Labour solidarity with Palestine

“I want to express my gratitude to both CUPE (Canadian Union of Public Employees) and CUPW (Canadian Union of Postal Workers) for the solidarity they have shown to the Palestinian people.” With these words, Manawell Abdul Al, member of the executive committee of the Palestinian General Federation of Trade Unions summed up the sentiment at the 150-strong opening plenary of the “Brick by Brick” conference at the Steelworkers Hall in Toronto. He was referring to the motions passed first at CUPE-Ontario, and this year at CUPW national, supporting the campaign for Boycott, Divestment and Sanctions against the state of Israel.

Organized by the Labour Committee of the Coalition Against Israeli Apartheid (CAIA), the conference focused on “building labour solidarity with Palestine.” As well as members of CUPE and CUPW, the weekend conference brought together members of CAW (Canadian Auto Workers), the USWA (United Steelworkers of America), FNEEQ (Fédération nationale des enseignantes et des enseignants du Québec), OSSTF (Ontario Secondary School Teachers Federation) and other unions to debate ways to strengthen the BDS campaign in the labour movement.

Marion Pollack from CUPW also spoke on the opening panel. “It is very clear to us that the struggle facing the Palestinian people is the same struggle faced by the South African people against apartheid,” she said, and thanked CUPE Ontario for taking the lead in being the first major union grouping in Canada to pass a BDS resolution. In the wake of the CUPE Ontario resolution, there were literally thousands of emails sent by pro-Israeli forces denouncing the union. After CUPW members at the recent national convention voted 90 per cent to endorse the BDS resolution, “we were braced for a backlash” Pollack said. “However, we have not had the same level of fall-out.”

One of the most moving speeches came from Paul Loulou Chery, Secretary of the Confederation of Haitian Workers. He described the extremely difficult conditions being faced by Haitian workers, chafing under military occupation sanctioned by the United Nations. He talked about the conditions created by the 2004 coup d’état, carried out by the military of the U.S., France and Canada. But he also said that even though Haitian workers face terrible conditions, they do not want their Palestinian sisters and brothers to stand alone. Manawell Abdul Al took the microphone in response, and said that the occupation of Haiti and the occupation of Palestine are one and the same. “It is the dictatorship of capital that wants to exploit and put its hands on the wealth of the people.”

Notably present at the opening plenary was Phyllis Bennis, well known anti-war activist, (prominent in United for Peace and Justice (UFPJ), the principal anti-war organization in the United States), who spoke from the floor as a member of the US Campaign to End the Israeli Occupation. Also from the US were members of US Labor Against the War. Links with the U.S. anti-war and labour movements will be critical in the campaign to build solidarity with Palestine.

© 2008 Paul Kellogg

Resources

Coalition Against Israeli Apartheid Labour Committee, www.caiaweb.org/labourcommittee
CUPE B.C., The Wall Must Fall, 2007, www.cupe.ca/updir/WallMustFall2007-eng.pdf
CUPE, “CUPE Resolution 50 Palestine“, www.cupe.on.ca
CUPW, Resolution for BDS, http:stopthewall.org
U.S. Campaign to End the Israeli Occupation, www.endtheoccupation.org

The toxic tango of markets and housing

You can see it in the streets of Cleveland, or Buffalo, or Minneapolis. On all those streets, the working poor who five years ago lived in their own homes, are back in cramped apartments, paying rent to their landlords. On the streets where they used to live, their old houses sit boarded up and rotting. Every week, some of these homes come down, as city governments spend millions to demolish houses abandoned because of what is being called the “subprime” mortgage crisis. It should be called the “free-market” housing crisis. What these streets tell us is the catastrophic failure of a decade long experiment in using the free-market to regulate housing policy in the United States.

Go back to 1999. Then U.S. Federal Reserve Chairman Alan Greenspan put his weight on the scales to block new regulations for interesting things called “derivative products.” Any new regulations would be a “major mistake” he told the Futures Industry Association in March of that year.[1] Derivatives are complex financial instruments whose value is related to an underlying asset. They can become enormously complex. But Greenspan – at the time arguably the most powerful financial manager in the world – used his authority to make sure that the trading in these derivatives should be very loosely regulated. Greenspan is a free-market evangelist.

A loosely regulated derivatives market encouraged the creation of “exotic” investment vehicles, including the practice of combining consumer debt (credit card debt, automobile, mortgages, etc.) from hundreds and thousands of different customers, dividing up the resulting amalgam into smaller portions, calling them “securities,” and then selling these securities for a profit. The underlying assumption was that behind these “exotics” were real assets – debt that was going to be repaid.

