costs have risen 500% since 1985 and students granted degrees in 2014 owe an average of US$30,000. Around 40 million Americans owe a total of US$1.2 trillion, although many default on small sums of just US$5,000, or US$10,000 because of the unforgiving policies of rapacious lenders.

Gladwell obtained his figures about Harvard and Yale from a 2015 report from the Nexus Research and Policy Center that outlined how more than 800 non-profit colleges and universities across North America hold endowment assets of US$516 billion, but are taxed on none of it.

The top universities employ in-house private equity managers to grow their margins, which can be considerable. On average, their funds grew 16% in 2014. As non-profit entities, they escape capital gains tax, but also avoid tax on their extensive land holdings.

For the top 10 American universities, which account for about US$180 billion of the US$516 billion total, Government largesse amounts to a US$41,000 annual taxpayer subsidy per student. As Gladwell noted, this is more than three times the direct appropriations of public universities in the same states.

“We are already spending enough money to fund public universities without burdening low-income students with debt. We just have to change where we spend it,” said Sara Goldrick-Rab, a University of Wisconsin-Madison sociologist and educational policy expert.

“It would take US$70 billion a year to fund free tuition at public universities and we currently spend close to that amount subsidising private education. It’s not just tax on endowments at colleges. A huge amount of taxpayer’s money is spent on private schools through the Government’s voucher system.”

In his College for All Act, Bernie Sanders has proposed to eliminate undergraduate tuition and fees at public colleges and universities and cut student-loan interest rates in half. One third of the required US$70 billion would come from the state and two-thirds from federal government, a cost that would be completely paid for by a small tax on speculative financial transactions on Wall Street.

Sanders says hundreds of thousands of young Americans have the qualifications to attend college, but do not go because their families do not have enough income. He also wants to expand the federal Pell Grant, a needs-based scholarship for low-income students.

Hillary Clinton’s approach would be to make college debt-free for students at in-state public schools. For those at private schools, Clinton still would rely heavily on loans, but on more reasonable terms. Interest rates would be lower, and “income-based repayment” (IBR) plans, would be streamlined. Clinton would cap payments at 10% of income per year, and write off all accumulated debt 20 years after graduation.

Rab-Goldrick, however, questions Clinton’s commitment to her program of reform, which would face stiff resistance in Congress. “She only started doing this because Sanders raised the issue. He has pressurised her on a number of issues and she is saying things she would never have said before. His influence on her education policy is incredible,” she said.

“It would take more than one or two administrations to get this through and it requires a president who keeps saying that if you are in financial distress this is the solution so eventually people will vote for it. A president’s role is not just about getting laws passed.

It’s also to set priorities and carry the message. Sanders would do that, but Clinton might not. I’m worried Clinton will make small incremental changes that will depress people’s sense that anything else is possible.”

Hammering the message home is essential because US students have largely bought the austerity agenda that says there is no money to fund college in the richest nation on earth. In Europe, England has followed the US example by introducing £9,000 tuition fees, but most other countries have maintained the principle that higher education is a right, not a privilege.

In Scandinavia and Germany there are no tuition fees for undergraduates and the French, Dutch and Swiss pay small amounts.

In Germany, mass demonstrations by hundreds of thousands forced the national Government to eliminate fees. The scale and organisation of the movement were impressive. The German Free Education Movement built momentum over several years, involving 200 groups, including student unions, trade unions and political parties. By 2013, public opinion had shifted and the Government had little choice but to back down. 

An even more dramatic example of the power of student protest came in Quebec, when in 2012 the Government proposed increasing tuition costs from CAD$2,100 to CAD$3,800. The cost was still cheap compared to England and the US, but students were defending a principle.

The protests were epic, fuelled by Government attempts to suppress them. Demonstrations and strikes began on February 13 and lasted more than 200 days. On March 22, more than 300,000 people marched in Montreal. A Government climbdown became inevitable.

“What Germany and Quebec achieved was fabulous,” said Goldrick-Rab. “But for the moment, it couldn’t happen in the US where there’s quite an anti-protest mindset because of the broad acceptance of austerity. Even though the middle class is falling apart in the US and student debt is a big part of it, they are still not protesting about their stagnant incomes, large debts and loss of wealth.

“There is more activism than there was and growing opposition to fees and debt. However, we will probably need another 15-20 years of increasing pain and outrage before anything is done. There will be increasing support as long as leaders like Sanders keep pushing the agenda.”

The post Government Handouts to Harvard Alumni Deprive Poorer Students appeared first on Economy Watch.

