January 2014 archive

U.S. Appeals Court Deals Major Blow To Net Neutrality

By Reuters

A U.S. appeals court on Tuesday struck down the government’s latest effort to require internet providers to treat all traffic the same and give consumers equal access to lawful content, a policy that supporters call net neutrality.

The Federal Communications Commission did not have the legal authority to enact the 2011 regulations, which were challenged in a lawsuit brought by Verizon Communications Inc, the U.S. Court of Appeals for the District of Columbia Circuit said in its ruling. [..]

During the oral argument in September, Verizon’s lawyer said the regulations violated the company’s right to free speech and stripped control of what its networks transmit and how.

The eventual outcome of the dispute may determine whether internet providers can restrict some content by, for instance, blocking or slowing down access to particular sites or charging websites to deliver their content faster.

As Expected, Court Strikes Down FCC’s Net Neutrality Rules: Now What?

By Mike Masnick, Techdirt

Basically, this is exactly what lots of us said at the start of this whole process. I’ve seen a bunch of reports overreacting to this today, from people saying that it’s “the death of the internet.” It’s not. There are problems on both sides here. The telcos absolutely do want to abuse things to effectively double charge both sides. And that could clearly create significant issues with the basic end-to-end nature of the internet.

However, on the flip side, we should be equally concerned about the FCC overstepping its bounds and mandate in regulating the internet. Because that opens up the opportunity for the FCC to regulate all sorts of aspects of the internet in dangerous ways. So, this ruling is both good and bad. It stops the FCC from overstepping its bounds… but opens up the opportunity for the telcos to sweep in and try to upset the basic concepts of the internet. It’s what happens now that becomes interesting. The court does leave open the possibility that the FCC could use other aspects of its mandate to establish net neutrality rules — where it has a much more firm legal footing. In other words, the court is telling the FCC basically: you can establish net neutrality rules if you do it correctly.

Circuit Court Of Appeals Strikes Down FCC’s Open Internet Order, Net Neutrality Threatened

By Darrell Etherington, TechCrunch

Media watchdog and advocacy agency Free Press released the following statement about the decision via President and CEO Craig Aaron, condemning it while also acknowledging that the Open Internet Order probably wasn’t the best possible solution for enforcing net neutrality:

   We’re disappointed that the court came to this conclusion. Its ruling means that Internet users will be pitted against the biggest phone and cable companies – and in the absence of any oversight, these companies can now block and discriminate against their customers’ communications at will.

   The compromised Open Internet Order struck down today left much to be desired, but it was a step toward maintaining Internet users’ freedom to go where they wanted, when they wanted, and communicate freely online. Now, just as Verizon promised it would in court, the biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.

   The FCC – under the leadership of former Chairman Julius Genachowski – made a grave mistake when it failed to ground its open Internet rules on solid legal footing. Internet users will pay dearly for the previous chairman’s lack of political will. That’s why we need to fix the problems the agency could have avoided in the first place.

   New FCC Chairman Tom Wheeler recently stated that the FCC must have the ability to protect broadband users and preserve the Internet’s fundamental open architecture. In order to do that, he must act quickly to restore reassert the FCC’s clear authority over our nation’s communications infrastructure. The agency must follow its statutory mandate to make broadband communications networks open, accessible, reliable and affordable for everyone.

   We look forward to working with Chairman Wheeler and the rest of the Commission to protect and preserve real Net Neutrality.

Take Action: Sign the Petition from Netroots Action

A federal appeals court just sided with Verizon and against you, against us, against the Internet.

If this ruling stands, the Internet as we know it will die.

Forget free and open access. Picture a system like cable TV with corporations charging for different levels of access, and blocking access to information they don’t favor!

The Internet is our tool for circumventing the corporate media, for reaching each other with a bit of truth and accuracy, for organizing each other into collective action. We cannot let this one go.

Sign this petition to the FCC, Congress, and the White House now!

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Dean Baker: Medical Travel: If Bill Gates Wanted to Do Something Good for the World

Everyone knows Bill Gates, the man who got incredibly rich by gaining a near monopoly in the computer operating system market. In the last decade Gates has devoted much of his money to the foundation he created for the ostensible purpose of helping humanity.

Whatever the merits of his foundation’s programs, he is missing out on an enormous opportunity to do good for the United States and the world. As has been often documented, health care costs in the United States are hugely out of line with health care costs elsewhere in the world. There is a huge gap with costs in the developing world, but the ratio of costs for most items and procedures is more than two to one even in comparison with other wealthy countries.