Move ahead to 2001. The long stock market expansion rooted in the 1990s came to a sudden halt. The enormous speculation in high tech industries was unsustainable. The stock index most closely associated with the high tech sector – the NASDAQ – suffered a collapse that rivaled that of the Japanese stock market ten years earlier.

Greenspan’s response was to cut interest rates to almost zero – effectively, printing money and making it available on the cheap to banks and other financial institutions, to keep the US economy out of recession.

But this had another effect. Other interest rates came down as well, including those for mortgages. With interest rates for mortgages at historic lows, a new industry emerged – selling mortgages to people who had low incomes, who had never thought of buying a house.

From the standpoint of the poor, it was a good move. If low interest rates meant that a mortgage was cheaper than rent, then why not invest in a mortgage? Millions did so. This in turn fed the practice of repackaging this debt as exotic derivatives, and increasing portions of these derivatives had mortgages as the underlying asset – and many of those were the mortgages taken on by the poor, the ones we have come to call “subprime”.

Don’t blame the poor for the consequences. According to Mark Seifert of Cleveland’s East Side Organizing Project (ESOP) “predatory lenders targeted inner-city, African-American neighbourhoods, where they fudged property values and signed up thousands of borrowers without explaining the details of the loans.”[2]

Lenders and investors were locked in a toxic tango – lenders pushing “cheap” mortgages on the working poor, investors creating a billions-dollar market for the derivatives based on these “cheap” mortgages. As long as the tango lasted, both lenders and investors made huge sums of money in fees and bonuses.

The low rates driving this tango could not last. In the years after 2001, the U.S. Federal Reserve sent interest rates steadily higher. The low interest rate policy had saved the stock market, but it had created another problem – a weakening of the U.S. dollar, which was slowly losing strength against other currencies. To protect the dollar, interest rates rose higher and higher.

By 2007, the problems created were massive. The rise in interest rates meant that mortgage payments were floating up, not down. The low “teaser” rates were ending, and millions of working poor did not have the income to make their payments. The home ownership mirage of the early 21st century had, in the words of British analyst Robin Blackburn, “avoided the real problem, which is the true extent of poverty in the Untied States and the folly of imagining that it can be banished by the waving the magic wand of debt creation.”[3]

Predictably, the working poor were driven from their homes. Their mortgages were unsustainable. They returned to cramped apartments, the locks on their foreclosed homes were changed, windows boarded up, a target for wind, rats and vandalism.

The result is an enormous mess. The subprime/derivatives tango had encouraged real estate speculation sending house prices through the roof. With defaults on the rise, the housing market is being flooded with homes, and predictably prices are now collapsing. But the derivatives market based on mortgages and based on assumptions of continuously rising real estate prices had become truly massive. The Federal Reserve has abandoned its high interest rate policy in an attempt to reduce the damage. This has had some impact – the U.S. economy is not yet in an official recession. But it is exposing the U.S. to other risks, as the return to low interest rates has accelerated the decline of the U.S. dollar.

But the real victims of the subprime crisis are on the working class streets of Cleveland. In 2003, there were 200 foreclosures in Cleveland Ohio. In 2007, there were 7,583. “On average, 20 Cleveland homeowners faced foreclosure every day last year.”

“Many streets” are “lined with vacant buildings. Most have been stripped of windows, doors, siding and even copper wiring and pipes.” And after a while, there is nothing to do with an abandoned house except to tear it down. “Last year, Cleveland spent $7-million demolishing abandoned homes, compared with about $1-million a couple of years ago.” That demolition bill might rise to $70 million to deal with all the vacant buildings.[4]

This is not just a Cleveland story. Chicago Heights mayor Anthony De Luca said that “city officials are planning a major wave of demolitions of homes and businesses that have been left in disrepair.”[5] And governments in Cleveland, Baltimore, Buffalo and Minneapolis “have all filed lawsuits against lenders or developers based on the devastating effects foreclosures have wreaked on their communities.”[6]

“I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk” said the Greenspan in his very defensive autobiography. “But I believed then, as now, that the benefits of broadened home ownership are worth the risk.”[7] But Greenspan was wrong on derivatives and wrong on mortgages, and the result has been an economic and social mess.