Despite the exorbitant costs and cruelties of the US-style private healthcare model, the UK is moving towards a similar model. The US companies are poised to take control of the system.

Supporters of a single-payer healthcare system in the US frequently hold up the British National Health Service (NHS) as a model. However, the bitter irony is that the British are copying the most iniquitous elements of the US system, rather than the US emulating what is good about the NHS.

Despite the exorbitant costs and cruelties of the US-style private healthcare model, the UK is moving towards a similar model. The US companies are poised to take control of the system.

Supporters of a single-payer healthcare system in the US frequently hold up the British National Health Service (NHS) as a model. However, the bitter irony is that the British are copying the most iniquitous elements of the US system, rather than the US emulating what is good about the NHS.

The policies of successive British governments have led to radical changes in the NHS’s structure that have seen private healthcare providers snaffle billions of pounds of contracts. That is just a staging post. It is only a matter of time, critics say, before we see the abolition of the central NHS principle of free healthcare for all citizens at point of delivery.

Aeron Davis, Professor of Political Communication at Goldsmith’s, University of London, said there was a deliberate government strategy to fully privatise the NHS as part of its wider political ideology. “The Conservative Government is hell-bent on privatising everything. It has one policy that goes back to the Margaret Thatcher years and that is to shrink the state and privatise and outsource as much as possible,” he said. “With the NHS, they have taken the steps before full privatisation by setting up structures that enable the swift and easy transition to privatisation. An increasing number of contracts are being outsourced to private providers and these are often US healthcare insurance companies.”

Professor Davis said there were three elements to the covert privatisation strategy. “First you change the structures to enable privatisation, and underfund it drastically and publicise its faults constantly. Second, if you can declare the NHS isn’t working, you can blame inefficient bureaucracies and overpaid, inflexible doctors. It’s easy to make those transitions in a British media dominated by right-wing newspapers. The final step is to say there is no choice but to bring in private healthcare insurance.”

A recent report from the King’s Fund economic think-tank provides evidence of this drastic underfunding despite a 2010 pledge from Prime Minister David Cameron to increase spending in real terms. The King’s Fund research reveals that NHS funding has fallen dramatically and will be £43 billion a year less than the European average by 2020. The report ranked the UK system 13th out of 15 EU members in terms of investment.

A closer look at the US system shows why it should be carefully avoided. For one thing, it is far more costly for everyone, including the state. Contrary to popular perception, a recent study published in the American Journal of Public Health showed that taxpayers fund 64% of US healthcare or US$1.9 trillion a year (2013).

That is actually more per capita than anywhere else, including countries with universal healthcare. The estimated total US health spending for 2013 was US$9,267 per capita, with the government’s share being US$5,960. President Obama’s Affordable Care Act will push that figure even higher by 2024.

“We pay the world’s highest healthcare taxes. But patients are still saddled with unaffordable premiums and deductibles,” said co-author Dr Steffie Woolhandler, a professor at the City University of New York School of Public Health. “Meanwhile, billions are squandered on paperwork, and insurers and drug companies pocket huge profits at taxpayer expense.”

Direct government payments for such programs as Medicare, Medicaid and the Veterans Administration accounted for 47.8% of overall US health spending. The analysis also identified two commonly overlooked tax-funded health expenditures involving the private sector.

The first was government outlays for public employees’ private health insurance coverage, which amounts to US$188 billion, or 6.4 % of total spending. The second is tax subsidies to healthcare, which costs US$294.9 billion, or 10.1% of the total.   

In the UK, the massive involvement of the private sector has already increased administrative costs. Dr Charles Webster in his book A Political History of the NHS said the introduction of the internal market had seen costs rise from 5% to 14% of total expenditure. In the US, administrative costs are even higher, accounting for 25% of hospital spending, according to a study by the Commonwealth Fund.

Immune to the facts, influential figures in the Conservative Government have long favoured the US-style model. David Cameron’s Chief of Policy, Oliver Letwin, penned a document for a think-tank in 1988 entitled ‘Britain’s biggest enterprise: Ideas for radical reform of the NHS’. It called for increased reliance on private companies, but it also advocated scrapping the founding principle of free healthcare at point of use and proposed charging patients for every service. Letwin claims to no longer hold these views, but few believe him. Meanwhile, the Health Secretary, Jeremy Hunt, co-authored a 2005 book Direct Democracy calling for the NHS to be replaced with a privatised service. He has also issued unconvincing denials.

