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CABLE JEOPARDY

BEYOND BOSTON COLLAGE

August 22, 2016

BY JASON PRAMAS @JASONPRAMAS

Now that broadband internet is a public utility, both cable companies and telephone companies need to pay for public access television — not try to defund it

Last week, the Boston Institute for Nonprofit Journalism (BINJ) was pleased to welcome the Alliance for Community Media (ACM) 2016 Annual Conference to our mini metropolis. Staff, board members, and volunteers from public access television stations from the around the nation were camped at the Westin Boston Waterfront Hotel — sharing skills, networking, and, unfortunately, discussing the best way to survive in a hostile political climate. Because despite being one of America’s greatest remaining democratic communications resources, public access TV is perennially fighting to preserve its funding. In honor of the ACM conference, I wrote the following commentary for the pilot episode of Beyond Boston — a video news digest that BINJ just launched this month in partnership with several area public access TV stations, including: Brookline Interactive Group (BIG), Cambridge Community Television (CCTV), Malden Access TV (MATV), and Somerville Community Access Television (SCAT). Our aim is to feature news produced at local public access TV stations and link it to news we produce at BINJ. Expanding the reach of all our work by effectively merging our audiences. Check out the show on participating stations and on the new Beyond Boston YouTube channel. And read on to get some perspective on the crisis facing a vital community media resource.

Public access television is one of greatest innovations of the grassroots movement for media democracy in the last half century. Also known as community television,  it has helped cities and towns nationwide to have their very own cable TV channels. Allowing residents to keep up with local news and views while enjoying a wide variety of arts and entertainment programming — most of which is produced by their family, friends and neighbors. Filling the gap in local nonprofit media options left by PBS and NPR.

One of the best things about public access television is the way it’s funded. Community media pioneers like noted filmmaker George Stoney helped craft regulations back in the late 1960s that made everything go. They were based on the principle that cable companies should pay an annual franchise fee to cities and towns in exchange for being able to build out their systems on municipal rights-of-way. In other words, companies like Comcast have to pay local governments for stringing their cables along public streets. That money can then be used to equip and sometimes staff public access stations. And those stations get used by the local population to celebrate their culture. Expanding free speech in the process.

That funding mechanism worked pretty well — despite a bunch of political speed bumps there’s no time to discuss today — until the telephone companies joined cable companies in offering broadband internet service about a decade back. Soon people in many places were getting all the content carried over the old cable systems and much much more from both telephone companies like Verizon and cable companies like Comcast. This created a problem for funding public access stations because cable companies offering broadband still had to pay the franchise fee to local governments that is used to finance those stations. But telephone companies that now also provide broadband don’t have to pay that franchise fee.

This has potentially provided the cable companies an opening to get rid of the franchise fee by stating that it’s unfair that they have to pay when the telephone companies don’t. Putting public access funding in extreme jeopardy. However, last year, the Federal Communications Commission ruled that broadband internet service is a public utility. Raising the possibility that both cable companies and telephone companies could be mandated to pay a franchise fee to cities and towns in exchange for stringing their broadband wires on public land.

The FCC is still figuring out how to proceed on that front, and they are under intense pressure from cable companies and telephone companies to free them from all responsibility for funding public access stations. So it is critical that everyone who supports public access media gets together with other interested folks in your community and starts building a new grassroots movement to demand the FCC apply the franchise fee to both cable companies and telephone companies. A win on this issue will keep public access stations funded for decades to come. And that’s a big win for democracy.

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Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

A WORSE FATE THAN GLOBAL WARMING

AH CLOUD

August 9, 2016

BY JASON PRAMAS @JASONPRAMAS

The return of the nuclear arms race requires the revival of the disarmament movement

“It is three minutes to midnight.” Young people reading those words probably won’t know what they mean. Folks who were adults when the Cold War ended with the 1991 collapse of the Soviet Union are more likely to understand. And to be very, very afraid.

The statement refers to the current setting of the Doomsday Clock—announced every year since 1947 by the Bulletin of the Atomic Scientists. Reaching midnight means nuclear war. The clock was first set at seven minutes to midnight when the United States was the only nation possessing nuclear weapons. In 1991, humanity rejoiced as the clock was set to 17 minutes to midnight when the US and USSR signed the Strategic Arms Reduction Treaty resulting in deep cuts in their nuclear weapons arsenals.

Now, a quarter-century later, nuclear weapons are still very much with us, and the Doomsday Clock has been pushed up to three minutes to midnight for two years running. As close to midnight as the clock has been set since 1984—during the nadir of relations between America and the Soviet Union.

The Bulletin of the Atomic Scientists Science and Security Board—consisting of “scientists and other experts with deep knowledge of nuclear technology and climate science, who often provide expert advice to governments and international agencies”—made the decision based on a number of dangerous portents last year that show no signs of abating this year.

Their January 26 announcement stated that in 2015 “ … tensions between the United States and Russia rose to levels reminiscent of the worst periods of the Cold War. Conflict in Ukraine and Syria continued, accompanied by dangerous bluster and brinkmanship, with … the director of a state-run Russian news agency making statements about turning the United States to radioactive ash, and NATO and Russia re-positioning military assets and conducting significant exercises with them. Washington and Moscow continue to adhere to most existing nuclear arms control agreements, but the United States, Russia, and other nuclear weapons countries are engaged in programs to modernize their nuclear arsenals … despite their pledges, codified in the Nuclear Non-Proliferation Treaty, to pursue nuclear disarmament.”

The modernization referred to in the announcement translates to an estimated US investment of nearly  $1 trillion over the next 30 years. Money to be essentially stolen from much-needed social programs. The Obama administration made this commitment even as the President asked nations with nuclear weapons to “have the courage to escape the logic of fear and pursue a world without them” during a historic visit to Hiroshima, Japan—the first of two cities destroyed by atomic bombs dropped by the US in the closing days of WWII. On July 20, eight progressive senators—including Mass Sens. Elizabeth Warren and Ed Markey (plus Bernie Sanders)—called on Obama to “restrain nuclear weapons spending and reduce the risk of nuclear war by scaling back excessive nuclear modernization plans, adopting a policy of no-first-use of nuclear weapons and canceling launch-on-warning plans.”

