1122 Sanders 'not electable because he's a Communist; it would be like Trotsky running for President'

Sanders 'not electable because he's a Communist; it would be like
Trotsky running for President'

Newsletter published on February 9, 2020

Sorry, I forgot to include Ellen's article in the last newsletter.

(3) Mexico Is Showing the World How to Defeat Neoliberalism - Ellen Brown
(5) Sanders 'not electable because he's a Communist; it would be like
Trotsky running for President'

(3) Mexico Is Showing the World How to Defeat Neoliberalism - Ellen Brown

https://www.truthdig.com/articles/mexico-is-showing-the-world-how-to-defeat-neoliberalism/

FEB 06, 2020

Mexico Is Showing the World How to Defeat Neoliberalism

by Ellen Brown

While U.S. advocates and local politicians struggle to get their first
public banks chartered, Mexico’s new president has begun construction on
2,700 branches of a government-owned bank to be completed in 2021, when
it will be the largest bank in the country. At a press conference on
Jan. 6, he said the neoliberal model had failed; private banks were not
serving the poor and people outside the cities, so the government had to
step in.

Andrés Manuel López Obrador (known as AMLO) has been compared to the
United Kingdom’s left-wing opposition leader Jeremy Corbyn, with one
notable difference: AMLO is now in power. He and his left-?wing
coalition won by a landslide in Mexico’s 2018 general election,
overturning the Institutional Revolutionary Party (PRI) that had ruled
the country for much of the past century. Called Mexico’s "first
full-fledged left-wing experiment," AMLO’s election marks a dramatic
change in the political direction of the country. AMLO wrote in his 2018
book "A New Hope for Mexico," "In Mexico the governing class constitutes
a gang of plunderers…. Mexico will not grow strong if our public
institutions remain at the service of the wealthy elites."

The new president has held to his campaign promises. In 2019, his first
year in office, he did what Donald Trump pledged to do — "drain the
swamp" — purging the government of technocrats and institutions he
considered corrupt, profligate or impeding the transformation of Mexico
after 36 years of failed market-focused neoliberal policies. Other
accomplishments have included substantially increasing the minimum wage
while cutting top government salaries and oversize pensions; making
small loans and grants directly to farmers; guaranteeing crop prices for
key agricultural crops; launching programs to benefit youth, the
disabled and the elderly; and initiating a $44 billion infrastructure
plan. López Obrador’s goal, he says, is to construct a "new paradigm" in
economic policy that improves human welfare, not just increases gross
domestic product.

The End of the Neoliberal Era

To deliver on that promise, in July 2019 AMLO converted the publicly
owned federal savings bank Bansefi into a "Bank of the Poor" (Banco del
Bienestar or "Welfare Bank"). He said on Jan. 6 that the neoliberal era
had eliminated all the state-owned banks but one, which he had gotten
approval to expand with 2,700 new branches. Added to the existing 538
branches of the former Bansefi, that will bring the total in two years
to 3,238 branches, far outstripping any other bank in the country.
(Banco Azteca, currently the largest by number of branches, has 1,860.)

Digital banking will also be developed. Speaking to a local group in
December, AMLO said his goal was for the Bank of the Poor to reach
13,000 branches, more than all the private banks in the country combined.

At a news conference on Jan. 8, he explained why this new bank was needed:

There are more than 1,000 municipalities that don’t have a bank branch.
We’re dispersing [welfare] resources but we don’t have a way to do it.
. . .  People have to go to branches that are two, three hours away. If
we don’t bring these services close to the people, we’re not going to
bring development to the people. …

They’re already building. I’ll invite you within two months, three at
the most, to the inauguration of the first branches because they’re
already working, they’re getting the land … because we have to do it
quickly.

The president said the 10 billion pesos ($530.4 million) needed to build
the new branches would come from government savings; and that 5 million
had already been transferred to the Banco del Bienestar, which would
pass the funds to the Secretariat of Defense, whose engineers were
responsible for construction. The military will also be used to
transport physical funds to the branches for welfare payments. AMLO
added, "They are helping me. They are propping me up. The military has
behaved very well and they don’t back down at all. They always tell me
‘yes you can, yes we do, go.’ "

To concerns that the government-owned bank would draw deposits away from
commercial banks and might compete in other ways, such as making
interest-free loans to small businesses, AMLO countered:

There’s no reason to be complaining about us building these branches. …
[I]f private banks want to build branches, they have every right to go
to the towns and build their branches, but as they won’t because they
believe that it’s not [good] business, we have to do it . . . it’s our
social responsibility, the state can’t shirk its social responsibility.

