Egyptians Revolt - Rubin's Folly and Labor Arbitrage

By Numerian
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The forces of globalization are increasingly and in surprising places and ways under attack. Globalization did not happen by accident; it was the result of policies put in place by people with a particular agenda.

Matt Stoller, a former policy advisor to Rep. Alan Grayson, has posted this morning his insights into the Egyptian Revolution – insights that are quite different from the usual take on these events. They can be found here at the Naked Capitalism blog managed by Yves Smith.

Stoller dismisses the fanciful praise of social networks as a driving force behind the revolution – a story the mainstream media are plugging rigorously. He focuses instead on the participation of young men and women who labor anonymously in the new cheap-labor factory mills set up in Egypt under the direction of Gamal Mubarak, the president’s son and anointed successor. These are the workers who organized the first protests – who responded at great risk to the call for demonstrations, who continued to occupy Tahrir Square despite the provocations from the government, and whose focus on civil liberties was motivated by the repressive police tactics used by the government to enforce the discipline demanded by the mostly-foreign corporations that run the labor mills.

Stoller connects this labor development in Egypt to the international practice of labor exploitation that is the result of the “deregulation, globalization, and privatization” corporatist philosophy of men like Robert Rubin, Clinton’s Treasury Secretary, and an executive early in his career at Goldman Sachs, and later at Citigroup. These policies have been the hallmark of elitist gatherings such as the Davos conference. They were embraced by Gamal Mubarak, who in 2009 gave Sen. Joe Lieberman a description of Egyptian development policies straight out of the Rubin playbook: bring Egypt into the global economy, reduce government regulation, and stimulate private investment.

Rubin's Globalization

Rubin’s globalization principles sound noble on paper. The planet’s neediest and poorest people are brought out of their destitution by giving them jobs that will allow them to compete in the global marketplace. As the global economy enlarges, countries will be able to focus on their own advantages, such as labor pool talents or natural resource riches, and redirect their economies away from less productive endeavors. This was the promise made by the Clinton administration when NAFTA was approved: Mexicans would work in factories at making things Americans could no longer manufacture as cheaply, while Americans would specialize in white collar service and information industries that represented a higher return on capital and continued to provide American workers with much higher living standards. Everybody would win since needy Mexicans could now gravitate toward Mexican factories rather than across the border seeking employment in the US, while Americans could continue earning one of the highest per capita incomes of any nation.

It didn’t work this way for a variety of reasons. In the NAFTA case, Mexican factories employed relatively modest numbers of workers, since to compete in the global economy there is a relentless push for manufacturers to automate their processes rather than rely on labor. Poor Mexicans continued therefore to steal across the border to seek employment in the US. Middle class Americans, in turn, were not finding their efforts rewarded in the global economy. Factory jobs were being eliminated at a rapid pace, sent to Mexico, China, India, and elsewhere. White collar labor was squeezed by management because it could – white collar workers have usually not been unionized, and where unions did exist they were under pressure, especially in the southern states which built their growth on laws that outlawed unions. From the start of the Clinton administration, wages in the US, which never fully recovered from the Reagan recession, began to stagnate, while increasing amounts of GNP were being absorbed by corporations to their bottom line.

This sort of labor arbitrage has played out in country after country, throughout Europe (especially as the former Soviet bloc states flooded Europe with cheap labor), and most notably in Asia. Official Chinese economic policy is predicated on the Rubinite principles of globalization, deregulation, and private investment. Labor laws are virtually non-existent in China, or where they do exist they are impossible to enforce. China has been able to avoid the Mexican manufacturing drive towards automation, because China instead used hundreds of millions of workers from the rural hinterlands as human robots in sweat shop factories, doing mind-numbing manual tasks that could easily be handled by machines. Discipline was enforced by draconian measures permitted to management and often enforced by local police if necessary. China has always justified its sweat shop and mercantilist economic policy as the only choice available to it if hundreds of millions of poorly-educated rural laborers are going to be fed.

Egypt Followed China's Model

Mubarak Enterprises went about globalization in the Chinese fashion, by setting up factory zones, and in many cases inviting Chinese companies to run them. Discipline was provided brutally by the police forces who otherwise spent their time rounding up political dissidents. Unions and labor organizing were not allowed. Government turned a blind eye to working conditions under the “virtuous necessity” of deregulating the economy so private enterprise could thrive. Egyptians in these factories produced handicrafts for the tourist market, cheap clothing for export, and low technology goods such as basic appliances necessary for the domestic market.

Because pay was set at a subsistence level for these workers, employees were allowed/encouraged to supplement their income through microloans, which were an emerging markets financing tool especially aimed at women. This was not, however, the type of microlending that won a Nobel Prize for its founders in India; the Egyptian model was exploitative, almost like loan sharking, where the collateral was the only thing poor people have: their body. As Stoller phrased it, “The police extract pain and humiliation if you do not pay your bill.”