One of the great stepping-stones in the Government’s far-sighted plan was the introduction of the Health and Social Care Act 2012. Although the act did not begin private sector involvement – both the Blair and Brown Labour governments used private providers as part of their reform programme – it extended a market-based ‘competitive’ approach by forcing the tendering of all lucrative contracts. In 2014, £3.54 billion out of £9.63billion worth of NHS deals – around 40% – went to private firms.  

However, the structure of the NHS is still evolving inexorably towards the final goal. The Health Act severed the Government’s responsibility for the NHS by devolving it into a series of separate bodies. Although done in the name of localism, the underfunded trusts are forced to sell services to the lowest bidders. Clinical commissioning groups (CCGs) are supported by commissioning support units (CSU) which are likely to be privatised.

“The structure of CCGs is in place to hand over budgetary control to the CSUs, which are led by the big four accountancy firms and UnitedHealth under their subsidiary Optum,” said Dr Bob Gill, an NHS Doctor and campaigner with the National Health Action Party. “Private insurance companies will hold all the funding and be able to commission services.”

Having run down the NHS services, the Government will begin to introduce charging and private healthcare insurance in a few years time. At this point, the resemblance to the US system will be flagrant. “Insurers will get hold of electronic data about medical histories as they have in the US. If an ill person has a minor condition that is cheap to treat, they will settle.

However, if there is a major diagnosis they will look through the medical records with a fine toothcomb to make the claim ineligible. The system corrupts doctors as the best-paid ones make decisions to deny people care,” said Dr Gill.

Within the NHS, there is great anger, but whistleblowers are being bullied into silence, according to Dr Gill. He gives the example of the brilliant cardiologist Doctor Raj Mattu, who criticised overcrowding and was forced out of the NHS. He won £1.22 million in damages for his treatment at the hands of bosses at the University Hospitals Coventry and Warwickshire NHS Trust (formerly Walsgrave Hospital). Nevertheless, Dr Mattu is still out of pocket after a legal battle lasting years. “NHS whistleblowers for 20 years have been systematically destroyed by a campaign of bullying and harassment in order to protect the privatisation project. We see behaviour you would associate with a dictatorship in our most treasured public service,” said Dr Gill.

Dr Mattu was kicked out of the NHS in 2002. His ‘crime’ was to expose publically the policy of cramming five beds into four-bed cardiology bays. The fifth bed was left without crucial emergency equipment, including oxygen, suction and defibrillation. His warnings about a ticking time bomb were ignored and his worst fears came to pass.

A man required emergency treatment, but the cramped position of the bed and the lack of equipment brought about a tragedy. “For raising this concern, he was suspended and had 200 false allegations made by the trust, including one of rape and another of fraud. None were substantiated and the police dismissed them all,” said Dr Gill.

With so many whistleblowers afraid to speak out, the movement to reinstate the NHS as a fully nationalised service requires high-level political support. The leader of the opposition, Jeremy Corbyn, believes the NHS “should be completely publically run”. However, Dr Gill says his leadership on the issue has been weak to date.

Meanwhile, Corbyn’s Shadow Health Secretary, Heidi Alexander is fully supportive of the Government’s privatisation agenda as New Labour’s Tony Blair had been. Worse still, the head of the NHS, Simon Stevens, used to work for UnitedHealth as head of their global division and has a vested interest in supporting his former employer’s industry. “While at UnitedHealth Europe he secured their position as a preferred provider for NHS commissioning and now he’s back to finish the job with his ‘five year plan’,” Dr Gill said.

The future of health care in the UK will look something like Michael Moore’s 2007 film Sicko, an alarming expose of the dark arts of US private healthcare companies, Dr Gill believes. The film opens with the heart-wrenching story of a professional middle-aged American couple who endured financial disaster in their late 50s after the husband had heart attacks and the wife got cancer.

The insurers refused to pay out and the humiliated couple had to sell their home and move into a crowded room in their daughter’s house. Explaining how insurers make billions from denying care, a claims adjuster tells Moore: “You’re not slipping through the cracks. They made the crack and are sweeping you toward it.”

Later in the film, Moore visits the NHS hospital of Hammersmith, in London, and gasps theatrically as a doctor tells him that sick people aren’t charged thousands of dollars for treatment. However, Dr Gill says that situation is about to change. “The film shows what the NHS could look like in a few years time if we can’t oppose it politically. It will be a plague on all our houses,” he said. 

The post British Government Hell-bent on Privatising the NHS appeared first on Economy Watch.

Bernie Sanders has proposed bringing back postal banking to save millions of unbanked Americans from the clutches of payday lenders.