A fine statement. But a display of not even a fraction of the political muscle that will be necessary to successfully challenge the military-industrial complex to change American nuclear weapons policy for the better. And not a sufficiently strong demand given that the only safe number of nuclear weapons is zero. With the US, Russia, and China all planning to build smaller nuclear warheads that are more likely to be used than traditional larger warheads, and developing hypersonic glide vehicles that are harder to intercept than conventional ballistic missiles, the road from a single “surgical” nuclear strike to an all-out nuclear war will soon become much shorter than it has ever been before.

That’s why it’s imperative for everyone to follow the lead of antiwar organizations like Mass Peace Action—who have just organized a series of local protests for Hiroshima and Nagasaki Week—and international disarmament campaigns like Global Zero in demanding the abolition of all nuclear weapons. Failure to do so will at best consign another generation to the lifetime of fear that earlier generations suffered under, and at worst doom the entire biosphere to death by fire. So, get informed and get involved. We’ve got our work cut out for us. There are currently more than 15,000 nuclear weapons on the planet Earth.

For a better understanding of the terrible destructive power of nuclear weapons, check out the classic 1982 BBC documentary “Q.E.D.: A Guide to Armageddon” on YouTube.

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Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

IMMIGRANT ADVOCACY GROUP OF CAMBRIDGE PROVIDES MODEL FOR MUNICIPAL HUMAN RIGHTS ACTIVISM

Joint Committee Meeting of the Cambridge City Council to Discuss Immigrant Representation and Resources, May 12, 2016. Photo by Jason Pramas. Copyright 2016 Jason Pramas.

Joint Committee Meeting of the Cambridge City Council to Discuss Immigrant Representation and Resources, May 12, 2016. Photo by Jason Pramas. Copyright 2016 Jason Pramas.

May 23, 2016

BY JASON PRAMAS @JASONPRAMAS

We live in strange times. On the one hand, the United States is a more diverse society than at any other point in its history. On the other, we’re witnessing a presidential campaign where Donald Trump has captured the Republican nomination in part by whipping up hysteria against immigrants. It’s an old game in American politics—with roots stretching back to the Know Nothing movement (originally, and ironically, called the Native American Party) in the mid-1850s and even further to the founding of the Republic. Blame the victim and ignore the actual oppressors. But it’s working quite well with white voters who have every reason to be angry in the ongoing economic downturn. And are casting about for someone to blame.

That’s why it’s refreshing to see an initiative taking shape in Cambridge to expand immigrant rights at the local level. Last week, City Manager Richard Rossi announced that a city Commission on Immigrant Rights and Citizenship that was created at the high water mark of immigrant rights activism nationwide in 2006 is at last searching for candidates to fill its 11 seats. That is an interesting development on its own merits. Especially given the apparent commonplace of dormant municipal committees. But the story of how the commission’s reanimation came to pass is even more interesting.

There are a significant number of immigrants in Cambridge. No surprise, given its world-famous universities, the large population of foreign born scholars they attract, the enterprises that set up shop nearby to avail themselves of those scholars, and the many immigrant service workers attracted to jobs connected to the university-driven economy (although most of them cannot afford to live where they work given a housing market that has become wildly expensive since rent control was defeated by the real estate industry in 1994). Not that a sizeable immigrant community is a new development, as previous generations of immigrants found work in the city’s once-strong industrial sector and put down deep roots that persist today in neighborhoods like East Cambridge and North Cambridge. Still, the percentage of immigrants has been on the rise again in Cambridge for some time.

Looking at the 2010-2014 estimate data from the US Census Bureau American Community Survey for Cambridge, out of a population of 106,844, an impressive 30,075 residents or 28.15 percent are foreign born. Placing the city in the top dozen Massachusetts municipalities for immigrant population, according to a report by The Immigrant Learning Center.  Of that total, the number of voting age non-citizen residents is 17,333 or 18.41 percent. Meaning that close to 20 percent of Cambridge residents have no representation in city politics. A statistic that includes an unknown number of undocumented immigrants—who have all been officially welcomed to Cambridge since it renewed its status as a sanctuary city for refugees and migrants without papers in 2006.

Since the early 1990s, there have been a number of attempts by immigrant advocates and the Cambridge City Council to give documented immigrants a voice in local elections by instituting non-citizen voting in local elections.  Each time, the effort ran into the same problem: it was not possible to enact such a city ordinance without the state legislature passing a home rule petition first. And the legislature has long been conservative on such matters—partially due to the anti-immigrant constituencies of many suburban and rural politicians. As such, no plan for including undocumented immigrants in a Cambridge municipal voting ordinance has ever been floated. Having precisely zero chance of passing muster in the legislature under current conditions.

Despite the difficult political hurdles to surmount at the state level, Councillor Nadeem Mazen has expressed interest in taking a fresh shot at making it possible for documented immigrants that have not yet become naturalized citizens to vote in city council and school committee races. His approach, however, has been somewhat different than that of his predecessors.

Mazen and his aide Daniel Schwartz have organized advocacy groups on several issues—including non-citizen voting. Emmanuel “Manny” Lusardi, a retired retail executive who strongly identifies with his family’s immigrant roots, got involved in the non-citizen voting advocacy group early on, and soon recruited Sylvie de Marrais—a recent Boston University graduate and restaurant server with a passion for expanding immigrant rights—to work with him. Noting what he calls her “exceptional organizational and leadership abilities,” Lusardi encouraged de Marrais to become the group’s leader.