And, this gap is not explained by better care in the United States. We actually have worse outcomes compared with most other wealthy countries.

Richard (RJ) Eskow: No, Congress, You Shouldn’t ‘Pay For’ Extending Unemployment Insurance

Despite record-high levels of unemployment — especially long-term unemployment — Republicans are refusing to permit any extension of unemployment insurance benefits unless it’s “paid for” with money taken from other government programs. They’ve never demanded that of Republican administrations. [..]

Even worse, Senate Democrats have proposed something Los Angeles Times business columnist Michael Hiltzik called a “flinthearted idea“: to pay for the extension by cutting Social Security benefits for the disabled. That sort of thing used to be considered too ruthless even for Republicans. Now it’s the “liberal” party’s proposal.

The Democrats’ offer perpetuates the misguided obsession with “pay-fors.” It also stigmatizes the recipients of government benefits, another preferred Republican theme, in this case by exaggerating the impact of “double dipping” between government programs.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

January 14 is the 14th day of the year in the Gregorian calendar. There are 351 days remaining until the end of the year (352 in leap years).

It is celebrated as New Year’s Day (at least in the 20th & 21st centuries) by countries still following the Julian calendar.

On this day in 1761, the Third Battle of Panipat is fought in India between the Afghans under Ahmad Shah Durrani and the Marhatas. The Afghan victory changes the course of Indian History.

The Third Battle of Panipat took place at Panipat (Haryana State, India), about 60 miles (95.5 km) north of Delhi. The battle pitted the French-supplied artillery and cavalry of the Marathas against the heavy cavalry and mounted artillery(zamburak and jizail) of the Afghans led by Ahmad Shah Durrani, an ethnic Pashtun, also known as Ahmad Shah Abdali. The battle is considered one of the largest battles fought in the 18th century.

The decline of the Mughal Empire had led to territorial gains for the Maratha Confederacy. Ahmad Shah Abdali, amongst others, was unwilling to allow the Marathas’ gains to go unchecked. In 1759, he raised an army from the Pashtun tribes and made several gains against the smaller garrisons. The Marathas, under the command of Sadashivrao Bhau, responded by gathering an army of between 70,000-100,000 people with which they ransacked the Mughal capital of Delhi. There followed a series of skirmishes along the banks of the river Yamuna at Karnal and Kunjpura which eventually turned into a two-month-long siege led by Abdali against the Marathas.

The specific site of the battle itself is disputed by historians but most consider it to have occurred somewhere near modern day Kaalaa Aamb and Sanauli Road. The battle lasted for several days and involved over 125,000 men. Protracted skirmishes occurred, with losses and gains on both sides. The forces led by Ahmad Shah Durrani came out victorious after destroying several Maratha flanks. The extent of the losses on both sides is heavily disputed by historians, but it is believed that between 60,000-70,000 were killed in fighting, while numbers of the injured and prisoners taken vary considerably. The result of the battle was the halting of the Maratha advances in the North.

The Legacy

The Third Battle of Panipat saw an enormous number of casualties and deaths in a single day of battle. It was the last major battle between indigenous South Asian military powers, until the creation of Pakistan in 1947.

To save their kingdom, the Mughals once again changed sides and welcomed the Afghans to Delhi. The Mughals remained in nominal control over small areas of India, but were never a force again. The empire officially ended in 1857 when its last emperor, Bahadur Shah II, was accused of being involved in the Sepoy Mutiny and exiled.

The Marathas’ expansion was stopped in the battle, and soon broke into infighting within their empire. They never regained any unity. They recovered their position under the next Peshwa Madhavrao I and by 1772 were back in control of the north, finally occupying Delhi. However, after the death of Madhavrao, due to infighting and increasing pressure from the British, their claims to empire only officially ended in 1818 after three wars with the British.

Meanwhile the Sikhs, the original reason Ahmad invaded, were left largely untouched by the battle. They soon retook Lahore. When Ahmad Shah returned in March 1764 he was forced to break off his siege after only two weeks due to rebellion in Afghanistan. He returned again in 1767, but was unable to win any decisive battle. With his own troops arguing over a lack of pay, he eventually abandoned the district to the Sikhs, who remained in control until 1849. . . . .

The battle proved the inspiration for Rudyard Kipling‘s poem “With Scindia to Delhi”.