Bernie Sanders has proposed bringing back postal banking to save millions of unbanked Americans from the clutches of payday lenders.

There has been a storm of publicity surrounding Bernie Sanders’ rhetoric about a corrupt American financial system and his promises to break up the largest Wall Street banks. However, Sanders also wants to tackle another deep-rooted social problem that gets much less publicity even though it is profoundly related to the rise of the banking behemoths. At the bottom of the ladder, more than 30 million poor Americans are unbanked, or under-banked. In their pursuit of profit, the banks have deserted them, leaving them prey to unregulated lenders who are as unscrupulous in their own way as the bankers at the top.

This places the poor in a perilous financial position in the event of a sudden financial emergency. Official government figures from the Federal Reserve show that more than half the households in the US could not come up with US$400 to cover a medical emergency without borrowing and almost two thirds lack enough savings to get by for three months if they lost their jobs.  

Millions of these unbanked Americans have fallen into the arms of payday lenders whose interest rates are uncapped. They can rise as high as 1,900%, but rates of 200%-500% are commonplace. Some borrowers seek payday loans for emergencies, but many use them to pay for necessities like food and rent in the low-wage US economy. Payday loan outlets frequently set up shop on military bases and nursing homes, where they are guaranteed a clientele with low fixed incomes.

Sanders’ solution involves using the national Postal Service to offer basic financial services to the poor, such as small loans and remittances. In an interview with Fusion magazine, he said, “If you are a low-income person, it is, depending upon where you live, very difficult to find normal banking. Banks do not want you. In addition, what people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off. And, yes, I think that the postal service, in fact, can play an important role in providing modest types of banking service to folks who need it.”

The idea of bringing back postal banking to the US did not originate with Sanders, however. It was first proposed three years ago by Mehrsa Baradaran, a University of Georgia law professor. Baradaran has authored a book about the exclusion of the poor from the normal credit system, entitled How The Other Half Banks. The title was inspired by the powerful photojournalism of Jacob Riis, whose 1890 work on the slums of New York, How the Other Half Lives, provoked a housing reform movement. 

In her book, Baradaran outlines the direct link between modern high-profit banking and the millions of unbanked poor. As banks became richer, they ceased to see the business case for banking the poor. “With the deregulation of the 1980s under Ronald Reagan and Margaret Thatcher, the ‘purpose’ of banks changed. The idea was to free them from the burden of government regulations so they could find markets and serve everyone,” she said.

“But they became obsessed with their ‘bottom line’, refuting suggestions they needed to be more regulated by arguing that ‘it will affect our profits’. Before the banking revolution, no one would have used that argument. The main purpose of banks was to serve the public. The ‘bottom line’ became a weapon they yielded to stop anyone threatening their profits and it has salience for policy-makers.”

However, it turned out those pesky banking regulations had been critically important in forcing banks to serve people. “As they grew more and more profitable, the banks abandoned low-income clients because they couldn’t make as much money out of them. Even community banks and the savings and loans banks, were forced to merge and abandon their missions to serve the poor in order to find more lucrative markets. That’s when payday lenders, check cashers, and title lenders moved in to fill the void,” she said.

Before the early 1980s, there were no payday lenders in the US. However, since the deregulation of the banks, there has been an explosive growth in their numbers. According to the Better Business Bureau, the number of payday lenders grew from 2,000 in 1996 to around 22,000 by 2008. Baradaran says there are now more payday lenders than branches of Starbucks and McDonald’s combined.

The typical customer, she says, is indebted for 199 days a year. They become trapped in a cycle, taking out new loans to repay the principal one. A typical two-week payday loan with a fee of US$15 per US$100 equates to an annual rate of about 400%, she says. The average family earning US$25,000 a year but without a bank account spends about US$2,400 a year on financial transactions, which is more than it is spends on food. Even those who manage to open regular bank accounts face disproportionately large fees and harsh penalties for small overdrafts.

In How the Other Half Banks, Baradaran writes “We do not ‘rise and fall as one people’,” a phrase carrying an ironic echo of the words President Barack Obama used to justify the bank bailouts. “Two banking systems exist in America: government-supported banks that serve the well-off and a Wild West of fringe lenders and check-cashing joints that answer the needs of everyone else.”

Neither can the poor rely on networks of family and friends to bail them out. Most poor people live among other poor people, she says. “I have a variety of friends and family I could hit up for a small loan and they wouldn’t miss it, but most poor people are not in that happy situation,” she said.