Understanding that it remains difficult to get a home rule petition passed on even documented non-citizen voting, the advocacy group began looking for some stopgap measure that would get more immigrant representation in Cambridge city government sooner rather than later. A few weeks back, they hit upon the idea of organizing a push for a non-voting immigrant representative on the council. While looking into its feasibility, however, they started studying the positive experience of Boston and other cities that had established immigrant affairs offices. Mazen and other city officials liked that approach, and the non-citizen voting advocacy group then started organizing to create a Cambridge immigrant affairs office.

Not long after, they discovered the never-activated Commission on Immigrant Rights and Citizenship, alerted City Manager Rossi, and were gratified last week when he announced a search for the 11 members needed to get it in motion. Later that week, Mazen convened a joint meeting of three city council committees to discuss immigrant representation and resources in Cambridge. It was attended by councillors Dennis Carlone, Jan Devereux, and Timothy Toomey, Vice Mayor Marc McGovern, Mayor Denise Simmons, a number of city officials, and special guest An Le of the Mayor’s Office of Immigrant Advancement in Boston.The arc of the resulting discussion bent towards empowering the new commission to work on a variety of tasks—including better coordination of city services for immigrants, and organizing an annual Immigrants Day at Cambridge City Hall—and ordering a study of an aspect of the non-citizen voting plan that could slow immigrants’ naturalization processes if an agreement isn’t worked out with US Citizenship and Immigration Services. But the various motions agreed upon at the meeting towards those goals will need to be passed by the full council in the coming weeks before they can be operationalized.

The non-citizen voting advocacy group—now called the Immigrant Advocacy Group of Cambridge—will certainly have a tough time getting all of its expanding agenda of reforms enacted in a period of anti-immigrant rhetoric and tight budgets at all levels of government. Even in the so-called “People’s Republic.” But its activists have done a fine job out of the gate. And its working relationship with a sitting politician seems to be an innovation worthy of notice. With the Commission on Immigrant Rights and Citizenship slated to start meeting in the fall, and forward motion on a non-citizen voting ordinance and an immigrant affairs office, the advocacy group offers a political model that both democratizes and humanizes the debate over how our cities and towns should treat immigrants—whether documented or undocumented. A model that other municipalities should think seriously about emulating.

Cambridge residents who would like to get active with the group should check out its Facebook page.

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Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director. Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

 
 

ECONOMIC VIOLENCE: VERIZON CUTS OFF HEALTH CARE BENEFITS TO STRIKERS AND THEIR FAMILIES

VERIZON PIC

May 6, 2016

BY JASON PRAMAS @JASONPRAMAS

As the Verizon strike enters its fourth week, the 39,000 union members on picket lines up and down the East Coast—and now taking their campaign nationwide—are continuing to hold fast for a better contract than the giant corporation has thus far been willing to offer. But a strike is no walk in the park. Not in the America of 2016. On May 1, International Workers’ Day,  Verizon cut off health care benefits to the strikers and their familiesan estimated 110,000 people overall. And while the two unions organizing the strike—Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW)—have socked away millions to pay strike benefits, helped members file for expensive stopgap COBRA health insurance, and even offered to pay medical expenses for members outright in the case of CWA, many people with chronic conditions are being put at serious risk of having their medical care disrupted. With potentially dire consequences.

Yet it’s difficult to find mentions of this vicious move by Verizon in the major American press. Coverage of the issue has been spotty at best. Despite it being a great example of why working families need proper national healthcare. Almost like it was not news at all. Even in centers of strike activity like Boston.

That’s a problem. When there are big layoffs by large companies owned by extraordinarily wealthy people, when wages are slashed, when huge numbers of jobs are outsourced to countries with even worse labor standards than our diminishing protections here in the US, much of the news media treats these tremendous crises for working people as mere footnotes to the much more important coverage of corporate bottom lines.

If any criticisms are raised—usually in passing and rhetorically—they are generally dismissed with easy answers. As with the 12,000 workers currently being laid off by microchip titan Intel. A recent and very typical article in The Oregonian, the Pacific Northwest’s newspaper of record, discusses the 2150 expected layoffs in their state matter-of-factly—explaining that Intel is “Oregon’s largest private employer and pays some of the state’s best wages.” So the loss of so many good paying jobs is really going to hurt the regional economy. But the piece then goes on to say that “Intel is a hugely profitable company—and a growing one.” It has other exciting divisions doing lots of whiz-bang things. Sure, those divisions are not necessarily in Oregon or even in the US—Intel being yet another multinational with robust manufacturing operations in low-wage countries like India—and it’s not at all clear that workers in those other divisions will make money as good as the laid-off American chip workers made. Nonetheless, the basic message of such articles is that “the market will take care of it.” Jobs will be lost here, but gained back elsewhere. Then all will be well and right with the world again.

But “the market” doesn’t take care of working families. It takes care of owners and top executives and big investors. Who use their massive and growing profits in this New Gilded Age to rig the political and economic systems to focus on their interests. Not everyone else’s.

 

That’s why Verizon’s union workers are on strike. It’s gotten to the point where they have no choice. In large part because the company has been doing its level best to wipe out its unions since its formation in 2000. To remove the last obstacle to allowing its management the freedom to do what so many non-unionized American companies are able to do to their workforces with impunity: ship many once-decent jobs abroad, and turn the rest into part-time, contract and temp jobs. Hiring people when they need them, and getting rid of them with impunity when they don’t. With no promise or expectation of good wages, benefits or job security.

All of these corporate moves are best described as economic violence. Because they destroy lives. And for all the criticism that labor gets for being unreasonable on the still-too-rare occasions that it mounts more than symbolic protests, unions like CWA and IBEW are remarkably restrained in the face of that ongoing violence. Hands tied by decades of anti-labor legislation, they limit their responses to those allowed by law: withholding their labor for as long as possible, picketing Verizon properties, “mobile picketing” (following scabs to worksites and talking to consumers about the strike), encouraging the public to boycott Verizon Wireless, and gamely waging PR battles in an often dismissive pro-corporate press. Trying to win enough hearts and minds to convince Verizon management that settling with the union is cheaper than letting the strike drag on.