The strength of Afghan military prowess was to both inspire hope in many orthodox Muslims, Mughal royalists and fear in the British. However the real truth of so many battle hardened Afghans killed in the struggle with the Marathas never allowed them to dream of controlling the Mughal Empire realistically again. On the other side, Marathas, possibly one of the only two real Indian military powers left capable of challenging the British were fatally weakened by the defeat and could not mount a serious challenge in the Anglo-Maratha wars 50 years later.

The bill to fast track the controversial Trans-Pacific Partnership Agreement was introduced last week

House Ways and Means Committee Chair Dave Camp (R) and top Senate Finance Committee members Max Baucus (D) and Orrin Hatch (R) on Thursday unveiled the Trade Priorities Act of 2014 that would require a simple up-or-down vote on major trade deals without the opportunity to offer amendments to pertinent bills. [..]

The Obama administration is seeking the heightened authority in trade deals, allowing the Executive Branch to smooth congressional negotiations on accords. The two major deals, both long in the works, that are likely to be subject to such legislation are the 12-nation Trans-Pacific Partnership (TPP) and the 28-nation pact with the European Union, the Trans-Atlantic Free Trade Agreement (TAFTA). The deals would establish the world’s largest so-called free-trade zones.

The US is also working on a services-trade accord with a group of nations that would encompass half of the global economy. [..]

The bill has been negotiated in secret and other than some leaked passages by WikiLeaks, only the negotiators and insider corporations have seen the full proposal which is nearing completion. There is push back in the House of Representatives that may scuttle the president’s plan to push this agreement without any debate or amendments

Late last year, 151 House Democrats signed a letter opposing the so-called fast track scheme, also known as trade promotion authority. Several House Republicans oppose fast track on the grounds that it excessively empowers the executive branch, but many others, including Speaker John Boehner (R-Ohio), support the proposal.

“Obama wants to pass it; Democrats in the House want to oppose it,” said one House Democratic aide, who was granted anonymity due to the sensitivity of the Democratic position. “Republicans are split ideologically, and want to know why they should take one for Obama.”

Nevertheless, Boehner said at a Thursday press conference that he cannot pass the bill without Democratic help. [..]

Many House Democrats are flatly opposed to the TPP and efforts to ease its passage. House Democrats are often more responsive to liberal interest groups than their Senate counterparts, and many members — including some in the Democratic Party leadership — believe that opposing TPP is good for electoral politics in 2014. While supporters of the deal argue it will increase economic growth, similar recent trade deals have undercut some U.S. industries and weakened global labor protections.

“The president has failed to find someone who is willing to introduce the bill. He’s got over 200 members to cultivate from, some of whom would like to have his support in the next election. But Democratic members are extremely skeptical of this,” Rep. Alan Grayson (D-Fla.) told HuffPost.

“We’ve tried free trade, and not only has free trade not improved the U.S. economy, it’s gutted manufacturing and driven down our labor standards,” he added, citing NAFTA as a prime example. [..]

Progressive groups came out strongly against the trade promotion authority, suggesting that approving it and the underlying trade deal would undercut efforts to curtail income inequality.

“The Trans-Pacific Partnership would be an unmitigated disaster for everything from the environment to Internet freedom and working families,” said Charles Chamberlain, the executive director of Democracy For America, a grassroots progressive organization, which intends to make trade an election-year issue.

In an interview with Huffington Post, political theorist and linguist Noam Chomsky slammed the agreement as a “neo-liberal assault”

(T)he deal, which is not yet finalized, is “designed to carry forward the neoliberal project to maximize profit and domination, and to set the working people in the world in competition with one another so as to lower wages to increase insecurity.”

Chomsky said it was “a joke” that the deal is designated a “free trade” agreement. “It’s called free trade, but that’s just a joke,” Chomsky said. “These are extreme, highly protectionist measures designed to undermine freedom of trade. In fact, much of what’s leaked about the TPP indicates that it’s not about trade at all, it’s about investor rights.”

The MIT professor also slammed the veil of secrecy that has surrounded TPP negotiations. [..]

As Chomsky noted:

“It’s very hard to make anything of the TPP because it’s been kept very secret. A half-secret, I should say. It’s not secret from the hundreds of corporate lawyers and lobbyists who are writing the legislation. To them, it’s perfectly public. They’re, in fact, writing it. It’s being kept secret from the population. Which of course raises obvious questions.”

If you haven’t done it need to tell our representatives to stop the “fast track” of the TPP. Even if you have do it again. Don’t Let Congress Fast-Track TPP.