The vast majority of Americans are morally uncomfortable with usury on the poor and disprove of extortionate interest rates. “Religious traditions, including Jewish, Christian and Muslim, all have strict codes against usury. Even without religion, most people regard it as exploitation.” A smaller number, on the political right, say the poor need to be ‘educated’ to avoid debt, but Baradaran dismisses the notion.

“What if I need a US$500 loan to fix my car and I can’t go to work without it so I will lose my job? These folks have minimum-wage jobs without reliable schedules and they’re not unionised so they can be fired. It is a rational decision to pay for the car. The question is how much do we want people to pay for that loan?”

Baradaran argues that the answer lies with the US Postal Service, which could provide a source of finance that would not exploit the poor. Postal banking is common in most of Asia and Europe, and only about 7% of the world’s national postal systems do not offer some bank-like services. There is also a precedent in the US, where from 1910 until 1966 the Postal Service banked millions of Americans, before being phased out in the heyday of community banking.

“The Post Office banks could fill the void left by the departure of community banks,” said Baradaran. “They don’t have profit as the main motive so they can offer a fairer deal. They would be self sustaining and any profits would go to the treasury.”

Her solution would resurrect the historic role of the US postal banking system as an instrument of social inclusion, she says. From the outset in 1910, the post-office administrators had high ideals, emphasising their mission to serve every community regardless of costs and not to be profit-oriented. They stated that postal banking “is not a money-making adjunct to the Post Office Department… Its aim is infinitely higher and more important”.

The moral foundation of US postal banking was evident throughout its short history. It brought millions of immigrants and rural dwellers into the US banking system and provided a safe haven during the Great Depression for the savings of the poor. Post-office war stamps and treasury bonds, Baradaran says, even helped fund two world wars.

The US Government, however, cannot force the Postal Service to offer banking services. The decision has to be taken by the USPS Inspector General who endorsed the idea back in a report last year. He suggested the Postal Service should consider not only opening savings accounts again, but also expand into short-term loans and debit cards.

“Postal banking can level the playing field by offering savings and checking accounts, money transfers, and small loans so the poor can escape the expensive cash economy,” said Baradaran. “At the moment the poor are the only ones who have to rely on market forces and pay way above the market rate for credit.  It is a terrible irony of the system we have now that the less money you have, the more you pay to use it.”

The post How Postal Banking could Save the American Poor from Usury appeared first on Economy Watch.

Transnational corporations are secretly and undemocratically, formulating the rules of the TTIP (Transatlantic Trade and Investment Partnership). The world’s largest ever, free trade deal will be the most powerful tool in corporate resistance to the COP21 agreement.

There was great optimism following the pledges made by nearly 200 nations at the COP21 conference on in Paris in December. In setting a goal of net zero emissions by the middle of the century, the Paris agreement went much further than the 1997 Kyoto protocol, which spectacularly failed.

Transnational corporations are secretly and undemocratically, formulating the rules of the TTIP (Transatlantic Trade and Investment Partnership). The world’s largest ever, free trade deal will be the most powerful tool in corporate resistance to the COP21 agreement.

There was great optimism following the pledges made by nearly 200 nations at the COP21 conference on in Paris in December. In setting a goal of net zero emissions by the middle of the century, the Paris agreement went much further than the 1997 Kyoto protocol, which spectacularly failed.

However, making promises is always the easy bit. The hardest part is following through. One reason Kyoto failed is that most of the corporate world did not want it to succeed. Despite ‘greenwash’ protestations to the contrary and some honourable exceptions, the vast majority of big businesses will resist any environmental regulations that endanger their profit margins. “The aims of COP21 are at odds with the neoliberal consensus around maximising growth which is shared by all governments and big business,” said Gabriel Siles-Brügge, a lecturer in politics at Manchester University.

Concurrent with the Paris talks in December gigantic transnational corporations were busy arming themselves to resist legislation. Their most powerful tool will be the TTIP (Transatlantic Trade and Investment Partnership), a free trade agreement being negotiated in secret between the EU and the US and expected to be introduced later this year. It will be the largest such trade deal ever, rewriting the rules for roughly half the world’s GDP. There are already 3,000 Bilateral Investment Treaties (TICs) in operation globally. All of them sound like perfectly reasonable ways to encourage more trade until you realise that the rules have been written to satisfy the demands of the richest corporations, according to Paris-based US author Susan George, who studied the TTIP in her recent book Shadow Sovereigns: How Global Corporations Are Seizing Power.