Issues With the Central Bank

While the legislature has approved the new bank, Mexico’s central bank
can still block it if bank regulations are breached. Ricardo Delfín, who
works at the international accounting firm KPMG, told the newspaper La
Razón that if the money to fund the bank comes from a loan from the
federal government rather than from capital, it will adversely affect
the bank’s "Capitalization Ratio." But AMLO contends that the bank will
be self-sufficient. Funding for construction will come from federal
savings from other programs, and the bank’s operating expenses will be
covered by small commissions paid on each transaction by customers, most
of whom are welfare recipients. Branches will be built on land owned by
the government or donated, and software companies have offered to advise
for free.

About the central bank, he said:

We’re going to speak with those from the Bank of México respecting the
autonomy of the Bank of México. We have to educate them because for them
this is an anachronism, even sacrilege, because they have other ideas.
But we’ve arrived here [in government] after telling the people that the
neoliberal economic policy was going to change. . . .

There shouldn’t be obstacles. How is the Bank of México going to stop us
from having a [bank] branch that disperses resources in favor of the
people? What damage does that do? Whom does it harm?

AMLO has repeatedly promised not to interfere in the business of the
central bank, which has been autonomous for the past quarter of a
century. But he has also said that he would like its mandate expanded
from just preserving the value of the peso by fighting inflation to
include fostering growth. The concern, according to The Financial Times,
is that he might use the central bank to fund government programs,
following in the footsteps of Argentina’s former President Cristina
Fernández de Kirchner, "whose heterodox policies led to high inflation
and, many economists believe, the country’s current crisis."

Mark Weisbrot counters in The New York Times, however, that Argentina’s
problems were caused, not by printing money to fund domestic
development, but by a massive foreign debt. Hyperinflation actually
happened under Fernández de Kirchner’s successor, President Mauricio
Macri, who replaced her in 2015. The public debt grew from 53% to more
than 86% of GDP, inflation soared from 18% to 54%, short-term interest
rates shot up to 75%, and poverty increased from 27% to 40%.

In an upset election in August 2019, the outraged Argentinian public
re-elected Fernández de Kirchner as vice president and her former head
of the cabinet of ministers as president, restoring the 12-year Kirchner
legacy begun by her husband, Nestor Kirchner, in 2003 and considered by
Weisbrot to be among the most successful presidencies in the Western
Hemisphere.

More appropriate than Argentina as a model for what can be achieved by a
government working in partnership with its central bank is that of
Japan, where Prime Minister Shinzo Abe has funded his stimulus programs
by selling government bonds directly to the Bank of Japan. The BOJ now
holds nearly 50% of the government’s debt, yet consumer price inflation
remains low — so low that the BOJ cannot get the figure up even to its
2% target.

Other Funding Options

AMLO is unlikely to go that route, because he has vowed not to interfere
with the central bank; but analysts say he needs to introduce some sort
of economic stimulus, because Mexico’s GDP has slipped in the last year.
The Mexican president has criticized GDP as the ultimate standard,
advocating instead for a model of development that incorporates wealth
distribution and access to education, health, housing and culture into
its measurements.

But as Kurt Hackbarth warned in Jacobin in December, "To fully unfurl
[his] program without simply ransacking other line items to pay for it
will require doing something AMLO has up to now categorically ruled out:
raising taxes on the rich and large corporations which, not
surprisingly, make out like utter bandits in Mexico’s rigged financial
system."

AMLO has continually vowed, however, not to raise taxes on the rich.
Instead he has enlisted Mexico’s business magnates as investors in
public-private partnerships, allowing him to avoid the "tequila trap"
that brought down Argentina and Mexico itself in earlier years — getting
locked into debt to foreign investors and the International Monetary
Fund. Mexico’s business leaders seem happy to invest in the country,
despite some slippage in GDP.

As noted by Carlos Slim, Mexico’s wealthiest man, "Debt didn’t go up,
there is no fiscal deficit and inflation came down." In November 2019,
the Economy Secretariat reported that foreign direct investment showed a
7.8% increase in the first nine months of that year compared with the
same period in 2018, reaching its second highest level ever; and at the
end of 2019 the peso was up around 4%. Stocks also rose 4.5%, and
inflation dropped from 4.8% to 3%.