In the run up to President Barack Obama’s promised decision on reforms the National Security Agency and its surveillance programs, there has been an  unsubstantiated press release, by House Intelligence Committee chairman Rep. Mike Rogers and his Democratic counterpart Rep. Dutch Ruppersberger, that the material taken by whistleblower Edward Snowden gravely impacted America’s national security, put the lives of US military personnel at risk and aided terrorists. There are no specifics about these allegations that Snowden had downloaded 1.7 million files or had considerable information on current U.S. military operations because the Pentagon report is, of course, classified.

Meanwhile top NSA officials and their allies are making their public appeals to retain their surveillance powers

In a lengthy interview that aired on Friday on National Public Radio (NPR), the NSA’s top civilian official, the outgoing deputy director John C Inglis, said that the agency would cautiously welcome a public advocate to argue for privacy interests before the secret court which oversees surveillance. Such a measure is being promoted by some of the agency’s strongest legislative critics. [..]

But security officials are arguing strongly against curtailing the substance of domestic surveillance activities.

While Inglis conceded in his NPR interview that at most one terrorist attack might have been foiled by NSA’s bulk collection of all American phone data – a case in San Diego that involved a money transfer from four men to al-Shabaab in Somalia – he described it as an “insurance policy” against future acts of terrorism. [..]

Inglis was bolstered on Thursday by the new FBI director James Comey, who said he opposed curbing the bureau’s power to collect information from businesses through a non-judicial subpoena called a national security letter. The use of national security letters, which occurs in secret, came under sharp criticism from Obama’s surveillance review panel, which advocated judicial approval over them.

Comey told reporters that would make it harder for his agency to investigate national security issues than conduct bank fraud investigations.

What we have learned is that the massive data collection has not led to the prevention of one terrorist attack and that conventional methods using court orders were more effective (pdf).

Activist and journalist Chris Hedges, along with former NSA technical director and NSA whistle-blower William Binney, tell Real News Network‘s Paul Jay that there should be accountability, including the President himself, for the criminal practices used by the NSA against the American people.

This Friday the president will publicly announce the results of his review of National Security Agency surveillance programs at the Department of Justice, not the White House.

I frequently read (and hear) a question that goes something like this-

ek, it’s all very well that you are here documenting the atrocities and I understand the the goals of your sites and writing are modest indeed, simply to provide a platform for others and encourage revolution in the small things, but I’m at my wits end!  What do I do?

To which my answer is invariably- stop rewarding bad behavior.

As your Mother said, this hurts me more than it does you.  The path of least resistance is appeasement and compliance, but spoiling pets, children, and politicians is the coward’s course.

The problem of resistance to the oligarchy

Ian Welsh

2014 January 12

You can also get change through making the lives of the rich unpleasant, or making them fear for their very lives.  Social peace has often been bought by treating ordinary people better, when the rich genuinely feared the army and police couldn’t protect them.

But if the elites think that their security forces can protect them, and especially if they live in a bubble where they never have to face people whose lives they have made miserable, as is the case for most of our rich, who fly by private jet, travel about the city in helicopters or chauffered limos and live in gated enclaves; and if you can’t cost them any real money, why should they let you have any of the surplus of society beyond the bare minimum you need to remain useful to them? (Not to survive: as the cutting of food stamps in the US indicates, that’s not a priority for the oligarchy.)

Be clear that distribution of goods and money in an economy is almost entirely unrelated to any ethical idea of merit or deservedness.  The bankers, amongst the best paid people in the world economy, destroyed far more money than they earned in the 00s, and yet are still paid billions of dollars in bonuses every year.  They receive the money they do because they had the power to make the government make them whole after they lost everything, then the power to make the government make them even richer than before.  They control a bundle of valuable rights from the state: the right to borrow at prime, the right to value assets to model (fantasy); the right to huge leverage; and the right lend, which is how money is actually created in our economy (aka. they can print money.)

This is why they’re rich: not because they produce net value: they destroy value; but because they have the power to make the government do what they want it to do and to make it not prosecute them when they break the laws, and even to change the laws so they can take even more money.

Distribution in an economy is based, virtually entirely, on power. A group receives goods and money because it can force others to give it to them.  The libertarian fantasy of free markets and free choice is exactly that. They don’t exist today, they have rarely existed in the past, and to the extent they have existed they owe their existence entirely to government making sure they exist.  As soon as any group gains enough power to take over government, they do, and free markets cease to exist because they make the government give them special rights,whether those are rights to print money, borrow low and lend high, or so-called intellectual property rights that let them continue to profit from ideas created 80 years ago.