George says the dual goals of TTIP are to obtain total freedom for investors by eliminating regulations and giving corporations the ‘right’ to sue governments in secret courts under ‘Investor-state dispute settlement’ (ISDS) provisions if they have introduced measures that ‘threaten’ to reduce profits. “The TTIP will enable big business to create a freezing effect on the executive branch of government. They will be able to threaten so many law suits and really influence the direction of politics,” said Susan George.

One example of this ‘freezing’ effect was the stymieing of the European Commission’s proposal for a 6% CO² decrease in fuel consumption in the transport sector. The idea was supported by major stakeholders in the transport sector, but it did not pass because it might have restricted trade in US tar sands. Under TTIP, the law would have exposed European nations to ISDS lawsuits.  

The EU tried to head off criticism a year ago by promising to reinforce the environmental protections enshrined in the TTIP, but leaked drafts seen by The Guardian newspaper revealed how the corporate lobby’s influence guaranteed the dilution of the legislation. The drafts contained vague and non-binding commitments to environmental safeguards. There were no obligations to ratify international environmental conventions, nor were there regulations to enforce goals on biodiversity, chemicals and the illegal wildlife trade.

The Paris-based environmental attorney Tim Grabiel said: “The safeguards provided to sustainable development are virtually non-existent compared to those provided to investors…The sustainable development chapter comprises a series of aspirational statements and loosely worded commitments with an unclear dispute settlement mechanism. It has little if any legal force.”

A petition signed by a million people expressed concerns to the EU that the corporations will use the ISDS courts to throw out environmental legislation. In addition, there is plenty of evidence to suggest they are right. Environmental cases have accounted for 60% of the 127 ISDS cases already brought against EU countries under existing bilateral trade agreements in the last two decades, according to Friends of the Earth Europe. Europe’s taxpayers have paid out at least US$3.5 billion to private investors as a result. Under the TTIP, this number is likely to increase rapidly. In other countries, too, there have been lawsuits under similar treaties. For example, under the North American Free Trade Agreement, an ISDS tribunal ruled that the Mexican Government needed to pay out US$15.6 million to a US company because it had not granted permission to build a hazardous waste landfill in the 1990s.

Although negotiations for TTIP are held in secret and the EC’s occasional summaries are ambiguous and sketchy, powerful lobby groups in both the US and the EU are working behind the scenes to shape the terms. Dr Gabriel Siles-Brügge, the co-author of TTIP: The Truth About the Transatlantic Investment Partnership, said: “The TTIP drafts we’ve seen so far closely resemble the proposals put forward by big business. States and corporations share a broad ideological commitment to the desirability of liberalising trade and minimising the impact of regulations.

“In such a context whose voice matters more? Is it an environmental NGO concerned about the dilution of environmental protections? Alternatively, business saying it wants to minimise the impact of environmental regulations on trade? Clearly, the latter has more weight even when the regulations serve an important social or environmental purpose.”

The ‘revolving door’ between corporate lobbies and government regulators has enabled big business to infiltrate the political world. The boundaries between the two have collapsed. More than a third of the members of the previous EC have taken corporate jobs and they will be able to lobby on behalf of their employers this year, according to a report by the NGO Corporate Europe Observatory. The writers revealed that former commissioners have accepted 115 appointments to business and non-profit roles.

“The revolving door is especially apparent in the European Commission, from where high officials in different directorates move into the Brussels HQ of a large company as soon as they leave, or they might join a powerful lobby group acting on behalf of the food industry, or big pharma,” said Susan George. “They are useful individuals because they know how things work and are part of the web of interlocking personal connections and influence.”

The shadowy power of the corporate lobby was even felt at the COP21 talks. Several of the COP21 corporate sponsors had direct ties to the fossil fuel industry, demonstrating a conflict of interest, according to a report from Corporate Accountability International. The major sponsors include Engie, the continent’s largest importer of natural gas, France’s EDF, which operates many large coal-fired power plants, and BNP Paribas, a multinational bank with billions of dollars invested in coalmines and coal-fired power plants. All three have massive greenhouse gas footprints. “It’s greenwashing,” CAI spokesperson Jesse Bragg has said. “Those corporations are able to say they’re part of the solution just because they write a check.”

To fight climate change it is essential to combat the networks of corporate power that will try to stop anything that costs them money in the short term. Nick Dearden, Director of Global Justice Now said, “Big business today has a frightening amount of power, absolutely incompatible with real democracy. These so-called ‘trade’ deals are actually about rewriting the rules of the global economy further in favour of big business.

“There is still apathy among electorates, but this arises from the disbelief that there are democratic alternatives. We must spell out how another world is possible – one where we have control over the world’s resources and use them more fairly and sustainably.”