Which might work this time as it has in several past strikes. But it’s getting harder for unions like CWA and IBEW as the years go by and their membership continues to shrink at the hands of mercenary profit-hungry companies like Verizon. They’re in a very difficult situation. But there’s one thing that readers can easily do to help expedite Verizon union workers’ herculean task of defending what they have while fighting to expand the labor movement back to some semblance of its former strength: When you hear about economic violence by bosses against workers, spread the word. Tell your friends, family and workmates. Don’t let atrocities like cutting health care benefits on striking workers remain a footnote in the national discourse. Make some noise. Then do the same at your own workplace when things get tough. Learn from Verizon’s unions. Fight back however you can. And in a few years, labor conditions might start finally improving for American workers again.

Readers who would like to support the Verizon strikers should visit standuptoverizon.com

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

STRIKE MATTERS: VERIZON’S UNION EMPLOYEES FIGHT FOR THE FUTURE OF THE AMERICAN WORKING CLASS

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Photo by Jason Pramas

April 22, 2016

BY JASON PRAMAS @JASONPRAMAS

BOSTON –  From the St. James Avenue side of Copley Square on Thursday afternoon, passers-by could be forgiven for wondering what the group of 300 people in red T-shirts opposite them was cheering about. If they were told that they were seeing the front lines of a desperate battle for the future of the American working class, they wouldn’t believe it. But the Communications Workers of America and International Brotherhood of Electrical Workers members and their families did not turn out for a nice day in the sun. They were there to fight.

The general public may be aware that 39,000 unionized Verizon workers (out of a total of 178,000) have been out on strike for a few days—including many here in Boston. But the vast majority of onlookers don’t understand the stakes.

Verizon (officially Verizon Communications, Inc.) is no ordinary company. Rather it’s a vast telecommunications conglomerate that has benefited hugely from government tax breaks, subsidies, and a favorable regulatory climate since it was created in 2000 out of the merger of Bell Atlantic (which had only recently merged with fellow “Baby Bell” NYNEX) and GTE.

It has two major businesses: its traditional wireline service, based on the old copper wire phone system and the newer fiber optic FiOS service (weirdly coming soon to Boston six years after Verizon said it would stopping building it out in any new cities). That’s where virtually all of the company’s 39,000 unionized workers are employed. Then it has Verizon Wireless—which was originally a joint venture of Bell Atlantic and the British telecom Vodafone, bought outright by Verizon in 2014. Only a handful of its wireless employees are currently unionized.

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Photo by Jason Pramas

Basically, Verizon leadership wants to focus on its extremely profitable wireless division and cut back its wireline service. The numbers show why. According to Fortunemagazine, “Wireless now brings in the vast majority of the company’s sales and profits. Last year, for example, the wireless unit brought in revenue of $91.7 billion, up 5% from a year earlier, and an operating profit of nearly $30 billion. The older wireline unit, which also includes wired video and Internet service, brought in revenue of only $37.7 billion, a 2% decline from the year before, and an operating profit of just $2.2 billion.”

Unfortunately, Verizon—like so many companies these days (our “new Boston neighbors” at General Electric spring to mind)—is a world class tax dodger and loves soaking the government for free handouts. According to the nonprofit Citizens for Tax Justice, between 2008 and 2013, the corporation made over $42 billion in profits, received a $732 million tax break (an effective federal tax rate of -2 percent), and paid almost $1.3 billion in state taxes (an effective state tax rate of 3 percent).  In the same period, it made almost $4 billion in foreign profits and paid $274 million in taxes (an effective foreign tax rate of 7 percent). And this year? In the first quarter of 2016, Verizon has made $4.31 billion in profits.

According to the nonprofit Good Jobs First, Verizon has also received about $149 million in state and federal subsidies. Free money. And about $1.5 billion in federal loans, loan guarantees, and bailout assistance. Almost free money.

The nonprofit Americans for Tax Fairness adds: “Verizon also reported $1.9 billion in accumulated offshore profits in 2012, on which it paid no U.S. income taxes … Verizon raked in $956 million in federal contracts in 2011, according to the federal government. It also recently landed a new nine-year government-wide contract worth up to $5 billion to provide communications services and equipment to federal agencies.”

So Verizon is filthy rich with help from its friends in the government. Just like its predecessor, AT&T, in the days of “natural monopoly” before its 1984 breakup into regional Baby Bells. Unlike the old AT&T, though, Verizon is not interested in putting up with a unionized workforce in exchange for what are approaching monopoly profits in markets it and the handful of other remaining telecoms dominate. It has eliminated thousands of unionized jobs since 2000. How many? There were 85,000 unionized Verizon workers on strike in that year. There are 39,000 now. Do the math.

Photo by Jason Pramas

Photo by Jason Pramas

This brings us to the central issue of the strike. Verizon wants to convert lots of decent jobs—unionized and ununionized—to contract jobs. Many of them abroad. Union leaders recently told CNN Money: “Verizon has outsourced 5,000 jobs to workers in Mexico, the Philippines, and the Dominican Republic.” The company is also “hiring more low-wage, non-union contractors.” Increasing wages, minimizing out-of-pocket health costs, preserving job security, keeping traditional pensions, and stopping forced out-of-state work transfers are all very important issues, too. And certainly worthy of more discussion in these pages. But, as ever, contingent work is a dagger pointed at the throat of organized labor. According to Computerworld, the Trade Adjustment Assistance forms that workers losing their jobs due to outsourcing file with the US Department of Labor show that offshoring jobs is indeed proceeding apace at Verizon—despite management denials.