Power, power is all that matters.  Even distribution, or something close to it, happens only when there is relatively equality between groups in society or there is an existential threat to society which requires the willing participation of all parts of society.

If you ever want to see raises for ordinary people again, you must figure out how they will become powerful: and power means “what can they do to hurt people who cross them, hurt them really, really badly.”

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Enemies of the Poor

Suddenly it’s O.K., even mandatory, for politicians with national ambitions to talk about helping the poor. This is easy for Democrats, who can go back to being the party of F.D.R. and L.B.J. It’s much more difficult for Republicans, who are having a hard time shaking their reputation for reverse Robin-Hoodism, for being the party that takes from the poor and gives to the rich.

And the reason that reputation is so hard to shake is that it’s justified. It’s not much of an exaggeration to say that right now Republicans are doing all they can to hurt the poor, and they would have inflicted vast additional harm if they had won the 2012 election. Moreover, G.O.P. harshness toward the less fortunate isn’t just a matter of spite (although that’s part of it); it’s deeply rooted in the party’s ideology, which is why recent speeches by leading Republicans declaring that they do too care about the poor have been almost completely devoid of policy specifics.

Let’s start with the recent Republican track record.

John Nichols: A ‘Fast Track’ to Less Democracy and More Economic Dislocation

The framers of the Constitution were wise to include Congress in the process of framing and approving trade agreements made by presidents. That authority to provide advice and consent should, the wisest legislators have always argued, be zealously guarded.

Unfortunately, in recent decades, Congress has frequently surrendered its authority when it comes to the shaping of trade agreements. By granting so-called “fast-track authority” to the White House, Congress opts itself out of the process at the critical stage when an agreement is being struck and retains only the ability to say “yes” or “no” to a done deal.

The result has been a framing of US trade agreements that is great for multinational corporations but lousy for workers, communities and the environment. Instead of benefitting the great mass of people in the United States and countries with which it trades, deals such as the North American Free Trade Agreement and the permanent normalization of trade relations agreement with China de-emphasize worker rights, human rights, environmental and democracy concerns and clear the way for a race to the bottom.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

January 13 is the 13th day of the year in the Gregorian calendar. There are 352 days remaining until the end of the year (353 in leap years).

It is still celebrated as New Year’s Eve (at least in the 20th & 21st centuries) by countries still using the thirteen day slower Julian calendar (Old New Year).

On this day in 1898, French writer Emile Zola’s inflammatory newspaper editorial, entitled “J’accuse,” is printed. The letter exposed a military cover-up regarding Captain Alfred Dreyfus. Dreyfus, a French army captain, had been accused of espionage in 1894 and sentenced in a secret military court-martial to imprisonment in a South American penal colony. Two years later, evidence of Dreyfus’ innocence surfaced, but the army suppressed the information. Zola’s letter excoriated the military for concealing its mistaken conviction.

Dreyfus Affair

Captain Alfred Dreyfus was a Jewish artillery officer in the French army. When the French intelligence found information about someone giving the German embassy military secrets, anti-semitism seems to have caused senior officers to suspect Dreyfus, though there was no direct evidence of any wrongdoing. Dreyfus was court-martialled, convicted of treason and sent to Devil’s Island in French Guiana.

LL Col. Georges Picquart, though, came across evidence that implicated another officer, Ferdinand Walsin Esterhazy, and informed his superiors. Rather than move to clear Dreyfus, the decision was made to protect Esterhazy and ensure the original verdict was not overturned. Major Hubert-Joseph Henry forged documents that made it seem that Dreyfus was guilty and then had Picquart assigned duty in Africa. Before leaving, Picquart told some of Dreyfus’s supporters what he knew. Soon Senator August Scheurer-Kestner took up the case and announced in the Senate that Dreyfus was innocent and accused Esterhazy. The right-wing government refused new evidence to be allowed and Esterhazy was tried and acquitted. Picquart was then sentenced to 60 days in prison.

Émile Zola risked his career and even his life on 13 January 1898, when his “J’accuse“, was published on the front page of the Paris daily, L’Aurore. The newspaper was run by Ernest Vaughan and Georges Clemenceau, who decided that the controversial story would be in the form of an open letter to the President, Felix Faure. Émile Zola’s “J’Accuse” accused the highest levels of the French Army of obstruction of justice and antisemitism by having wrongfully convicted Alfred Dreyfus to life imprisonment on Devil’s Island. Zola declared that Dreyfus’ conviction came after a false accusation of espionage and was a miscarriage of justice. The case, known as the Dreyfus affair, divided France deeply between the reactionary army and church, and the more liberal commercial society. The ramifications continued for many years; on the 100th anniversary of Zola’s article, France’s Roman Catholic daily paper, La Croix, apologized for its antisemitic editorials during the Dreyfus Affair. As Zola was a leading French thinker, his letter formed a major turning-point in the affair.