The post How Secret TTIP Deal Will Help Corporates Resist Paris ‘Green’ Pledges appeared first on Economy Watch.

Massive global overuse of antibiotics in the farming industry has led to the emergence of terrifying superbugs that beat off all known drugs. Scientists say the threat rivals global warming, whilst drugs’ companies focus on developing more lucrative medicines and governments are slow to react.

Massive global overuse of antibiotics in the farming industry has led to the emergence of terrifying superbugs that beat off all known drugs. Scientists say the threat rivals global warming, whilst drugs’ companies focus on developing more lucrative medicines and governments are slow to react.

For decades, we have taken the miraculous powers of antibiotics for granted. However, societies worldwide have been so careless in overusing antibiotics that the plucky little bacteria have fought back.  They are now winning the Darwinian struggle against the drugs and scientists say we are on the verge of a post-antibiotics era. The leading American microbiologist Professor Lance Price says our profligacy has led to a situation in which antibiotic resistance is the “second greatest threat to humanity after global warming”.

“It doesn’t get as much publicity as global warming because we’ve always had another drug to use in human medicine for 80 years and we’ve dealt with drug-resistant bacteria multiple times, but that pattern is about to end and we’re about to hit a dead zone,” said Professor Price, a researcher into the evolution of drug-resistant bacteria at George Washington University.

The emergence of untreatable bacteria, he says, will change every aspect of our daily lives. “People will be terrified of picking up common bacteria as more and more people will die of everyday infections. It will transform everyday activities such as riding around on the underground. People will be afraid to grab the handle to stabilise themselves for fear of picking up deadly bacteria.”

Lethal bacterial infections are just the start. There are deadly repercussions for the treatment of many other illnesses. “Antibiotics are essential for a lot of procedures in hospitals that lower the immune system and make people susceptible to bacterial infections, such as using chemotherapy,” he said.

“They’re also crucial when we carry any surgery on a part of the body that harbours a population of bacteria such as the guts, bladder and genitals. A lot of it will be off the table when we have widespread untreatable bacteria.”

Microbiologists have been warning the world for decades about the dangers of abusing antibiotics, Professor Price says. However, there is an analogy with global warming in that policymakers paid no heed to their ‘crackpot’ and ‘marginal’ views. Like global warming, the problem has become so serious that all we can do now is mitigate it.

“The microbiologist Stuart B. Levy started his Alliance for the Prudent Use of Antibiotics nearly 40 years ago, but no one listened to this eccentric bow-tie wearing scientist with no media empire to help him shape his messages,” said Professor Price. “We are a reactive society and we have an enduring faith in technology. Even I have a belief that we will find new drugs even though that flies in the face of the evidence,” he said.

The most alarming development to date in the story of antibiotics resistance was announced just a few weeks before Christmas, in China. A study published in the Lancet Infectious Diseases journal in late November showed that bacteria with a dangerous new antibiotic-resistance gene had spread from livestock to people. To Professor Price it was the equivalent of finding the proverbial ‘smoking gun’.

The gene – called mcr-1 – allows common bacteria to become resistant to colistin, the sole remaining antibiotic capable of dealing with the worst superbugs. The mcr-1 gene has a scary ability to make copies of itself and jump between common bacteria, including E coli and Klebsiella.

It is already widespread in the superbugs called Enterobacteriaceae (CRE) carried by pigs and people in south China and scientists predict it will soon spread worldwide. CRE can cause a range of diseases, from pneumonia to serious blood infections. Some strains with the gene have epidemic potential.

“I’ve studied this issue for years and been running round the world telling people about the dangers of overuse of antibiotics in livestock and this is the big in-your-face evidence I’ve been expecting,” said Professor Price. “The scientists found a clear link between the overuse of colistin in agriculture in China – where they use thousands of tonnes a year – and the development of resistance in E coli and Klebsiella. It is now undeniable that the most dangerous gene out there came from animal production.

“The worrying thing is how fast it is spreading. In just two weeks, there was evidence of it in 10 different countries. If the gene overlays onto CRE, we will see many people dying of infections. This bacterium spreads silently. There are no symptoms except in cases in intensive care units. But usually there’s no trail of breadcrumbs to track it down.”

The development of superbugs in industrial farming raises questions about the dangers of mistreating animals for profit. Producers depend on antibiotics to prevent the spread of diseases. Without the restraining effect of antibiotics, disease is more likely to spread between stressed animals housed in closely confined spaces. However, this is an abuse of antibiotics for profit.