Once jobs have left the US, it’s highly unlikely they’re coming back. And if it’s hard for unions to organize units like Verizon Wireless now, it’s nearly impossible to organize workers transnationally. Similarly, once “regular” full-time jobs with benefits have been replaced with lousy part-time, contract and other contingent jobs, it’s very difficult to convert them back. And it’s extremely difficult to organize contingent workers into unions or other types of labor organizations.

That is why this strike matters to all American workers. If well organized and militant union members at Verizon—who have gone on strike against the company and its predecessors in 1983, 1986, 1989, 1998, 2000, 2004, 2011 and now—can’t stop the outsourcing and destruction of decent jobs, unorganized workers spread across the planet in industries like telecommunications will find the task insurmountable.

Yet that’s where we’re heading. The end of traditional labor unions. The end of decent jobs. The war of all against all. This is where latter day capitalism is taking us. Unless we help good unions like CWA and IBEW win this strike, and start expanding the labor movement again. This isn’t about “the dignity of labor,”as the Boston Globe would have it. It’s about class war. Working people didn’t start it. But we sure as hell had better finish it. Before it finishes us.

Readers who would like to support the Verizon strikers should visit standuptoverizon.com

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Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

 
 

GE BOSTON DEAL: THE MISSING MANUAL, PART 4

Untitled drawing

February 29, 2016

BY JASON PRAMAS @JASONPRAMAS

In May 2012, three former GE executives were imprisoned after being convicted on multiple charges of conspiracy to commit wire fraud and defraud the United States. Dominick Carollo, Steven Goldberg and Peter Grimm had all worked for GE Capital—the financial division that operated as a semi-legal “shadow bank,” and that accounted for about half of its parent corporation’s profits until the global financial collapse it helped precipitate began in 2007. Between 1999 and 2006, the trio conspired to skim millions from municipal bond investment contracts. With the full approval of their bosses.

According to Rolling Stone’s Matt Taibbi, the scam worked as follows for the company that Marty Walsh, Charlie Baker and cheerleaders like the Boston Globe have welcomed to Boston with open arms: Municipal governments commonly partner with big banks to sell bonds to pay for significant capital costs—like building schools. The banks invite investors to buy the municipal bonds and deposit the resulting funds in tax-exempt accounts from which all necessary project expenses can be paid. However, since all the bond money does not get spent at once, municipal governments typically hire brokers to find major financial institutions to invest it for them through a public auction process. In general, it is legally required that brokers get bids from at least three financial institutions—and the one that offers the highest annual rate of return wins the contract to invest the spare cash from a given bond fund.

But for GE Capital—and a host of other major financial institutions—the process was rigged from top to bottom. In the case of GE’s Carollo et al, the defendants conspired with executives at the brokerage CDR and financial institutions like Bank of America, JPMorgan Chase, Wells Fargo, and Morgan Stanley to divvy up investment contracts for municipal bond funds. CDR would drum up business with local politicians around the country—often bribing them with various kinds of campaign donations and gifts. The pols would then reward CDR with contracts to invest unspent funds from municipal bond issues, while CDR would work with the GE Capital—in concert with the other major financial institutions—to illegally decide which corporation would win which auction for such investment contracts in advance. The “winner” of each auction would collude with the other bidding financial services companies on the bid rate to ensure that the “winning” bid was as low as possible. The agreed upon rate was usually lower than a fair market rate by just a few tenths of a percent. But that was enough to make a killing.

For example, if a fair bid in an auction might have been that GE Capital would invest a municipal government’s unused bond funds at a 5.04 percent annual rate of return, CDR would coach the company to only offer 5 percent. The other bidders would purposely offer lower rates, losing in exchange for winning future rigged auctions. GE would then pocket the .04 percent windfall. A municipal bond fund that might have $200,000,000 to invest in its first year would return around $80,000 extra to GE in that fashion. Which doesn’t sound like much. But such bond funds would be invested by GE Capital for years until they were spent down fulfilling their original purpose to build schools and the like. And GE Capital and CDR colluded on huge numbers of such illegal arrangements, pouring vast sums into GE’s coffers. While depriving municipal governments of that same money. GE Capital then kicked back some of its take to CDR as “fees.”

Given the complexity and ubiquity of this practice, no one knows exactly how much was stolen. But since fines paid by large corporations to governments at various levels for such crimes tend to be vanishingly small, it’s possible to get an idea of the scale of the crime. According to the Securities and Exchange Commission (SEC), GE paid a $70 million coordinated settlement in 2011 to the SEC, Department of Justice, Internal Revenue Service, and a coalition of 25 state attorneys general. The SEC alleged that “from August 1999 to October 2004, [GE Capital] illegally generated millions of dollars by fraudulently manipulating at least 328 municipal bond reinvestment transactions in 44 states and Puerto Rico.”

GE committed yet another massive crime against the public interest. And got away with it. In November 2013, Carollo, Goldberg and Grimm were freed on appeal. The reason? The government had taken too long—ten years—to build its case against the former GE executives.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL, PART 3

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Image by Kent Buckley

February 15, 2016

BY JASON PRAMAS @JASONPRAMAS

Returning to our ongoing look at General Electric’s recent and inconvenient history of violating the public trust, in part 2 of this “missing manual” the corporation got out of the subprime housing loan market just in time to avoid destruction in late 2007. But it could not escape from the consequences of an economy based on selling toxic home loans to poor people who were defaulting in vast numbers by 2008.

That year, everything began to unravel for GE—as it did for all other large interlocked financial services companies that derived a substantial percentage of their profits from predatory loans in the same period.

According to Fortune magazine, after reporting an unprecedented first quarter loss of $700 million, GE’s stock price began spiraling downwards in April 2008. Failing to sell off its light bulb, appliance, and private-label credit card businesses over the summer due to the worsening economic climate stopped the corporation from making typical course corrections to get back on its feet.

In September 2008, GE’s stock price crashed after Lehman Brothers—a financial services titan—collapsed on the heels of Bear Stearns’ disintegration that March. The company became starved for operating funds. But the private credit markets were frozen in terror.