Zola was brought to trial for criminal libel on 7 February 1898, and was convicted on 23 February, sentenced, and removed from the Legion of Honor. Rather than go to jail, Zola fled to England. Without even having had the time to pack a few clothes, he arrived at Victoria Station on 19 July. After his brief and unhappy residence in London, from October 1898 to June 1899, he was allowed to return in time to see the government fall.

The government offered Dreyfus a pardon (rather than exoneration), which he could accept and go free and so effectively admit that he was guilty, or face a re-trial in which he was sure to be convicted again. Although he was clearly not guilty, he chose to accept the pardon. Émile Zola said, “The truth is on the march, and nothing shall stop it.” In 1906, Dreyfus was completely exonerated by the Supreme Court.

The 1898 article by Émile Zola is widely marked in France as the most prominent manifestation of the new power of the intellectuals (writers, artists, academicians) in shaping public opinion, the media and the state.

From Earth Insight by Nafeez Ahmed, hostsed by the Gardian, Former BP geologist: peak oil is here and it will ‘break economies’:

Dr. Richard G. Miller, who worked for BP from 1985 before retiring in 2008, said that official data from the International Energy Agency (IEA), US Energy Information Administration (EIA), International Monetary Fund (IMF), among other sources, showed that conventional oil had most likely peaked around 2008.

Dr. Miller critiqued the official industry line that global reserves will last 53 years at current rates of consumption, pointing out that “peaking is the result of declining production rates, not declining reserves.” Despite new discoveries and increasing reliance on unconventional oil and gas, 37 countries are already post-peak, and global oil production is declining at about 4.1% per year, or 3.5 million barrels a day (b/d) per year:

“We need new production equal to a new Saudi Arabia every 3 to 4 years to maintain and grow supply… New discoveries have not matched consumption since 1986. We are drawing down on our reserves, even though reserves are apparently climbing every year. Reserves are growing due to better technology in old fields, raising the amount we can recover – but production is still falling at 4.1% p.a. [per annum].”

No one should be surprised these days when yet another company goes belly-up in these difficult financial times, especially in devastated economies such as Spain.  Yet the bankruptcy of Fagor, the flagship cooperative in the Mondragon Cooperative Corporation (MCC) has shaken many anti-capitalists around the world as akin to witnessing the ending of Camelot. The fact that at least two of the other largest cooperatives in the Mondragon network, Caja Laboral (the bank and financial center of the corporation) and Eroski (a chain of retail stores throughout Europe)  are in dire financial straits has only added to the ominous threat.

Fagor, with its 5,600 workers, is a relatively small part of the whole. Even so, Trevino (Fagor’s CEO) warns that its fall “will have an uncontrollable domino effect on the rest of the group with major social implications.” He believes Fagor’s liquidation would create a €480m hole at Mondragon, including inter-group loans and payments the group’s insurance arm would have to make on Fagor workers’ unemployment policies.

Mondragon has promised to find new jobs or offer early-retirement terms for as many as it can of Fagor’s Spanish workers, but this is a tall order in a country with 27% unemployment. Besides their jobs, workers stand to lose the money they had invested in the co-op if it is liquidated.

Demystifying the Mondragon Myth

For the last 50 some years, the growth of what is now the Mondragon Cooperative Corporation has given many anarchists, socialists and other progressives in the cooperative movement the hope that yes, Virginia, there really is a viable alternative to Capitalism or, at the very least, an economic system that could provide a transition to socialism. Moreover, although many socialists won’t easily admit it, there is often the underlying hope that somehow this transition could occur “peacefully”, without a real class struggle ending in state ownership; that somehow, within the belly of the beast of capitalism, the cooperative model could “out compete” the capitalist multinationals at their own game and become the dominant economic paradigm.

Yet, as one blogger commented in Alternatives to Capitalism,

“There is no escaping the need to challenge Wall Street and the other big financial centers across the world for political and economic power which requires a well-organized and intense class struggle […] something the promoters of these cooperative schemes try to evade as they try to convince workers there are ways around bringing mines, mills and factories under public ownership which is going to require the nationalization of entire industries.”