Partnering with local businessleaders is politically expedient, but
public/private partnerships can be expensive; and as U.K. Professor
Richard Werner points out, tapping up private investors merely
recirculates existing money in the economy. Better would be to borrow
directly from banks, which create new bank money when they lend, as the
Bank of England has confirmed. This new money then circulates in the
economy, stimulating productivity.

Today, the best model for that approach is China, which funds
infrastructure by borrowing from its own state-owned banks. Like all
banks, they create loans as bank credit on their books, which is then
repaid with the proceeds of the projects created with the loans. There
is no need to tap up the central bank or rich investors or the tax base.
Government banks can create money on their books just as central banks
and private banks do.

For Mexico, however, using its public banks as China does would be
something for the future, if at all. Meanwhile, AMLO has been a
trailblazer in showing how a national public banking system can be
initiated quickly and efficiently. The key, it seems, is just to have
the political will — along with massive support from the public, the
legislature, local business leaders and the military.

(5) Sanders 'not electable because he's a Communist; it would be like
Trotsky running for President'
From: Paul Bustion <pbustion87@gmail.com>
Subject: Your statement about Bernie Sanders

Peter,

You wrote in a recent newsletter:

 > Returning power to the people, unseating the Wall Street crooks who run
 > everything at present, is the most important issue. Therefore, we must
 > back Sanders.

I don't agree with you about this. Sanders is not electable because he's
a crackpot Communist, it would be like Trotsky running for president. I
think the only Democrats who can beat Trump are Elizabeth Warren and Joe
Biden. The most likely scenario is Biden gets the Democratic
presidential nomination, and Tulsi Gabbard runs as a third party
candidate taking votes away from Biden, and Trump is reelected as a result.

Paul

Comment (Peter M>):

 > it would be like Trotsky running for president

I had a good laugh at that.

Trotsky had a domineering and bloodthirsty style that Sanders lacks.
Trotsky was so arrogant that even his comrades feared him. That's why
Stalin was able to out-manoevre him.

There's no way that Sanders could install full-blown Communism in 4
years. Don't forget that Congress and the MSM would be a headwind.

It's not as if there's no middle ground between Communism and
Capitalism. What about Scandanavian style Socialism? We had that too in
Australia, from about 1940 to the late 1980s. It was MUCH better than
what we've got now.

"Virtus in Medio Stat" - virtue lies in the middle ground. I forget who
first said it; can anyone remind me?

Biden is already out of the race, after his poor showing in Iowa. That's
why the DNC are panicky - they want Bloomberg. But Bloomberg is an
Oligarch; Sanders keeps talking about him BUYING the election, and this
is a potent issue with voters.

Bloomberg has recently recast himself as a candidate who wants to
address Inequality. But his own past record is just the opposite.

The 2016 election was about the Culture War; Hillary's quip about
'Deplorables' summed it up. But Trump has dealt with those issues. The
2020 election will be about Inequality - restoring Democracy, i.e.
taking control back from the Oligarchy.

The economy does not belong to the 1% who claim to 'Own' it. Their idea
of Private Property is absolute; but that's wrong. The economy belongs
to everyone, and when some people are allowed to 'Own' it, that's just
Provisional, a delegated right. They have duties, obligations, not just
Rights.

As Wilkerson said, they're planning to introduce Robotics & Artificial
Intelligence to further cull the workforce.
They can't be allowed to get away with it. This is a Life & Death matter
for the American people.

Much as I detest AOC's line on Culture War issues, I give her credit for
saying that the Campaign Donation system in the US is actually 'Corruption'.

If rich people are able to buy the election, then it's not Democracy.
Wilkerson made that point when he called it 'Oligarchy'.

Communism in the USSR made the mistake of nationalizing ALL private
property, to fulfil the mantra, "One For All and All For One".

Not only the estates of the Aristocrats, but the small farms of the
Peasants (Collectivization) and the small businesses of craftsmen. Local
markets, where people buy & sell small things, were not allowed.

In the satellite countries of Eastern Europe, the farms were not
collectivized; small businesses were allowed, and the Church was
permitted to operate. This was a much better kind of Comminism than the
Soviet one.

We need Market Socialism, in which people own their own homes and small
farms, and the market still operates, i.e. a large part of the economy
is privately owned, but major parts of the economy (banks, railroads,
shipping lines, water utilities, electricity utilities etc) are publicly
owned and run.

This is the way it was done in Australia from about 1940 to 1990.

Despite all the talk about Sanders being a Communist, the most he will
be able to do in 4 years is inaugurate Market Socialism.

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