On September 30, GE made two desperate moves. At 7:30 am it sold $3 billion in preferred stock to billionaire investor Warren Buffet’s Berkshire Hathaway Inc. on very bad terms. At 1:44 pm, GE announced its deal with Buffet and said it would sell $12 billion of common stock the next day at prices far lower than it had paid to buy back $15 billion of its own stock over the preceding year. Meaning it was selling the stock at a huge loss in exchange for ready cash.

The next day, the coup de grace: Word spread throughout the markets that GE would be unable to cover billions in regular payouts to holders of its commercial paper. Basically a kind of I.O.U., commercial paper is a kind of short-term promissory note that big corporations like GE are able to issue on an ongoing basis to raise money to cover things like daily expenses. There is no collateral behind commercial paper. Only the good name—and, ideally, top-flight credit rating—of the company issuing it. In normal times, it’s a far cheaper way to borrow money than a line of credit with a commercial bank. But 2008 was not a normal time. At one point that year, GE had over $100 billion dollars out in commercial paper as it tried to stay afloat.

Executives clearly knew their company was doomed unless the government bailed it out. Already on September 30, a GE spokesperson “e-mailed the media with a message that Congress must act ‘urgently’ on the pending financial bailout package.” But the company didn’t wait for congressional action. Since it was not a traditional bank, GE did not qualify for a significant direct cash infusion under the infamousTroubled Asset Relief Program (TARP). So it spent the next few weeks brokering a backroom deal with the Federal Deposit Insurance Corporation (FDIC).

According to the New York Times, on November 12, 2008 the FDIC announced that it would back GE’s commercial paper for up to $139 billion under the Temporary Liquidity Guarantee Program (TLGP). A program that the federal government changed overnight to allow GE to qualify—just as TARP was changed to benefit Goldman Sachs et al—according to Pro Publica and the Washington Post. GE had “joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates.” The company was able to sell $74 billion in government-backed commercial paper and longer-term notes by Spring 2009.

And how did GE survive the period between its early October 2008 financial collapse—when it was still short on funds despite the precipitous sale of $15 billion of its stock—and its November 2008 bailout by the TLGP program? In 2010, Pro Publica reported that Federal Reserve Board documents released that year showed that GE had effectively borrowed $16 billion more dollars at that time by selling commercial paper through the Fed’s Commercial Paper Funding Facility (CPFF).

So General Electric was saved by two government programs that provided it with upwards of $90 billion dollars of cheap credit. According to the corporation’s own September 30, 2009 10-Q filing to the Securities and Exchange Commission, GE paid only $2.3 billion in fees for its participation in the TLGP and CPFF programs. Meaning that GE got unbelievably good loan terms—the equivalent of a flat 2.56 percent interest rate. Less than the rates that Americans pay on most any other loans. Including the housing loans that wrecked the economy in 2007-2008. And the student loans that could very well lead to another financial catastrophe before this decade is out.

That is how GE got to survive the recession it helped create. By gaining access to a massive pool of public funds totally unavailable to its tens of thousands of subprime housing loan victims. The same company under the same leadership that Massachusetts officials are paying $270 million to bring to Boston. Excelsior!

Coming soon in part 4: GE’s municipal bond scandal and other amusements.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

MANCHESTER DIVIDED: SEIU ‘FIGHTS FOR $15’ IN NH WHILE ITS CANDIDATE FIGHTS FOR $12

Republican Debate Night_020616_DSC_3124_Images©2016 Derek Kouyoumjian

Photo by Derek Kouyoumjian

February 8, 2016

BY JASON PRAMAS @JASONPRAMAS

The “protest pit” outside the Republican Presidential Debate at Saint Anselm College in Goffstown, New Hampshire on Saturday evening was a fenced-in area in a field about a quarter mile down the road from the main entrance to the campus.

Bumper to bumper traffic ran in front of the pit. Odd given that NH State Police were letting few cars onto the campus. Most were told to turn around. No one that Republican leadership didn’t want in was getting anywhere near the Carr Center where the debate was taking place.

Powerful lights shone down on the scene from one side—lending it an eerie cast. Behind the fence facing the road were a couple hundred supporters for a few of the Republican candidates. But that was just the first layer. Behind them were about 500 activists with the Fight for 15 campaign—organized andbankrolled for $30 million as of last August by the Service Employees International Union (SEIU). Whose leaders had bused in SEIU staff and members; student activists; and allies from other unions and immigrant organizations from around the region. At least 13 busloads from southern New England overall, according to the campaign’s registration form for the event.

A respectable showing, if not the “massive crowd of underpaid workers” that SEIU’s press release had promised.

So there they were. Supporters of a $15 an hour federal minimum wage. A fairly diverse group. Standing in a snowy field on a back road, enthusiastically waving banners—some quite creative, cylindrical and glowing from within like Japanese lanterns—and periodically trading chants with the mostly white right-wing activists in front of them.

Republican Debate Night_020616_DSC_3138_Images©2016 Derek Kouyoumjian

Photo by Derek Kouyoumjian

Their presence was part of SEIU’s current tactic to raise the profile of the Fight for $15 campaign byprotesting presidential debates and other high profile events like the Super Bowl in recent months. Which makes sense as far as it goes.

What doesn’t make sense is why SEIU pulled out 500 people onto a chilly windswept hill in suburban New Hampshire to protest for a laudable reform that their chosen presidential candidate, Hillary Clinton, absolutely does not support.

Clinton, like Barack Obama, has come out in favor of a $12 an hour minimum wage. Bernie Sanders, the only candidate whose politics are in line with labor unions like SEIU, is also the only candidate who publicly supports the Fight for $15 campaign’s main goal—a $15 an hour minimum wage. Barely a living wage at all in many parts of the country. Hardly the huge ask that opponents make it out to be. Especially given the wage freeze imposed on most Americans by corporations and our political duopoly since the 1970s.