Here’s a modest idea. Instead of pushing people out of apartments and into houses, and then back to their apartments, instead of boarding up their abandoned homes and then spending millions to demolish them, instead of spending additional millions to sue the lenders and developers who profited from this mess – instead of this frenzy of unproductive spending, lets instead invest in public housing. Instead of tricking people into financing this public housing with risky mortgages, lets make these new houses geared to income. Instead of leaving the managing of housing to speculators and developers, lets manage housing ourselves through the well-established principle of housing co-ops. There will be some who object, saying “that’s a socialist housing program.” Whatever you call it, it’s a bit more rational than the chaos left behind by ten years of the free market.

© 2008 Paul Kellogg

References

[1] Nelson D. Schwartz and Julie Creswell, “What Created This Monster?”, New York Times, March 23, 2008; cited in Robin Blackburn, “The Subprime Crisis,” New Left Review, 50, March/April, 2008, p. 82
[2] Paul Waldie, “Is the U.S. housing mess headed our way?“, The Globe and Mail, January 19, 2008, p. F.1
[3] Blackburn, p. 73
[4] Waldie
[5] David Schwab, “30 buildings to be demolished this summer,” The Southtown Star, May 4, 2008
[6] Julie Kay, “Empty Homes Spur Cities’ Suits,” The National Law Journal, May 9, 2008, www.law.com
[7] Alan Greenspan, The Age of Turbulence: Adventures in a New World, New York 2007, p. 233; cited in Blackburn, p. 82

Transit strike exposes fault lines in labour movement

The Ontario legislature convened at 1:30 pm, April 27 – the first time in history that the august body had met on a Sunday. In 35 minutes, the politicians had time to have prayers, make a few speeches and, oh yes, give three readings to a bill called the “Toronto Public Transit Service Resumption Act.” By 2:05 pm it was finished, with the support of the NDP and its leader Howard Hampton, his “reservations” notwithstanding.[1] Workers in Ontario will be living with the repercussions of these actions for some time.

Unionized workers at the Toronto Transit Commission (TTC) had been on legal strike since midnight, Friday April 25, and the strike had caught most by surprise. The Toronto Star of April 24 carried a short article headlined “TTC contract expected to pass vote.”[2] Tense negotiations had resulted in a tentative agreement between the Toronto Transit Commission and the 8,900 strong Amalgamated Transit Union (Local 113) that most saw as a victory for the union. TTC drivers won a wage increase of 3 per cent a year in each year of a three-year deal. On top of that, in what became known as the “GTA clause” drivers received the right to remain the highest paid transit drivers in the GTA (Greater Toronto Area). What it means is that if, at the end of 2009, city of Toronto transit drivers are earning less than transit drivers in Mississauga or any other municipality in the GTA, they would “get an increase of 5 cents an hour above the other drivers’ wage.” The Mississauga example is key, because “TTC drivers have been earning 5 cents an hour less than those in Mississauga.”[3]

Conservative members of Toronto City Council were outraged at the deal. “I think it’s a mistake … We’ve turned over control. It’s not wise,”[4] said Councillor Doug Holyday. “I don’t know where we are going to get the money from,” said Councillor Denzil Minnan-Wong.[5] But if the right-wing was dissatisfied, so was the rank and file – but for completely different reasons.

First – one of the key areas of disagreement, the treatment of workers injured on the job, had not been fully addressed. Under the old contract, workers injured on the job received 85% of their pay while they were away from work. The union wanted that raised to 100%, and while they made some headway, “obviously, we didn’t get everything we wanted,” said local president Bob Kinnear.[6] The importance of the issue was graphically demonstrated April 20, when two TTC workers were injured, one seriously, after two subway cars collided in a maintenance yard.[7]

There were other issues. While drivers were awarded the “GTA clause,” no such agreement existed for other sections of the local, including maintenance workers who represent about 1/3 of the locals’ membership. Skilled trades workers were also dissatisfied. They had wanted a 10-cent an hour premium raised to 50 cents, but were offered only 25 cents. Tensions around these issues were so high, that seven members of the local’s 16-member executive refused to sign the tentative agreement.[8] In this context of a division at the top, and a feeling that drivers were being treated differently than non-drivers, rumours began to swirl through the membership – most starkly, that there were plans afoot to contract out much of its maintenance work.