In some parts of the world, notably in Scandinavia, the use of antibiotics in farming is more carefully controlled. Sweden, for example, banned their use in 1986. Instead, farmers rely on better hygiene, ventilation and balanced diets to keep animals healthy.

As a result, older antibiotics Penicillin and Doxycycline are still effective, whereas they are obsolete in the US. “What we’ve seen in Sweden is that older antibiotics can become revitalised when antibiotics use is restricted,” said Professor Price. “I have arguments in the US with people who say ‘why do you care about these antibiotics that are now useless in human medicine?’ But the Swedish experience shows that strains of bacteria carrying the extra resistance can get outcompeted when there aren’t a lot of them floating around.”

In a globalised world, however, Swedish bacteria cannot exist entirely in isolation. Bacteria are always likely to be brought by passengers on planes from foreign climes. Local solutions help up to a point, but global solutions are essential to solve the problem.

Lazily, we assume that science and technology will save us, but the belief that we will continue to produce new antibiotics is false, Professor Price says. Drug makers developed 13 classes of antibiotics between 1935 and 1968, but there have been only three since then.

Nowadays, most drug companies are not investing in the development of antibiotics because they make far more money out of other drugs. Two of the few major companies still in the antibiotic discovery business, Merck & Co. and AstraZeneca, recently announced plans to lay off more than 200 scientists tasked with finding new ways to fight dangerous bacteria.

“There’s been a dramatic decline in research because they make more money out of expensive drugs for high blood pressure, or heart disease, that people take every day for the rest of their lives. Antibiotics are normally taken for short periods only,” said Professor Price. “Antibiotics have no place in a for-profit business model. We naively think the drug companies have an obligation to society, but they are just vehicles for making profit.”

What we need, he argues, are global trusts that set the rules on how antibiotics are used and establish permanent non-profit patents. Federal and state funding is also essential to finance research. John Rex, the head of anti-infective drug development at AstraZeneca has proposed an insurance-style scheme under which the Government pays a fixed fee for antibiotics regardless of the volume sold, removing the incentive for manufacturers to maximise sales.

“With enough federal incentives we could do this easily. It could be set up in a competitive structure so that high-functioning groups are involved. The US Government has started down this road towards incentivising drug companies but we need much more,” Professor Price said.

Even more important than new research, however, is more judicious use of existing antibiotics. This means drastically reducing their use in farming. However, when President Obama announced his National Action Plan for Combating Antibiotic-Resistant Bacteria in March last year there was a lot about reducing human consumption of antibiotics, but little attention paid to animals. Yet around 80% of antibiotics in the US go to farm animals.

“If it weren’t for politics we’d have solved the problem 40 years ago,” said Professor Price. “It’s disgusting how the powerful farming lobbies influence the debate. In addition, I have been disappointed with the Obama administration’s lack of progress. The Government continues to separate the human and animal issues, whereas it is the same problem.

They let the US Department of Agriculture handle the animal side, but that public entity does what the industry wants rather than what is good for society. Their reluctance to act is a form of corruption even though no one is handing out money in a back room. It’s corruption that is accepted as legitimate.”

Despite a growing awareness of the dangers, the global problem of the overuse of antibiotics in animals is getting worse, according to a Princeton University study. Antibiotic use in animals expects to surge by two thirds globally between 2010 and 2030, while doubling in emerging BRIC giants like China, Brazil, India and Russia. China’s livestock industry alone could soon be consuming nearly a third of the world’s antibiotics.  

A recent report commissioned by the British Government forecast that a failure to tackle drug-resistant infections would lead to at least 10 million extra deaths a year and cost the global economy up to US$100 trillion (£64 trillion) by 2050. To put the figures into context there are currently about 8.2 million deaths a year from cancer and the annual global GDP stands at around US$75 trillion.

One good sign is that consumer pressure is starting to influence producers. Because of media exposure, Tyson Foods, the largest meat and poultry producer in the US, has pledged to drastically reduce the use of human antibiotics in its chicken production. McDonalds and Chick-fil-A are also committed to reducing antibiotics use. However, the fact remains that millions of kilogrammes of antibiotics are used for US animals every year. 

“We have to hope that the emergence of the mcr-1 gene is a wake-up call for the Chinese Government and they act swiftly to reduce antibiotics’ use in farming,” said Professor Price. “Just as important in the developing world is the development of better hygiene. If you have bacteria in the Ganges and people get their water there they will be colonised much more quickly and that’s a fast way to disseminate these kinds of bacteria around the world.” 

The post World on Verge of Antibiotics Apocalypse appeared first on Economy Watch.