Photo by Jason Pramas

Photo by Jason Pramas

Yet the leaders of the 1.9  million member SEIU backed Clinton last November. Joining the heads of a number of other large American unions in supporting the candidate with a proven record of pushing policies completely antithetical to union demands. Like the insurance industry scam known asObamacare instead of “Medicare for all.” And they have alreadypumped millions to Clinton Super PACs over the heads of their largely voiceless members.

In response, a coalition of progressive unions and activist union members has formed Labor for Bernie to win as many union endorsements for Sanders as possible. Even as Sanders hasamassed a $75 million warchestfrom mostly small donations—without the truckloads of cash that labor unions have traditionally lavished on Democratic candidates over the past few decades.

With Sanders doing very well in the NH polls as of this writing, and clearly capable of staying in the race all the way to this summer’s Democratic National Convention, it appears that SEIU leadership made a serious miscalculation this election. And the fallout from that miscalculation is already playing out in the very state where they organized the standout for their Fight for $15 campaign over the weekend.

Two New Hampshire SEIU locals—560 (Dartmouth College workers) and 1984 (NH State Employees’ Association)—broke ranks with SEIU leadership last fall and backed Sanders for President. Both locals were present in Goffstown on Saturday.

Whether Bernie Sanders wins the nomination and election or not, current SEIU leadership—and the leadership of every union marching in lockstep with the worst elements of the Democratic Party—is going to face increasing pressure from its rank-and-file members to stop supporting pro-corporate anti-labor candidates like Clinton. Likely culminating in major grassroots insurgent campaigns aimed at removing union leaders perceived as sellouts—as has happened on many occasions in labor history. It remains to be seen whether such internal reforms will happen before the major unions collapse under the death of a thousand cuts being inflicted on them by their traditional political enemies and their erstwhile allies alike.

SEIU and less democratic unions like it could forestall the looming civil war in their own ranks—and increase the American labor movement’s chance of survival—by learning from the more democratic practices of the 700,000 member Communication Workers of America (CWA)—whose leadership stepped aside last year and let their members directly decide: a) If they should endorse any candidates for POTUS, and b) Which candidate they should endorse.

CWA members, some 30 percent of whom are Republicans, voted to back Sanders in December.

This article is syndicated by the Boston Institute for Nonprofit Journalism — and stands in for this week’s Apparent Horizon column. Jason Pramas is BINJ’s network director. He has been a member of three SEIU locals (925, 285 and 888) over the past 17 years, and helped lead a successful union drive with SEIU Local 509 last year at the cost of his job.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL, PART 2

18.04 AH IMAGE GE

Image by Kent Buckley

February 1, 2016

BY JASON PRAMAS @JASONPRAMAS

Two weeks after the first installment of this Missing Manual, we now know that GE will receive up to another $100 million of Boston’s largesse in the form of reopening the Old Northern Avenue Bridge and $25 million in state money for work on roads, pedestrian walkways, and bike lanes near the corporation’s new Seaport District HQ. Pushing the total giveaway to over $270 million in public funds.

Gov. Charlie Baker, Mayor Marty Walsh, and boosters like the Boston Globe claim that the investment will be worth it. Yet GE’s record of slashing jobs, despoiling the environment, and evading taxes says otherwise. And their role in the subprime mortgage crisis further repudiates such official optimism.

Back in 1999, the Glass-Steagall Act—a critical piece of Depression-era social legislation that put up a firewall between commercial banks and investment houses—was torpedoed by Congress. One of the excuses for the deregulatory push was the claim that so-called “shadow banks”—institutions that perform banking functions outside of the traditional system of federally-regulated banks—were doing great business with less regulation. The now-diminished GE Capital was then one of the largest shadow banks, since as the finance arm of an industrial concern it was not classified as a bank. Thanks to that fact and the happy coincidence that GE Capital owned a small Utah savings and loan operation, it was allowed to “engage in banking under the lighter hand of the Office of Thrift Supervision.” Rather than the more strict banking regulations overseen by the Federal Reserve—which do not allow banks to engage in commerce—according to a 2009 report by ProPublica and the Washington Post.

Ironically, the deregulation of the banking system proved to be a key factor in the 2007 subprime mortgage crisis and the resulting 2008 financial crisis. And the much-praised practices of shadow banks like GE Capital were precisely the ones that nearly wiped out the US economy. GE had long used GE Capital, equivalent to the seventh largest banking company in the US until 2008, to fatten its bottom line. According to Maureen Farrell of the Wall Street Journal, “GE got into lending decades ago and grew that arm of its business steadily in the years before the crisis, as it was able to leverage its triple-A credit rating for access to cheap capital. Before the credit crisis, GE relied upon lending for around 50 percent of its earnings.”

So in 2004 GE Capital had plenty of ready cash to buy California-based WMC Mortgage Corp.—a company that specialized in foisting subprime housing loans on poor families that couldn’t really afford them, using highly unethical sales tactics—for about half a billion dollars. According to a 2012 report by Michael Hudson of The Center for Public Integrity, even before the purchase, WMC “… was producing $8 billion a year in subprime home loans and boasting profits of $140 million a year.”

Then in 2006, US housing prices declined sharply. Subprime borrowers with no reserve cash were unable to refinance their home loans as their adjustable-rate mortgage payments increased mercilessly. Subprime lenders then began to automatically slap late-paying borrowers with even higher penalty rates. More and more people defaulted on their loans. Lenders like WMC suddenly went from being cash-rich to being cash-poor.

GE Capital was hemorrhaging money by 2007. During the first half of that year WMC lost over $500 million as the mortgage industry “spun into chaos.” By October 2007, the Center for Public Integrity report concludes, “WMC Mortgage was effectively out of business, dead after having pumped out roughly $110 billion in subprime and ‘Alt-A’ loans under GE’s watch.”  