But to really understand the events, the entire context has to be seen. City workers – including transit workers – have lived through years and years of budget crises, cuts to services, threats to wages and threats of attacks on conditions such as contracting out. But this year, for the first time since the creation of the amalgamated City of Toronto in 1997, the City came forward with a balanced budget. With Canada’s labour party (the NDP) dominating many of the key positions in the City (including in the mayor’s office, held by David Miller, a long-time NDP stalwart), and with the threat of a budget deficit finally removed from over the heads of the city’s workers, there was a sense that now was the time to make up ground lost in the difficult years of the 1990s. There was developing what labour historian Stuart Marshall Jamieson called in earlier times, a “momentum of rising expectations,”[9] expectations that it was time to make some progress. In that context, we should not be surprised that maintenance and other workers should want to be treated just as well as drivers in the new contract. That is the context in which the tentative agreement was rejected, 65% voting it down.

The rejection of the transit deal was announced late afternoon, Friday April 25. By midnight, the transit system was shut down, the local leadership having called its members out on legal strike. But it was a strike of a special kind. There were no picket assignments, no picket signs, no picket lines, no activity of any sort. At midnight, the doors were locked, the union’s members were sent home and the “strike” was on. The rank and file had spoken, decisively, and the union leadership responded by showing absolutely no leadership.

The workers had been put in an incredibly vulnerable position. Their leadership had announced up and down throughout the long negotiations that any strike would happen after 48 hours’ notice. Instead there was none, maximizing the possibility of a backlash against the union. And with no picket lines, the striking workers were expected to take on their boss, the city and the anti-union media by staying at home – a recipe for failure and demoralization. Perhaps Kinnear and the rest of the ATU leadership were too divided to come up with a plan. Perhaps they were so surprised at the rejection of the deal that they were paralyzed. Perhaps Kinnear was himself “on strike” against the rank and file – pulling them out after the vote, but refusing to do anything to give shape and structure to the strike. In any case, the effect was total confusion.

It did not take long for anti-union forces to enter into the vacuum created by the local leadership’s inaction. Shamefully, it was mayor Miller, flanked by TTC head Adam Giambrone (former head of the federal NDP) who led the charge, calling the strike “unacceptable and unnecessary.”[10] This set the stage for the provincial NDP to help out the Liberals and the Tories in making the strike illegal. So as quickly as it was over, the strike was done.

There is now talk of declaring the TTC an “essential service” and completely stripping its workers of the right to strike. It is not clear that this will happen without a fight. Sid Ryan, Ontario president of the Canadian Union of Public Employees (CUPE) said in a press release: “We successfully mobilized labour throughout the province when [former Tory premier] Mike Harris tried to suspend the right to strike during amalgamation, and we are prepared to do that again. The right to strike is a fundamental right in any democracy … If you take that right away, workers are little more than indentured servants.”[11]

The whole experience has shed light on the fault lines that exist inside the labour movement in this country. The rank and file showed surprising militancy, rejecting a deal that most saw as a victory – saying that they deserved more. The union leadership showed itself incapable of providing a lead to this new sentiment of militancy. And social democratic politicians showed again, that – when forced to choose between working class militancy and being good corporate managers – it is their management hat that often carries the day.

© 2008 Paul Kellogg

References

[1] “Hansard Issue: L034,” April 27, 2008 http://hansardindex.ontla.oon.ca
[2] Tess Kalinowsky, “TTC contract expected to pass vote,” Toronto Star, April 24, 2008, www.thestar.com
[3] Tess Kalinowski, Vanessa Lu, “Critics slam deal’s GTA clause,” Toronto Star, April 22, 2008, www.thestar.com
[4] Kalinowski, Lu, “Critics slam deal’s GTA clause
[5] Jeff Gray, “Miller opponents say TTC deal is too generous,” The Globe and Mail, April 22, 2008, p. A8.
[6] Katie Rook, “TTC deal averts transit strike,” National Post, April 21, 2008, www.nationalpost.com
[7] 680News staff, “Two TTC workers injured after subway cars collide,” 680 News, April 20, 2008, www.680news.com
[8] Jeff Gray, “Coup at TTC union blamed for strike,” Globe and Mail, April 29, 2008, p. A1
[9] Stuart Marshall Jamieson, Times of Trouble: Labour Unrest and Industrial Conflict in Canada, 1900-66 (Ottawa: Ministry of Supply and Services Canada, 1976), p. 418
[10] CityNews.ca Staff, “Visibly Angered Mayor David Miller Calls Sudden TTC Strke ‘Unacceptable And Irresponsible,’” www.citynews.ca
[11] CUPE, “Expect province-wide labour unrest,” April 28, 2008 http://cupe.ca