Egyptians were, like Indians, like Americans, and like middle class Chinese, encouraged by government and the private sector to take out loans in order to meet basic living requirements in the new global economy. The debt machine appears now, in retrospect and after it has blown up spectacularly on a global scale, to be an important component of the Rubinite program. It is no surprise that Gamal Mubarak was, prior to his career as Egypt’s de facto minister of development, an officer at Bank of America.

To the extent Stoller’s analysis is correct, it ties Egypt into a trend of worker uprisings and outright rejections of globalization in a number of countries. Worker strikes in China, which are illegal, have forced the government to award pay increases of 20% or more, to keep workers on the job and to allow them to afford pricey necessities such as rice, chicken and pork. China is said to have at least 10,000 demonstrations a year by Chinese workers protesting their treatment by management and local government and police forces.

Iceland's Alternative - Arrests and Trials for Bankers

In Iceland, home to one of the most pernicious banking collapses of any country, voters have rejected any further bank bailouts, and the new government in Iceland has arrested prominent bankers and put them on trial for fraud and corruption. Ireland’s voters seem to be heading down this path as well, and there have been violent demonstrations in the UK, France, Greece and elsewhere in Europe by workers unwilling to accept austerity programs imposed on them by governments that have directed billions of dollars of bailouts to the banks.

In the US, home of the biggest housing bubble collapse so far, there have been few protests, but voters have thrown out of office dozens of Democrats who promised but failed to deliver on basic economic and financial reforms. Americans are increasingly attacking the banking industry where it is most vulnerable, by walking away from their home mortgages and accepting foreclosure and bankruptcy rather than continue to spend their lives grinding away as debt slaves.

The forces of globalization are increasingly and in surprising places and ways under attack. Globalization did not happen by accident; it was the result of policies put in place by people with a particular agenda. These people hold in their hands powerful tools of repression that can be used to maintain their program of globalization. To the extent the average person concludes that globalization has nothing in it for them, and in fact may represent a crushing burden, and to the extent global elites are unwilling to abandon their positions of power nor their agenda, the tools of repression may be the implements of last resort used to maintain the social and economic “order” that is the foundation of the Rubinite program.

First published at The Agonist

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Comments

winner, winner Chicken Dinner!

Whew! This is a must read article! Folks, use the share buttons to spread this one around.

Just like most media coverage, such as the budget deficit, you will not hear the real reasons, they will create a few non-issues and the 'debate' those as if they have much to do with anything.

Globalization, wage arbitrage, labor arbitrage not only affects the United States, it affects workers globally and simply needs to be stopped. The point of economies and governments is not to make Goldman Sachs richer, it's to support the nation-state and the people, i.e. workers, middle classes, within it.

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The issue is raised

The unions played a key role in the demonstrations turned revolution at Tahrir Square and throughout Egypt. They were motivated by the labor arbitrage and general anti worker policies adopted by Egyptian leaders to please the gurus of globalism. The globalists, aka Rubinites, will not give up. They'll try to put "our man in Cairo" in place, ElBaradie, or some other servant to their greater good. So it comes back to the independent unionists from Msahalla and other parts of Egypt who said, 'we've had enough.'

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Globalization

What's wrong with globalization? At the rate we're populating this place, we'll be lucky to have enough food for 8 billion people. It's scary to say, but a one world government seems more appealing to me than letter countries only be responsible for themselves. Climate change, food shortages and overpopulation are very real issues that we'll be faced with in the next 25-50 years. Regardless of what happens, it will be a very different planet.

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Hi, I'm Ed. Nice to meatchew.

Frank Wisner: Our Man In Cairo

http://www.marketskeptics.com/2011/02/frank-wisner-is-in-cairo-at-reques...

But news ages quickly lately...

I commend your courage to reveal the truth. Rubin, Paulson, Geithner - these are Wall Street clones, they come from Wall Street to serve Wall Street. Just like the FED, the office of the Secretary of Treasury receives no compensation to represent the United States, it operates under the governorship of the IMF.

Wall Street = Globalism.

When the interest rate swapolypse finally hails down on the world, the bankers will make another deal to enslave not just Americans, but all humanity, in forgiveness of the exponentiating, unrepayable debt of the interest rate derivative collapse. You make a deal with the Devil to deliver up your soul, in return for the fantasy of wealth without basis. We did it in 1933, and we're about to do it again.

In America, you are born into bondage as a result of that bargain from the first banker-orchestrated depression. Your labor is taxed, your property is taxed, you work all your life to own nothing, all for an illusion. And we accept this without question.

Unless you are born into generational wealth, your children's children will be obligated to the deal we make with the global elite who are. And our grandchildren will accept the deal, without question, and toil all their lives for the illusion that they can rise above their station, an illusion fueled by debt, and the fantasy of wealth without basis.

That is the future we are headed toward, if the American people don't dance the Tunisian hustle. But a Swapolypse now, this way comes ...
http://letthemfail.us/archives/7677

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