Meanwhile, GE Capital, like many other financial institutions of the period, had rolled packages of subprime mortgage debt into Residential Mortgage-Backed Securities (RMBSs)—which it then sold to investors. Including institutional investors like government-sponsored housing lender Freddie Mac. When the WMC subprime mortgages collapsed in 2007, the GE Capital RMBSs based on them followed suit. And the whole house of cards built on bad mortgages to poor people fell down. GE Capital immediately put hundreds of millions of dollars aside to pay off its investors. But not its mortgage holders. WMC-issued mortgages failed at rates of up to 75 percent in some areas. Ruining the lives of tens of thousands of working families in the process.

GE had gotten out of the subprime racket just in time to stay solvent into 2008. The most significant federal blowback from the episode came in 2011 when the Federal Housing Finance Agency that regulates Freddie Mac sued General Electric for selling them $549 million in subprime-based RMBSs. According to American Banker, they “charged GE’s former mortgage lending unit with presenting a false picture of the riskiness of residential mortgages behind securities that were sold to Freddie Mac.”

GE settled the suit in 2013 for just $6.25 million.

Coming soon in part 3: the 2008 financial crisis and federal bailout of General Electric.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: AN ACTIVIST HANDBOOK

NEW WEB HEAD TEMPLATE (1)

Images (from 2012 protest against GE in Boston) by Chris Faraone

January 28, 2016

BY JASON PRAMAS @JASONPRAMAS

Say friend … is a multinational corporation with a terrible reputation, a limitless PR budget, and a penchant for backroom deals with fawning politicians bleeding your state for hundreds of millions of public dollars that would be better spent on virtually anything else? A multinational named General Electric?

Are you afraid of the consequences of such malfeasance for your community and for democracy itself? Want to do something about it? Then look no further. What you need is a corporate campaign. Sourcewatch—a fine resource for journalists and researchers alike—has a concise definition of the term:

Corporate campaigns were developed in the mid twentieth century by activists and organizers such as Saul Alinsky, and honed in recent decades by labor unions and non-governmental organizations in the environmental, social justice and consumer movements. The goal of a corporate campaign is to publicize undesirable behavior or practices by a corporation through various strategies and tactics that can force change upon the company and thus allow the campaigning organization to claim a victory for its cause. At any given time organizations and even individual citizen activists are waging scores of corporate campaigns, some of which last for years, with varying results.

In my own experience, a corporate campaign is a limited strategy. It does not automatically lead to a broader democracy movement in a society, but can be a stepping stone along that path. It is not always a progressive strategy, although progressives probably use it more than any other political current. NIMBY activists in rich towns use it to keep apartment buildings and wind farms out. Right-wing Christians use it to attack companies that publicly support things they oppose—like reproductive rights, gay marriage, and the wheel.

That said, a corporate campaign is still a useful arrow in the proverbial quiver of justice. And here’s how you can run one.

  • First, decide that a campaign is needed. Gather some like-minded friends into a loose organization, and agree to work together towards a common goal.
  • Second, see if there’s already an organization running such a campaign. If there is, check them out. Do they seem to be a real grassroots expression of the needs of some definable community? If they do, then consider joining them or working with them in coalition. Or do they look like what seasoned activists call an “astroturf” group—a fake organization typically set up by some powerful interest or other to help confuse its antagonists and stop them gaining public support. If so, give them a wide berth and spread the word that others should do the same.
  • Third, start researching your target corporation. Talk to librarians, journalists, academics, and experienced campaigners for advice. Find out everything you can about the company —with a focus on their recent activities. Look for proof of bad behavior in their business and political dealings.
  • Fourth, research possible remedies. What have other communities done to reign in the power of your target corporation and corporations like it? Court action, regulation, and legislation are all good avenues to pursue.
  • Fifth, publish your evidence. Papers, articles, broadsides, podcasts, and videos are all good ways to get the word out.
  • Sixth, if you haven’t already, start fundraising. You’ll need money to win a corporate campaign. You might get some small grants from open-minded foundations early on, but your lifeblood will (and should) be donations you raise from your personal network, your new organization’s network, online via crowdfunding using platforms like GoFundMe, and through fundraisers of various types. You’ll never have anything like the money of your opponents. But you’ll have the strength of your convictions, and—if you do your job well—the support of your community. And can therefore overcome any obstacle if you persevere.
  • Seventh, organize your allies. Pull together community organizations, religious groups, non-profits, labor unions, friendly politicians—anyone who is going to aid your campaign and is willing to work with you.
  • Eighth, build a solid social media presence. Make use of widely available free communications technology to make friends and turn them into supporters. Create a page on Facebook, and a central Twitter account—both with your campaign’s name on them. Regularly feed your presence with updates about campaign activities and links to relevant material. Converse directly with your followers as interaction is key on social media.  Keep in mind that you may never have to create a full website for your campaign if you make good use of social media, but it’s usually a good idea to at least launch a blog on one of the many free blogging communities.
  • Ninth, prepare your public relations campaign. Develop contacts in the press. Plan events and actions that will get and hold the public’s attention. Encourage journalists to cover those events and actions.
  • Tenth, hold your events and actions: open forums, lobby days, protests, and boycotts are all good ways to pressure politicians and corporate leaders to change their policies.

Finally, mobilize as many people as you can to support your campaign. Be sure to give them simple things they can do to show their support and attract even more people: like wearing one of your campaign buttons or putting one of your bumpers stickers on their car. If you’ve done your job well, so many people in your community will agree with you that it will become possible to win your campaign goals—whatever they are.

For a useful model, check out the recent successful #NoBoston2024 campaign—which wasn’t a traditional corporate campaign, but that nonetheless had all the elements of one. And it was a slam dunk resulting in a resounding popular victory against putting the City of Boston in hock for decades for a sporting event with a long history of corruption.

Questions? Feel free to contact me at jason@binjonline.org. And for those of you who might launch a corporate campaign against GE: let’s be careful out there.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.